UNITED
STATES
SECURITIES AND EXCHANGE COMMISSION
Washington,
D.C. 20549
SCHEDULE
14A
Proxy Statement Pursuant to Section 14(a)
of
the Securities Exchange Act of 1934
(Amendment No. 2)
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Preliminary Proxy Statement
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☐Definitive
Proxy Statement
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Definitive Additional Materials
☐ Soliciting
Material under §240.14a-12
Bannix
Acquisition Corp.
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other
than the Registrant)
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Fee paid previously with preliminary materials.
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computed on table in exhibit required by Item 25(b) per Exchange Act Rules 14a6(i)(1) and 0-11
PROXY STATEMENT FOR SPECIAL MEETING OF
BANNIX
ACQUISITION CORP.
FOR 85,000,000 SHARES OF COMMON STOCK
All of the members of the board
of directors of Bannix Acquisition Corp., a Delaware corporation (“Bannix”), voting on the transaction approved the Business
Combination Agreement, dated as of June 23, 2023 (such agreement as amended from time to time, the “Business Combination Agreement”),
by and among Bannix, EVIE Autonomous Group Ltd., a private company newly formed under the Laws of England and Wales (the “Company”
or “EVIE”), and the shareholder of the Company (the “Company Shareholder”), pursuant to which, subject to the
satisfaction or waiver of certain conditions precedent in the Business Combination Agreement, the following transactions will occur: the
acquisition by Bannix of all of the issued and outstanding share capital of the Company from the Company Shareholder in exchange for the
issuance of 85,000,000 new shares of common stock of Bannix, $0.01 par value per share (the “Common Stock”), pursuant to which
the Company will become a direct wholly owned subsidiary of Bannix (the “Share Acquisition”) and (b) the other transactions
contemplated by the Business Combination Agreement and the Ancillary Documents referred to therein (the “Business Combination”).
EVIE is a pre-revenue company with fully developed, ready to install intellectual properties as level 4 autonomous technology stack that
any OEM can install on their own equipment enable it to self-drive and operate. In connection with the consummation of the Business Combination,
Bannix will change its corporate name to “[*]” In this proxy statement, when we refer to “Evie,” we mean EVIE
Autonomous Group Ltd. prior to the consummation of the Business Combination, and when we refer to “New Bannix” or the “Combined
Company” we mean Bannix, under its new corporate name after the consummation of the Business Combination.
As part
of the Transaction, on or about July 12, 2023, Bannix filed with the United Kingdom Cabinet Office a notification under the National Security
and Investment Act 2021 (the “Act”) in relation to the acquisition of EVIE, which is required by the Act (the “Notification”).
On September 6, 2023, Bannix was notified by the U.K. Cabinet Office, Risk Identification and Review Investment Security Unit, that the
Secretary of State has considered the notification and approved it. With such approval, in accordance with section 14 of the Act, the
Secretary of State has determined that he will be taking no further action in relation to the acquisition of EVIE by the Company.
On August 8, 2023,
Bannix entered into a Patent Purchase Agreement (“PPA”) with GBT Tokenize Corp. (“Tokenize”). Tokenize
is 50% owned of GBT Technologies Inc. (“GBT”) and 50% owned by Magic Internacional Argentina FC, S.L. (“Magic”).
Magic is controlled by Sergio Fridman who has no connection to Bannix or any of its directors or sponsors GBT provided its consent,
to acquire the entire right, title, and interest of certain patents and patent applications providing an intellectual property
basis for a machine learning driven technology that controls radio wave transmissions, analyzes their reflections data, and constructs
2D/3D images of stationary and in motion objects, (the “Patents”). There are no current arrangements between the executive
officers and the board of directors of either GBT or Bannix’s executive officers, directors or stockholders holding in excess
of other company’s issued and outstanding securities. The closing date of the PPA will immediately follow the closing of
the Business Combination. The Purchase Price is set at 5% of the consideration that Bannix is paying to the shareholders of EVIE
Group in connection with the Business Combination. The BCA sets the consideration to be paid by Bannix at $850 million and, in
turn, the consideration in the PPA to be paid to Tokenize is $42.5 million. If the final Purchase Price is less than $30 million,
Tokenize has the option to cancel the PPA. In accordance therewith, Bannix agrees to pay, issue and deliver to Tokenize, $42,500,000
in series A preferred stock to Tokenize, which such terms will be more fully set forth in the Series A Preferred Stock Certificate
of Designation to be filed with the Secretary of State of the State of prior to the closing. The 42,500 Series A Preferred Stock
will have stated value of face value of $1,000 per share and is convertible, at the option of Tokenize, into shares of common
stock of Bannix at 5% discount to the VWAP during the 20 trading days prior to conversion, and in any event not less than $1.00.
The Series A Preferred Stock will not have voting rights and will be entitled to dividends only in the event of liquidation. The
Series A Preferred Stock will have a 4.99% beneficial ownership limitation providing that the Series A Preferred Stock may not
be converted into more than 4.99% of the shares of common stock outstanding at any point in time. Series A Preferred Stock and
the shares of common stock issuable upon conversion of the Series A Preferred Stock (the “Conversion Shares”) shall
be subject to a lock-up beginning on the Closing Date and ending on the earliest of (i) the six (6) months after such date, (ii)
a Change in Control, or (iii) written consent of Purchaser (the “Seller Lockup Period”).
At the effective time of the
Business Combination each outstanding share of Company common stock will be cancelled and converted into the right to receive 85,000,000
shares of Bannix common stock. See the section entitled “Proposal 1: The Business Combination Proposal.” The total
number of shares of Bannix common stock expected to be issued represents approximately 89.7% of the issued and outstanding shares of Bannix
common stock immediately following the closing of the Business Combination, assuming no redemptions occur and maximum redemptions occur,
respectively, which includes the full conversion of the Series A Preferred Stock held by Tokenize into common stock. Please see the section
of the accompanying proxy statement entitled “Selected Unaudited Pro Forma Condensed Consolidated Combined Financial Information”
for further information regarding what constitutes a “maximum redemption” scenario.
Proposals to approve the Business
Combination Agreement and the other matters discussed in this proxy statement will be presented for approval by Bannix’s stockholders
at the special meeting of stockholders of Bannix (the “Special Meeting”) scheduled to be held on *, 2023, in virtual format.
Bannix’s Units,
Common Stock, and Warrants originally sold as part of the Units are currently listed on The Nasdaq Stock Market (“Nasdaq”)
under the symbols “BNIXU,” “BNIX” and “BNIXW,” respectively. Bannix intends to apply for listing
of the shares of New Company common stock effective upon the consummation of the Business Combination on the Nasdaq under the
proposed symbol “EVVE.” No shares will trade on Nasdaq under the symbol “BNIX” following the consummation
of the Business Combination. It is a condition of the consummation of the Business Combination that the New Company common stock
is approved for listing on Nasdaq (subject only to official notice of issuance thereof), but there can be no assurance such listing
condition will be met. If such listing condition is not met, the Business Combination will not be consummated unless the listing
condition set forth in the Business Combination Agreement is waived by the parties to that agreement.
Bannix is an “emerging
growth company” as defined in the Jumpstart Our Business Startups Act of 2012, as amended, and has elected to comply with certain
reduced public company reporting requirements.
This proxy statement incorporates
by reference important business and financial information about Bannix from documents that are not included in or delivered with this
proxy statement. You can obtain documents incorporated by reference in this proxy statement and other filings of Bannix with the Securities
and Exchange Commission (the “SEC”) by visiting its website at www.sec.gov or requesting them in writing or by telephone
from Bannix at the following address:
8265 West Sunset Blvd., Suite# 107
West Hollywood, CA 90046
Telephone: (323) 682-8949
You will not be charged for
any of these documents that you request. Stockholders requesting documents should do so by *, 2023 (five business days prior to the
date of the Special Meeting) in order to receive them before the Special Meeting.
This proxy statement provides
you with detailed information about the Business Combination and other matters to be considered at the Special Meeting. We urge you to
carefully read this entire document and the documents incorporated herein by reference. In particular, you should review the matters discussed
under the heading “Risk Factors” beginning on page *of this proxy statement.
Neither the SEC nor any state
securities commission has approved or disapproved of the transactions described in this proxy statement or the securities referenced herein,
passed upon the merits or fairness of the Business Combination or related transactions, or passed upon the adequacy or accuracy of this
proxy statement. Any representation to the contrary is a criminal offense.
The proxy statement is dated *, 2023 and is first being mailed to stockholders
of Bannix on or about [*], 2023.
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
OF BANNIX ACQUISITION CORP.
To Be Held On *, 2023
To the Stockholders of Bannix Acquisition Corp.:
NOTICE IS HEREBY GIVEN that a
special meeting of stockholders (the “Special Meeting”) of Bannix Acquisition Corp., a Delaware corporation (“Bannix,”
“we,” “our” or “us”), will be held on *, 2023, at [*] PM Eastern Time, via live webcast at the
following address: ____________.:____________. You will need the 12-digit meeting control number that is printed on your proxy card to
enter the Special Meeting. Bannix recommends that you log in at least 15 minutes before the Special Meeting to ensure you are logged in
when the Special Meeting starts. Please note that you will not be able to attend the Special Meeting in person. You are cordially invited
to attend the Special Meeting to consider the following proposals (the “Proposals”):
1. to (a) adopt and approve
the Business Combination Agreement, dated as of June 23, 2023 (as it may be further amended and/or restated from time to time, the “Business
Combination Agreement”), by and among Bannix, EVIE Autonomous Group Ltd, a private company formed under the Laws of England and
Wales (the “Company”), and the shareholder of the Company (the “Company Shareholder”), entered into a Business
Combination Agreement (the “Business Combination Agreement”), pursuant to which, subject to the satisfaction or waiver of
certain conditions precedent in the Business Combination Agreement, the following transactions will occur: the acquisition by Bannix of
all of the issued and outstanding share capital of the Company from the Company Shareholder in exchange for the issuance of eighty-five
million new shares of Common Stock, pursuant to which the Company will become a direct wholly owned subsidiary of Bannix (the “Share
Acquisition”) and (b) the other transactions contemplated by the Business Combination Agreement and the Ancillary Documents referred
to therein (collectively, the “Transactions”):
We refer to this proposal as
the “Business Combination Proposal.” A copy of the Business Combination Agreement is attached to the accompanying proxy statement
as Annex A;
2. to approve, assuming
the Business Combination Proposal is approved and adopted, a proposed third amended and restated certificate of incorporation
for the Combined Company (as defined in the accompanying proxy statement) (the “Proposed Charter,” a copy of which
is attached to the accompanying proxy statement as Annex B), which will amend and restate Bannix’s current Second
Amended and Restated Certificate of Incorporation (the “Current Charter”), and amended by-laws for the Combined Company
(the “Proposed Bylaws,” a copy of which is attached to the accompanying proxy statement at Annex C), which
will be in effect upon the closing (the “Closing”) of the Business Combination (the “Charter Amendment
Proposal”);
3.
to approve, on a non-binding advisory basis, the following material differences between the Proposed Charter and the Current Charter,
which are being presented pursuant to guidance of the SEC as seven separate sub-proposal (the “Advisory Charter Amendment
Proposals”):
(a)
Advisory Charter Proposal A — to change the corporate name of the Combined Company to “[*]” at and
from the time of the Business Combination;
(b)
Advisory Charter Proposal B — to increase the authorized shares of common stock of the Combined Company to 400,000,000
shares;
(c)
Advisory Charter Proposal C — to increase the authorized shares of preferred stock that the Combined Company’s
board of directors could issue to 10,000,000 shares; and
(d)
Advisory Charter Proposal D — to omit from the Proposed Charter the various provisions applicable only to special
purpose acquisition companies.
4. to approve, assuming the Business
Combination Proposal is approved and adopted, for purposes of complying with the applicable provisions of Nasdaq Listing Rule 5635
and listing rules of Nasdaq, the issuance of up to 85,000,000 shares of Bannix common stock in connection with the Business Combination,
which amount will be determined as described in more detail in the accompanying proxy statement (the “Stock Issuance Proposal”);
5. to approve, assuming the Business
Combination Proposal is approved and adopted, the appointment of five (5) directors who, upon consummation of the Business Combination,
will become directors of the Combined Company (the “Director Election Proposal”); and
6. to approve a proposal to adjourn
the Special Meeting to a later date or dates if it is determined that more time is necessary or appropriate, in the judgment of the Board
or the officer presiding over the Special Meeting, for Bannix to consummate the Business Combination (the “Adjournment Proposal”).
Each of the Business Combination
Proposal, the Charter Amendment Proposal and the Stock Issuance Proposal, (together, the “Condition Precedent Proposals”)
is cross-conditioned on the approval of each other. The Adjournment Proposal and the Advisory Charter Amendment Proposals are not cross-conditioned
on the approval of any other proposal set forth in this proxy statement.
Only holders of record of Common
Stock of Bannix (collectively, the “Bannix Common Stock”) at the close of business on *, 2023 (the “Record Date”)
are entitled to notice of the Special Meeting and to vote at the Special Meeting and any adjournments or postponements of the Special
Meeting. A complete list of Bannix stockholders of record entitled to vote at the Special Meeting will be available for ten days before
the Special Meeting at the principal executive offices of Bannix for inspection by stockholders during ordinary business hours for any
purpose germane to the Special Meeting.
Pursuant to the Current
Charter, Bannix is providing its public stockholders (“Public Stockholders”) with the opportunity to redeem, upon
the Closing, the shares of Common Stock (the “Public Shares”) issued in the Initial Public Offering then held by them
for cash equal to their pro rata share of the aggregate amount on deposit (as of two business days prior to the Closing)
in the trust account (the “Trust Account”) that holds the proceeds (including interest but less franchise and income
taxes payable) of the Initial Public Offering. For illustrative purposes,
based on funds in the Trust Account of approximately $* on the Record Date, the estimated per share redemption price would have
been approximately $*. Public Stockholders may elect to redeem Public Shares even if they vote for the Business Combination Proposal.
A Public Stockholder, together with any of his, her or its affiliates or any other person with whom he, she or it is acting in
concert or as a “group” (as defined under Section 13 of the Securities Exchange Act of 1934, as amended),
will be restricted from redeeming in the aggregate his, her or its shares or, if part of such a group, the group’s shares,
with respect to 15% or more of the Public Shares issued in the Initial Public Offering. Bannix’s Sponsor has agreed
to waive its redemption rights with respect to any Founder Shares and Private Placement Warrants (each as defined in the accompanying
proxy statement) and any Public Shares it may hold, and the Sponsor has also agreed to waive its redemption rights with respect
to any other equity securities it holds in connection with the Closing, and such shares will be excluded from the pro rata
calculation used to determine the per-share redemption price. The Sponsor has agreed to vote any Founder Shares, Private Placement
Warrants and Public Shares owned by them, and the Sponsor has also agreed to vote any other equity securities in favor of the
Business Combination Proposal, which represent approximately 46.2% of the voting power of Bannix as of the Record Date. The Sponsor
has also agreed to vote its shares in favor of all other Proposals being presented at the Special Meeting.
Pursuant to Bannix’s bylaws,
a majority of the voting power of all outstanding shares of Bannix Common Stock entitled to vote, represented at the Special Meeting or
by proxy, will constitute a quorum for the transaction of business at the Special Meeting. Under the Delaware General Corporation Law
(the “DGCL”), shares that are voted “abstain” or “withheld” are counted as present for purposes of
determining whether a quorum is present at the Special Meeting. Because the Proposals are “non-discretionary” items, your
broker will not be able to vote uninstructed shares for any of the Proposals. As a result, if you do not provide voting instructions,
a broker “non-vote” will be deemed to have occurred for each of the Proposals. Broker “non-votes” will not be
counted as present for purposes of determining whether a quorum is present.
The approval of the Business
Combination Proposal requires the affirmative vote of the holders of a majority of the shares of Bannix Common Stock cast in respect of
that Proposal and entitled to vote thereon at the Special Meeting, voting together as a single class. The approval of each of the Stock
Issuance Proposal, the Adjournment Proposal and each of the Advisory Charter Amendment Proposals also requires the affirmative vote of
the holders of a majority of the shares of Bannix Common Stock cast in respect of the relevant Proposal and entitled to vote thereon at
the Special Meeting, voting together as a single class. The approval of the Charter Amendment Proposal requires the affirmative vote of
a majority of the issued and outstanding shares of Common Stock, as well as the vote of a majority of the issued and outstanding shares
of Common Stock.
The approval of the Director
Election Proposal requires a plurality vote of the shares of Bannix Common Stock cast in respect of that Proposal and entitled to vote
thereon at the Special Meeting, voting as a single class. “Plurality” means that the individuals who receive the largest number
of votes cast “FOR” are elected as directors. Consequently, any shares not voted “FOR” a particular nominee (whether
as a result of an abstention, a direction to withhold authority or a broker non-vote) will not be counted in the nominee’s favor.
If the Business Combination Proposal
is not approved, the Charter Amendment Proposal, the Advisory Charter Amendment Proposals, the Stock Issuance Proposal, and the Director
Election Proposal, will not be presented to the Bannix stockholders for a vote. The approval of the Business Combination Proposal, the
Charter Amendment Proposal, the Stock Issuance Proposal, the Director Election Proposal, are preconditions to the Closing.
As of the Record Date,
there was approximately $* in the Trust Account. Each redemption of Public Shares by Public Stockholders will decrease the amount
in the Trust Account. Bannix will not redeem Public Shares in an amount that would cause it to have net tangible assets of less
than $5,000,001.
Your
attention is directed to the proxy statement accompanying this notice (including the Annexes thereto) for a more complete description
of the proposed Business Combination and related transactions and each of the Proposals. We encourage you to read this proxy statement
carefully. If you have any questions or need assistance voting your shares, please call our proxy solicitor, *., at *, or email
at *. *, 2023
By
Order of the Board of Directors
TABLE
OF CONTENTS
MARKET AND INDUSTRY DATA
Certain information contained
in this document relates to or is based on studies, publications, surveys and other data obtained from third-party sources and Bannix’s
own internal estimates and research. While we are not aware of any misstatements regarding such third-party information and data presented
in this proxy statement, such information and data involves risks and uncertainties and is subject to change based on various factors,
including, potentially, those discussed under the section of this proxy statement entitled “Risk Factors.” Furthermore,
such information and data cannot always be verified with complete certainty due to limits on the availability and reliability of raw data,
the voluntary nature of the data gathering process and other limitations and uncertainties inherent in any statistical survey. Finally,
while we believe our own internal estimates and research are reliable, and are not aware of any misstatements regarding such information
and data presented in this proxy statement, such research has not been verified by any independent source.
TRADEMARKS
This document contains references
to trademarks, trade names and service marks belonging to other entities. Solely for convenience, trademarks, trade names and service
marks referred to in this proxy statement may appear without the ® or TM symbols, but such references are not intended to indicate,
in any way, that the applicable licensor will not assert, to the fullest extent under applicable law, its rights to these trademarks and
trade names. We do not intend our use or display of other entities’ trade names, trademarks or service marks to imply a relationship
with, or endorsement or sponsorship of us by, any other entities.
SUMMARY TERM SHEET
This Summary Term Sheet and the
sections entitled “Questions and Answers About the Proposals” and “Summary of the Proxy Statement”
summarize certain information contained in this proxy statement, but may not contain all of the information that is important to you.
You should carefully read this entire proxy statement, including all of the accompanying financial statements and the attached annexes,
for a more complete understanding of the matters to be considered at the Special Meeting.
1)
Bannix is a special purpose acquisition company (“SPAC”)
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.
2) On
September 10, 2021, Bannix completed its Initial Public Offering of 6,900,000 units (the “Units”), each Unit consisting of
one share of Bannix Common Stock, one redeemable warrant (“Warrant”), each whole Warrant entitling the holder thereof to purchase
one share of Common Stock for $11.50 per share and one right (“Right”), with each Right entitling the holder to 1/10 of one
share of Common Stock, generating proceeds of $69,000,000 before underwriting discounts and expenses. Simultaneously with the closing
of the Initial Public Offering, Bannix consummated the private placement (“Private Placement”) with one of the sponsors and
anchor investors of 406,000 units (the “Private Units”), generating total proceeds of $3,835,000. The Private Units are identical
to the Units sold in the Initial Public Offering except that the holders have agreed not to transfer, assign, or sell any of the Private
Units or underlying securities until the earlier of (A) one year after the completion of the Business Combination or (B) subsequent
to the Company’s initial Business Combination, (x) if the last sale price of the 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 90 days after the consummation of the initial Business Combination, or (y) the date on which Bannix completes
a liquidation, merger, capital stock exchange, reorganization or other similar transaction that results in all of the Bannix stockholders
having the right to exchange their shares of Common Stock for cash, securities or other property. Bannix’s sponsors and the anchor
investors were granted certain demand and piggyback registration rights in connection with the purchase of the Private Warrants.
3)EVIE is an innovations and
technologies group based in the United Kingdom. It brings together existing electric vehicle architecture, artificial intelligence and
autonomous control technology as well as a software platform for control and rapid programming, with decades of automotive industry expertise.
EVIE is updating its current POD offering as well as developing a range of autonomous mobile platform concepts intended to transform industries
such as logistics, construction, agriculture and public mass transit in off highway, controlled environments. EVIE is a pre-commercial
stage advanced artificial intelligence (“AI”), robotics and autonomous mobility developer. EVIE owns an extensive library
of intellectual property related to its core areas of expertise. EVIE’s core product is a complete and reliable level 4 autonomous
technology stack that can be used on its own mobility offerings as well as sold to 3rd party manufactures can install the system
on their own equipment to enable it to drive autonomously and operate. This system in essence can be, “Lifted and Shifted”
from one vehicle type to another. It is provided at a low price point, enabled by a propriety software architecture, which is purpose
built for robotics and autonomous development as well as being covered by copywrite law. EVIE intends to have these manufactured and produced
under license by established production partners providing instant global scale without the capital expenditure needs.
4) On June 23, 2023,
Bannix the Company and the Company Shareholder entered into the Business Combination Agreement. Under the terms of the Business
Combination Agreement, the parties thereto will enter into the Business Combination pursuant to which Bannix will acquire all
of the Company share capital from the Company Shareholder and the Company will become a wholly-owned subsidiary of Bannix. As
enhancement to the acquisition of EVIE, on August 8, 2023, Bannix entered into the PPA with Tokenize to acquire the entire right,
title, and interest of certain patents and patent applications providing an intellectual property basis for a machine learning
driven technology that controls radio wave transmissions, analyzes their reflections data, and constructs 2D/3D images of stationary
and in motion objects, (the “Patents”). The closing date of the PPA will immediately follow the closing of the Business
Combination. The Purchase Price is set at 5% of the consideration that Bannix is paying to the shareholders of EVIE Group in connection
with the Business Combination. The Business Combination Agreement sets the consideration to be paid by Bannix at $850 million
and, in turn, the consideration in the PPA to be paid to Tokenize is $42.5 million. If the final Purchase Price is less than $30
million, Tokenize has the option to cancel the PPA. In accordance therewith, Bannix agrees to pay, issue and deliver to Tokenize,
$42,500,000 in series a preferred stock to Tokenize, which such terms will be more fully set forth in the Series A Preferred Stock
Certificate of Designation to be filed with the Secretary of State of the State of prior to the closing. The Series A Preferred
Stock will have stated value of face value of $1,000 per share and is convertible, at the option of Tokenize, into shares of common
stock of Bannix at 5% discount to the VWAP during the 20 trading days prior to conversion, and in any event not less than $1.00.
The Series A Preferred Stock will not have voting rights and will be entitled to dividends only in the event of liquidation. The
Series A Preferred Stock will have a 4.99% beneficial ownership limitation providing that the Series A Preferred Stock may not
be converted into more than 4.99% of the shares of common stock outstanding at any point in time. Series A Preferred Stock and
the Conversion Shares shall be subject to the Seller Lockup Period.
For more information regarding the consideration to be paid in
connection with the Business Combination, please see the section entitled “Summary
of the Proxy Statement.”
6)
In evaluating the Business Combination, our Board considered various factors in determining whether to approve the Business Combination
Agreement For more information about our decision-making process, as well as other factors, uncertainties and risks considered,
see the section entitled “Proposal 1: The Business Combination Proposal — The Board’s Reasons
for Approval of the Business Combination.”
7)
Pursuant to the Current Charter, holders of Public Shares may request that we redeem all or a portion of their Public Shares for
cash if the Business Combination is consummated. Holders of Public Shares may elect to redeem their Public Shares even if they
vote “FOR” the proposal to approve the Business Combination, or any other Proposal. If the Business Combination is
not consummated, the Public Shares will be returned to the respective holder or their broker, bank or other nominee. If the Business
Combination is consummated, and if a holder of Public Shares properly exercises their right to redeem all or a portion of the
Public Shares that they hold, including by timely delivering their shares to Continental, we will redeem such Public Shares for
a per-share price, payable in cash, equal to the pro rata portion of the Trust Account, calculated as of two business days
prior to the consummation of the Business Combination, including interest but less franchise and income taxes payable. For illustrative
purposes, based on funds in the Trust Account of approximately $* on the Record Date, the estimated per share redemption price
would have been approximately $*. If a holder of Public Shares properly exercises their redemption rights in full, then they will
be electing to exchange all of their Public Shares for cash and will not own any shares of the Combined Company. Please see the
section entitled “Summary of the Proxy Statement — Redemption Rights of Bannix Stockholders”
for further information regarding the redemption rights of holders of Public Shares.
8)
In addition to voting on the proposal to approve and adopt the Business Combination Agreement and approve the Business Combination
(together, the “Business Combination Proposal”) at the Special Meeting, our stockholders will be asked to vote to
approve the following Proposals:
a)
assuming the Business Combination Proposal is approved and adopted, the Proposed Charter, which will amend and restate the Current
Charter, and amended bylaws for the Combined Company, which will be in effect upon the Closing (the “Charter Amendment Proposal”);
b)
on a non-binding advisory basis, the following material differences between the Proposed Charter and the Current Charter, which
are being presented pursuant to guidance of the SEC as seven separate sub-proposals (the “Advisory Charter Amendment Proposals”):
| |
● |
Advisory
Charter Proposal A — to change the corporate name of the Combined Company to “[*].” At and from
the time of the Business Combination; |
| |
● |
Advisory
Charter Proposal B — to increase the authorized shares of common stock of the Combined Company to 400,000,000
shares; |
| |
● |
Advisory
Charter Proposal C — to increase the authorized shares of preferred stock that the Combined Company’s board of
directors could issue to 10,000,000 shares; and |
| |
● |
Advisory Charter Proposal
D —to omit from the Proposed Charter the various provisions applicable only to special purpose acquisition companies;
and |
c)
assuming the Business Combination Proposal is approved and adopted, for purposes of complying with the applicable provisions of
Nasdaq Listing Rule 5635, the issuance of up to 85,000,000 shares of New Company common stock in connection with the Business
Combination (the “Stock Issuance Proposal”);
d)
assuming the Business Combination Proposal is approved and adopted, the appointment of five (5) directors who, upon consummation
of the Business Combination, will become directors of the Combined Company (the “Director Election Proposal”); and
e)
the adjournment of the Special Meeting to a later date or dates if it is determined that more time is necessary or appropriate,
in the judgment of the Board or the officer presiding over the Special Meeting, for Bannix to consummate the Business Combination
(the “Adjournment Proposal”).
Each
of the Business Combination Proposal, the Charter Amendment Proposal, the Stock Issuance Proposal, and the Director Election Proposal,
(together, the “Condition Precedent Proposals”) is cross-conditioned on the approval of each other. The Adjournment
Proposal and the Advisory Charter Amendment Proposals are not cross-conditioned on the approval of any other proposal set forth
in this proxy statement.
For
further information, please see the section entitled “Summary of the Proxy Statement — Additional Matters
Being Voted On By Bannix Stockholders.” The approval of the Business Combination Proposal, the Charter Amendment Proposal,
the Stock Issuance Proposal, and the Director Election Proposal are preconditions to the Closing. Each of these Proposals is more
fully described in this proxy statement, which each Bannix stockholder is encouraged to read carefully and in its entirety.
| ● |
|
Unless
waived by the parties to the Business Combination Agreement, and subject to applicable law, the Closing is subject to a number
of conditions set forth in the Business Combination Agreement. There can be no assurance that the parties to the Business
Combination Agreement would waive any such provision of the Business Combination Agreement. For more information about the
closing conditions to the Business Combination, please see the section entitled “Proposal 1: The Business Combination
Proposal.” |
| ● |
|
The
proposed Business Combination, including our business following the Business Combination, involves numerous risks. For more
information about these risks, please see the section entitled “Risk Factors.” |
| ● |
|
When
you consider the recommendation of our Board in favor of approval of the Business Combination Proposal and the other Proposals
included herein, you should keep in mind that the Sponsor and our directors and officers have interests in such Proposals
that are different from, or in addition to, those of our stockholders generally. Our Board was aware of and considered these
interests, among other matters, in evaluating and negotiating the Business Combination Agreement and the other transaction
agreements and in recommending to our stockholders that they vote in favor of the Proposals presented at the Special Meeting,
including the Business Combination Proposal. Bannix stockholders should take these interests into account in deciding whether
to approve the Proposals presented at the Special Meeting, including the Business Combination Proposal. For further information,
please see the section entitled “Summary of the Proxy Statement — Interests of the Sponsor and
Bannix’s Directors and Officers in the Business Combination.” |
QUESTIONS
AND ANSWERS ABOUT THE PROPOSALS
The
questions and answers below highlight only selected information from this proxy statement and only briefly address some commonly
asked questions about the Special Meeting and the Proposals to be presented at the Special Meeting, including with respect to
the proposed Business Combination. The following questions and answers do not include all the information that may be important
to Bannix stockholders. Bannix stockholders are urged to read this entire proxy statement, including the Annexes and the other
documents referred to herein.
QUESTIONS
AND ANSWERS ABOUT THE BUSINESS COMBINATION
Q:
What is the Business Combination?
A:
Bannix and Company have entered into the Business Combination Agreement, pursuant to which Bannix will acquire all the outstanding
share capital of the Company, with the Company becoming a wholly owned subsidiary of Bannix.
Q:
Why am I receiving this proxy statement?
A:
Bannix and Company have agreed to a Business Combination under the terms of the Business Combination Agreement that is described
in this proxy statement. A copy of the Business Combination Agreement is attached to this proxy statement as Annex A, and
Bannix encourages its stockholders to read it in its entirety. Bannix’s stockholders are being asked to consider and vote
upon a proposal to approve the Business Combination Agreement, which, among other things, provides for the Business Combination
whereby Bannix will acquire all the outstanding share capital of the Company, with the Company becoming a wholly owned subsidiary
of Bannix. See the section entitled “Proposal 1: The Business Combination Proposal.”
This
document is a proxy statement because the Board is soliciting proxies using this proxy statement from Bannix stockholders. It
is a because Bannix, in connection with the Business Combination, is offering shares of Common Stock in exchange for the outstanding
shares of Company common stock and Company preferred stock. See the section entitled “Proposal 1: The Business Combination
Proposal.”
Q:
What will be the ownership interest of the post-Business Combination company after the Closing?
A:
Ownership of the Post-Business Combination Company After the Closing
It
is anticipated that upon completion of the Business Combination and assuming no additional redemptions by the Public Stockholders,
the Public Stockholders will retain an ownership interest of approximately 3.98% in the Combined Company, the Sponsor and related
parties will retain an ownership interest of approximately 2.81% of the Combined Company, and the Company Stockholders will own
approximately 93.21% of the Combined Company.
The
following tables illustrate estimated ownership levels in the Combined Company, immediately following the consummation of the
Business Combination, based on the varying levels of redemptions by the Public Stockholders, excluding potential sources of dilution,
and the following additional assumptions:
| |
|
After
the Business Combination |
|
|
|
|
|
|
| |
|
No
redemption |
|
|
|
Net
Tangible Asset Scenario |
| |
|
Number |
|
Percent |
|
Number |
|
Percent |
| |
|
of
Shares |
|
Owned |
|
of
Shares |
|
Owned |
| |
|
|
|
|
|
|
|
|
| Company
Stockholders |
|
|
85,000,000 |
|
|
|
93.3 |
% |
|
|
85,000,000 |
|
|
|
94.2 |
% |
| Public
Stockholders (2) (3) |
|
|
3,629,613 |
|
|
|
4.0 |
% |
|
|
2,745,383 |
|
|
|
3.0 |
% |
| Sponsor
and related parties |
|
|
2,564,600 |
|
|
|
2.7 |
% |
|
|
2,564,600 |
|
|
|
2.8 |
% |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
100.00 |
% |
|
|
|
|
|
|
100.00 |
% |
| Pro forma Common Stock as of November
30, 2023 | |
| |
|
| Potential sources of
dilution: | |
| | | |
| | |
| | |
| | | |
| | |
| Public Warrants | |
| 6,900,000 | | |
| 6,900,000 | |
(1)
Assumes that no additional Public Shares are redeemed (and
including 690,000 common shares deriving from public rights upon closing).
(2) Assumes that 884,230 Public Shares are redeemed
for aggregate redemption payments of approximately $9.6 million assuming a $10.89 per share redemption price and based on funds in the
Trust Account as of January 16, 2024. The net tangible asset scenario reflects the maximum number of Bannix Public Shares that can be
redeemed without violating the conditions of the Business Combination Agreement or the requirement of Bannix’s Existing Organizational
Documents that Bannix cannot redeem Public Shares if it would result in Bannix having a minimum net tangible asset value of less than
$5,000,001 after giving effect to the payments to redeeming shareholders. This scenario is included in this proxy statement for illustrative
purposes only.
(3)
This does not include the issuance of up to 42,500,000 shares of common stock upon conversion of the Series A Preferred Stock
to be held by Tokenize. Following the closing of the business combination, in connection with Bannix’s acquisition of the
Patents pursuant to the PPA, Bannix agrees to pay, issue and deliver to Tokenize, Series A Preferred Stock with a stated value
of $42,500,000, which such terms will be more fully set forth in the Series A Preferred Stock Certificate of Designation to be
filed with the Secretary of State of the State of Delaware prior to the closing of the PPA. The 42,500 Series A Preferred Stock
will have stated value of face value of $1,000 per share and is convertible, at the option of Tokenize, into shares of common
stock of Bannix at 5% discount to the VWAP during the 20 trading days prior to conversion, and in any event not less than $1.00.
The Series A Preferred Stock will not have voting rights and will be entitled to dividends only in the event of liquidation. The
Series A Preferred Stock will have a 4.99% beneficial ownership limitation providing that the Series A Preferred Stock may not
be converted into more than 4.99% of the shares of common stock outstanding at any point in time. Series A Preferred Stock and
the shares of common stock issuable upon conversion of the Series A Preferred Stock (the “Conversion Shares”) shall
be subject to a lock-up beginning on the Closing Date and ending on the earliest of (i) the six (6) months after such date, (ii)
a change in control, or (iii) written consent of Tokenize (the “Seller Lockup Period”).
See
“Risk Factors — Risks Related to Bannix, the Business Combination, and Redemptions — The
Public Stockholders will experience dilution as a consequence of the issuance of New Company common stock as consideration in
the Business Combination.” For additional information related to the risk of dilution to the Public Stockholders.
Q:
How do the Public Warrants differ from the Private Placement Warrants and what are the related risks for any Public Warrant holders
post business combination?
A:
The Public Warrants are identical to the Private Placement Warrants, except that, so long as the Private Placement Warrants
are held by the Sponsor or its permitted transferees: (1) they (including the Common Stock issuable upon exercise of these warrants)
may not, subject to certain limited exceptions, be transferred, assigned or sold by the Sponsor until 30 days after the completion
of the Business Combination; (2) they may be exercised by the holders on a cashless basis; and (3) they (including the Common
Stock issuable upon exercise of these warrants) are entitled to registration rights.
Following
the Closing, Bannix may redeem the Public Warrants prior to their exercise at a time that is disadvantageous to you. More specifically,
Bannix will have the ability to redeem outstanding Public Warrants at any time after they become exercisable and prior to their
expiration, at a price of $0.01 per Company Public Warrant, provided that the closing price of the Bannix common stock equals
or exceeds $18 per share (as adjusted for adjustments to the number of shares issuable upon exercise or the exercise price of
a warrant) for any 20 trading days within a 30 trading day period ending on the third trading day prior to the date on which the
notice of redemption is sent to the warrant holders (which we refer to as the “Reference Value”), provided that certain
other conditions are met.
Q:
When do you expect the Business Combination to be completed?
A:
It is currently anticipated that the Business Combination will be consummated promptly following the Special Meeting, which
is set for *, 2023; however, the Special Meeting could be adjourned, as
described
herein. Bannix cannot assure you of when or if the Business Combination will be completed, and it is possible that factors outside
of the control of Bannix and Company could result in the Business Combination being completed at a different time or not at all.
Bannix must first obtain the approval of its stockholders for certain of the Proposals set forth in this proxy statement.
Q:
Is the Business Combination subject to conditions, and what happens in the event such conditions are not satisfied?
A:
The completion of the Business Combination is subject to a number of conditions. The completion of the Business Combination is
not assured and is subject to risks, including the risk that approval of the Business Combination by Bannix stockholders is not
obtained, in each case subject to certain terms specified in the Business Combination Agreement (as described in the section entitled
“Proposal 1: The Business Combination Proposal — Conditions to the Closing”).
In
the event the conditions to Closing are not satisfied, pursuant to the Business Combination Agreement, the parties may (a) extend
the time for the performance of any of the obligations or other acts required of the parties as set forth in the Business Combination
Agreement or (b) waive compliance with any of the agreements or conditions set for the in the Business Combination Agreement.
However, Bannix cannot guarantee that Company will grant any extension or waiver.
Q:
What happens if the Business Combination is not consummated?
A:
If Bannix does not complete the Business Combination with Company, for whatever reason, Bannix will search for another target
business with which to complete an initial business combination. If Bannix does not complete the Business Combination with Company
or another business combination by March 14, 2024 ( as approved by the stockholders at the extension meeting held on March 8,
2023 and as may be further amended), Bannix must redeem 100% of the Public Shares, at a per-share price, payable in cash, equal
to the aggregate amount then on deposit in the Trust Account, including interest earned on the funds held in the Trust Account
and not previously released to Bannix to pay its franchise and income taxes (less up to $100,000 of such net interest to pay dissolution
expenses), divided by the number of then-outstanding Public Shares. The Sponsor has waived any rights it may have with respect
to any monies held in the Trust Account or any other asset of Bannix as a result of any liquidation of Bannix with respect to
the Founder Shares and Private Placement Warrants and, accordingly, in the event a business combination is not effected by Bannix
in the required time period, the Founder Shares and Private Placement Warrants held by the Sponsor would be worthless.
Q:
Did the Board obtain a third-party valuation or fairness opinion in determining whether or not to proceed with the Business Combination?
A:
No, the Board did not obtain a third-party valuation or fairness opinion. Consequently, you have no assurance from an independent
source that the price proposed to be paid for Company is fair from a financial point of view.
Q:
Will any New Company securities have registration rights following the consummation of the Business Combination?
A:
Yes. The Company and Bannix, along with certain other signatories, have agreed to a form of amended and restated registration
rights agreement in connection with the Business Combination, and such amended and restated registration rights agreements will
be entered into in connection with the Closing. For further information, please see the section of this proxy statement entitled
“Proposal 1: The Business Combination Proposal — Related Agreements — Registration
Rights Agreement.”
QUESTIONS
AND ANSWERS ABOUT THE SPECIAL MEETING
Q:
How do I attend a virtual meeting?
A:
As a registered stockholder, along with this proxy statement, you received a proxy card from Continental Stock Transfer &
Trust Company (“Continental”), Bannix’s transfer agent, which contains instructions on how to attend
the virtual Special Meeting, including the URL address and your control number. You will need your control number for access.
If you do not have your control number, contact Continental at 917-262-2373 or by email at proxy@continentalstock.com.
Beneficial
owners who own their Common Stock through a bank, broker or other nominee will need to contact Continental to receive a control
number. If you plan to vote at the Special Meeting, you will need to have a legal proxy from your broker, bank or other nominee
or, if you would like to join and not vote, Continental can issue you a guest control number with proof of ownership. Either way,
you must contact Continental at the number or email address above for specific instructions on how to receive the control number.
Please allow up to 72 hours prior to the meeting for processing your control number.
Q:
Are there any other matters being presented to Bannix stockholders at the Special Meeting?
A:
In addition to voting on the Business Combination Proposal, assuming it is approved and adopted, the stockholders of Bannix
will vote on each of the other Proposals described in the section above entitled “Summary Term Sheet.”
Bannix
will hold the Special Meeting to consider and vote upon these Proposals. This proxy statement contains important information about
the proposed Business Combination and the other matters to be acted upon at the Special Meeting. Stockholders should read it carefully.
Consummation
of the Business Combination is conditioned on approval of the Business Combination Proposal, the Charter Amendment Proposal, the
Stock Issuance Proposal and the Director Election Proposal (and each such Proposal is cross-conditioned on the approval of such
other Proposals). If any of these Proposals is not approved, the other Proposals will not be presented to stockholders for a vote.
The
vote of stockholders is important. Bannix stockholders are encouraged to vote as soon as possible after carefully reviewing this
proxy statement.
Q:
What will happen to Bannix’s securities upon consummation of the Business Combination?
A:
Bannix’s Units, Common Stock originally sold as part of the Units, and Warrants originally sold as part of the
Units are currently listed on Nasdaq under the symbols “BNIXU,” “BNIX” and “BNIXW,” respectively.
Upon the Closing, New Bannix will have one class of common stock, the New Company common stock, which Bannix intends to apply
to list on Nasdaq under the symbol “* While trading on Nasdaq is expected to begin on the first business day following the
Closing, there can be no assurance that New Company’s securities will be listed on Nasdaq or another national securities
exchange or that a viable and active trading market will develop. Public Stockholders who do not elect to have their Public Shares
redeemed for a pro rata share of the Trust Account need not submit Public Shares, and such shares of stock (which will be
New Company common stock upon the Closing) will remain outstanding.
Q:
Why is Bannix proposing the Business Combination?
A:
Bannix was organized to effect a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or other
similar business combination with one or more businesses.
On
September 10, 2021, Bannix completed its Initial Public Offering of 6,900,000 units (the “Units”), each Unit
consisting of one share of Bannix Common Stock, one redeemable warrant (“Warrant”), each whole Warrant entitling
the holder thereof to purchase one share of Common Stock for $11.50 per share and one right (“Right”), with
each Right entitling the holder to 1/10 of one share of Common Stock, generating proceeds of $69,000,000 before underwriting discounts
and expenses. Since its Initial Public Offering, Bannix’s activity has been limited to the evaluation of business combination
candidates, which is evaluate more than potential 30 targets before choosing EVIE group based in the United Kingdom. It brings
together existing artificial intelligence and autonomous technology with decades of automotive industry expertise. EVIE is developing
a range of autonomous mobile platform concepts intended to transform industries such as logistics, public EVIE
As part of enhancing EVIE intellectual portfolio, Bannix enter into a Patent Purchase Agreement as described before
to acquire the “Apollo System” (internal name) which in short is a radio base platform based on machine learning driven
technology that controls radio wave transmissions, analyzes their reflections data, and constructs 2D/3D images of stationary
and moving objects.
EVIE
is an innovations and technologies group based in the United Kingdom. It brings together existing electric vehicle architecture,
artificial intelligence and autonomous control technology as well as a software platform for control and rapid programming, with
decades of automotive industry expertise. EVIE is updating its current POD offering as well as developing a range of autonomous
mobile platform concepts intended to transform industries such as logistics, construction, agriculture and public mass transit
in off highway, controlled environments. EVIE is a pre-commercial stage advanced artificial intelligence (“AI”), robotics
and autonomous mobility developer. EVIE owns an extensive library of intellectual property related to its core areas of expertise.
EVIE’s core product is a complete and reliable level 4 autonomous technology stack that can be used on its own mobility
offerings as well as sold to 3rd party manufactures can install the system on their own equipment to enable it to drive
autonomously and operate. This system in essence can be, “Lifted and Shifted” from one vehicle type to another. It
is provided at a low price point, enabled by a propriety software architecture, which is purpose built for robotics and autonomous
development as well as being covered by copyright law. EVIE intends to have these manufactured and produced under license by established
production partners providing instant global scale without the capital expenditure needs.
Based
on its due diligence investigations of Company and the industry in which Company operates, including the financial and other information
provided by Company in the course of the negotiations in connection with the Business Combination Agreement, Bannix believes
that Company has an appealing market opportunity and growth profile and a compelling valuation. As a result, Bannix believes
that the Business Combination with Company including the PPA from Tokenize will provide Bannix stockholders with an opportunity
to participate in the ownership of a company with potential significant value. See the section entitled “Proposal 1:
The Business Combination Proposal — The Board’s Reasons for Approval of the Business Combination.”
Q:
Do I have redemption rights?
A:
If you are a Bannix stockholder holding Public Shares, you have the right to demand that Bannix redeem your Public
Shares for a pro rata portion of the cash held in the Trust Account. We sometimes refer to these rights to demand redemption
of the Public Shares as “redemption rights.” If a public unit holder redeems their common stock, they will continue
to hold public warrants unless they sell those warrants, Bannix redeems them at a future date, or they expire unexercised.
Notwithstanding
the foregoing, a Bannix stockholder, together with any affiliate or any other person with whom such holder is acting in concert
or as a “group” (as defined in Section 13(d)(3) of the Exchange Act), will be restricted from exercising
redemption rights with respect to 15% or more of the Public Shares without the prior consent of Bannix.
Q:
How do I exercise my redemption rights?
A:
A Public Stockholder may exercise redemption rights regardless of whether they vote on the Business Combination Proposal or if they
are a stockholder on the Record Date. If you are a Public Stockholder and wish to exercise your redemption rights, you must (i) if
you hold your Public Shares though Units, elect to separate your Units into the underlying Public Shares and Public Warrants prior to
exercising your redemption rights with respect to the Public Shares, and (ii) prior to 5:00 p.m., local time, on *, 2023 (two
business days before the Special Meeting), tender your shares electronically and submit a request in writing that we redeem your Public
Shares for cash to Continental, our transfer agent, at the following address: Continental Stock Transfer & Company, 1 State Street,
30th Floor, New York, New York 10004. Rather than delivering your Public Shares directly to Continental, you may also deliver
your Public Shares either physically or electronically through the Depositary Trust Company, or DTC, to Continental at least two business
days before the Special Meeting. Any Public Stockholder seeking redemption will be entitled to a full pro rata portion of the amount
then in the Trust Account (which, for illustrative purposes, was $*, or $* per share, as of the Record Date), less any owed but unpaid
franchise and income taxes. Such amount will be paid promptly upon consummation of the Business Combination. There are currently no owed
but unpaid franchise or income taxes on the funds in the Trust Account. There will be no redemption rights with respect to the Warrants.
Holders of outstanding units of Bannix must separate the underlying public shares and public warrants prior to exercising redemption
rights with respect to the public shares. If a broker, dealer, commercial bank, trust company or other nominee holds your units, you
must instruct such nominee to separate your Units. Your nominee must send written instructions by email to proxy@continentalstock.com.
Such written instructions must include the number of Units to be split and the nominee holding such Units. Your nominee must also initiate
electronically, using the Depository Trust & Clearing Corporation (“DTCC”) DWAC (deposit withdrawal at custodian) system,
a withdrawal of the relevant Units and a deposit of an equal number of Public Shares and Public Warrants. This must be completed far
enough in advance to permit your nominee to exercise your redemption rights upon the separation of the Public Shares from the Units.
While this is typically done electronically on the same business day, you should allow at least one full business day to accomplish the
separation. If you fail to cause your Public Shares to be separated in a timely manner, you will likely not be able to exercise your
redemption rights.
Any
request for redemption, once made by a Public Stockholder, may be withdrawn at any time prior to the time the vote is taken with
respect to the Business Combination Proposal at the Special Meeting. If you deliver your Public Shares for redemption directly
to Continental, or deliver your Public Shares either physically or electronically through DTC to Continental, and later decide
prior to the Special Meeting not to elect redemption, you may request that Continental return the shares (physically or electronically).
You may make such request by contacting Continental at the phone number or address set forth in this proxy statement.
Any
written demand of redemption rights must be received by *, 2023, at least two business days prior to the vote taken on the Business
Combination Proposal at the Special Meeting. No demand for redemption will be honored unless the holder’s stock has been
delivered (either physically or electronically) to Continental.
Q:
Do I have appraisal rights if I object to the proposed Business Combination?
A:
No. Bannix stockholders do not have appraisal rights in connection with the proposed Business Combination under Delaware law.
Q:
What happens if a substantial number of stockholders vote in favor of the Business Combination Proposal and exercise redemption
rights?
A:
Public Stockholders may vote in favor of the Business Combination and still exercise their redemption rights and are not required
to vote in any way to exercise their redemption rights. Accordingly, the Business Combination may be consummated even though the
funds available from the Trust Account and the number of Public Shares are substantially reduced as a result of redemptions by
Public Stockholders. Also, with fewer Public Shares and Public Stockholders, the trading markets for New Company common stock
following the Closing may be less liquid than the market for Common Stock was prior to the Business Combination and New Company
may not be able to meet the listing standards of a national securities exchange, including Nasdaq. In addition, with fewer funds
available from the Trust Account, the capital infusion from the Trust Account into New Company’s business will be reduced
and New Company may not be able to achieve its business plans.
Q:
How do the Sponsor and the officers and directors of Bannix intend to vote on the Proposals?
A:
The Sponsor, as well as Bannix’s officers and directors, beneficially own and are entitled to vote an aggregate of approximately
46.2% of the outstanding Bannix Common Stock as of the Record Date. As a result of the concentration of ownership held by the Sponsor
and Bannix’s officers and directors, we will need at minimum 1,027,348 shares of common stock, representing 18.80% of the issued
and outstanding shares held by unaffiliated public stockholders to approve each of the proposals to consummate the Business Combination.
the Sponsor and Bannix’s officers and directors have agreed to vote their shares in favor of the Business Combination Proposal.
These holders have also agreed to vote their shares in favor of all other Proposals being presented at the Special Meeting. At any time
at or prior to the proposed transaction, subject to applicable securities laws (including with respect to material non-public information),
the Sponsor, the Bannix Stockholders or our or their respective directors, officers, advisors or respective affiliates may (a) purchase
Public Shares from institutional and other investors who vote, or indicate an intention to vote, against any of the Condition Precedent
Proposals, or elect to redeem, or indicate an intention to redeem, Public Shares, (b) execute agreements to purchase such shares from
such investors in the future, or (c) enter into transactions with such investors and others to provide them with incentives to acquire
Public Shares, vote their Public Shares in favor of the Condition Precedent Proposals or not redeem their Public Shares. In the event
that the Sponsor, or our or its directors, officers, advisors or affiliates purchase shares or warrants in privately negotiated transactions
from public shareholders, such shares and warrants that are purchased by the Sponsor, or its directors, officers, advisors or affiliates
would not be voted in favor of the Business Combination Proposal. Such a purchase may include a contractual acknowledgement that such
shareholder, although still the record holder of Bannix Common Stock, is no longer the beneficial owner thereof and therefore agrees
not to exercise its Redemption Rights. In the event that the Sponsor, the Bannix Stockholders or our or their respective directors, officers,
advisors, or respective affiliates purchase shares in privately negotiated transactions from Public Stockholders who have already elected
to exercise their Redemption Rights, such selling shareholders would be required to revoke their prior elections to redeem their Public
Shares. The purpose of such share purchases and other transactions would be to increase the likelihood of (a) satisfaction of the
requirement that holders of a majority of the Bannix Common Stock, represented in person or by proxy and entitled to vote at the Special
Meeting, vote in favor of the Business Combination Proposal, the Charter Amendment Proposal, the Advisory Charter Amendment Proposals,
the Stock Issuance Proposal, the Director Election Proposal, and the Adjournment Proposal, (b) otherwise limiting the number of
Public Shares electing to redeem and (c) Bannix’s net tangible assets (as determined in accordance with Rule 3a51-1(g)(1) of the
Exchange Act) being at least $5,000,001. See “Risk Factors — Certain insiders may elect to purchase shares
or warrants prior to the consummation of the Business Combination, which may influence the vote on the Business Combination.”
For additional information related to the risk of voting repurchased shares.
Q:
What do I need to do now?
A:
Bannix urges you to carefully read and consider the information contained in this proxy statement, including the annexes,
and to consider how the Business Combination will affect you as a stockholder of Bannix. Bannix stockholders should then vote
as soon as possible in accordance with the instructions provided in this proxy statement and on the enclosed proxy card.
Q:
How do I vote?
A:
If you are a holder of record of Bannix Common Stock on the Record Date, you may vote virtually at the Special Meeting or
by submitting a proxy for the Special Meeting. You may submit your proxy by completing, signing, dating and returning the enclosed
proxy card in the accompanying pre-addressed postage paid envelope. If you hold your shares in “street name,” which
means your shares are held of record by a broker, bank or nominee, you should contact your broker, bank or nominee to ensure that
votes related to the shares you beneficially own are properly counted. In this regard, you must provide the broker, bank or nominee
with instructions on how to vote your shares or, if you wish to attend the meeting and vote in person (which would include presence
at a virtual meeting), obtain a legal proxy from your broker, bank or nominee.
If you
do not give instructions to your brokerage firm, the brokerage firm will not be allowed to vote your shares with respect to the
Proposals. The Proposals are “non-discretionary” items. Your broker may not vote for non-discretionary items, and
those votes will be counted as broker “non-votes.”
After
obtaining a valid legal proxy from your broker, bank or nominee, to register to attend the Special Meeting, you must submit proof
of your legal proxy reflecting the number of your shares along with your name and email address to Continental at proxy@continentalstock.com.
Beneficial owners who e-mail a valid legal proxy will be issued a 12-digit meeting control number that will allow them to register
to attend and participate in the Special Meeting. Beneficial owners who wish to attend the Special Meeting online should contact
Continental no later than *, 2023 to obtain this information. Written requests can be emailed to proxy@continentalstock.com.
Q:
If my shares are held in “street name,” will my broker, bank or nominee automatically vote my shares for me?
A:
No. Your broker, bank or nominee cannot vote your shares unless you provide instructions on how to vote in accordance with
the information and procedures provided to you by your broker, bank or nominee.
Q:
May I change my vote after I have mailed my signed proxy card?
A:
Yes. Bannix stockholders may send a later-dated, signed proxy card to the Company at 8265 West Sunset Blvd., Suite# 107, West
Hollywood, CA 90046, Attn: Doug Davis at the address set forth above so that it is received prior to the vote at the Special Meeting
or attend the Special Meeting virtually and vote. Bannix stockholders also may revoke their proxy by sending a notice of revocation
to the Company at 8265 West Sunset Blvd., Suite# 107, West Hollywood, CA 90046, Attn: Doug Davis, which must be received prior
to the vote at the Special Meeting.
Q:
What happens if I fail to take any action with respect to the Special Meeting?
A:
If you fail to take any action with respect to the Special Meeting and the Business Combination is approved by stockholders
and consummated, you will continue to be a holder of Common Stock. As a corollary, failure to deliver (either physically or electronically)
your stock certificate(s) to Bannix’s transfer agent, Continental, no later than two business days prior to the Special
Meeting, means you will not have any right in connection with the Business Combination to exchange your Public Shares for a pro rata
share of the funds held in the Trust Account. If you fail to take any action with respect to the Special Meeting and the Business
Combination is not approved, you will continue to be a stockholder of Bannix.
Q:
What should I do with my share certificate(s)?
A:
Those Public Stockholders who do not elect to have their Public Shares redeemed for a pro rata share of the funds held
in the Trust Account need not submit their certificate(s). Public Stockholders who exercise their redemption rights must deliver
their share certificate(s) to Continental (either physically or electronically) or through DTC to Continental at least two business
days before the Special Meeting, as described above.
Q:
What should I do if I receive more than one set of voting materials?
A:
Bannix stockholders may receive more than one set of voting materials, including multiple copies of this proxy statement and
multiple proxy cards or voting instruction cards. For example, if you hold your Bannix shares in more than one brokerage account,
you will receive a separate voting instruction card for each brokerage account in which you hold such shares. If you are a holder
of record and your Bannix shares are registered in more than one name, you will receive more than one proxy card. Please complete,
sign, date and return each proxy card and voting instruction card that you receive in order to cast a vote with respect to all
of your Bannix shares.
Q:
Who can help answer my questions?
A:
If you have questions about the Business Combination or if you need additional copies of this proxy statement or the enclosed
proxy card, you should contact:
Bannix
Acquisition Corp.
8265 West Sunset Blvd., Suite# 107
West
Hollywood, CA 90046
Attn: Doug Davis, CEO
You may
also contact our proxy solicitor at:
*
You
may also obtain additional information about Bannix from documents filed with the SEC by following the instructions in the section
entitled “Where You Can Find More Information.” If you are a Bannix stockholder and you intend to seek redemption
of your shares, you will need to deliver your Public Shares (either physically or electronically) to Continental (or through DTC)
at the address listed below at least two business days prior to the vote at the Special Meeting. If you have questions regarding
the certification of your position or delivery of your stock, please contact: proxy@continentalstock.com
Q:
Who will solicit and pay the cost of soliciting proxies?
A:
Bannix will pay the reasonable cost of soliciting proxies for the Special Meeting. Bannix will also reimburse banks, brokers
and other custodians, nominees and fiduciaries representing beneficial owners of Common Stock for their expenses in forwarding
soliciting materials to beneficial owners of shares of common stock and in obtaining voting instructions from those owners. Our
directors, officers and employees may also solicit proxies by telephone, by facsimile, by mail, on the Internet or in person.
They will not be paid any additional amounts for soliciting proxies.
SUMMARY
OF THE PROXY STATEMENT
This
summary highlights selected information from this proxy statement and does not contain all of the information that is important
to you. To better understand the proposals to be submitted for a vote at the Special Meeting, including the Business Combination
Proposal, you should read this entire document carefully, including the Annexes attached to this proxy statement. The Business
Combination Agreement is the primary legal document that governs the Business Combination and other transactions that will be
undertaken in connection with the Business Combination. It is described in detail in this proxy statementin the section
entitled “Proposal 1: The Business Combination Proposal.”
The
Parties
Bannix
Bannix
Acquisition Corp. is a blank check company 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. Bannix was incorporated under the
laws of the State of Delaware on November 17, 2020.
On
September 10, 2021, Bannix completed its Initial Public Offering of 6,900,000 units (the “Units”), each Unit consisting
of one share of Bannix Common Stock, one redeemable warrant (“Warrant”), each whole Warrant entitling the holder thereof
to purchase one share of Common Stock for $11.50 per share and one right (“Right”), with each Right entitling the
holder to 110 of one share of Common Stock, generating proceeds of $69,000,000 before underwriting discounts and expenses. Simultaneously
with the closing of the Initial Public Offering, Bannix consummated the private placement (“Private Placement”) with
one of the sponsors and anchor investors of 406,000 units (the “Private Units”), generating total proceeds of $3,835,000.
The Private Units are identical to the Units sold in the Initial Public Offering except that the holders have agreed not to transfer,
assign, or sell any of the Private Units or underlying securities until the earlier of (A) one year after the completion
of the Business Combination or (B) subsequent to the Company’s initial Business Combination, (x) if the last sale price
of the 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 90 days after the consummation of the
initial Business Combination, or (y) the date on which Bannix completes a liquidation, merger, capital stock exchange, reorganization
or other similar transaction that results in all of the Bannix stockholders having the right to exchange their shares of Common
Stock for cash, securities or other property. Bannix’s sponsors and the anchor investors were granted certain demand and
piggyback registration rights in connection with the purchase of the Private Warrants. A total of $69,690,000, including $225,000
of the deferred underwriting commissions, was deposited into the Trust Account, and the remaining proceeds, net of underwriting
discounts and commissions and other costs and expenses, became available to be used by Bannix as working capital to provide for
business, legal and accounting due diligence on prospective business combinations and continuing general and administrative expenses.
As of the Record Date, there was approximately $* held in the Trust Account.
On
October 20, 2022, pursuant to a Securities Purchase Agreement, Instant Fame LLC, a Nevada limited liability company that was established
in April 2022, acquired an aggregate of 385,000 shares of common stock of Bannix from Bannix Management LLP, Balaji Venugopal
Bhat, Nicholos Hellyer, Subbanarasimhaiah Arun, Vishant Vora and Suresh Yezhuvath and 90,000 private placement units from Suresh
Yezhuvath (collectively, the “Sellers”) in a private transaction, for a consideration of $200,000. The Sellers immediately
loaned the entire proceeds to Bannix for its working capital requirements. This loan will be forfeited by the Sellers upon liquidation
or business combination. In connection with this transaction, all parties agreed that there will be certain changes to the Board
of Directors. Instant Fame LLC is a single asset entity, having no other holdings and or assets other than its Bannix interest.
As
a result of the above, Subash Menon resigned as Chief Executive Officer of the Company and Nicholas
Hellyer resigned as Chief Financial Officer, Secretary and Head of Strategy. Douglas Davis was appointed as the Chief Executive
Officer. Further, Balaji Venugopal Bhat, Subbanarasimhaiah Arun and Vishant Vora resigned as Directors. Mr.
Bhat, Mr. Arun and Mr. Vora served on the Audit Committee with Mr. Bhat serving as the committee chair. Mr. Bhat, Mr. Arun and
Mr. Vora served on the Compensation Committee with Mr. Arun serving as the committee chair. The Board was also increased
from two to seven and Craig Marshak and Douglas Davis were appointed as Co-Chairmans of the Board
of Directors effective immediately. Further, Jamal Khurshid, Eric T. Shuss and Ned L. Siegel were appointed to the Board
of Directors effective ten days after the mailing of a Schedule 14f Information Statement. The resignations referenced above were
not the result of any disagreement with management or the Board. Transferred of founders shares and private placement units, as
permitted transferee, took place after Doug Davis was appointed as CEO. On November 10,
2022, Sudeesh Yezhuvath resigned as a director for personal reasons. The resignation was not the result of any disagreements
with management or the Board. Following Mr. Yeshuvath’s resignation, Mr. Subash Menon is the only remaining director that
served prior to the sale by the Sellers to Instant Fame. Bannix currently six (6) directors, where five (5) of them been appointed
by Instant Fame.
Bannix’s
Units, Common Stock, and Warrants originally sold as part of the Units are currently listed on Nasdaq under the symbols “BNIXU,”
“BNIX” and “BNIXW,” respectively.
The
mailing address of Bannix’s principal executive office is 8265 West Sunset Blvd., Suite# 107, West Hollywood, CA 90046,
and its telephone number is (323) 682-8949. After the consummation of the Business Combination, Bannix’s principal executive
office will be that of the Company.
For
additional information about Bannix, see the section entitled “Information About Bannix.”
Company
EVIE
is an innovations and technologies group based in the United Kingdom. It brings together existing electric vehicle architecture,
artificial intelligence and autonomous control technology as well as a software platform for control and rapid programming, with
decades of automotive industry expertise. EVIE is updating its current POD offering as well as developing a range of autonomous
mobile platform concepts intended to transform industries such as logistics, construction, agriculture and public mass transit
in off highway, controlled environments. EVIE is a pre-commercial stage advanced artificial intelligence (“AI”), robotics
and autonomous mobility developer. EVIE owns an extensive library of intellectual property related to its core areas of expertise.
EVIE’s core product is a complete and reliable level 4 autonomous technology stack that can be used on its own mobility
offerings as well as sold to 3rd party manufactures can install the system on their own equipment to enable it to drive
autonomously and operate. This system in essence can be, “Lifted and Shifted” from one vehicle type to another. It
is provided at a low price point, enabled by a propriety software architecture, which is purpose built for robotics and autonomous
development as well as being covered by copywrite law. EVIE intends to have these manufactured and produced under license by established
production partners providing instant global scale without the capital expenditure needs.
As
part of enhancing EVIE intellectual portfolio, Bannix enter into a Patent Purchase Agreement as described before to acquire the
“Apollo System” (internal name) which in short is a radio base platform based on machine learning driven technology
that controls radio wave transmissions, analyzes their reflections data, and constructs 2D/3D images of stationary and moving
objects.
For
additional information about Company, see the section entitled “Information About Company.”
Patent
Acquisition Agreement
On
August 8, 2023, Bannix entered into the PPA with Tokenize, which is 50% owned of GBT Technologies Inc., which provided its consent,
to acquire the entire right, title, and interest of certain Patents and patent applications providing an intellectual property
basis for a machine learning driven technology that controls radio wave transmissions, analyzes their reflections data, and constructs
2D/3D images of stationary and in motion objects. The closing date of the PPA will immediately follow the closing of the Business
Combination. The Purchase Price is set at 5% of the consideration that Bannix is paying to the shareholders of EVIE Group in connection
with the Business Combination. The BCA sets the consideration to be paid by Bannix at $850 million and, in turn, the consideration
in the PPA to be paid to Tokenize is $42.5 million. If the final Purchase Price is less than $30 million, Tokenize has the option
to cancel the PPA. In accordance therewith, Bannix agrees to pay, issue and deliver to Tokenize, $42,500,000 in series A preferred
stock to Tokenize, which such terms will be more fully set forth in the Series A Preferred Stock Certificate of Designation to
be filed with the Secretary of State of the State of prior to the closing. The 42,500 Series A Preferred Stock will have stated
value of face value of $1,000 per share and is convertible, at the option of Tokenize, into shares of common stock of Bannix at
5% discount to the VWAP during the 20 trading days prior to conversion, and in any event not less than $1.00. The Series A Preferred
Stock will not have voting rights and will be entitled to dividends only in the event of liquidation. The Series A Preferred Stock
will have a 4.99% beneficial ownership limitation providing that the Series A Preferred Stock may not be converted into more than
4.99% of the shares of common stock outstanding at any point in time. Series A Preferred Stock and the Conversion Shares shall
be subject to the Seller Lockup Period. GBT conducted its own valuation of the Patents based on comparable in the market place,
application in different industries, as well as potential uses by EVIE, and as such Bannix and Tokenize agreed that the final
Purchase Price at closing will be equal to 5% of the total consideration that Bannix will pay to the Company Shareholders following
the closing of the Business Combination. If the final Purchase Price is less than $30 million, Tokenize has the option to cancel
the PPA.
Tokenize
possesses intellectual property, with a specific focus on autonomous vehicles. The intellectual property includes a wireless computer
vision system that uses radio waves to create 3D images and videos of objects. It can be used to detect obstacles and other vehicles,
even in low visibility conditions. Apollo also integrates security measures to protect against cyber threats and data privacy
concerns. It is expected that the Patents and related intellectual property can be incorporated into EVIE’s technology with
the goal of working together to create a dependable, secure, and safe automatic transportation system. Below is a brief summary
of each of Tokenize’s patents and their technological benefits, with a special emphasis on their applications for EVIE:
| ● | The
use
of
radio
waves
to
create
3D
images
and
videos
of
objects. |
| ● | It
can
be
used
to
detect
obstacles
and
other
vehicles,
even
in
low
visibility
conditions. |
| ● | It
integrates
security
measures
to
protect
against
cyber
threats
and
data
privacy
concerns. |
| ● | It
optimizes
communication
between
autonomous
vehicles
in
a
vehicle-to-everything
(V2X)
ecosystem. |
The
intellectual property provides a comprehensive computer vision system that is expected to enhance the existing EVIE system with
advanced features, including:
| ● | 360°
RF-based,
detailed
computer
vision
through
a
complete
360-degree
imaging
of
the
vehicle’s
surroundings
using
AI-driven
radio
waves
transmission
and
reflections
analysis
methods.
It
combines
data
from
multiple
antennas
using
neural
networks
to
generate
a
seamless
coverage
of
the
entire
environment. |
| ● | Obstacles
detection
and
avoidance:
the
intellectual
property
has
the
ability
to
detect
and
track
objects
in
the
vehicle’s
vicinity
by
analyzing
the
reflections
of
radio
waves
that
bounce
off
objects.
It
identifies
different
types
of
objects
and
applies
reliability
algorithms
to
determine
if
the
object
is
an
obstacle. |
| ● | Passenger
count: the intellectual property has the ability to count
passengers entering and leaving the vehicles using ML-driven
algorithms to identify humans. |
| ● | Emergency
Situation
Identification:
the
intellectual
property
detects
volumetric
changes
and
translates
them
to
identify
emergency
situations,
such
as
a
human’s
movement
or
fall.
It
can
also
detect
medical
emergencies,
hostage
situations,
crimes,
and
more. |
| ● | Concealed
Weapon Identification: the intellectual property has the
ability to identify concealed weapons by analyzing the shapes
and material types of objects using radio waves. |
| ● | Credit
Card
charging:
the
intellectual
property
can
communicate
directly
with
customers’
credit
cards
and
perform
charge
per
ride. |
In
addition to the above, we believe that we will be able to incorporate various other Tokenize intellectual property into the EVIE
products including (i) facial recognition technology using AI to identify people including those wearing masks, provide personalized
vehicle access control, driver monitoring and passenger authentication, (ii) database management using AI to secure and manage
all data for the EVIE systems, (iii) a secure communication system that uses advanced cryptography to protects data and prevents
cyber threats. It can also track vehicles without GPS and communicate directly with satellites. The system is designed to enhance
the safety and performance of autonomous vehicles.
Going
Concern
Company’s
management concluded that Company does not have sufficient cash to fund its operations 12 months from the date of its financial
statements included within this registration statement, without additional financing, and as a result, there is substantial doubt
about Company’s ability to continue as a going concern. Similarly, Company’s independent registered public accounting
firm included an explanatory paragraph in its report on Company’s consolidated financial statements as of and for the year
ended December 31, 2022 with respect to this uncertainty.
Emerging
Growth Company and Smaller Reporting Company
Upon
consummation of the Business Combination, New Company will remain an “emerging growth company,” as defined under the
JOBS Act. As an emerging growth company, New Company will be eligible to take advantage of certain exemptions from various reporting
requirements that are applicable to other public companies that are not emerging growth companies. These include, but are not
limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act,
reduced disclosure obligations regarding executive compensation in its periodic reports and proxy statements, and exemptions from
the requirements of holding a non-binding advisory vote on executive compensation and the requirement to obtain stockholder approval
of any golden parachute payments not previously approved.
New
Company will remain an emerging growth company until the earlier of (1) December 31, 2026 (the last day of the fiscal
year following the fifth anniversary of the consummation of the Initial Public Offering), (2) the last day of the fiscal
year in which New Company has total annual gross revenue of at least $1.07 billion, (3) the last day of the fiscal year
in which New Company is deemed to be a “large accelerated filer,” as defined in the Exchange Act, and (4) the
date on which New Company has issued more than $1.0 billion in nonconvertible debt securities during the prior three-year
period.
Upon
consummation of the Business Combination, New Company will also be a “smaller reporting company” as defined in the
rules promulgated under the Exchange Act. Even after New Company no longer qualifies as an emerging growth company, it may still
qualify as a “smaller reporting company” which would allow it to take advantage of many of the same exemptions from
disclosure requirements, including exemption from compliance with the auditor attestation requirements of Section 404 and
reduced disclosure obligations regarding executive compensation in periodic reports and proxy statements.
New
Company will be able to take advantage of these scaled disclosures for so long as its voting and non-voting common stock held
by non-affiliates on the last business day of its second fiscal quarter is less than $250.0 million, or its annual revenue
is less than $100.0 million during the most recently completed fiscal year and its voting and non-voting common stock held
by non-affiliates on the last business day of the second quarter of that fiscal year is less than $700.0 million.
The
Business Combination Proposal
Pursuant
to the Business Combination Agreement, a Business Combination between Bannix and Company will be effected whereby Bannix will
acquire all of the Company share capital from the Company Shareholder and the Company will become a wholly-owned subsidiary of
Bannix.
After
consideration of the factors identified and discussed in the section entitled “Proposal 1: The Business Combination Proposal — The
Board’s Reasons for Approval of the Business Combination,” our Board concluded that the Business Combination met
all of the requirements disclosed in the prospectus for our Initial Public Offering.
The
terms and conditions of the Business Combination are contained in the Business Combination Agreement, which is attached to this
proxy statement as Annex A and is incorporated by reference herein in its entirety. Bannix encourages you to read the Business
Combination Agreement carefully, as it is the legal document that governs the Business Combination. For more information on the
Business Combination Agreement, see the section entitled “Proposal 1: The Business Combination Proposal.”
Business
Combination – Termination
The
Business Combination Agreement may be terminated (i) by mutual written consent of Bannix and the Company, (ii) by either party,
if any of the representations or warranties of the other party shall not be true and correct or if the Company or the Company
Shareholders has failed to perform any covenant or agreement on the part of the Company or the Company Shareholders, (iii) by
either party if a governmental entity shall have issued an order or taken any other action permanently enjoining, restraining
or otherwise prohibiting the transactions contemplated by the Business Combination Agreement and such order or other action shall
have become final and non-appealable, or (iv) by either party if the special meeting has been held, has concluded, the stockholders
of Bannix have duly voted and the approval of the Business Combination was not obtained. The Business Combination Agreement may
be terminated by either party, with certain limitations, after December 31, 2023, if the Business Combination has not closed.
No termination fee will be paid in the event of a termination.
Financing
Requirements
New
Company believes that the proceeds from the Business Combination will be sufficient to meet the immediate working capital
needs of New Company assuming that there are no significant redemptions. If the redemptions are significant, then the New Company
will not have the required proceeds to fund New Company’s operations. As a result of EVIE’s lack of operations, limited
cash reserves, and lack of positive cash flow, it will be difficult for New Bannix to bring new products to market without significant
additional financing should a significant amount of public investors redeem their public common stock.
New Company and Bannix expect to enter into additional financing agreements as needed, which may
include an equity line of credit in addition to other sources of financing. Nonetheless, New Company’s current expectations
may prove to be inaccurate. Changing circumstances, some of which may be beyond New Company’s control, could cause New Company
to spend capital significantly faster than we currently anticipate, and we may need to seek additional funding sooner than
planned, including financing in addition to any interim financing we may obtain. To the extent this occurs, it could impose
significant dilution on the stockholders of New Company.
Company
and Bannix are expected to enter into additional financing agreements. The nature and degree of certainty of the financing arrangements
into which the Company expects to enter cannot be predicted as of the date of this proxy statement. While we expect that the terms
of any such financing arrangements, including an equity line of credit described above, will be disclosed prior to the time any
Public Stockholders are asked to make voting and redemption decisions, it is possible that the terms of such financing arrangements
may not be finalized as of the time that the Public Stockholders are asked to make voting and redemption decisions, and the terms
of such financing arrangements may dilute the equity interests of our public shareholders in connection with the Business Combination,
and that dilution may be significant and may result in a decrease to New Company’s stock price.
Special
Meeting – March 2023
Bannix
held a special meeting on March 8, 2023 pursuant to which Bannix filed an amendment to its Amended and Restated Certificate of
Incorporation with the Delaware Secretary of State on March 9, 2023 (the “Extension Amendment”), to extend the date
(the “Extension”) by which Bannix must (1) complete a merger, share exchange, asset acquisition, stock purchase, recapitalization,
reorganization or similar business combination involving Bannix and one or more businesses (an “initial business combination”),
(2) cease its operations except for the purpose of winding up if it fails to complete such initial business combination, and (3)
redeem 100% of Bannix’s common stock (“common stock”) included as part of the units sold in Bannix’s initial
public offering that was consummated on September 14, 2021 (the “IPO”), from March 14, 2023, and to allow Bannix,
without another stockholder vote, to further extend the date to consummate a business combination on a monthly basis up to twelve
(12) times by an additional one (1) month each time after March 14, 2023 or later extended deadline date, by resolution of Bannix’s
board of directors (the “Board”), if requested by Instant Fame, LLC, a Nevada limited liability company (“Sponsor”),
upon five days’ advance
notice prior to the applicable deadline date, until March 14, 2024, or a total of up to twelve (12) months after March 14, 2023
(such date as extended, the “Deadline Date”), unless the closing of a business combination shall have occurred prior
thereto.
In
connection with the vote on the Extension Amendment at the Special Meeting, stockholders holding a total of 3,960,387 shares of
Bannix’s common stock exercised their right to redeem such shares for a pro rata portion of the funds in Bannix’s
trust account. As a result, approximately $41,077,189.13 (approximately $10.37201 per share) been removed from Bannix’s
trust account to pay such holders. Following redemptions, Bannix had 5,463,613 shares outstanding.
The
Board’s Reasons for Approval of the Business Combination
The
Board considered a wide variety of factors in connection with its evaluation of the Business Combination. In light of the complexity
of those factors, the Board, as a whole, did not consider it practicable to, nor did it attempt to, quantify or otherwise assign
relative weights to the specific factors it took into account in reaching its decision. Individual members of the Board may have
given different weight to different factors.
As
part of the Transaction, on or about July 12, 2023, the Company filed with the United Kingdom Cabinet Office a notification under
the National Security and Investment Act 2021 (the “Act”) in relation to the acquisition of EVIE, which is required
by the Act (the “Notification”). On September 6, 2023, the Company was notified by the U.K. Cabinet Office, Risk Identification
and Review Investment Security Unit, that the Secretary of State has considered the notification and approved it. With such approval,
in accordance with section 14 of the Act, the Secretary of State has determined that he will be taking no further action in relation
to the acquisition of EVIE by the Company.
For
a more complete description of the Board’s reasons for the approval of the Business Combination and its recommendations
in favor of the Business Combination Proposal, please see the section entitled “Proposal 1: The Business Combination
Proposal — The Board’s Reasons for Approval of the Business Combination.”
Sources
and Uses of Funds for the Business Combination
The
following tables summarize the sources and uses for funding the Business Combination (i) assuming that no additional shares of
Common Stock are redeemed in connection with the Business Combination and (ii) assuming maximum redemptions. For an illustration
of the number of shares and percentage interests outstanding under each scenario see the section entitled “Unaudited
Pro Forma Condensed Consolidated Combined Financial Information.”
No
Additional Redemptions
Sources
of Funds
(in millions) | |
Uses
(in millions) |
| Cash
held in Trust Account(1) | |
$ | 31,914,538 | | |
Common
stock of Combined Company issued to Company Stockholders(2) | |
$ | 850,000,000 | |
| Committed
Financing(2) | |
| | | |
Transaction
and other costs(3) | |
| | |
| Common
stock of Combined Company issued to Company Stockholders(3) | |
| | | |
Cash
to Combined Company balance sheet | |
| | |
| Total
Sources | |
$ | 31,914,538 | | |
Total
Uses | |
$ | 850,000,000 | |
| (0) | As
of
November
,
30,
2023,
respective
of
the
3,960,387
Public
Shares
redeemed
for
aggregate
redemption
payments
of
approximately
41,077,189
a
$10.37
per
share
redemption
price)
as
part
of
the
Special
Meeting
on
March
8,
2023. |
(2)
Shares issued to Company Stockholders are at a deemed value of $10.00 per share. Assumes [*] shares of New Company common stock
issued. See the section entitled “Unaudited Pro Forma Condensed Consolidated Combined Financial Information”
for more details.
(3)
Represents an estimated amount, inclusive of fees related to the Business Combination and related transactions.
Net
Tangible Asset Scenario
Sources
of Funds (in
millions) | |
(in Uses
millions) |
| Cash held in Trust
Account(1) 21,054,790 | |
$ | | | |
Common
stock of Combined Company issued
to
Company
Stockholders(2)
850,000,000 | |
$ | | |
| | |
| | | |
Transaction and other costs(3) | |
| | |
| Common stock of Combined Company
issued to Company Stockholders(3) | |
| | | |
Cash to Combined Company balance
sheet | |
| | |
| Total Sources
21,054,790 | |
$ | | | |
Total Uses 850,000,000 | |
$ | | |
| (0) | As
of
November,
30,
2023,
respective
of
the
3,960,387
Public
Shares
redeemed
for
aggregate
redemption
payments
of
approximately
$41,077,189
a
$10.37
per
share
redemption
price)
as
part
of
the
Special
Meeting
on
March
8,
2023. |
(2)
Shares issued to Company Stockholders are at a deemed value of $10.00 per share. Assumes 85,000,000 shares of New Company common
stock issued. See the section entitled “Unaudited Pro Forma Condensed Consolidated Combined Financial Information”
for more details.
(3)
Represents an estimated amount, inclusive of fees related to the Business Combination and related transactions.
Accounting
Treatment
We
expect the Transactions to be accounted for as a reverse recapitalization in accordance with GAAP. Under this method of accounting,
Bannix is expected to be treated as the “acquired” company for financial reporting purposes. Accordingly, for accounting
purposes, the financial statements of Combined Company will represent a continuation of the financial statements of EVIE with
the Transactions treated as the equivalent of EVIE issuing shares for the net assets of Bannix, accompanied by a recapitalization.
The net assets of Bannix will be stated at historical cost, with no goodwill or other intangible assets recorded. Operations prior
to the Transactions will be those of EVIE in future reports of Combined Company.
Ownership
of the Post-Business Combination Company After the Closing
It
is anticipated that upon completion of the Business Combination and assuming no additional redemptions by the Public Stockholders,
the Public Stockholders will retain an ownership interest of approximately 3.98% in the Combined Company, the Sponsor and related
parties will retain an ownership interest of approximately 2.81% of the Combined Company, and the Company Stockholders will own
approximately 93.21% of the Combined Company.
The
following tables illustrate estimated ownership levels in the Combined Company, immediately following the consummation of the
Business Combination, based on the varying levels of redemptions by the Public Stockholders, excluding potential sources of dilution,
and the following additional assumptions:
| |
|
After
the Business Combination |
|
|
|
|
|
|
| |
|
No
redemption |
|
|
|
Net
Tangible Asset Scenario |
| |
|
Number |
|
Percent |
|
Number |
|
Percent |
| |
|
of
Shares |
|
Owned |
|
of
Shares |
|
Owned |
| |
|
|
|
|
|
|
|
|
| Company
Stockholders |
|
|
85,000,000 |
|
|
|
93.2 |
% |
|
|
85,000,000 |
|
|
|
94.2 |
% |
| Public
Stockholders (2) (3) |
|
|
3,629,613 |
|
|
|
3.7 |
% |
|
|
2,105,479 |
|
|
|
3.0 |
% |
| Sponsor
and related parties |
|
|
2,564,600 |
|
|
|
2.8 |
% |
|
|
2,564,600 |
|
|
|
2.8 |
% |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
100.00 |
% |
|
|
|
|
|
|
100.00 |
% |
| Pro forma Common Stock as of November
30, 2023 | |
| |
|
| Potential sources of
dilution: | |
| | | |
| | |
| | |
| | | |
| | |
| Public Warrants | |
| 6,900,000 | | |
| 6,900,000 | |
(1)
Assumes that no additional Public Shares are redeemed (and
including 690,000 common shares deriving from public rights upon closing).
(2) Assumes that 884,230 Public Shares are redeemed
for aggregate redemption payments of approximately $9.6 million assuming a $10.89 per share redemption price and based on funds in the
Trust Account as of January 16, 2024. The net tangible asset scenario reflects the maximum number of Bannix Public Shares that can be
redeemed without violating the conditions of the Business Combination Agreement or the requirement of Bannix’s Existing Organizational
Documents that Bannix cannot redeem Public Shares if it would result in Bannix having a minimum net tangible asset value of less than
$5,000,001 after giving effect to the payments to redeeming shareholders. This scenario is included in this proxy statement for illustrative
purposes only.
(3)
This does not include the issuance of up to 42,500,000 shares of common stock upon conversion of the Series A Preferred Stock
to be held by Tokenize. Following the closing of the business combination, in connection with Bannix’s acquisition of the
Patents pursuant to the PPA, Bannix agrees to pay, issue and deliver to Tokenize, Series A Preferred Stock with a stated value
of $42,500,000, which such terms will be more fully set forth in the Series A Preferred Stock Certificate of Designation to be
filed with the Secretary of State of the State of Delaware prior to the closing of the PPA. The 42,500 Series A Preferred Stock
will have stated value of face value of $1,000 per share and is convertible, at the option of Tokenize, into shares of common
stock of Bannix at 5% discount to the VWAP during the 20 trading days prior to conversion, and in any event not less than $1.00.
The Series A Preferred Stock will not have voting rights and will be entitled to dividends only in the event of liquidation. The
Series A Preferred Stock will have a 4.99% beneficial ownership limitation providing that the Series A Preferred Stock may not
be converted into more than 4.99% of the shares of common stock outstanding at any point in time. Series A Preferred Stock and
the shares of common stock issuable upon conversion of the Series A Preferred Stock (the “Conversion Shares”) shall
be subject to a lock-up beginning on the Closing Date and ending on the earliest of (i) the six (6) months after such date, (ii)
a change in control, or (iii) written consent of Tokenize (the “Seller Lockup Period”).
Additional
Matters Being Voted On By Bannix Stockholders
In
addition to voting on the Business Combination Proposal, Bannix stockholders will vote on the following Proposals:
| |
● |
Charter Amendment Proposal |
| |
● |
Advisory Charter Amendment
Proposals |
| |
● |
Stock Issuance Proposal |
| |
● |
Director Election Proposal |
The
proposals are detailed below.
The
Charter Amendment Proposal
Assuming
the Business Combination Proposal is approved and adopted, Bannix stockholders will vote on a proposal to approve the Proposed
Charter, which will amend and restate the Current Charter, and amended bylaws for the Combined Company. If approved, the Proposed
Charter and Proposed Bylaws will be in effect upon the Closing. See the section entitled “Proposal 2: The Charter Amendment
Proposal.” Copies of the Proposed Charter and the Proposed Bylaws are attached to this proxy statement as Annex B
and Annex C, respectively.
The
Advisory Charter Amendment Proposals
On
a non-binding advisory basis, Bannix stockholders will vote on a proposal to approve the Advisory Charter Amendment Proposals,
which are being presented pursuant to guidance of the SEC as seven separate sub-proposals. See the section entitled “Proposal
3: The Advisory Charter Amendment Proposals.”
The
Stock Issuance Proposal
Assuming
the Business Combination Proposal is approved and adopted, for purposes of complying with the applicable provisions of Nasdaq
Listing Rule 5635, Bannix stockholders will vote on the issuance of 85,000,000 shares of New Company common stock in connection
with the Business Combination. See the section entitled “Proposal 4: The Stock Issuance Proposal.”
The
Director Election Proposal
Assuming
the Business Combination Proposal is approved and adopted, Bannix stockholders will vote on a proposal to approve of the appointment
of five (5) directors nominated by the Company who, upon consummation of the Business Combination, will become the directors of
the Combined Company. See the section entitled “Proposal 5: The Director Election Proposal.”
The
Adjournment Proposal
Bannix
stockholders will be asked to consider and vote upon a proposal to adjourn the Special Meeting to a later date or dates if it
is determined that more time is necessary or appropriate, in the judgment of the Board or the officer presiding over the Special
Meeting, for Bannix to consummate the Business Combination (including to solicit additional votes in favor of any of the Proposals).
See the section entitled “Proposal 8: The Adjournment Proposal.”
Bannix’s
Sponsor and Officers and Directors
As
of the Record Date, the Sponsor and Bannix’s officers and directors beneficially owned and were entitled to vote an aggregate
of 2,524,000 shares of Bannix Common Stock. The shares owned by the Sponsor and Bannix’s officers and directors currently
constitute approximately 46.2% of the outstanding Bannix Common Stock.
In
connection with the Initial Public Offering, the Sponsor and each of Bannix’s officers and directors agreed to vote their
Founder Shares, Private Placement Warrants and Public Shares in favor of an initial business combination.
In
connection with Bannix’s entry into the Business Combination Agreement, pursuant to the Sponsor Support Agreement (a copy
of which is exhibited to the Business Combination Agreement), and effective as of the consummation of the Closing, the Existing
Sponsor Lock-ups will be replaced with the lock-up arrangements described in the Proposed Bylaws further described in the section
entitled “Proposal 1: The Business Combination Proposal — Related Agreements — Sponsor
Support Agreement.”
Special
Meeting Information
Date,
Time and Place of Special Meeting
The
Special Meeting will be held virtually on *, 2023, at 12:00 PM Eastern Time, at *. Bannix stockholders may attend, vote and
examine the list of Bannix stockholders entitled to vote at the Special Meeting by visiting and entering the control number found
on their proxy card, voting instruction form or notice they previously received. In light of public health concerns regarding
the novel coronavirus (COVID-19), the Special Meeting will be held in a virtual meeting format only. You will not be able to attend
the Special Meeting physically.
Voting
Power; Record Date
Bannix
stockholders will be entitled to vote or direct votes to be cast at the Special Meeting if they owned Bannix Common Stock at the
close of business on *, 2023, which is the Record Date for the Special Meeting. Stockholders will have one vote for each share
of Bannix Common Stock owned at the close of business on the Record Date. If your shares are held in “street name”
or are in a margin or similar account, you should contact your broker to ensure that votes related to the shares you beneficially
own are properly counted. On the Record Date, there were * shares of Bannix Common Stock entitled to vote at the Special Meeting,
of which * were owned by the Sponsor or an affiliate thereof.
Quorum
and Vote of Bannix Stockholders
A
quorum of Bannix stockholders is necessary to hold a valid meeting. A quorum will be present at the Special Meeting if a majority
of the voting power of all outstanding shares of Bannix Common Stock entitled to vote at the meeting are represented in person
(which would include presence at a virtual meeting) or by proxy. As of the Record Date, there were * shares of Common Stock outstanding;
therefore, a total of * shares of Bannix Common Stock must be represented at the Special Meeting in order to constitute a quorum.
Abstentions and withheld votes will count as present for the purposes of establishing a quorum, but will not count as votes cast
at the Special Meeting for any of the Proposals. Because the Proposals are “non-discretionary” items, your broker
will not be able to vote uninstructed shares for any of the Proposals. As a result, if you do not provide voting instructions,
a broker “non-vote” will be deemed to have occurred for each of the Proposals. Broker “non-votes” will
not be counted as present for purposes of determining whether a quorum is present. As of the Record Date, the Sponsor holds approximately
*% of the outstanding Bannix Common Stock.
The Proposals
presented at the Special Meeting will require the following votes:
| ● |
|
The
approval of the Business Combination Proposal will require the affirmative vote of the holders of a majority of the shares
of Bannix Common Stock cast in respect of that Proposal and entitled to vote thereon at the Special Meeting, voting as a single
class. |
| ● |
|
The
approval of the Charter Amendment Proposal and each of the Advisory Charter Amendment Proposals will require the affirmative
vote of a majority of the issued and outstanding shares of each of the Common Stock. Accordingly, a Bannix stockholder’s
failure to vote by proxy or to vote in person (which would include presence at a virtual meeting) at the Special Meeting,
a broker non-vote, or an abstention will have the same effect as a vote “AGAINST” the Charter Amendment Proposal. |
| ● |
|
The
approval of each of the Stock Issuance Proposal and the Adjournment Proposal and each of the Advisory Charter Amendment Proposals
will require the affirmative vote of the holders of a majority of the shares of Bannix Common Stock cast in respect of the
relevant Proposal and entitled to vote thereon at the Special Meeting, voting as a single class. |
| ● |
|
The
Director Election Proposal will require a plurality vote of the shares of Bannix Common Stock, voting as a single class, cast
in respect of that Proposal and entitled to vote thereon at the Special Meeting. “Plurality” means that the individuals
who receive the largest number of votes cast “FOR” are elected as directors. Consequently, any shares not voted
“FOR” a particular nominee (whether as a result of an abstention, a direction to withhold authority or a broker
non-vote) will not be counted in the nominee’s favor. |
Abstentions
and broker non-votes will have no effect on any of the Proposals that will be presented at the Special Meeting, other than as
indicated above.
Consummation
of the Business Combination is conditioned on approval of the Business Combination Proposal, the Charter Amendment Proposal, the
Stock Issuance Proposal, the Director Election Proposal, (and each such Proposal is cross-conditioned on the approval of such
other Proposals).
Redemption
Rights of Bannix Stockholders
Pursuant
to the Current Charter, any holders of Public Shares may demand that such shares be redeemed in exchange for a pro rata share
of the aggregate amount on deposit in the Trust Account, less franchise and income taxes payable. If demand is properly made and
the Business Combination is consummated, these shares, immediately prior to the Business Combination, will cease to be outstanding
and will represent only the right to receive a pro rata share of the aggregate amount then on deposit in the Trust Account
(including interest earned on the funds held in the Trust Account and not previously released to pay the Company’s franchise
and income taxes, less any owed but unpaid taxes on the funds in the Trust Account). For illustrative purposes, based on funds
in the Trust Account of $* on the Record Date, the estimated per share redemption price would have been approximately $*.
In order
to exercise your redemption rights, you must:
| ● |
|
check
the box on the enclosed proxy card to elect redemption; |
| ● |
|
provide,
in the written request to redeem your Public Shares for cash to Continental, Bannix’s transfer agent, a “Stockholder
Certification” if you are not acting in concert or as a “group” (as defined in Section 13d-3
of the Exchange Act) with any other stockholder with respect to shares of Bannix Common Stock; and |
| ● |
|
prior
to *, 2023 (two business days before the Special Meeting), tender your shares physically or electronically and submit a request
in writing that Bannix redeem your Public Shares for cash to Continental at the following address: Continental Stock Transfer
& Trust Company, 1 State Street, 30th
Floor, New York, New York 10004. |
| ● |
|
deliver
your Public Shares either physically or electronically through DTC or to Continental at least two business days before the
Special Meeting. Public Stockholders seeking to exercise their redemption rights and opting to deliver physical certificates
should allot sufficient time to obtain physical certificates from Continental and time to effect delivery. It is Bannix’s
understanding that stockholders should generally allot at least two weeks to obtain physical certificates from Continental.
However, Bannix does not have any control over this process and it may take longer than two weeks. Stockholders who hold their
Public Shares in “street” name will have to coordinate with their bank, broker or other nominee to have the shares
certificated or delivered electronically. If you do not submit a written request and deliver your Public Shares as described
above, your shares will not be redeemed. |
Any
request for redemption, once made by a Public Stockholder, may be withdrawn at any time prior to the time the vote is taken with
respect to the Business Combination Proposal at the Special Meeting. If you deliver your Public Shares for redemption directly
to Continental or deliver your Public Shares either physically or electronically through DTC, and later decide prior to the Special
Meeting not to elect redemption, you may request that Continental return the shares (physically or electronically). You may make
such request by contacting Continental at 917-262-2373, by email at proxy@continentalstock.com or by writing to the address at:
Continental Stock Transfer & Trust Company, 1 State Street,
30th Floor, New York, New York 10004.
Prior
to exercising redemption rights, stockholders should verify the market price of shares of Common Stock as they may receive higher
proceeds from the sale of their shares of Common Stock in the public market than from exercising their redemption rights if the
market price per share is higher than the redemption price. We cannot assure you that you will be able to sell your shares of
Common Stock in the open market, even if the market price per share is higher than the redemption price stated above, as there
may not be sufficient liquidity in Common Stock when you wish to sell your shares.
If
you exercise your redemption rights, your shares of Common Stock will cease to be outstanding immediately prior to the Business
Combination and will only represent the right to receive a pro rata share of the aggregate amount on deposit in the Trust
Account, as described above. You will no longer own those shares and will have no right to participate in, or have any interest
in, the future growth of the Combined Company, if any. You will be entitled to receive cash for these shares only if you properly
and timely demand redemption, in accordance with the process described above.
If
the Business Combination is not approved or completed for any reason, then Public Stockholders who elected to exercise their redemption
rights will not be entitled to redeem their shares. In such case, Bannix will promptly return any Public Shares previously delivered
by the Public Stockholders.
Tax
Consequences of Business Combination
For
a description of the material U.S. federal income tax consequences of the Business Combination, please see the information set
forth in the section entitled “Material U.S. Federal Income Tax Considerations.”
Appraisal
Rights
Bannix’s
stockholders do not have appraisal rights in connection with the Business Combination under Delaware law.
Regulatory
Matters
Neither
Bannix nor Company is aware of any material regulatory approvals or actions that are required for completion of the Business Combination
other than the expiration of the waiting period under
the
HSR Act, which period has expired. It is presently contemplated that if any such additional regulatory approvals or actions are
required, those approvals or actions will be sought. There can be no assurance, however, that any additional approvals or actions
will be obtained.
Proxy
Solicitation
Proxies
may be solicited by mail, telephone or in person (which would include presence at a virtual meeting). Stockholders may also change
their votes by submitting a later-dated proxy as described in the section entitled “Special Meeting of Bannix Stockholders — Revoking
Your Proxy.”
Interests
of the Sponsor and Bannix’s Directors and Officers in the Business Combination
In
considering the recommendation of the Board to vote in favor of approval of the Business Combination Proposal, the Charter Amendment
Proposal and the other Proposals, Bannix stockholders should keep in mind that the Sponsor (which is affiliated with certain of
Bannix’s officers and directors) and Bannix’s officers and directors have interests in such Proposals that are different
from, or in addition to, your interests as a Bannix stockholder. These interests include, among other things:
| ● |
|
If
the Business Combination with Company or another business combination is not consummated by March 14, 2024 (as approved by
the stockholders at the extension meeting held on March 8, 2023 and as may be further amended), Bannix will cease all operations
except for the purpose of winding up, redeeming 100% of the outstanding Public Shares for cash and, subject to the approval
of its remaining stockholders and its Board, dissolving and liquidating. In such event, (i) the 2,524,000 Founder Shares
held by the Sponsor, which were acquired by the Sponsor for a purchase price of approximately $0.0114 per share, or $[28,750]
in the aggregate, prior to the Initial Public Offering, and (ii) 406,000 Private Placement Units purchased by the Sponsor
for a purchase price of $9.11 per unit, or $3,700,000 in the aggregate, in the Concurrent Private Placement, would be worthless
because the holders are not entitled to participate in any redemption or distribution from the Trust Account with respect
to such securities. Such securities had an aggregate market value of approximately $* million based upon the closing price
of $* per share of Common Stock on Nasdaq on the Record Date. |
| |
|
|
| ● |
|
The fact that
given the differential in the purchase price that the Sponsor paid for the Founder Shares, as compared to the price of the
Public Shares sold in the Initial Public Offering and the shares of Common Stock that the Sponsor will receive upon conversion
of the Founder Shares in connection with the Business Combination, the Sponsor may earn a positive rate of return on its investment
even if the New Company common stock trades below the price initially paid for the Public Shares in the Initial Public Offering
and the Public Stockholders experience a negative rate of return following the completion of the Business Combination. |
| |
|
|
| ● |
|
If Bannix is
unable to complete an initial business combination within the required time period, the Sponsor will be personally liable
under certain circumstances described herein to ensure that the proceeds in the Trust Account are not reduced by the claims
of target businesses or claims of vendors or other entities that are owed money by Bannix for services rendered or contracted
for or products sold to Bannix. If Bannix consummates an initial business combination, on the other hand, Bannix will be liable
for all such claims. |
| |
|
|
| ● |
|
The Business
Combination Agreement provides for the continued indemnification of Bannix’s current directors and officers and the
continuation of directors’ and officers’ liability insurance covering Bannix’s current directors and officers
from and after the Effective Time for a period of six years. |
| ● |
|
Certain
of Bannix’s current directors and officers are expected to be directors of New Company after the consummation of the
Business Combination and as such, in the future, they may receive cash fees, stock options, stock awards or other remuneration
that the New Company Board determines to pay to them and any other applicable compensation as described under section “Executive
and Director Compensation — Director Compensation.” |
| |
|
|
| ● |
|
None of Bannix’s
officers or directors will be required to commit his or her full time to the affairs of New Company and, accordingly, may
have conflicts of interest in allocating his or her time among various business activities. |
| |
|
|
| ● |
|
In the course
of their other business activities, Bannix’s officers and directors may become aware of investment and business opportunities
which may be appropriate for presentation to New Company as well as the other entities with which they are affiliated. Bannix’s
management may have conflicts of interest in determining to which entity a particular business opportunity should be presented. |
| |
|
|
| ● |
|
The Sponsor has
agreed to waive its redemption rights with respect to the shares of Bannix Common Stock it holds in connection with the Business
Combination. Additionally, the Sponsor agreed to waive its redemption rights with respect to any Founder Shares and Public
Shares held by it if we fail to consummate our initial business combination within 24 months after the closing of the
Initial Public Offering. If Bannix does not complete an initial business combination within such applicable time period, the
proceeds of the sale of the Private Placement Warrants held in the Trust Account will be used to fund the redemption of the
Public Shares, and the Private Placement Warrants purchased in the Concurrent Private Placement will become worthless. The
Private Placement Warrants purchased in the Concurrent Private Placement held by the Sponsor had an aggregate market value
of approximately $* million based upon the closing price of $* per share of Common Stock on Nasdaq on the Record Date. In
addition, effective as of the consummation of the Closing, with certain limited exceptions, the lock-up arrangements described
in the Proposed Bylaws (a copy of which is attached to this proxy statement as Annex C) will prevent the transfer or
assignment of New Company common stock (or any securities convertible into or exercisable or exchangeable for shares of New
Company common stock) in accordance with the terms thereof. These lock-up arrangements are further described in the section
entitled “Proposal 1: The Business Combination Proposal — Related Agreements — Sponsor
Support Agreement.” Since the Sponsor and Bannix’s officers and directors may directly or indirectly own Bannix
Common Stock following the Initial Public Offering, Bannix’s officers and directors may have a conflict of interest
in determining whether a particular target business is an appropriate business with which to effectuate the initial business
combination. |
| ● |
|
The
Sponsor may use the funds held by Bannix outside the trust account to pay for any expenses or liabilities of Bannix or otherwise
distributing or paying over any funds held by Bannix outside the trust account to the Sponsor or any of its affiliates, in
each case, prior to the Closing; provided, that prior to any distribution or payment of any funds to the Sponsor or any of
its affiliates pursuant to the foregoing clause, Bannix shall cause any indebtedness of Bannix payable or owing to the Sponsor
or any of its affiliates to be paid in full and discharged with no further liability or obligation of Bannix. Such amount
held outside the Trust Account is currently $31,310,191 as of June 30, 2023. |
Recommendation
to Bannix Stockholders
After
careful consideration, the Board determined unanimously that each of the Business Combination Proposal, the Charter Amendment
Proposal, the Advisory Charter Amendment Proposals, the Stock Issuance Proposal, the Director Election Proposal and the Adjournment
Proposal, if presented, is fair to and in the best interests of Bannix and its stockholders. The Board has approved and declared
advisable and unanimously recommends that you vote or give instructions to vote “FOR” each of these Proposals.
For
a description of various factors considered by the Board in reaching its decision to recommend in favor of voting for each of
the Proposals to be presented at the Special Meeting, see the sections herein regarding each of the Proposals.
Summary
of Risk Factors
The
following is a summary of the principal risks to which (i) Company’s business, operations and financial performance
and (ii) the Business Combination are subject to. Each of these risks is more fully described in the individual risk factors
set forth under “Risk Factors” in this proxy statement. Unless the context otherwise requires, all references
in this subsection to the “Company,” “we,” “us” or “our” refer to the business
of Company prior to the consummation of the Business Combination, which will be the business of the Combined Company following
the consummation of the Business Combination.
Comparison
of Governance and Stockholders’ Rights
Following
the Closing, the rights of Bannix stockholders who remain New Company stockholders will no longer be governed by the Current Charter
and the Current Bylaws and will instead be governed by the Proposed Charter and the Proposed Bylaws adopted in connection with
the Charter Amendment Proposal. See the section entitled “Comparison of Governance and Stockholders’ Rights”
beginning on page *.
SELECTED
HISTORICAL FINANCIAL INFORMATION
Bannix
is providing the following selected historical financial information to assist you in your analysis of the financial aspects of
the Business Combination.
Bannix’s
selected historical financial information is derived from Bannix’s audited financial statements included elsewhere in this
proxy statement for the year ended December 31, 2022 and 2021.
Company’s
balance sheet data as of December 31, 2022 and December 31, 2021, and statement of operations and comprehensive loss
data for the fiscal years ended December 31, 2022 and December 31, 2021 are derived from Company’s audited
financial statements, included elsewhere in this proxy statement.
The
financial data set forth below should be read in conjunction with, and is qualified by reference to, the text of the sections
entitled “Bannix Management’s Discussion and Analysis of Financial Condition and Results of Operations”
and “Company Management’s Discussion and Analysis of Financial Condition and Results of Operations” and
the financial statements and notes thereto included elsewhere in this proxy statement. Bannix’s and Company’s financial
statements are prepared and presented in accordance with U.S. GAAP. The historical results included below and elsewhere in this
proxy statement are not indicative of future performance of Bannix or Company.
Selected
Historical Financial Information: Bannix
The selected historical statement
of operations data of Bannix for the years ended December 31, 2021 and December 31, 2022 and the balance sheet data as of December 31,
2022 are derived from Bannix’s audited annual financial statements (as restated) included elsewhere in this proxy statement. The
selected historical condensed consolidated statement of operations data of Bannix for the three and nine months ended September
30, 2023 and the selected historical condensed consolidated balance sheet data as of September 30, 2023 are derived from Bannix’s
unaudited interim condensed consolidated financial statements included elsewhere in this proxy statement. The unaudited interim condensed
consolidated financial data set forth below have been prepared on the same basis as our audited annual consolidated financial statements
(as restated) and, in the opinion of Bannix’s management, reflect all adjustments, consisting only of normal recurring adjustments,
that are necessary for the fair statement of such data.
Bannix’s historical
results are not necessarily indicative of the results that may be expected for any other period in the future and Bannix’s results
for the nine months ended September 30, 2023 are not necessarily indicative of the results that may be expected for the full year ending
December 31, 2023 or any other period. You should read the selected historical financial data set forth below together with Bannix’s
financial statements and the accompanying notes included elsewhere in this proxy statement, the information in the section entitled “Bannix’s
Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and other financial information
included elsewhere in this proxy.
Bannix
is providing the following selected historical consolidated financial information to assist you in your analysis of the financial
aspects of the Transactions.
The following tables present Bannix’s selected
historical financial information derived from Bannix’s unaudited financial statements included elsewhere in this proxy statement
for the nine months ended September 30, 2023 and 2022 and Bannix’s audited financial statements as of and for the years ended December 31,
2022 and as December 31, 2021.
The
financial data set forth below should be read in conjunction with, and is qualified by reference to, “Bannix’s Management’s
Discussion and Analysis of Financial Condition and Results of Operations” and the financial statements and notes thereto
included elsewhere in this proxy statement. Bannix’s financial statements are prepared and presented in accordance with
U.S. GAAP.
| |
|
For
the Nine Months Ended September 30, 2023 |
|
For
the Nine Months Ended September 30, 2022 |
|
Year
Ended December 31, 2022 |
|
For
the Period From January 21, 2021 (Inception) Through December 31, 2021 |
| Income
Statement Data: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Loss
from operations |
|
$ |
(1,197,866 |
) |
|
$ |
(743,647 |
) |
|
$ |
(1,000,944 |
) |
|
$ |
(395,702 |
) |
| Net
(loss) income |
|
$ |
(151,848 |
) |
|
$ |
(170,124 |
) |
|
$ |
47,107 |
|
|
$ |
(277,203 |
) |
| Basic
and diluted weighted average shares outstanding |
|
|
6,435,576 |
|
|
|
9,424,000 |
|
|
|
9,424,000 |
|
|
|
4,785,051 |
|
| Basic
and diluted net (loss) income per share |
|
$ |
(0.02 |
) |
|
$ |
(0.02 |
) |
|
$ |
0.00 |
|
|
$ |
(0.06 |
) |
| |
|
September
30, 2023 |
|
December
31, 2022 |
|
December
31, 2021 |
| Balance
Sheet Data: |
|
|
|
|
|
|
|
|
|
|
|
|
| Investments
held in the Trust Account |
|
$ |
31,906,039 |
|
|
$ |
71,421,125 |
|
|
$ |
69,691,502 |
|
| Total
assets |
|
$ |
31,951,561 |
|
|
$ |
71,466,678 |
|
|
$ |
70,292,562 |
|
| Total
liabilities |
|
$ |
3,860,608 |
|
|
$ |
1,735,906 |
|
|
$ |
657,727 |
|
| Common
stock subject to possible redemption |
|
$ |
31,270,132 |
|
|
$ |
70,973,384 |
|
|
$ |
58,071,313 |
|
| Total
shareholders’ (deficit) equity |
|
$ |
(3,179,179 |
) |
|
$ |
(1,242,612 |
) |
|
$ |
11,563,522 |
|
Selected
Historical Financial Information: EVIE
The selected historical consolidated
statements of operations data of EVIE for the period from May 8, 2023 (inception) through September 30, 2023 and the selected historical
consolidated balance sheets data as of September 30, 2023 are derived from EVIE’s audited consolidated financial statements included
elsewhere in this proxy statement.
EVIE’s historical results
are not necessarily indicative of the results that may be expected for any other period in the future and EVIE’s results for the
period from May 8, 2023 (inception) through September 30, 2023 are not necessarily indicative of the results that may be expected for
the full year ending December 31, 2023 or any other period. You should read the selected historical consolidated financial data set forth
below together with EVIE’s consolidated financial statements and the accompanying notes included elsewhere in this proxy statement,
the information in the section entitled “EVIE’s Management’s Discussion and Analysis of Financial Condition and
Results of Operations,” and other financial information included elsewhere in this .
EVIE
is providing the following selected historical consolidated financial information to assist you in your analysis of the financial
aspects of the Transactions.
EVIE
AUTONOMOUS GROUP LTD
BALANCE
SHEET
| |
|
September
30, 2023 |
| Assets |
|
|
|
|
| Cash |
|
$ |
— |
|
| Total
current assets |
|
|
— |
|
| |
|
|
|
|
| Total
assets |
|
$ |
— |
|
| |
|
|
|
|
| Liability
and Stockholder’s Equity |
|
|
|
|
| Current
liabilities: |
|
|
|
|
| Accounts
payable |
|
|
55,492 |
|
| Related
party payable |
|
$ |
20,000 |
|
| Total
liabilities |
|
|
75,492 |
|
| |
|
|
|
|
| Stockholder’s
Equity: |
|
|
|
|
| Common
stock, $1.2617 par value; 100 shares authorized, issued and outstanding |
|
|
126 |
|
| Accumulated
other comprehensive gain |
|
|
1,420 |
|
| Additional
paid-in capital |
|
|
— |
|
| Accumulated
deficit |
|
|
(77,038 |
) |
| Total
stockholder’s equity |
|
|
(75,492 |
) |
| |
|
|
|
|
| Total
Liabilities and Stockholder’s Equity |
|
$ |
— |
|
EVIE
AUTONOMOUS GROUP LTD
STATEMENTS OF OPERATIONS
| | |
For the Period from May 8, 2023
(Inception) to September 30, 2023 |
| Operating costs | |
$ | 76,912 | |
| Net loss | |
$ | (76,912 | ) |
| | |
| | |
| Weighted average shares outstanding, basic and diluted | |
| 100 | |
| Basic and diluted net income per common share | |
$ | (769.12 | ) |
SELECTED
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED COMBINED FINANCIAL INFORMATION
The
unaudited pro forma condensed combined financial statements do not necessarily reflect what the combined company’s financial
condition or results of operations would have been had the Business Combination occurred on the dates indicated. The unaudited
pro forma condensed combined financial statements also may not be useful in predicting the future financial condition and results
of operations of the combined company. The actual financial position and results of operations may differ significantly from the
pro forma amounts reflected herein due to a variety of factors. The unaudited pro forma condensed combined financial statements
are presented for illustrative purposes only.
The
historical financial statements of EVIE have been prepared in accordance with U.S. GAAP and in its functional and presentation
currency of the United States dollar (“USD”). The historical financial statements of Bannix have been prepared in
accordance with U.S. GAAP in its functional and presentation currency of USD.
The
unaudited pro forma condensed combined financial information has been prepared using the assumptions below with respect to the
potential redemption into cash of Bannix common stock:
| |
● |
Assuming
No Additional Redemptions: This presentation assumes that, after the redemptions of 3,960,387 shares of common stock of Bannix
in March 2023 (the “March Redemptions”), no additional public shareholders of Bannix exercise redemption rights with
respect to their Public Shares upon consummation of the Business Combination. |
| |
● |
Net
Tangible Asset Scenario: This presentation assumes that, after the March Redemptions, Bannix public shareholders holding 884,230
shares of Bannix common stock will exercise their redemption rights for $9.6 million upon consummation of the Business Combination at
a redemption price of approximately $10.89 per share. The net tangible asset scenario reflects the maximum number of Bannix Public Shares
that can be redeemed without violating the conditions of the Business Combination Agreement or the requirement of Bannix’s Existing
Organizational Documents that Bannix cannot redeem Public Shares if it would result in Bannix having a minimum net tangible asset value
of less than $5,000,001 after giving effect to the payments to redeeming shareholders. This scenario includes all adjustments contained
in the “no additional redemptions” scenario and presents additional adjustments to reflect the effect of the net tangible
asset scenario. |
The following table sets out share ownership of
EVIE on a pro forma basis assuming the No Additional Redemption Scenario and the Net Tangible Asset Scenario:
| |
|
No
Additional Redemption Scenario |
|
Net
Tangible Asset Scenario |
| EVIE
stockholders |
|
|
85,000,000 |
|
|
|
85,000,000 |
|
| Bannix
public stockholders (2) |
|
|
3,629,613 |
|
|
|
2,745,383 |
|
| Sponsor’s
Founders Shares (1) |
|
|
2,564,600 |
|
|
|
2,564,600 |
|
| Total |
|
|
91,194,213 |
|
|
|
90,309,983 |
|
| |
(1) |
Includes
406,000 Private Rights converted to 40,600 shares of common stock upon consummation of the Business Combination. |
| |
(2) |
Includes
6,900,000 Public Rights converted to 690,000 shares of common stock upon consummation of the Business Combination. |
The following table sets out summary data derived
from the unaudited pro forma condensed combined statement of financial position and the unaudited pro forma condensed combined statement
of operations. The summary unaudited pro forma condensed combined balance sheet as of September 30, 2023, gives effect to the Business
Combination as if it had occurred on September 30, 2023. The summary unaudited pro forma condensed combined statement of operations for
the nine months ended September 30, 2023 and for the year ended December 31, 2022, gives effect to the Business Combination as if it
had occurred on January 1, 2022.
| |
|
Pro
Forma Combined |
| |
|
No
Additional Redemption Scenario |
|
Net
Tangible Asset Scenario |
| Summary
Unaudited Pro Forma Condensed Combined Statement of Operations Data for the Nine Months Ended September 30, 2023 |
|
|
|
|
|
|
|
|
| Net
loss |
|
$ |
(1,229,778 |
) |
|
$ |
(1,229,778 |
) |
| Net
loss per share – basic and diluted |
|
$ |
(0.01 |
) |
|
$ |
(0.01 |
) |
| Weighted
average shares outstanding – basic and diluted |
|
|
91,194,213 |
|
|
|
90,309,983 |
|
| Summary
Unaudited Pro Forma Condensed Combined Statement of Operations Data for the Year Ended December 31, 2022 |
|
|
|
|
|
|
|
|
| Net
loss |
|
$ |
(15,264,991 |
) |
|
$ |
(15,264,991 |
) |
| Net
loss per share – basic and diluted |
|
$ |
(0.17 |
) |
|
$ |
(0.17 |
) |
| Weighted
average shares outstanding – basic and diluted |
|
|
91,194,213 |
|
|
|
90,309,983 |
|
| Summary
Unaudited Pro Forma Condensed Combined Balance Sheet Data as of September 30, 2023 |
|
|
|
|
|
|
|
|
| Total
assets |
|
$ |
25,455,102 |
|
|
$ |
25,455,102 |
|
| Total
liabilities |
|
$ |
10,454,423 |
|
|
$ |
10,454,423 |
|
| Total
equity |
|
$ |
15,000,679 |
|
|
$ |
15,826,497 |
|
FORWARD-LOOKING
STATEMENTS
This
proxy statement contains statements that are forward-looking and as such are not historical facts. This includes, without limitation,
statements regarding the financial position, business strategy and the plans and objectives of management for future operations,
including as they relate to the potential Business Combination. These statements constitute projections, forecasts and forward-looking
statements, and are not guarantees of performance. Such statements can be identified by the fact that they do not relate strictly
to historical or current facts. When used in this proxy statement, words such as “anticipate,” “believe,”
“continue,” “could,” “estimate,” “expect,” “intend,” “may,”
“might,” “plan,” “possible,” “potential,” “predict,” “project,”
“should,” “strive,” “would” and similar expressions may identify forward-looking statements,
but the absence of these words does not mean that a statement is not forward-looking. When Bannix discusses its strategies or
plans, including as they relate to the potential Business Combination, it is making projections, forecasts or forward-looking
statements. Such statements are based on the beliefs of, as well as assumptions made by and information currently available to,
Bannix’s management.
Bannix
cautions you that the foregoing list may not contain all of the forward-looking statements made in this proxy statement.
These
forward-looking statements are only predictions based on the current expectations and projections of Bannix and Company about
future events and are subject to a number of risks, uncertainties and assumptions, including those described in “Risk
Factors” and elsewhere in this proxy statement. Moreover, Company operates in a competitive industry, and new risks
emerge from time to time. It is not possible for the management of Bannix or Company to predict all risks, nor can Bannix or Company
assess the impact of all factors on their respective businesses or the extent to which any factor, or combination of factors,
may cause actual results to differ materially from those contained in any forward-looking statements Bannix may make in this proxy
statement. In light of these risks, uncertainties and assumptions, the forward-looking events and circumstances discussed in this
proxy statement may not occur, and actual results could differ materially and adversely from those anticipated or implied in the
forward-looking statements in this proxy statement.
The
forward-looking statements included in this proxy statement are made only as of the date hereof. You should not rely upon forward-looking
statements as predictions of future events. Although Bannix believes that the expectations reflected in its forward-looking statements
are reasonable, neither Bannix nor Company can guarantee that the future results, levels of activity, performance or events and
circumstances reflected in the forward-looking statements will be achieved or occur. Neither Bannix nor Company undertakes any
obligation to update publicly any forward-looking statements for any reason after the date of this proxy statement to conform
these statements to actual results or to changes in expectations, except as required by law.
You
should read this proxy statement and the documents that have been filed as Annexes and Exhibits hereto with the understanding
that the actual future results, levels of activity, performance, events and circumstances of Bannix and Company may be materially
different from what is expected.
RISK
FACTORS
Stockholders
should consider and read carefully all of the risks and uncertainties described below, as well as other information included in
this proxy statement, before they decide whether to vote or instruct their vote to be cast to approve the Proposals described
in this proxy statement. The value of your investment in New Company following consummation of the Business Combination will be
subject to the significant risks affecting New Company and inherent to the industry in which it will operate. If any of the events
described below occur, the post-acquisition business and financial results could be adversely affected in a material way. This
could cause the trading price of New Company’s common stock to decline, perhaps significantly, and you therefore may lose
all or part of your investment. Unless the context otherwise requires, all references in this subsection to the “Company,”
“we,” “us” or “our” refer to the business of Company prior to the consummation of the Business
Combination, which will be the business of New Company following the consummation of the Business Combination.
Risks
Related to Our Business Operations and Financial Position
Evie’s
limited operating history and evolving business model make it difficult for you to evaluate its business and future prospects.
In
October 2022, AIM acquired the assets of Westfield Autonomous Vehicles Ltd. (“Westfield”) from its insolvency administrator.
EVIE, which was incorporated in May 2023, subsequently acquired the intellectual property and business rights from AIM and Cavonix
in May 2023 through separate Asset Purchase Agreements with AIM (for the AIM and Westfield intellectual property) and Cavonix.
The purchase included a number of completed pods, parts, components, mold tools, designs, data and trademarks. The aim of the
business is to utilize these assets to service potential customers, update the pods with the latest autonomous technologies to
effectively demonstrate these and to evolve the autonomous pod product range to address significant demand for the movement of
people and goods in off highway and commercial environments.
If
EVIE fails to address the risks and difficulties that it faces, including those described elsewhere in this “Risk Factors”
section, its business, financial condition, and results of operations could be impaired. EVIE has encountered in the past, and
will encounter in the future, risks, and uncertainties frequently experienced by growing companies with limited operating histories
in rapidly changing industries. If EVIE’s assumptions regarding these risks and uncertainties, which it uses to plan and
operate its business, are incorrect or change, or if it does not address these risks successfully, it may not be able to operate
profitable or generate positive cash flow from operations.
EVIE
requires significant funds for its operations and to service the market opportunities, as well as the development of the Evie
2.0 product range and future designs and the failure to obtain the necessary funding may impair its ability to continue in business.
EVIE
is likely to need additional funds in order to execute its business plan, and the extent of its cash requirements will be dependent
upon the funds available from the Trust Account following redemption by the Bannix Public Shareholders and the Company’s
ability to raise funding from external sources. The amount of funding may be substantial, particularly if EVIE does not have funding
in place at the time of the closing and the cost of any new funding may be substantial. Any financing which EVIE may be able to
obtain may result in significant dilution to the holders of EVIE Ordinary Shares, may include provisions which may have an adverse
effect upon the price of the EVIE Ordinary Shares and may contain covenants which may affect the ability of EVIE to conduct is
business in accordance with its business plan. Further, funds may not be available to EVIE when it needs them on reasonable, if
any, terms, and if EVIE cannot raise sufficient additional funds when it needs them, it may not be able to develop its business
or operations, and its business, prospects, financial condition and operating results may be severely impacted.
EVIE’s
business is primarily conducted in the United Kingdom.
As
EVIE seeks to enter other markets it will incur significant start-up costs, including marketing costs in each geographical area
in which it seeks to generate business, with no assurance that it will generate sufficient revenue to cover such costs. EVIE will
not have the funds for such expansion unless it receives sufficient funds from the Trust Account or any other financing agreements
which Evie may enter into either before or subsequent to the closing.
Risk
of lack of operational and management controls may result in losses and negatively impact shareholder value.
EVIE
may experience difficulties in managing its growth and expanding its operations, as it needs to continue to improve its operational,
financial and management controls and reporting systems, including its compliance programs, privacy, cybersecurity and anti-corruption and
financial controls, and may not be successful in doing so.
Risk
of legislation changes may negatively impact our ability to sell our products negatively impacting revenue, if any.
EVIE’s
business could be negatively affected by changes in legislation, insurance appetite and other externalities. EVIE is engaged with
various government transport bodies around the world to understand current legislation and the autonomous maturity roadmap of
each market. EVIE is focused on commercial opportunities for its proven technology today, which are the off highway commercial
applications including Agritech and the autonomous movement of cargo in port and airside setting, which have other regulatory
bodies and influence that may not have been appreciated until commercial operations embark.
Risk
of geopolitical and economic externalities may negatively impact operations.
EVIE
faces risks related to the growth rate and the global expansion of its business, including worldwide or regional economic conditions,
exchange rate fluctuations, supply chain conditions and the competitiveness of the market, including conditions resulting from
the Russian invasion of the Ukraine and instability in the middle east.
Our
business depends on, and is directly affected by, the global vehicle and equipment industry supply chain. Equipment production
and sales are highly cyclical and depend on general economic conditions and other factors, including consumer spending and preferences,
changes in interest rate levels and credit availability, consumer confidence, fuel costs, fuel availability, environmental impact,
governmental incentives and regulatory requirements, and political volatility, especially in energy-producing countries and growth
markets.
Our
business is highly dependent on the supply of silicone chips which worldwide supply chain has experienced substantial disruption.
There is no guarantee that disruptions to the supply of silicone chips will not continue.
In
addition, industrial equipment production and sales can be affected by our OEM customers’ ability to continue operating
in response to challenging economic conditions, such as the financial crisis that has followed the pandemic, and in response to
labour relations issues, regulatory requirements, trade agreements and other factors.
Globally,
OEMs and their suppliers continue to experience significant difficulties from weakened economies and tightened credit markets,
and many are still recovering from Covid and the end of non-zero-base rates and high inflation rates. The volume of automotive
production in North America, Europe and the rest of the world has fluctuated, sometimes significantly, from year to year, and
such fluctuations give rise to fluctuations in the demand for our products. Any significant adverse change in any of these factors,
including, but not limited to, general economic conditions and the resulting bankruptcy of an OEM customer or the closure of an
OEM manufacturing facility, may result in a reduction in equipment sales and production by our OEM customers, and could have a
material adverse effect on our business, results of operations and financial condition.
Risk
of Intellectual Property disputes, theft and infringement
The
industry in which our business operates is characterized by a large number of patents, some of which may be of questionable scope,
validity or enforceability, and some of which may appear to overlap with other issued patents. As a result, there is a significant
amount of uncertainty in the industry regarding patent protection and infringement. In recent years, there has been significant
litigation globally involving patents and other intellectual property rights. We could become subject to claims and litigation
alleging infringement by us of third-party patents and other intellectual property generally, including by academic institutions.
These claims and any resulting lawsuits, if resolved adversely to us, could subject us to significant liability for damages, impose
temporary or permanent injunctions against our products or business operations, or invalidate or render unenforceable our intellectual
property.
In
addition, because patent applications can take many years until the patents issue, there may be applications now pending of which
we are unaware, which may later result in issued patents that our products may infringe. If any of our products infringes a valid
and enforceable patent, or if we wish to avoid potential intellectual property litigation on any alleged infringement of such
products, we could be prevented from selling, or elect not to sell, such products unless we obtain a license, which may be unavailable.
Alternatively, we could be forced to pay substantial royalties or to redesign one or more of our products to avoid any infringement
or allegations thereof. Additionally, we may face liability to our customers, business partners or third parties for indemnification
or other remedies in the event that they are sued for infringement in connection with their use of our products.
We
also may not be successful in any attempt to redesign our products to avoid any alleged infringement. A successful claim of infringement
against us, or our failure or inability to develop and implement non-infringing technology, or license the infringed technology,
on acceptable terms and on a timely basis, could materially adversely affect our business and results of operations. Furthermore,
such lawsuits, regardless of their success, would likely be time-consuming and expensive to resolve and would divert management’s
time and attention from our business, which could seriously harm our business. Also, such lawsuits, regardless of their success,
could seriously harm our reputation with our OEMs and Tier 1 customers and in the industry at large.
EVIE’s
designs and technologies contain Intellectual Property (IP) and where appropriate are protected. Despite engaging with suitable
patent and intellectual specialist advisors there is a risk of IP infringement claims that require resources to defend which impacts
operations and the execution of the business plan.
EVIE
may not be able to adequately protect or enforce its intellectual property rights or prevent unauthorized parties from copying
or reverse engineering its solutions and products. EVIE’s efforts to protect and enforce its intellectual property rights
and prevent third parties from violating its rights may be costly.
In
addition to patented technology, EVIE relies on its unpatented proprietary technology, trade secrets, processes and know-how,
which it may not be able to protect.
Risk
of poor-quality end product delivered by our OEMs partners could have a material adverse effect on our business, results of operations
and financial condition.
EVIE
will partner with suitable qualified and reputable production OEMs to build agreed product to agreed specifications and quality
standards to ensure a high quality end product that exceeds users’ needs and provide a reliable and effective sustainable
transport solution for the movement of people and goods autonomously and despite implementing best practices and quality assurance
controls there is a risk that sub-standard components and builds enters the supply chain, creating recall issues, poor quality
perception and down the line costs to make good. This could have a material adverse effect on our business, results of operations
and financial condition.
If
there is a slowing of the increasing requirements for active safety technology, our business, results of operations and financial
condition would be adversely affected.
If
market acceptance of EVIE’s products does not develop, or develops more slowly than EVIE expects, its business will be adversely
affected, particularly if EVIE does not receive significant proceeds from the Business Combination.
We
have seen an increased demand for our technology and the growth of our business that correlates with operator and OEM awareness
and acceptance of the autonomous capabilities our technology provides. This acceptance and awareness is primarily due strong market
forces to improve productivity, improve profitability, safety and deskill operations of complex machinery so that labour shortages
can be addressed. We believe that this trend in regulation and ratings will continue and even accelerate over the next decade,
thus increasing awareness and acceptance of, and consequently demand for, related technology. However, should there be a slowing
of the increasing requirements for our autonomous technology, our growth might be limited and our business, results of operations
and financial condition would be adversely affected.
If
our OEM customers are unable to maintain and increase end operator acceptance of our technology, our business, results of operations
and financial condition would be adversely affected.
Our
future operating results will depend on the ability of OEMs to maintain and increase consumer acceptance of autonomation generally
and of our radar and camera-based technologies and autonomous driving specifically.
There
is no assurance that OEMs can achieve these objectives. Market acceptance of our solution, our technologies and autonomous driving
depends upon many factors, including regulatory requirements, evolving safety standards, cost and driver preferences.
Market
acceptance of our products also depends on the ability of market participants to resolve technical challenges for increasingly
complex autonomous technologies in a timely and cost-effective manner.
Equipment
operators and fleet owners will also need to be made aware of the advantages of our technologies compared to competing technologies,
specifically those with different sensor modalities such as lidar. If Equipment operators and fleet owners acceptance of our technology
in the OEM market does not increase, sales of our products could also be adversely affected.
If
we fail to enter into agreements with OEMs to incorporate our technology into their vehicles then our business, results of operations
and financial condition would be adversely affected.
Certain
EVIE’s strategic arrangements could be terminated or may not materialize into long-term contracts. We invest effort
and money seeking OEM validation of our autonomous technology stacks, and there can be no assurance that we will win integration
supply arrangements, which could adversely affect our future business, results of operations and financial condition. We invest
effort and money from the time of our initial contact with an OEM to the date on which the OEM chooses our technology for Connected
Autonomous Vehicle (CAV) applications to be incorporated into one or more specific vehicle models to be produced by the OEM. The
OEM acquires our products through our supplier arrangements. The OEM integrates our proprietary software and technologies into
their equipment / vehicle with our support. The selection process is known as a “design win.” We could expend our
resources without success. After a design win, it is typically quite difficult for a product or technology that did not receive
the design win to displace the winner until the OEM issues a new RFQ because It is very unlikely that an OEM will change complex
technology until a vehicle model is revamped. In addition, the firm with the winning design may have an advantage with the OEM
going forward because of the established relationship between the winning firm and such OEM, which could make it more difficult
for such firm’s competitors to win the designs for other production models. If we fail to win a significant number of OEM
design competitions in the future, our business, results of operations and financial condition would be adversely affected.
The
period of time from a project and design win to implementation is long and we are subject to the risks of cancellation or postponement
of the contract or unsuccessful implementation.
Our
products are technologically complex, incorporate many technological innovations and are typically intended for use in safety
applications. Prospective OEM customers generally must make significant commitments of resources to test and validate our products
before including them in any particular model vehicle. The development cycles of our products with new OEM customers are approximately
one to three years after a design win, depending on the OEM and the complexity of the product. These development cycles result
in our investing our resources prior to realizing any revenues from the production models. Further, we are subject to the risk
that an OEM cancels or postpones implementation of our technology, as well as that we will not be able to implement our technology
successfully. Further, our sales could be less than forecast if the vehicle model is unsuccessful, including reasons unrelated
to our technology. Long development cycles and product cancellations or postponements may adversely affect our business, results
of operations and financial condition.
Where
EVIE vehicles have been selected as the preferred platform, this is usually as part of a competitive bid process and may require
substantial infrastructure changes to be implemented which can take time and be subject to changes and cancellation.
Autonomous
driving is a complex set of technologies and there is no assurance that additional autonomous driving applications will develop
in the near future or that a market for fully autonomous driving will develop.
Autonomous
driving is a complex set of technologies, which requires the continuing development of both sensing technology and control technology.
Functions and capabilities are in different stages of development and their reliability must continue to improve in order to meet
the higher standards required for autonomous driving. Sensing technology provides information to the vehicle and includes new
sensors, communication and guidance technology, and software.
We
are continually improving of our technology stack and self-driving features which requires significant algorithmic innovation
by us. There can be no assurance that we can complete such development in a timely manner. If we cannot achieve design wins for
these additional capabilities or if, following any such design win, our product is not fully validated and does not go into serial
production, our future business prospects and results of operations could be materially adversely affected.
Risk
of an incident / injury involving EVIE technology.
EVIE
is a design and technologies innovation company with a focus on autonomous platforms that move people and goods in off highway
environments. Although the technologies have been developed over a number of years and the environments are controlled there will
always be a risk of an incident / injury involving EVIE vehicles and technologies. This could involve passengers or external third
parties. Despite of having suitable insurance coverage in place, quality controls, monitoring and supervision any serious incident
will cause significant harm to operations and market adoption.
Furthermore,
the automotive industry in general is subject to litigation claims due to the nature of personal injuries that result from accidents.
As a provider of products related to, among other things, preventing accidents, we could be subject to litigation for operational-related
accidents, even if our products or services or the failure thereof did not cause any particular accident.
The
emerging technologies of operator assistance and autonomous driving have not yet been litigated or legislated to a point whereby
their legal implications are well documented. As a provider of such products, we may become liable for losses that exceed the
current industry and regulatory norms. If such a punitive liability landscape develops, we may also incur demand-related losses
due to a reduction in the number of OEMs offering such technology.
In
the event that we are required to pay significant damages as a result of one or more lawsuits that are not covered by insurance
or that exceed our coverage limits, it could materially harm our business, results of operations and financial condition. The
defense against such claims — even if they are ultimately unsuccessful — could cause
us to incur significant expenses and result in a diversion of management’s attention.
In
addition, if any of our products are, or are alleged to be, defective, we may be required to participate in a recall of such products
if the defect or the alleged defect relates to motor vehicle safety. OEMs are increasingly looking to their suppliers for contribution
when faced with product liability, warranty and recall claims. Depending on the terms under which we supply our products, an OEM
may hold us (through our Tier 1 customer that sold our products to the OEM) responsible for some or all of the entire repair or
replacement costs of these products under the OEM’s new vehicle warranties. Our costs associated with recalls or providing
product warranties could be material. Product liability, warranty and recall costs could have an adverse effect on our business,
results of operations and financial condition.
Risk
of technical obsolescence.
The
connected autonomous vehicles technologies market, in which EVIE competes, is characterized by rapid technological change, which
requires EVIE to continue to develop new products and product innovations, and could adversely affect market adoption of its products.
Failure to innovate or failure to find marketable innovations may adversely affect the Company’s future prospects and stock
price.
Disruptions
to our IT system may disrupt our operations and materially adversely affect our business and results of operations.
Technology
failures or cyberattacks on EVIE’s technology systems or Evie’s ineffective response to technology failures or cyberattacks
could disrupt EVIE’s operations and negatively impact EVIE’s reputation, business, financial condition, or results
of operations.
Interruption,
interference with or failure of EVIE’s information technology and communications systems could hurt its ability to effectively
provide its services and offer its products, which could damage its reputation and harm its operating results.
Our
servers and equipment may be subject to computer viruses, break-ins and similar disruptions from unauthorized tampering with computer
systems. We can provide no assurance that our current information technology (“IT”) system is fully protected against
third-party intrusions, viruses, hacker attacks, information or data theft or other similar threats. A cyber-attack that bypasses
our IT security systems causing an IT security breach may lead to a material disruption of our IT business systems and/or the
loss of business information. Any such event could have a material adverse effect on our business until we recover using our back-up
information. To the extent that such disruptions or uncertainties result in delays or cancellations of customer programs or misappropriation
or release of our confidential data or our intellectual property, our business and results of operations could be materially and
adversely affected.
Risk
of software updates introducing bugs and errors
The
key to developing the business is both for EVIE to offer a high-quality product and to develop a long-term service offering, Autonomy
as a Service, where the technology is kept current with regular updates over the air. Ensuring machinery and equipment is regularly
connected enabling updates to complete successfully will be critical. Proper regression testing with Quality Assurance (QA) processes
aim to ensure that any update meets the intended requirements without introducing any new bugs or errors. No QA process provides
a 100% defect free release (hence why security updates are often continuously required as issues are discovered). There is a risk
that an update introduces multiple issues that were not detected during the testing and QA phase, this could be down to a malformed
testing environment, poorly configured simulation with insufficient scenarios or error in configuration and deployment tools used.
This would have significant downstream user impact and operational risks.
There
are a number of relevant standards for a connected autonomous mobility technology developer to provide assurances around capability.
They provide guidance on how to develop and test connected autonomous mobility technology in a safe and reliable manner. By following
these standards, developers can help to ensure that their technology is safe for use by the public.
Evie
adopts industry best practices in regards its IT operations and development activities. As we scale up and develop our capabilities,
we and our supply chain partners will ensure that we have achieve the relevant International Standards for automotive and technology
development such as ISO 9001, ISO/IEC 12207, ISO 14001, IATF 16949, ISO 45001, ISO 50001, ISO 29119 and ISO 27001. This requires
investment and careful execution to ensure continuous improvement and maturity of capabilities.
Despite
following rigorous structured testing, simulation, adopting standards and best practices there is a risk that errors and bugs
are introduced into the system that then cause an issue in live operations. This would have material impact and our business and
results of operations could be materially and adversely affected.
Risk
of unauthorized remote vehicle control
EVIE
Pods and underlying technology operate as connected autonomous vehicles, providing the ability to remotely monitor, supervise,
update and if necessary, stop and control the vehicle. Even with robust security design and processes, penetration testing, bug
bounties and other means such as class leading encryption to ensure the integrity of the vehicle and the connection, as with all
connected devices and modern-day automobiles, there is a risk that they can be taken control off, this would result in significant
operational and reputational harm.
Privacy
concerns relating to EVIE’s technology could damage its reputation and deter current and potential users from using its
services and products.
EVIE’s
businesses require the collection, transmission, and retention of large volumes of user data, including personally identifiable
information, in various information technology systems that it maintains and in those maintained by third parties with whom it
contracts to provide services. As EVIE’s business relies upon artificial intelligence, machine learning, big data and cloud
computing in large scale, it is imperative it secures the private and sensitive information it collects. Any systems failure or
compromise of EVIE’s security that results in the release of its data could seriously limit the use of its services and
products, as well as harm its reputation and brand and, therefore, its business.
EVIE
will be required to expend significant resources to protect against security breaches. The risk that these types of events could
seriously harm its businesses is likely to increase with its growth and expansion. In addition, the interpretation and application
of customer and data protection laws in the U.S., Europe and elsewhere are often uncertain and in flux. It is possible that these
laws may be interpreted and applied in a manner that is inconsistent with EVIE’s data practices. If so, in addition to the
possibility of fines, this could result in an order requiring that EVIE change its data practices, which could have an adverse
effect on its business and results of operations.
Complying
with these various law interpretations and changes could cause EVIE to incur substantial costs or require it to change its business
practices in a manner adverse to its businesses.
Risk
of adverse anti-competitive actions
The
connected autonomous vehicles technologies market is competitive and dominated by a number of well-known companies, many
of which have the ability to inhibit EVIE activity via their supply chain influence. Anti-competitive activities may do harm before
they can be identified and mitigated adequately, with the harm already suffered.
Risk
of loss of key personnel may negatively impact operations.
EVIE
is dependent on a number of key people, its founder and chief executive officer Mr. Steven Lake. The Chief Technology Officer,
Carl Owen, The Head of Software, Mr. Malcolm Barbour all hold knowledge and experience that is vital to the core mission and underlying
proprietary autonomous technology, source code and physics models. The loss of their services and EVIE’s failure to hire
additional qualified key personnel will harm EVIE’s business.
We
may be unable to attract and retain key personnel, which could seriously harm our business.
We
compete in a market that involves rapidly changing technological and other developments, which requires us to employ a workforce
with a broad set of expertise and intellectual capital. In order for us to successfully compete and grow, we must attract, recruit,
retain and develop the necessary software, engineering, technical and other personnel who can provide the needed expertise across
the entire spectrum of our intellectual capital needs. The market for qualified personnel is competitive and we may not succeed
in recruiting additional personnel, retaining current personnel or effectively replacing current personnel who may depart. We
cannot assure you that qualified employees will continue to be employed by us or that we will be able to attract and retain additional
qualified personnel in the future. Failure to retain or attract key personnel could have an adverse effect on our business, results
of operations and financial condition.
We
depend on licenses for certain technologies from third parties for which we pay royalties.
We
integrate certain technologies developed and owned by third parties into our products, including the central processing unit core
of our Autonomous Control System and sensors chips, through license and technology transfer agreements. Under these
agreements, we are obligated to pay royalties for each unit of our products that we sell that incorporates such third-party technology.
In
addition, some of our agreements with third parties entitle the licensor to purchase our products at a specified purchase price.
If we are unable to maintain our contractual relationships with the third-party licensors on which we depend, we may not be able
to find replacement technology to integrate into our products on a timely basis or for a similar royalty fee, in which case our
business, results of operations and financial condition would also be adversely affected.
A
few of our critical components are supplied by one or a few suppliers and any disruptions in the supply of these components will
have a negative impact on operations.
We
purchase key components from multiple parties through our existing equipment supply chain partnerships. Our autonomy stack relies
on perception sensors such as 4d radar and chip sets that are leading edge. This could have a material adverse effect on our business,
results of operations and financial condition that might not be fully offset by any inventory of components and chips that we
maintain. Because of the complex proprietary nature of our system components, any transition to new supplier or, if there were
a disaster at the facility, bringing a new facility online, would take a significant period of time to complete and could potentially
result in our having insufficient inventory, which could adversely affect our business, results of operations and financial condition.
In addition, our contractual relationship with these key suppliers does not lock in rates for the long term, and both we and suppliers
are free to terminate the arrangement at any time. Further, we are vulnerable to the risk that these suppliers may become bankrupt.
If
we acquire companies, products or technologies, we may face integration risks and costs associated with those acquisitions that
could adversely affect our business, results of operations and financial condition.
If
we are presented with appropriate opportunities, we may acquire or make investments in complementary companies, products or technologies.
If we acquire companies or technologies, we will face risks, uncertainties and disruptions associated with the integration process,
including difficulties in the integration of the operations of an acquired company, integration of acquired technology with our
products, diversion of our management’s attention from other business concerns, the potential loss of key employees or customers
of the acquired business and impairment charges if future acquisitions are not as successful as we originally anticipate. In addition,
our operating results may suffer because of acquisition-related costs or amortization expenses or charges relating to acquired
intangible assets. Any failure to successfully integrate other companies, products or technologies that we may acquire may have
a material adverse effect on our business and results of operations. Furthermore, we may have to incur debt or issue equity securities
to pay for any additional future acquisitions or investments, the issuance of which could be dilutive to our existing shareholders.
There
are significant risks associated with any acquisition program, including, but not limited to, the following:
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EVIE
may incur significant expenses and devote significant management time to the acquisition, and it may be unable to consummate
the acquisition on acceptable terms. |
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● |
If
EVIE identifies an acquisition, it may face competition from other companies in the industry or from financial buyers in seeking
to make the acquisition. |
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● |
The
integration of any acquisition with EVIE’s existing business may be difficult and, if Evie is not able to integrate
the business successfully, it may not only be unable to operate the business profitably, but management may be unable to devote
the necessary time to the development of EVIE’s existing business; |
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● |
The
key employees who operated the acquired business successfully prior to the acquisition may not be happy working for EVIE and
may resign, thus leaving the business without the necessary continuity of management. |
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● |
Even
if the business is successful, EVIE’s senior executive officers may need to devote significant time to the acquired
business, which may distract them from their other management activities. |
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If
the business does not operate as we expect, we may incur an impairment charge based on the value of the assets acquired. |
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● |
EVIE
may have difficulty maintaining the necessary quality control over the acquired business and its products and services. |
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● |
The
acquisition may require financing which was not anticipated and EVIE may not be able to obtain the necessary financing on
reasonable, if any, terms. |
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● |
The
intellectual property owned, developed or licensed by the acquired company may not be compatible with EG’s intellectual
property or the acquired company may not have good title to the intellectual property or employees of the acquired company
or consultants engaged by the acquired company may have rights to the intellectual property. |
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To
the extent that an acquired company operates at a loss prior to EVIE’s acquisition, EVIE may not be able to develop
profitable operations following the acquisition. |
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● |
Problems
and claims relating to the acquired business that were not disclosed at the time of the acquisition may result in increased
costs and may impair EVIE’s ability to operate the acquired company. |
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● |
The
acquired company may have liabilities or obligations which were not disclosed to EVIE, or the acquired assets, including intellectual
property assets, may not have the value EVIE anticipated. |
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Any
indemnification obligations of the seller under the purchase agreement may be inadequate to compensate EVIE for any loss,
damage. Liability or expense which it may sustain, including undisclosed claims or liabilities. |
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To
the extent that the acquired company is dependent upon its management to maintain relationships with existing customers, EVIE
may have difficulty in retaining the business of these customers if there is a change in management. |
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Government
agencies may seek damages after EVIE makes the acquisition for conduct which occurred prior to the acquisition and EVIE may
not have adequate recourse against the seller. |
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EVIE
may require significant capital both to acquire and to operate the business, and the capital requirements of the business
may be greater than Evie anticipated, and EVIE’s failure to obtain capital on reasonable terms may impair the value
of the acquisition and may impair its continuing operations. |
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The
acquired company may be impacted by unanticipated events, such as a pandemic such as the COVID-19 pandemic, the effect
of climate changes or social unrest or other factors over which EVIE may have no control. |
If
any of these risks occur, EVIE’s business, financial condition and prospects may be impaired.
Fluctuation
of the results of EVIE’s earnings on a quarterly and annual basis could cause the share price of the Evie Ordinary Shares
to fluctuate or decline
EVIE
is an early-stage company, and the results of its operations to date have primarily reflected its research and development expenses,
and, commenced operations in May 2023. In October 2022, AIM acquired the assets of Westfield Autonomous Vehicles Ltd. (“Westfield”)
from its insolvency administrator. EVIE, which was incorporated in May 2023, subsequently acquired the intellectual property and
business rights from AIM and Cavonix in May 2023 through separate Asset Purchase Agreements with AIM (for the AIM and Westfield
intellectual property) and Cavonix. In the future, EVIE’s earnings in any given quarter can fluctuate based on its ability
to market its products and compete in the market in which it operates, as well as based on general market conditions.
Accordingly,
the results of any one quarter should not be relied upon as an indication of future performance. EVIE’s quarterly financial
results may fluctuate as a result of a variety of factors, many of which are outside of its control and may not fully reflect
the underlying performance of EVIE’s business.
These
fluctuations could adversely affect EVIE’s ability to meet its expectations or those of securities analysts or investors.
If EVIE does not meet these expectations for any period, the value of its business and its securities could decline significantly.
Factors that may cause these quarterly fluctuations include, without limitation, those listed below:
-Pricing
changes EVIE may adopt to drive market adoption or in response to competitive pressure;
-EVIE’s
ability to retain its partnerships with OEMs;
-General
changes in the operations and profitability of OEMs and key partners
-Market
acceptance of EVIE’s core products, namely the Evie Platform, and further technological advancements by EVIE and EVIE’s
competitors and other market participants;
-Any
change in the competitive dynamics of EVIE’s markets, including consolidation of competitors, regulatory developments and
new market entrants;
-Adverse
litigation, judgments, settlements or other litigation-related costs, or claims that may give rise to such costs; and
-General
economic, industry and market conditions, including trade disputes.
EVIE’s
management team has limited experience managing a public company.
The
majority of EVIE’s management team has limited experience managing a publicly-traded company, interacting with public company
investors and complying with the increasingly complex laws pertaining to public companies. EVIE’s management team may not
successfully or efficiently manage their new roles and responsibilities, EVIE’s transition to being a public company subject
to significant regulatory oversight and reporting obligations under the federal securities laws and the continuous scrutiny of
securities analysts and investors. These new obligations and constituents will require significant attention from EVIE’s
senior management and could divert their attention away from the day-to-day management of EVIE’s business, which could adversely
affect EVIE’s business, financial condition and operating results.
In
addition, EVIE may not have adequate personnel with the appropriate level of knowledge, experience and training in the accounting
policies, practices or internal controls over financial reporting required of public companies in the United States. EVIE is in
the process of upgrading our finance and accounting systems and related controls to an enterprise system suitable for a public
company, and a delay could impact our ability or prevent it from timely reporting its operating results or timely filing reports
with the SEC. The development and implementation of the standards and controls necessary for EVIE to achieve the level of accounting
standards required of a public company in the U.S. may require costs greater than expected. Evie may need to significantly expand
its employee and independent contractor base in order to support its operations as a public company, increasing its operating
costs. Failure to adequately comply with the requirements of being a public company, could adversely affect EVIE’s business,
financial condition and results of operation.
Risks
Related to New Company and the New Company Common Stock Following the Business Combination
The
New Company common stock may not be listed on a national securities exchange after the Business Combination, which could limit
investors’ ability to make transactions in such securities and subject New Company to additional trading restrictions.
We
intend to apply to have the New Company common stock approved for listing on Nasdaq or another national securities exchange after
the consummation of the Business Combination. We will be required to meet certain initial listing requirements to be listed, including
having a minimum number of round lot shareholders. We may not be able to meet the initial listing requirements in connection with
the Business Combination. Being listed on Nasdaq or another national securities exchange is a condition to closing and the parties
would need to waive this condition if the New Company common stock are not listed on Nasdaq or another national securities exchange.
Further, even if the New Company common stock is so listed, we may be unable to maintain the listing of such securities in the
future. If we fail to meet the initial listing requirements and Nasdaq does not list the New Company common stock (and the related
closing condition with respect to the listing of the New Company common stock is waived by the parties), we could face significant
material adverse consequences, including:
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● |
a
limited availability of market quotations for the New Company common stock; |
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● |
a
reduced level of trading activity in the secondary trading market for the New Company common stock; |
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● |
a
limited amount of news and analyst coverage for New Company; |
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● |
a
decreased ability to issue additional securities or obtain additional financing in the future; and |
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our
securities would not be “covered securities” under the National Securities Markets Improvement Act of 1996, which
is a federal statute that prevents or pre-empts the states from regulating the sale of certain securities, including securities
listed on the Nasdaq, in which case our securities would be subject to regulation in each state where we offer and sell securities. |
The
New Company stock price may be volatile.
The
New Company stock price is likely to be volatile. The market price for New Company common stock may be influenced by many factors,
including the other risks described in this section of the proxy statement entitled “Risk Factors” and the
following:
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New Company’s ability
to advance its current or potential future product candidates; |
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● |
regulatory or legal developments
in the United States and other countries, especially changes in laws or regulations applicable to New Company’s future
products; |
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● |
the success of competitive
products or technologies; |
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● |
introductions and announcements
of new product candidates by New Company or its competitors, and the timing of these introductions or announcements; |
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● |
actions taken by regulatory
authorities with respect to New Company future product, manufacturing process or sales and marketing terms; |
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● |
actual or anticipated
variations in New Company’s financial results or those of companies that are perceived to be similar to New Company; |
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the success of New Company’s
efforts to acquire or in-license additional technologies, products or product candidates; |
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● |
developments concerning
any future collaborations, including, but not limited to, those with any sources of manufacturing supply and future collaborators; |
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● |
market conditions in the
Company’s business; |
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● |
market conditions and
sentiment involving companies that have recently completed a business combination with a special purpose acquisition company
(“SPAC”); |
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● |
announcements by New Company
or its competitors of significant acquisitions, strategic alliances, joint ventures or capital commitments; |
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● |
developments or disputes
concerning patents or other proprietary rights, including patents, litigation matters and New Company’s ability to obtain
patent protection for its products; |
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● |
New Company’s ability
or inability to raise additional capital and the terms on which it is raised; |
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● |
the recruitment or departure
of key personnel; |
| |
● |
changes in the structure
of healthcare payment systems; |
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● |
actual or anticipated
changes in earnings estimates or changes in stock market analyst recommendations regarding New Company common stock, other
comparable companies or the industry generally; |
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● |
New Company’s failure
or the failure of its competitors to meet analysts’ projections or guidance that New Company or its competitors may
give to the market; |
| |
● |
fluctuations in the valuation
of companies perceived by investors to be comparable to New Company; |
| |
● |
announcement and expectation
of additional financing efforts; |
| |
● |
speculation in the press
or investment community; |
| |
● |
trading volume of New
Company common stock; |
| |
● |
sales of New Company common
stock by New Company or its stockholders; |
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● |
the concentrated ownership
of New Company common stock; |
| |
● |
changes in accounting
principles; |
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● |
terrorist acts, acts of
war or periods of widespread civil unrest; |
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● |
natural disasters, public
health crises and other calamities; and |
| |
● |
general economic, industry
and market conditions. |
In
addition, the stock markets in general, and the markets for SPAC post-business combination businesses, electric autonomous technology
and electric vehicle stocks in particular, have experienced extreme volatility, including since the public announcement of the
Business Combination Agreement on June 28, 2023. This volatility can often be unrelated to the operating performance of the underlying
business. These broad market and industry factors may seriously harm the market price of New Company common stock, regardless
of New Company’s operating performance.
New
Company may incur significant costs from class action litigation due to the expected stock volatility.
New
Company’s stock price may fluctuate for many reasons, including as a result of public announcements regarding the progress
of development efforts for New Company’s main products, the development efforts of competitors, the addition or departure
of key personnel, variations in quarterly operating results and changes in market valuations of EV companies. This risk is especially
relevant to New Company because EV companies have experienced significant stock price volatility in recent years, including
since the public announcement of the Business Combination Agreement on June 2023. In addition, recently there has been significant
stock price volatility involving the shares of companies that have recently completed a business combination with a SPAC. When
the market price of a stock has been volatile as New Company’s stock price may be, holders of that stock have occasionally
brought securities class action litigation against the company that issued the stock. Additionally, there has recently been a
general increase in litigation against companies that have recently completed a business combination with a SPAC alleging fraud
and other claims based on inaccurate or misleading disclosures. If any New Company stockholders were to bring a lawsuit of this
type against New Company, even if the lawsuit is without merit, New Company could incur substantial costs defending the lawsuit.
Any such lawsuit could also divert the time and attention of management.
Any
failure to meet the continued listing requirements of Nasdaq could result in a delisting of New Company securities.
If,
after listing, New Company fails to satisfy the continued listing requirements of Nasdaq such as any applicable corporate governance
requirements or the minimum closing bid price requirement, Nasdaq may take steps to delist our securities. Such a delisting would
likely have a negative effect on the price of our securities and would impair your ability to sell or purchase the securities
when you wish to do so. In the event of a delisting, we can provide no assurance that any action taken by us to restore compliance
with listing requirements would allow our securities to become listed again, stabilize the market price or improve the liquidity
of our securities, prevent our securities from dropping below the Nasdaq minimum bid price requirement or prevent future non-compliance
with Nasdaq’s listing requirements. Additionally, if our securities are not listed on, or become delisted from, Nasdaq for
any reason, and are quoted on the OTC Bulletin Board, an inter-dealer automated quotation system for equity securities that is
not a national securities exchange, the liquidity and price of our securities may be more limited than if our securities were
quoted or listed on Nasdaq or another national securities exchange. You may be unable to sell your securities unless a market
can be established or sustained.
New
Company will be an “emerging growth company” and it cannot be certain if the reduced disclosure requirements applicable
to emerging growth companies will make the New Company common stock less attractive to investors and may make it more difficult
to compare performance with other public companies.
New
Company will be an emerging growth company as defined in the JOBS Act, and it intends to take advantage of certain exemptions
from various reporting requirements that are applicable to other public companies that are not emerging growth companies, including
not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced
disclosure obligations regarding executive compensation in periodic reports and proxy statements, and exemptions from the requirements
of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not
previously approved. To the extent New Company continues to take advantage of any of these exemptions, the information that we
provide stockholders may be different than what is available with respect to other public companies. Investors may find the New
Company common stock less attractive because New Company will continue to rely on these exemptions. If some investors find the
New Company common stock less attractive as a result, there may be a less active trading market for their common stock, and the
stock price may be more volatile.
An
emerging growth company may elect to delay the adoption of new or revised accounting standards. With Bannix making this election,
Section 102(b)(2) of the JOBS Act allows New Company to delay adoption of new or revised accounting standards until those
standards apply to non-public business entities. As a result, the financial statements contained in this proxy statement and those
that New Company will file in the future may not be comparable to companies that comply with public business entities revised
accounting standards effective dates.
New
Company will also be a “smaller reporting company” as defined in the rules promulgated under the Exchange Act. Even
after New Company no longer qualifies as an emerging growth company, it may still qualify as a “smaller reporting company”
which would allow it to take advantage of many of the same exemptions from disclosure requirements, including exemption from compliance
with the auditor attestation requirements of Section 404 and reduced disclosure obligations regarding executive compensation
in periodic reports and proxy statements. New Company will be able to take advantage of these scaled disclosures for so long as
its voting and non-voting common stock held by non-affiliates on the last business day of its second fiscal quarter is less than
$250.0 million,
or
its annual revenue is less than $100.0 million during the most recently completed fiscal year and its voting and non-voting
common stock held by non-affiliates on the last business day of the second quarter of that fiscal year is less than $700.0 million.
Investors could find New Company common stock less attractive because it may rely on these exemptions. If some investors find
New Company common stock less attractive as a result, there may be a less active trading market for New Company common stock and
the trading price may be more volatile.
Future
sales and issuances of New Company common stock or rights to purchase New Company common stock could result in additional dilution
of the percentage ownership of New Company stockholders and could cause the New Company common stock price to fall.
We
anticipate that the net proceeds from the Business Combination, along with our cash, will be sufficient to fund our operating
plan through at least *, 2023. However, we have based these estimates on assumptions, that may prove to be wrong, and we could
spend our available capital resources much faster than we currently expect or require more capital to fund our operations than
we currently expect. Significant additional capital will be needed in the future to continue New Company’s planned operations,
including further development of New Company’s products, expanded R&D activities and costs associated with operating
a public company. To raise capital, New Company may sell common stock, convertible securities or other equity securities in one
or more transactions at prices and in a manner as determined from time to time. If New Company sells common stock, convertible
securities or other equity securities, investors may be materially diluted by subsequent sales. Such sales may also result in
material dilution to existing stockholders, and new investors could gain rights, preferences and privileges senior to the holders
of New Company common stock.
New
Company’s disclosure controls and procedures may not prevent or detect all errors or acts of fraud.
New
Company must design its disclosure controls and procedures to reasonably assure that information we must disclose in reports we
file or submit under the Exchange Act is accumulated and communicated to management, and recorded, processed, summarized, and
reported within the time periods specified in the rules and forms of the SEC. We believe that any disclosure controls and procedures
or internal controls and procedures, no matter how well-conceived and operated, can provide only reasonable, not absolute, assurance
that the objectives of the control system are met. These inherent limitations include the realities that judgments in decision-making
can be faulty, and that breakdowns can occur because of simple error or mistake. For example, our directors or executive officers
could inadvertently fail to disclose a new relationship or arrangement causing us to fail to make a required related party transaction
disclosure. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people
or by an unauthorized override of the controls. Accordingly, because of the inherent limitations in our control system, misstatements
due to error or fraud may occur and not be detected.
Reports
published by analysts, including projections in those reports that differ from New Company’s actual results, could adversely
affect the price and trading volume of New Company common stock.
Bannix
currently expects that securities research analysts will establish and publish their own periodic financial projections for the
business of New Company. These projections may vary widely and may not accurately predict the results New Company actually achieves.
New Company’s stock price may decline if its actual results do not match the projections of these securities research analysts.
Similarly, if one or more of the analysts who write reports on New Company downgrades its stock or publishes inaccurate or unfavorable
research about its business, New Company’s stock price could decline. If one or more of these analysts ceases coverage of
New Company or fails to publish reports on New Company regularly, its stock price or trading volume could decline. While Bannix
expects research analyst coverage following the Business Combination, if no analysts commence coverage of New Company, the trading
price and volume for New Company common stock could be adversely affected.
New
Company’s actual financial position and results of operations may differ materially from the unaudited pro forma condensed
consolidated combined financial information included in this proxy statement, which may not be indicative of what New Company’s
actual financial position or results of operations would have been.
The
unaudited pro forma condensed consolidated combined financial information in this proxy statement is presented for illustrative
purposes only and is not necessarily indicative of what New Company’s actual financial position or results of operations
would have been had the Business Combination been completed on the dates indicated. See the section titled “Unaudited
Pro Forma Condensed Consolidated Combined Financial Information” for more information.
The
obligations associated with being a public company will involve significant expenses and will require significant resources and
management attention, which may divert from New Company’s business operations.
As
a public company, New Company will become subject to the reporting requirements of the Exchange Act and the Sarbanes-Oxley Act.
The Exchange Act requires the filing of annual, quarterly and current reports with respect to a public company’s business
and financial condition. The Sarbanes-Oxley Act requires, among other things, that a public company establish and maintain effective
internal control over financial reporting. The listing requirements of Nasdaq also require that we satisfy certain corporate governance
requirements. As a result, New Company will incur significant legal, accounting and other expenses that Company did not previously
incur. New Company’s entire management team and many of its other employees will need to devote substantial time to compliance,
and may not effectively or efficiently manage its transition into a public company.
These
rules and regulations will result in New Company incurring substantial legal, financial and accounting compliance costs in addition
to other expenses and will make some activities more time-consuming and costly. The increased costs will decrease our net income
or increase our consolidated net loss, and may require us to reduce costs in other areas of our business or increase the prices
of our products or services. For example, these rules and regulations will likely make it more difficult and more expensive for
New Company to obtain director and officer liability insurance, and it may be required to accept reduced policy limits and coverage
or incur substantially higher costs to obtain the same or similar coverage. We cannot predict or estimate the amount or timing
of additional costs we may incur to respond to these requirements. As a result, it may be difficult for New Company to attract
and retain qualified people to serve on its board of directors, its board committees or as executive officers.
Provisions
in New Company’s proposed amended and restated certificate of incorporation, New Company’s proposed amended and restated
bylaws and Delaware law may have anti-takeover effects that could discourage an acquisition of New Company by others, even if
an acquisition would be beneficial to our stockholders, and may prevent attempts by our stockholders to replace or remove our
current management, which could depress the trading price of New Company common stock.
New
Company’s Proposed Charter, Proposed Bylaws, and Delaware law contain provisions that may have the effect of discouraging,
delaying or preventing a change in control of us or changes in our management that stockholders may consider favorable, including
transactions in which you might otherwise receive a premium for your shares. New Company’s Proposed Charter and Proposed
Bylaws include provisions that:
| |
● |
authorize
“blank check” preferred stock, which could be issued by our board of directors without stockholder approval and
may contain voting, liquidation, dividend and other rights superior to New Company common stock; |
| |
● |
specify
that special meetings of our stockholders can be called only by our board of directors, the chairperson of the New Company
Board or New Company’s chief executive officer or president; |
| |
● |
establish
an advance notice procedure for stockholder approvals to be brought before an annual meeting of our stockholders, including
proposed nominations of persons for election to our board of directors; |
| |
● |
specify that no stockholder
is permitted to cumulate votes at any election of directors; |
| |
● |
expressly
authorize our board of directors to adopt, amend or repeal our proposed amended and restated bylaws; and |
| |
● |
require
supermajority votes of the holders of New Company common stock to amend specified provisions of our proposed second amended
and restated certificate of incorporation and proposed amended and restated bylaws. These provisions, alone or together, could
delay or prevent hostile takeovers and changes in control or changes in our management. These provisions could also limit
the price that investors might be willing to pay in the future for shares of New Company common stock, thereby depressing
the market price of New Company common stock. |
In
addition, because we are incorporated in the State of Delaware, we are governed by the provisions of Section 203 of the DGCL,
which prohibits a person who owns in excess of 15% of our outstanding voting stock from merging or combining with us for a period
of three years after the date of the transaction in which the person acquired in excess of 15% of our outstanding voting
stock, unless the merger or combination is approved in a prescribed manner.
Any
provision of New Company’s Proposed Charter, Proposed Bylaws or Delaware law that has the effect of delaying or deterring
a change in control could limit the opportunity for our stockholders to receive a premium for their shares of New Company common
stock, and could also affect the price that some investors are willing to pay for New Company common stock.
New
Company’s Proposed Charter and Proposed Bylaws designate the Court of Chancery of the State of Delaware as the exclusive
forum for certain state law litigation that may be initiated by our stockholders and the U.S. federal district courts as the exclusive
forum for certain securities law actions, which could limit our stockholders’ ability to litigate disputes with us in a
different judicial forum and increase the costs for our stockholders to pursue certain claims against us.
Pursuant
to New Company’s Proposed Bylaws and Proposed Charter, unless we consent in writing to the selection of an alternative forum,
the Court of Chancery of the State of Delaware will be the sole and exclusive forum for the following types of actions or proceedings
under Delaware statutory or common law: (i) any derivative action or proceeding brought on our behalf; (ii) any action
asserting a claim of breach of a fiduciary duty owed by any of our current or former directors, officers or employees to us or
our stockholders; (iii) any action asserting a claim arising pursuant to any provision of the DGCL, New Company’s
Proposed Charter and Proposed Bylaws (including their interpretation, validity or enforceability); or (iv) any action asserting
a claim governed by the internal affairs doctrine. This exclusive forum provision will not apply to any causes of action arising
under the Securities Act or the Exchange Act or any other claim for which the federal courts have exclusive jurisdiction. Stockholders
cannot waive compliance with the Securities Act, the Exchange Act or any other federal securities laws or the rules and regulations
thereunder. Unless we consent in writing to the selection of an alternate forum, the United States federal district courts shall
be the sole and exclusive forum for resolving any complaint asserting a cause of action arising under the Securities Act. In addition,
our Proposed Bylaws provide that any person or entity purchasing or otherwise acquiring any interest in shares of our capital
stock is deemed to have notice of and consented to these exclusive forum provisions. The forum selection provisions in our Proposed
Bylaws may limit our stockholders’ ability to litigate disputes with us in a judicial forum that they find favorable for
disputes with us or our directors, officers or employees, which may discourage the filing of lawsuits against us and our directors,
officers and employees, even though an action, if successful, might benefit our stockholders. In addition, these forum selection
provisions may impose additional litigation costs for stockholders who determine to pursue any such lawsuits against us.
Redemptions
of Public Shares by Public Stockholders may affect the market price of New Company common stock.
Redemptions
by Public Stockholders may affect the market price of New Company common stock, but it is not possible to predict or quantify
what the impact will be on the market price at any given level of redemptions. For example, as redemptions go up, it is possible
that the market may view this as a sign of a lack of confidence in the value of New Company common stock. In addition, as the
level of redemptions rise, stockholders may become increasingly concerned about New Company’s cash position and/or the efficiency
of its capital structure. Also, as
redemptions go up, the remaining shares of New Company common stock will be more significantly impacted by the resulting increasing
dilutive effect of any conversion or exercise of instruments convertible into or exercisable for New Company common stock, such
as the options and RSUs covering shares of New Company common stock which will be outstanding following Closing, and any issuance
of shares of New Company common stock in respect of the Contingent Consideration. It is not possible to predict or quantify the
impact a given level of redemptions will have on the market price of shares of New Company common stock. In all cases, the impact
will be based at least in part on market perceptions and, in some cases, the impact will also be affected by other market factors
such as, in the case of potential dilution from instruments convertible into or exercisable for shares of New Company common stock,
how far out of the money the dilutive instruments are at the time, prevailing interest rates and the volatility of shares of New
Company common stock at the relevant time.
The
issuances of additional shares of Common Stock or New Company common stock under future financing agreements, if entered, may
result in dilution of future holders of shares of New Company common stock and have a negative impact on the market price of the
shares of New Company common stock.
New
Company believes that the proceeds from the Business Combination will be sufficient to meet the immediate working capital
needs of New Company assuming that there are no significant redemptions. If the redemptions are significant, then the New Company
will not have the required proceeds to fund New Company’s operations. New Company and Bannix expect to enter into additional
financing asagreements as needed, which may include an equity line of credit in addition to other sources of financing. As a result
of EVIE’s lack of operations, limited cash reserves, and lack of positive cash flow, it will be difficult for New Bannix
to bring any products to market without significant additional financing should a significant amount of public investors redeem
their public common stock. Nonetheless, New Company’s current expectations may prove to be inaccurate. Changing circumstances,
some of which may be beyond New Company’s control, could cause New Company to spend capital significantly faster than
we currently anticipate, and we may need to seek additional funding sooner than planned, including financing in addition
to any interim financing we may obtain. To the extent this occurs, it could impose significant dilution on the stockholders
of New Company.
Company
and Bannix are expected to enter into additional financing agreements. The nature and degree of certainty of the financing arrangements
into which the Company expects to enter cannot be predicted as of the date of this proxy statement. While we expect that the terms
of any such financing arrangements, including an equity line of credit described above, will be disclosed prior to the time any
Public Stockholders are asked to make voting and redemption decisions, it is possible that the terms of such financing arrangements
may not be finalized as of the time that the Public Stockholders are asked to make voting and redemption decisions, and the terms
of such financing arrangements may dilute the equity interests of our public shareholders in connection with the Business Combination,
and that dilution may be significant and may result in a decrease to New Company’s stock price.
Risks
Related to Bannix, the Business Combination and Redemptions
Bannix
will incur significant transaction and transition costs in connection with the Business Combination.
Bannix
has incurred and expects to incur significant, non-recurring costs in connection with consummating the Business Combination and
operating as a public company following the consummation of the Business Combination. Bannix may also incur additional costs to
retain key employees. Certain transaction expenses incurred in connection with the Business Combination, including all legal,
accounting, consulting, investment banking and other fees, expenses and costs, subject to certain limitations, will be paid by
New Company following the Closing.
Bannix
will not have any right after the Closing to make damage claims against Company or Company Stockholders for the breach of any
representation, warranty or covenant made by Company in the Business Combination Agreement.
The
Business Combination Agreement provides that all of the representations, warranties and covenants of the parties contained therein
shall not survive the Closing, except for those covenants that by their terms apply or are to be performed in whole or in part
after the Closing, and then only with respect to breaches occurring after the Closing. Accordingly, there are no remedies available
to the parties with respect to any breach of the representations, warranties or covenants of the parties to the Business Combination
Agreement after the Closing, except for covenants to be performed in whole or in part after the Closing. As a result, Bannix will
have no remedy available to it if the Business Combination is consummated and it is later revealed that there was a breach of
any of the representations, warranties and covenants made by Company at the time of the Business Combination.
Subsequent
to the Closing, New Company may be required to take write-downs or write-offs, restructuring and impairment or other charges that
could have a significant negative effect on its financial condition, results of operations and stock price, which could cause
you to lose some or all of your investment.
Although
Bannix has conducted due diligence on Company, Bannix cannot assure you that this diligence revealed all material issues that
may be present in Company’s business, that it would be possible to uncover all material issues through a customary amount
of due diligence, or that factors outside of Bannix’s and Company’s control will not later arise. As a result, after
the Closing, New Company may be forced to later write-down or write-off assets, restructure its operations, or incur impairment
or other charges that could result in losses. Even if Bannix’s due diligence successfully identifies certain risks, unexpected
risks may arise and previously known risks may materialize in a manner not consistent with Bannix’s preliminary risk analysis.
Even though these charges may be non-cash items and may not have an immediate impact on New Company’s liquidity, the fact
that New Company may charges of this nature could contribute to negative market perceptions about the Combined Company’s
securities. In addition, charges of this nature may cause New Company to be unable to obtain future financing on favorable terms
or at all. Accordingly, Bannix stockholders who choose to remain stockholders of the Combined Company following the Business Combination
could suffer a reduction in the value of their shares. Such stockholders are unlikely to have a remedy for such reduction in value
unless they are able to successfully claim that the reduction was due to the breach by Bannix’s officers or directors of
a duty of care or other fiduciary duty owed to them, or if they are able to successfully bring a private claim under securities
laws that the proxy solicitation relating to the Business Combination contained an actionable material misstatement or material
omission.
The
Sponsor and Bannix’s officers and directors own Bannix Common Stock that will be worthless and hIave incurred reimbursable
expenses that may not be reimbursed or repaid if the Business Combination is not approved. Such interests may have influenced
their decision to approve and, in the case of the Board, recommend, the Business Combination with Company.
The
Sponsor and Bannix’s officers and directors and/or their affiliates beneficially own or have a pecuniary interest in Founder
Shares and additional securities that they purchased in the Concurrent Private Placement. The holders have no redemption rights
with respect to these securities in the event a business combination is not effected in the required time period. Therefore, if
the Business Combination with Company or another business combination is not approved within the required time period, such securities
held by such persons will be worthless. Such securities had an aggregate market value of $* million based upon the closing
price of the Common Stock on Nasdaq on the Record Date. Furthermore, the Sponsor and Bannix’s officers and directors and
their affiliates are entitled to reimbursement of out-of-pocket expenses incurred by them in connection with certain activities
on Bannix’s behalf, such as identifying and investigating possible business targets and business combinations. Any such
expenses will be repaid upon completion of the Business Combination with Company As of June 30, 2023, $1,182,850 reimbursable
expenses and/or convertible notes have been incurred to related parties and additional $436,040 to is payable to Evie for providing
funding to Bannix with Convertible Notes. If Bannix fails to consummate the Business Combination, the Sponsor and Bannix’s
officers and directors will not have any claim against the Trust Account for repayment or reimbursement. Accordingly, Bannix may
not be able to repay or reimburse these amounts if the Business Combination is not completed. See the section entitled “Proposal 1:
The Business Combination Proposal — Interests of the Sponsor and Bannix’s Directors and Officers in the
Business Combination.”
These
financial interests may have influenced the decision of Bannix’s directors to approve the Business Combination with Company
and to continue to pursue such Business Combination. In considering the recommendations of the Board to vote for the Business
Combination Proposal and other proposals, Bannix’s stockholders should consider these interests.
The
exercise of Bannix’s directors’ and officers’ discretion in agreeing to changes or waivers in the terms of the
Business Combination Agreement may result in a conflict of interest when determining whether such changes to the terms of the
Business Combination Agreement or waivers of conditions are appropriate and in the best interests of Bannix’s stockholders.
In
the period leading up to the Closing, events may occur that, pursuant to the Business Combination Agreement, would require Bannix
to agree to amend the Business Combination Agreement, to consent to certain actions taken by Company or to waive rights that Bannix
is entitled to under the Business Combination Agreement. Such events could arise because of changes in the course of Company’s
business, a request by Company to undertake actions that would otherwise be prohibited by the terms of the Business Combination
Agreement or the occurrence of other events that would have a material adverse effect on Company’s business and would entitle
Bannix to terminate the Business Combination Agreement. In any of such circumstances, it would be at Bannix’s discretion,
acting through its Board, to grant its consent or waive those rights. The existence of the financial and personal interests of
the directors described in the preceding risk factors may result in a conflict of interest on the part of one or more of the directors
between what he, she or they may believe is best for Bannix and what he, she or they may believe is best for himself, herself
or themselves in determining whether or not to take the requested action. As of the date of this proxy statement, Bannix does
not believe there will be any material changes or waivers that Bannix’s directors and officers would be likely to make after
the mailing of this proxy statement. Bannix will circulate a supplemental or amended proxy statement if changes to the terms of
the Business Combination that would have a material impact on its stockholders occur prior to the vote on the Business Combination
Proposal.
Bannix
stockholders will not have any rights or interests in funds from the Trust Account, except under certain limited circumstances.
Therefore, to liquidate the investment, Bannix stockholders may be forced to sell their Public Shares or Warrants, potentially
at a loss.
Public
Stockholders will be entitled to receive funds from the Trust Account only upon the earlier to occur of: (i) the completion of
an initial business combination, and then only in connection with those Public Shares that such shareholder properly elected to
redeem, subject to the limitations described herein, (ii) the redemption of any Public Shares properly tendered in connection
with a shareholder vote to amend Bannix’s existing organizational documents pursuant to the extension proxy statement and
(iii) the redemption of Public shares if we are unable to complete an initial business combination by March 14, 2024 (as approved
by the stockholders at the extension meeting held on March 8, 2023 and as may be further amended), subject to applicable law and
as further described herein. In no other circumstances will a Public Stockholder have any right or interest of any kind in the
Trust Account. Holders of Warrants will not have any right to the proceeds held in the Trust Account with respect to the Warrants.
Accordingly, to liquidate the investment, Bannix’s stockholders may be forced to sell their Public Shares or Warrants, potentially
at a loss.
If
Bannix is unable to complete the Business Combination with Company or another business combination by March 14, 2024 (as approved
by the stockholders at the extension meeting held on March 8, 2023 and as may be further amended), Bannix will cease all operations
except for the purpose of winding up, redeeming 100% of the outstanding Public Shares for cash and, subject to the approval of
its remaining stockholders and the Board, dissolving and liquidating. In such event, third parties may bring claims against Bannix
and, as a result, the proceeds held in the Trust Account could be reduced and the per-share liquidation price received by stockholders
could be less than $10.00 per Public Share.
Under
the terms of the Current Charter, Bannix must complete the Business Combination with Company or another business combination by
March 14, 2024 (as approved by the stockholders at the extension meeting held on March 8, 2023 and as may be further amended),
or Bannix must cease all operations except for the purpose of winding up, redeeming 100% of the outstanding Public Shares for
cash and, subject to the approval of its remaining stockholders and the Board, dissolving and liquidating. In such event, third
parties may bring claims against Bannix. Although Bannix seeks waiver agreements from certain vendors and service providers it
has engaged and owes money to, and the prospective target businesses it has negotiated with, whereby such parties will waive any
right, title, interest or claim of any kind they may have in or to any monies held in the Trust Account, there is no guarantee
that vendors, regardless of whether they execute such waivers, will not seek recourse against the Trust Account notwithstanding
such agreements. Furthermore, there is no guarantee that a court will uphold the validity of such agreements. Accordingly, the proceeds held in the Trust Account could be subject
to claims which could take priority over those of the Public Stockholders. If Bannix is unable to complete a business combination
within the required time period, the Sponsor has agreed that it will be liable under certain circumstances described herein to
ensure that the proceeds in the Trust Account are not reduced by the claims of target businesses or claims of vendors or other
entities that are owed money by Bannix for services rendered or contracted for or products sold to Bannix. However, the Sponsor
may not be able to meet such obligation as its only assets are securities of Bannix. Therefore, the per-share distribution from
the Trust Account in such a situation may be less than $10.00 due to such claims.
Additionally,
if Bannix is forced to file a bankruptcy case or an involuntary bankruptcy case is filed against it which is not dismissed, or
if Bannix otherwise enters compulsory or court supervised liquidation, the proceeds held in the Trust Account could be subject
to applicable bankruptcy laws, and may be included in its bankruptcy estate and subject to the claims of third parties with priority
over the claims of Bannix’s stockholders. To the extent any bankruptcy claims deplete the Trust Account, Bannix may not
be able to return to its Public Stockholders at least $10.00 per share of Bannix Common Stock.
Bannix’s
stockholders may be held liable for claims by third parties against Bannix to the extent of distributions received by them.
If
Bannix is unable to complete the Business Combination with Company or another business combination within the required time period,
Bannix will (i) cease all operations except for the purpose of winding up, (ii) as promptly as reasonably possible but
not more than ten business days thereafter, redeem the Public Shares, at a per-share price, payable in cash, equal to the aggregate
amount then on deposit in the Trust Account including interest earned on the funds held in the Trust Account and not previously
released to Bannix to pay taxes (less up to $100,000 of interest to pay dissolution expenses), divided by the number of then outstanding
Public Shares, which redemption will completely extinguish Public Stockholders’ rights as stockholders (including the right
to receive further liquidating distributions, if any), subject to applicable law, and (iii) as promptly as reasonably possible
following such redemption, subject to the approval of remaining Bannix stockholders and the Board, dissolve and liquidate, subject
in the case of clauses (ii) and (iii) above to Bannix’s obligations under Delaware law to provide for claims of
creditors and the requirements of other applicable law. Bannix cannot assure you that it will properly assess all claims that
may potentially be brought against it. As such, Bannix’s stockholders could potentially be liable for any claims to the
extent of distributions received by them (but no more) and any liability of its stockholders may extend well beyond the third
anniversary of the date of distribution. Accordingly, Bannix cannot assure you that third parties will not seek to recover from
its stockholders amounts owed to them by Bannix.
If
Bannix files a bankruptcy petition or an involuntary bankruptcy petition is filed against Bannix that is not dismissed, the proceeds
held in the Trust Account could be subject to applicable bankruptcy laws, and may be included in Bannix’s bankruptcy estate
and subject to the claims of third parties with priority over the claims of Bannix’s stockholders. To the extent any bankruptcy
claims deplete the Trust Account, Bannix cannot provide any assurance that Bannix will be able to return $10.00 per share to its
Public Stockholders. Additionally, if Bannix files a bankruptcy petition or an involuntary bankruptcy petition is filed against
Bannix that is not dismissed, any distributions received by stockholders could be viewed under applicable debtor/creditor and/or
bankruptcy laws as either a “preferential transfer” or a “fraudulent conveyance.” As a result, a bankruptcy
court could seek to recover some or all amounts received by Bannix’s stockholders. Furthermore, the Board may be viewed
as having breached its fiduciary duty to Bannix’s creditors and/or having acted in bad faith, thereby exposing both the
Board and Bannix to claims of punitive damages, by paying Public Stockholders from the Trust Account prior to addressing the claims
of creditors. Bannix cannot provide any assurance that claims will not be brought against Bannix for these reasons.
Actions
taken by existing Bannix stockholders to increase the likelihood of approval of the Business Combination Proposal and the other
Proposals could have a depressive effect on Bannix Common Stock.
At
any time prior to the Special Meeting, during a period when they are not then aware of any material nonpublic information regarding
Bannix or its securities, the Sponsor, Bannix’s officers, directors and stockholders from prior to the Initial Public Offering,
Company or Company Stockholders and/or their respective affiliates may enter into transactions with investors and others to provide
them with incentives to acquire Bannix Common Stock or vote their shares in favor of the Business Combination Proposal. The purpose
of such transactions would be to increase the likelihood of satisfaction of the requirements to consummate the Business Combination
where it appears that such requirements would otherwise not be met. Entering into any such arrangements may have a depressive
effect on Bannix Common Stock. For example, as a result of these arrangements, an investor or holder may have the ability to effectively
purchase shares of Common Stock at a price lower than market and may therefore be more likely to sell the shares he, she or it
owns, either prior to or immediately after the Special Meeting.
If
the Adjournment Proposal is not approved, and an insufficient number of votes have been obtained to authorize the consummation
of the Business Combination, the Board will not have the ability to adjourn the Special Meeting to a later date in order to solicit
further votes, and, therefore, the Business Combination will not be approved.
Neither
the Board nor any committee thereof obtained a third-party financial opinion in determining whether or not to pursue the Business
Combination.
Neither
the Board nor any committee thereof obtained an opinion from an independent investment banking or accounting firm that the price
that Bannix is paying for Company is fair to Bannix from a financial point of view. Neither the Board nor any committee thereof
obtained a third-party valuation in connection with the Business Combination. In analyzing the Business Combination, the Board
and management conducted due diligence on Company and researched the industry in which Company operates. The Board reviewed, among
other things,
financial
due diligence materials prepared by Company, including, financial and market data information on selected comparable companies
and the implied purchase price multiple of Company and the financial terms set forth in the Business Combination Agreement, and
concluded that the Business Combination was in the best interest of Bannix stockholders. Accordingly, investors will be relying
solely on the judgment of the Board and management of Bannix in valuing Company, and the Board and management of Bannix may not
have properly valued such business. The lack of a third-party valuation may also lead an increased number of Bannix stockholders
to vote against the Business Combination or demand redemption of their shares, which could potentially impact Bannix’s ability
to consummate the Business Combination.
Bannix
is dependent upon our current executive officers and directors and their loss could adversely affect its ability to operate.
Bannix’s
operations are dependent upon a relatively small group of individuals and, in particular, its executive officers and directors.
Bannix believes that its success depends on the continued service of its officers and directors, at least until it has completed
the Business Combination.
Certain
of Bannix’s existing stockholders have agreed to vote in favor of the Business Combination, regardless of how the Public
Stockholders vote.
Certain
of Bannix’s existing shareholders, including the Sponsor, have agreed to vote the Founder Shares, as well as any Public
Shares purchased during or after the Initial Public Offering, in favor of the Business Combination.
At
the time of the Special Meeting, Bannix expects that the Sponsor and Bannix’s directors and officers will collectively own
approximately 20% of the outstanding Bannix Common Stock. Accordingly, it is more likely that the necessary stockholder approval
will be received than would be the case if such persons agreed to vote their shares in accordance with the majority of the votes
cast by Public Stockholders.
Bannix’s
actual financial position and results of operations may differ materially from the unaudited pro forma financial information
included in this proxy statement.
The
unaudited pro forma condensed consolidated combined financial information in this proxy statement is presented for illustrative
purposes only and is not necessarily indicative of what Bannix’s actual financial position or results of operations would
have been had the Business Combination been completed on the dates indicated. See “Unaudited Pro Forma Condensed Consolidated
Combined Financial Information” for more information.
Bannix
does not have a specified maximum redemption threshold. The absence of such a redemption threshold may make it possible for Bannix
to complete an initial business combination, including the Business Combination even if a substantial majority of Bannix’s
stockholders choose to redeem their shares.
The
Current Charter does not provide a specified maximum redemption threshold, except that in no event will Bannix redeem its Public
Shares in an amount that would cause Bannix’s net tangible assets, after payment of the deferred underwriting commissions,
to be less than $5,000,001 upon completion of the Business Combination (such that Bannix does not then become subject to the SEC’s
“penny stock” rules), or any greater net tangible asset or cash requirement that may be contained in the agreement
relating to Bannix’s initial business combination. As a result, Bannix may be able to complete an initial business combination,
including the Business Combination, even if a substantial majority of Public Stockholders do not agree with the transaction and
have redeemed their shares or have entered into privately negotiated agreements to sell their shares to the Sponsor, Bannix’s
officers and directors, advisors or any of their affiliates. In the event the aggregate cash consideration Bannix would be required
to pay for all Common Stock that are validly submitted for redemption plus any amount required to satisfy cash conditions pursuant
to the terms of the proposed initial business combination, including the Business Combination, exceeds the aggregate amount of
cash available to Bannix, it will not complete such initial business combination, including the Business Combination, or redeem
any shares, all Common Stock submitted for redemption will be returned to the holders thereof, and it instead may search for an
alternate business combination.
Certain
insiders may elect to purchase shares or warrants prior to the consummation of the Business Combination, which may influence the
vote on the Business Combination.
At
any time at or prior to the Business Combination, during a period when they are not then aware of any material non-public information
regarding us or Bannix’s securities, the Sponsor or our or their respective directors, officers, advisors or respective
affiliates may purchase public shares or warrants from institutional and other investors including from investors who vote, or
indicate an intention to vote, against any of the Condition Precedent Proposals, or execute agreements to purchase such shares
or warrants from such investors in the future, or they may enter into transactions with such investors and others to provide them
with incentives to acquire public shares or warrants or vote their public shares in favor of the Condition Precedent Proposals.
In the event that the Sponsor, or our or its directors, officers, advisors or affiliates purchase shares or warrants in privately
negotiated transactions from Public Stockholders, such shares and warrants that are purchased by the Sponsor, or its directors,
officers, advisors or affiliates would not be voted in favor of the Business Combination Proposal. Such a purchase may include
a contractual acknowledgement that such shareholder, although still the record holder of Bannix’s shares, is no longer the
beneficial owner thereof and therefore agrees not to exercise its redemption rights. In the event that the Sponsor, or our or
its directors, officers, advisors or affiliates purchase shares or warrants in privately negotiated transactions from Public Stockholders,
such shares and warrants that are purchased by the Sponsor, or its directors, officers, advisors or affiliates would not be voted
in favor of the Business Combination Proposal, the Sponsor, and its directors, officers, advisors and affiliates would waive their
redemption rights and Bannix would file a Current Report on Form 8-K prior to the Special Meeting providing the following information:
| |
● |
the
amount of Bannix Common Stock and Bannix Warrants purchased outside of the redemption offer by the Sponsor or its affiliates,
along with the purchase price; |
| |
● |
the
purpose of the purchases by the Sponsor or its affiliates |
| |
● |
the
impact, if any, of the purchases by the Sponsor or its affiliates on the likelihood that the Business Combination will be
approved; |
| |
● |
the
identities of Bannix security holders who sold to the Sponsor or its affiliates (if not purchased on the open market) or the
nature of Bannix security holders (e.g., 5% security holders) who sold to the Sponsor or its affiliates; and |
| |
● |
the
number of Bannix Common Stock and Bannix Warrants for which Bannix has received redemption requests pursuant to its redemption
offer. |
In
the event that the Sponsor or their directors, officers, advisors or respective affiliates purchase shares in privately negotiated
transactions from Public Stockholders who have already elected to exercise their redemption rights, such selling shareholder would
be required to revoke their prior elections to redeem their shares. The purpose of such share purchases and other transactions
would be to increase the likelihood of (1) satisfaction of the requirement that holders of a majority of the Common Stock, represented
in person or by proxy and entitled to vote at the Special Meeting, vote in favor of the Business Combination Proposal, the Charter
Amendment Proposal, the Advisory Charter Amendment Proposals, the Stock Issuance Proposal, the Director Election Proposal, and
the Adjournment Proposal (to the extent not limited by the preceding paragraph), (2) otherwise limiting the number of public shares
electing to redeem and (3) Bannix’s net tangible assets (as determined in accordance with Rule 3a51-1(g)(1) of the Exchange
Act) being at least $5,000,001. The purpose of such purchases of Public Warrants would be to reduce the number of Public Warrants
outstanding or to vote such warrants on any matters submitted to the warrant holders for approval in connection with our initial
business combination. See “Risk Factors — Certain insiders may elect to purchase shares or warrants
prior to the consummation of the Business Combination, which may influence the vote on the Business Combination.” for
additional information related to the risk of voting repurchased shares.
In
the event the Sponsor or our directors, officers, advisors or affiliates were to purchase shares or warrants in privately negotiated
transactions from Public Stockholders, such purchases would be structured in compliance with the requirements of Rule 14e-5 under
the Exchange Act including, in pertinent part, through adherence to the following:
| |
● |
This
proxy statement discloses the possibility that the Sponsor, or our or its directors, officers, advisors or affiliates may
purchase shares, rights or warrants from Public Stockholders outside the redemption process, along with the purpose of such
purchases; |
| |
● |
If
the Sponsor, or our or its directors, officers, advisors or affiliates were to purchase shares or warrants from Public Stockholders,
they would do so at a price no higher than the price offered through our redemption process; |
| |
● |
This
proxy statement includes a representation that any of our securities purchased by the Sponsor, or our or its directors, executive
officers, advisors or any of their affiliates would not be voted in favor of approving the business combination transaction; |
| |
● |
The
Sponsor, or our or its directors, executive officers, advisors or affiliates would not possess any redemption rights with
respect to our securities or, if they do acquire and possess redemption rights, they would waive such rights in the event
that the Business Combination is consummated; and |
| |
● |
Bannix
would disclose in a Current Report on Form 8-K, before the Special Meeting, the following material terms: |
| |
● |
the
amount of our securities purchased outside of the redemption offer by the Sponsor, or our or its directors, officers, advisors
or any of their affiliates, along with the purchase price; |
| |
● |
the
purpose of the purchases by the Sponsor, or our or its directors, officers, advisors or affiliates; |
| |
● |
the
impact, if any, of the purchases by the Sponsor, directors, officers, advisors or any of their affiliates on the likelihood
that the business combination transaction will be approved; |
| |
● |
the
identities of our security holders who sold to our sponsor, directors, executive officers, advisors or any of their affiliates
(if not purchased on the open market) or the nature of our security holders (e.g., 5% security holders) who sold to our sponsor,
directors, executive officers, advisors or any of their affiliates; and |
| |
● |
the
number of shares of Bannix Common Stock and Bannix Warrants for which Bannix has received redemption requests pursuant to
the redemption offer. |
If
the proposed Business Combination’s benefits do not meet the expectations of investors, stockholders or financial analysts,
the market price of Bannix’s Common Stock may decline before the Closing, or the market price of New Company common stock
may decline after the Closing.
If
the benefits of the proposed Business Combination do not meet the expectations of investors or securities analysts, the market
price of Common Stock prior to the Closing may decline. The market value of our Common Stock at the time of the Business Combination
may vary significantly from its price on the date the Business Combination Agreement was executed, the date of this proxy statement,
or the date on which Bannix stockholders vote on the Business Combination.
In
addition, following the Business Combination, fluctuations in the price of New Company common stock could contribute to the loss
of all or part of your investment. Any of the factors listed below could have a material adverse effect on your investment, and
Bannix’s Common Stock before the Closing (or New Company common stock after the Closing) may trade at a price significantly
below the price you paid for it. In such circumstances, the trading price of Bannix’s Common Stock before the Closing (or
New Company common stock after the Closing) may not recover and may experience a further decline.
Broad
market and industry factors may materially harm the market price of New Company common stock after the Closing, irrespective of
New Company’s operating performance. The stock market in general and Nasdaq have experienced price and volume fluctuations
that have often been unrelated or disproportionate to the operating performance of the particular companies affected. The trading
prices and valuations of these stocks, and of New Company’s securities, may not be predictable. A loss of investor confidence
in the market for retail stocks or the stocks of other companies, notably in the electric technology vehicle industry, which investors
perceive to be similar to New Company, could depress New Company’s stock price regardless of its business, prospects, financial
conditions or results of operations. A decline in the market price for New Company common stock also could adversely affect New
Company’s ability to issue additional securities and New Company’s ability to obtain additional financing in the future.
Bannix
is currently an emerging growth company within the meaning of the Securities Act, and if it takes advantage of certain exemptions
from disclosure requirements available to emerging growth companies, this could make its securities less attractive to investors
and may make it more difficult to compare its performance with other public companies.
Bannix
is currently an emerging growth company within the meaning of the Securities Act, as modified by the JOBS Act, and it may take
advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not
emerging growth companies including, but not limited to, not being required to comply with the auditor attestation requirements
of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in its periodic
reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation
and shareholder approval of any golden parachute payments not previously approved. As a result, Bannix shareholders may not have
access to certain information they may deem important. Bannix could remain an emerging growth company for up to five years
from the date of its Initial Public Offering, although circumstances could cause us to lose that status earlier, including if
the market value of its Common Stock (or New Company common stock following the Closing) held by non-affiliates exceeds $700,000,000
as of any June 30 before that time, in which case we would no longer be an emerging growth company as of the following December 31.
Bannix cannot predict whether investors will find its securities less attractive because it expects to rely on these exemptions.
If some investors find Bannix’s securities less attractive as a result of its reliance on these exemptions, the trading
prices of its securities may be lower than they otherwise would be, there may be a less active trading market for its securities
and the trading prices of its securities may be more volatile.
Further,
Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial
accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared
effective or do not have a class of securities registered under the Exchange Act) are required to comply with the new or revised
financial accounting standards. The JOBS Act provides that a company can elect to opt out of the extended transition period and
comply with the requirements that apply to non-emerging growth companies but any such an election to opt out is irrevocable. Bannix
has elected not to opt out of such extended transition period which means that when a standard is issued or revised and it has
different application dates for public or private companies, Bannix, as an emerging growth company, can adopt the new or revised
standard at the time private companies adopt the new or revised standard. This may make comparison of Bannix’s financial
statements with another public company which is neither an emerging growth company nor an emerging growth company which has opted
out of using the extended transition period difficult or impossible because of the potential differences in accountant standards
used.
Bannix’s
directors may decide not to enforce the indemnification obligations of the Sponsor, resulting in a reduction in the amount of
funds in the Trust Account available for distribution to Public Stockholders.
The
Sponsor has agreed that it will be liable to Bannix if and to the extent any claims by a third party for services rendered or
products sold to Bannix, or a prospective target business with which Bannix has entered into a written letter of intent, confidentiality
or other similar agreement or business combination agreement, reduce the amount of funds in the Trust Account to below the lesser
of (i) $10.00 per public share and (ii) the actual amount per Public Share held in the Trust Account as of the date
of the liquidation of the Trust Account, if less than $10.00 per Public Share due to reductions in the value of the trust assets,
less taxes payable, provided that such liability will not apply to any claims by a third party or prospective target business
who executed a waiver of any and all rights to the funds held in the Trust Account (whether or not such waiver is enforceable)
nor will it apply to any claims under our indemnity of the underwriters of the Initial Public Offering against certain liabilities,
including liabilities under the Securities Act. However, Bannix has not asked the Sponsor to reserve funds for such indemnification
obligations, nor has Bannix independently verified whether the Sponsor has sufficient funds to satisfy its indemnity obligations.
Bannix believes that the Sponsor’s only assets are securities of Bannix. Therefore, Bannix cannot provide any assurance
that the Sponsor would be able to satisfy those obligations. None of Bannix officers or directors will indemnify it for claims
by third parties including, without limitation, claims by vendors and prospective target businesses.
If
the Sponsor asserts that it is unable to satisfy its indemnification obligations or that it has no indemnification obligations
related to a particular claim, Bannix’s independent directors would determine whether to take legal action against the Sponsor
to enforce its indemnification obligations. While Bannix currently expects that our independent directors would take legal action
on its behalf against the Sponsor to enforce its indemnification obligations to it, it is possible that Bannix’s independent
directors, in exercising their business judgment, may choose not to do so if, for example,
the
cost of such legal action is deemed by the independent directors to be too high relative to the amount recoverable or if the independent
directors determine that a favorable outcome is not likely. Bannix has not asked the Sponsor to reserve funds for such indemnification
obligations and Bannix cannot provide any assurance that the Sponsor would be able to satisfy those obligations. Accordingly,
Bannix cannot provide any assurance that due to claims of creditors the actual value of the per-share redemption price will not
be less than $10.00 per Public Share.
Bannix
management has identified a material weakness in its internal control over financial reporting. If we are unable to develop and
maintain an effective system of internal control over financial reporting, we may not be able to accurately report our financial
results in a timely manner, which may adversely affect investor confidence in us and materially and adversely affect our business
and operating results.
Bannix
management has identified a material weakness in its internal control over financial reporting related to interpretation and accounting
for the extinguishment of a significant contingent obligation. As a result of the material weakness, Bannix management has concluded
that the disclosure controls and procedures were not effective as of December 31, 2022. Bannix management has taken a number of
measures to remediate the material weakness described herein. However, if Bannix management is unable to remediate its material
weakness in a timely manner or we identify additional material weaknesses, it may be unable to provide required financial information
in a timely and reliable manner and we may incorrectly report financial information. Likewise, if Bannix financial statements
are not filed on a timely basis, Bannix could be subject to sanctions or investigations by the stock exchange on which its securities
are quoted, the SEC or other regulatory authorities. The existence of a material weakness in internal control over financial reporting
could adversely affect its reputation or investor perceptions of us, which could have a negative effect on the trading price of
our securities.
Management
has implemented remediation steps to improve our internal control over financial reporting. Specifically, we expanded and improved
our review process for complex securities and related accounting standards. We plan to further improve this process by enhancing
access to accounting literature, identification of third-party professionals with whom to consult regarding complex accounting
applications and consideration of additional staff with the requisite experience and training to supplement existing accounting
professionals. Bannix management can give no assurance
that the measures they have taken and plan to take in the future will remediate the material weakness identified or that any additional
material weaknesses or restatements of financial results will not arise in the future due to a failure to implement and maintain
adequate internal control over financial reporting or circumvention of these controls. Even if they are successful in strengthening
our controls and procedures, in the future those controls and procedures may not be adequate to prevent or identify irregularities
or errors or to facilitate the fair presentation of our financial statements.
A
material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting such that there
is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or
detected and corrected on a timely basis.
Effective
internal controls are necessary for us to provide reliable financial reports and prevent fraud. We continue to evaluate steps
to remediate the material weakness. These remediation measures may be time consuming and costly and there is no assurance that
these initiatives will ultimately have the intended effects.
If
Bannix identify any new material weaknesses in the future, any such newly identified material weakness could limit our ability
to prevent or detect a misstatement of our accounts or disclosures that could result in a material misstatement of our annual
or interim financial statements. In such case, Bannix may be unable to maintain compliance with securities law requirements regarding
timely filing of periodic reports in addition to applicable stock exchange listing requirements, investors may lose confidence
in our financial reporting and the price of our securities may decline as a result. Bannix cannot assure you that any measures
it may take in the future, will be sufficient to avoid potential future material weaknesses.
The
Business Combination is subject to conditions, including certain conditions that may not be satisfied on a timely basis, if at
all.
The
completion of the Business Combination is subject to a number of conditions. The completion of the Business Combination is not
assured and is subject to risks, including the risk that approval of the Business Combination by Bannix stockholders is not obtained,
subject to certain terms specified in the Business Combination Agreement (as described in the section entitled “Proposal
1: The Business Combination Proposal — Conditions to the Closing”), or that other Closing conditions
are not satisfied. If Bannix does not complete the Business Combination, Bannix could be subject to several risks, including:
the
parties may be liable for damages to one another under the terms and conditions of the Business Combination Agreement;
| |
● |
negative
reactions from the financial markets, including declines in the price of Common Stock due to the fact that current prices
reflect a market assumption that the Business Combination will be completed; |
| |
● |
the
attention of Bannix’s management will have been diverted to the Business Combination rather than the pursuit of other
opportunities in respect of an initial business combination; and |
| |
● |
Bannix
will have a limited period of time, if any, to complete an alternative initial business combination and Bannix may not be
as attractive to potential alternative partners to an initial business combination if we are unable to complete the Business
Combination. |
The
listing of New Company’s securities on Nasdaq will not benefit from the process undertaken in connection with an underwritten
initial public offering.
Upon
the Closing, we intend to apply to list the Common Stock (which will be New Company common stock) on Nasdaq under the symbol “Company.”
Unlike an underwritten initial public offering of New Company’s securities, the listing of New Company’s securities
as a result of the Business Combination will not benefit from the following:
|
● |
the
book-building process undertaken by underwriters, which helps inform efficient price discovery with respect to opening trades
of newly listed securities; |
|
● |
underwriter
support to help stabilize, maintain or affect the public price of the securities immediately after listing; and |
|
● |
underwriter
due diligence review of the offering and potential liability for material misstatements or omissions of fact in a prospectus
used in connection with the securities being offered, or for statements made by its securities analysts or other personnel. |
The
lack of such a process in connection with the listing of New Company’s securities could result in diminished investor demand,
inefficiencies in pricing and a more volatile public price for New Company’s securities during the period immediately following
the listing than would typically be experienced in connection with an underwritten initial public offering.
The
ability of Bannix stockholders to exercise redemption rights with respect to a large number of shares of Common Stock could increase
the probability that the Business Combination would be unsuccessful and that stockholders would have to wait for liquidation in
order to redeem their shares of Common Stock.
At
the time Bannix entered into the Business Combination Agreement and related agreements for the Business Agreement, Bannix did
not know how many stockholders would exercise their redemption rights, and therefore Bannix structured the Business Combination
based on our expectations as to the number of shares that would be submitted for redemption. If a larger number of shares are
submitted for redemption than Bannix initially expects, this may limit Bannix’s ability to complete the Business Combination
or optimize its capital structure.
There
is no guarantee that a stockholder’s decision to continue to hold shares of New Company common stock following the Business
Combination will put the stockholder in a better future economic position than if such stockholder decided to redeem such stockholder’s
Public Shares for a pro rata portion of the Trust Account, and vice versa.
Bannix
and New Company can give no assurance as to the price at which a stockholder may be able to sell its Public Shares following the
completion of the Business Combination or any alternative business combination. Certain events following the consummation of any
initial business combination, including the Business Combination, may cause an increase in Bannix’s share price, and may
result in a lower value realized now than a stockholder of Bannix might realize in the future had the stockholder redeemed their
shares. Similarly, if a stockholder does not redeem its shares, the stockholder will bear the risk of ownership of the Public
Shares after the consummation of any initial business combination, including the Business Combination, and there can be no assurance
that such stockholder can sell such shares in the future for a greater amount than the redemption price set forth in this proxy
statement. A stockholder should consult the stockholder’s own tax and/or financial advisor for assistance on how this may
affect his, her or its individual situation.
If
Bannix stockholders fail to comply with the redemption requirements specified in this proxy statement, they will not be entitled
to redeem their Common Stock for a pro rata portion of the funds held in the Trust Account.
In
order to exercise their redemption rights, Public Stockholders are required to submit a request in writing and deliver their stock
to Bannix’s transfer agent at least two business days prior to the Special Meeting. Stockholders electing to redeem their
shares will receive their pro rata portion of the Trust Account less franchise and income taxes payable, calculated as of
two business days prior to the anticipated consummation of the Business Combination. See the section entitled “Special
Meeting of Bannix Stockholders — Redemption Rights” for additional information on how to exercise
your redemption rights.
Bannix
stockholders who wish to redeem their shares for a pro rata portion of the Trust Account must comply with specific requirements
for redemption that may make it more difficult for them to exercise their redemption rights prior to the deadline.
As
more fully described in the section entitled “Special Meeting of Bannix Stockholders — Redemption Rights,”
Public Stockholders who wish to redeem their shares for a pro rata portion of the Trust Account must, among other things,
deliver their shares (either physically or electronically) to Continental (or through DTC to Continental) prior to 5 PM, Eastern
Time, on *, 2023.
A
new 1% U.S. federal excise tax could be imposed on Bannix or New Company in connection with redemptions by Bannix of Common Stock.
On
August 16, 2022, President Biden signed into law the IR Act, which, among other things, imposes a 1% excise tax on the fair
market value of stock repurchased by “covered corporations” beginning in 2023, with certain exceptions (the “Excise
Tax”). The Excise Tax is imposed on the repurchasing corporation itself, not its stockholders from which the stock is repurchased.
Because Bannix is a Delaware corporation and its securities are trading on Nasdaq, Bannix is a “covered corporation”
for this purpose. The amount of the Excise Tax is generally 1% of the fair market value of the shares repurchased at the time
of the repurchase. However, for purposes of calculating the Excise Tax, repurchasing corporations are permitted to net the fair
market value of certain new stock issuances against the fair market value of stock repurchases during the same taxable year. In
addition, certain exceptions apply to the Excise Tax. Whether and to what extent we would be subject to the Excise Tax would depend
on a number of factors, including (i) the fair market value of the redemptions and repurchases in connection with our Business
Combination, (ii) the structure of the Business Combination, (iii) the nature and amount of any interim financing arrangements
or other equity issuances in connection with the Business Combination (or otherwise issued not in connection with the Business
Combination but issued within the same taxable year of the Business Combination) and (iv) the content of regulations and
other guidance from the U.S. Department of the Treasury. The U.S. Department of Treasury has been given authority to provide regulations
and other guidance to carry out, and prevent the abuse or avoidance of, the Excise Tax; however, no guidance has been issued to
date. It is uncertain whether, and/or to what extent, the Excise Tax could apply to any redemptions of Common Stock after December 31,
2022, including any redemptions in connection with the Business Combination. In addition, because the excise tax would be payable
by Bannix or New Company, and not by the redeeming holder, the mechanics of any required payment of the excise tax have not been
determined. The foregoing could cause a reduction in the cash available on hand to complete the Business Combination and limit
Bannix’s ability to complete the Business Combination.
If
you or a “group” of stockholders of which you are a part are deemed to hold an aggregate of more than 15% of Bannix
Common Stock issued in the Initial Public Offering, you (or, if a member of such a group, all of the members of such group in
the aggregate) will lose the ability to redeem all such shares in excess of 15% of the Bannix Common Stock issued in the Initial
Public Offering.
A
Public Stockholder, together with any of his, her or its affiliates or any other person with whom he, she or it is acting in concert
or as a “group” (as defined under Section 13 of the Exchange Act), will be restricted from redeeming in
the aggregate his, her or its shares or, if part of such a group, the group’s shares, with respect to 15% or more of the
Public Shares issued in the Initial Public Offering. In order to determine whether a stockholder is acting in concert or as a
group with another stockholder, Bannix will require each Public Stockholder seeking to exercise redemption rights to certify to
Bannix whether such stockholder is acting in concert or as a group with any other stockholder. Such certifications, together with
other public information relating to stock ownership available to Bannix at that time, such as Section 13D, Section 13G
and Section 16 filings under the Exchange Act, will be the sole basis on which Bannix makes the above-referenced determination.
Your inability to redeem any such excess shares will reduce your influence over Bannix’s ability to consummate the Business
Combination and you could suffer a material loss on your investment in Bannix if you sell such excess shares in open market transactions.
Additionally, you will not receive redemption distributions with respect to such excess shares if Bannix consummates the Business
Combination. As a result, you will continue to hold that number of shares aggregating to more than 15% of the shares sold in the
Initial Public Offering and, in order to dispose of such excess shares, would be required to sell your stock in open market transactions,
potentially at a loss. Bannix cannot assure you that the value of such excess shares will appreciate over time following the Business
Combination or that the market price of New Company common stock will exceed the per-share redemption price. Notwithstanding the
foregoing, stockholders may challenge Bannix’s determination as to whether a stockholder is acting in concert or as a group
with another stockholder in a court of competent jurisdiction.
However,
Bannix stockholders’ ability to vote all of their shares (including such excess shares) for or against the Business Combination
is not restricted by this limitation on redemption. Public Stockholders will experience dilution as a consequence of, among other
transactions, the issuance of New Company common stock as consideration in the Business Combination. Having a minority share position
may reduce the influence that the Public Stockholders have on the management of Bannix.
Public
Stockholders will experience dilution as a consequence of, among other transactions, the issuance of New Company common stock
as consideration in the Business Combination.
Public
Stockholders will experience immediate dilution as a consequence of the issuance of New Company common stock as consideration
in the Business Combination. Having a minority share position may reduce the influence that Public Stockholders have on the management
of Bannix.
It
is anticipated that upon completion of the Business Combination and assuming no additional redemptions by Public Stockholders,
Public Stockholders will retain an ownership interest of approximately [*]% in the Combined Company, the Sponsor and related parties
will retain an ownership interest of approximately [*]% of the Combined Company, and the Company Stockholders will own approximately
[*]%.
The
ownership percentage does not take into account (i) the additional redemption of any Public Shares by Public Stockholders
or (ii) the issuance of any additional shares pursuant to the potential sources of dilution noted below. If the actual facts
are different from these assumptions (which they are likely to be), the percentage ownership retained by the Bannix stockholders
will be different. See “Unaudited Pro Forma Condensed Consolidated Combined Financial Information.”
It
is anticipated that upon completion of the Business Combination and assuming no additional redemptions by the Public Stockholders,
the Public Stockholders will retain an ownership interest of approximately 3.98% in the Combined Company, the Sponsor and related
parties will retain an ownership interest of approximately 2.81% of the Combined Company, and the Company Stockholders will own
approximately 93.21% of the Combined Company.
The
following tables illustrate estimated ownership levels in the Combined Company, immediately following the consummation of the
Business Combination, based on the varying levels of redemptions by the Public Stockholders, excluding potential sources of dilution,
and the following additional assumptions:
| | |
After the Business Combination | |
| |
| |
|
| | |
No redemption | |
| |
Net Tangible Asset Scenario |
| | |
Number | |
Percent | |
Number | |
Percent |
| | |
of Shares | |
Owned | |
of Shares | |
Owned |
| | |
| |
| |
| |
|
| Company Stockholders | |
| 85,000,000 | | |
| 93.2 | % | |
| 85,000,000 | | |
| 94.2 | % |
| Public Stockholders (2) (3) | |
| 3,629,613 | | |
| 3.7 | % | |
| 2,745,383 | | |
| 3.0 | % |
| Sponsor and related parties | |
| 2,564,600 | | |
| 2.8 | % | |
| 2,564,600 | | |
| 2.8 | % |
| | |
| | | |
| | | |
| | | |
| | |
| | |
| | | |
| 100.00 | % | |
| | | |
| 100.00 | % |
| Pro forma Common Stock as of November
30, 2023 | |
| |
|
| Potential sources of
dilution: | |
| | | |
| | |
| | |
| | | |
| | |
| Public Warrants | |
| 6,900,000 | | |
| 6,900,000 | |
(1)
Assumes that no additional Public Shares are redeemed (and
including 690,000 common shares deriving from public rights upon closing).
(2) Assumes that 884,230 Public Shares are redeemed
for aggregate redemption payments of approximately $9.6 million assuming a $10.89 per share redemption price and based on funds in the
Trust Account as of January 16, 2024. The net tangible asset scenario reflects the maximum number of Bannix Public Shares that can be
redeemed without violating the conditions of the Business Combination Agreement or the requirement of Bannix’s Existing Organizational
Documents that Bannix cannot redeem Public Shares if it would result in Bannix having a minimum net tangible asset value of less than
$5,000,001 after giving effect to the payments to redeeming shareholders. This scenario is included in this proxy statement for illustrative
purposes only.
(3)
This does not include the issuance of up to 42,500,000 shares of common stock upon conversion of the Series A Preferred Stock
to be held by Tokenize. Following the closing of the business combination, in connection with Bannix’s acquisition of the
Patents pursuant to the PPA, Bannix agrees to pay, issue and deliver to Tokenize, Series A Preferred Stock with a stated value
of $42,500,000, which such terms will be more fully set forth in the Series A Preferred Stock Certificate of Designation to be
filed with the Secretary of State of the State of Delaware prior to the closing of the PPA. The 42,500 Series A Preferred Stock
will have stated value of face value of $1,000 per share and is convertible, at the option of Tokenize, into shares of common
stock of Bannix at 5% discount to the VWAP during the 20 trading days prior to conversion, and in any event not less than $1.00.
The Series A Preferred Stock will not have voting rights and will be entitled to dividends only in the event of liquidation. The
Series A Preferred Stock will have a 4.99% beneficial ownership limitation providing that the Series A Preferred Stock may not
be converted into more than 4.99% of the shares of common stock outstanding at any point in time. Series A Preferred Stock and
the shares of common stock issuable upon conversion of the Series A Preferred Stock (the “Conversion Shares”) shall
be subject to a lock-up beginning on the Closing Date and ending on the earliest of (i) the six (6) months after such date, (ii)
a change in control, or (iii) written consent of Tokenize (the “Seller Lockup Period”).
SPECIAL
MEETING OF BANNIX STOCKHOLDERS
General
Bannix
is furnishing this proxy statement to its stockholders as part of the solicitation of proxies by the Board for use at the Special
Meeting to be held on *, 2023 and at any adjournment or postponement thereof. This proxy statement provides Bannix’s stockholders
with information they need to know to be able to vote or direct their vote to be cast at the Special Meeting.
Date,
Time and Place
The
Special Meeting will be held on *, 2023, at 12:00 PM Eastern Time, via live webcast at the following address: *. In light of the
COVID-19 pandemic and to better support the global nature and well-being of Bannix’s stockholders, directors and management,
the Special Meeting will be completely virtual.
Voting
Power; Record Date
You
will be entitled to vote or direct votes to be cast at the Special Meeting if you owned shares of Bannix Common Stock at the close
of business on April 11, 2023, which is the Record Date. You are entitled to one vote for each share of Bannix Common Stock
that you owned as of the close of business on the Record Date. If your shares are held in “street name” or are in
a margin or similar account, you should contact your broker, bank or other nominee to ensure that votes related to the shares
you beneficially own are properly counted. On the Record Date, there were * shares of Bannix Common Stock outstanding, of which
[*]are Public Shares, and * shares are held by the Sponsor and affiliates.
Vote
of the Sponsor, Directors and Officers
In
connection with the Initial Public Offering, Bannix entered into agreements with each of its Sponsor, directors and officers pursuant
to which each agreed to vote the Founder Shares, Private Placement Warrants and any Public Shares owned by them in favor of the
Business Combination Proposal and for all other proposals presented at the Special Meeting (including the Proposals).
Bannix’s
Sponsor, directors and officers have waived any redemption rights with respect to the Founder Shares, Private Placement Warrants
and any Public Shares which they may hold, and the Sponsor has also agreed to waive its redemption rights with respect to any
other equity securities of Bannix it holds, in connection with the Business Combination.
Quorum
and Required Vote for Proposals
A
quorum of Bannix stockholders is necessary to hold a valid meeting. A quorum will be present at the Special Meeting if a majority
of the voting power of all outstanding shares of Bannix Common Stock entitled to vote at the meeting are represented in person
(which would include presence at a virtual meeting) or by proxy. As of *, the Record Date, there were 5,463,613 shares of Common
Stock outstanding; therefore, a total of 3,551,348 shares of Bannix Common Stock must be represented at the Special Meeting in
order to constitute a quorum. Abstentions and withheld votes will count as present for the purposes of establishing a quorum,
but will not count as votes cast at the Special Meeting for any of the Proposals. Because the Proposals are “non-discretionary”
items, your broker will not be able to vote uninstructed shares for any of the Proposals. As a result, if you do not provide voting
instructions, a broker “non-vote” will be deemed to have occurred for each of the Proposals. Broker “non-votes”
will not be counted as present for purposes of determining whether a quorum is present. As of the Record Date, the Sponsor holds
approximately 46.2% of the outstanding Bannix Common Stock.
The
Proposals presented at the Special Meeting will require the following votes:
| |
● |
The
approval of the Business Combination Proposal will require the affirmative vote of the holders of a majority of the shares
of Bannix Common Stock cast in respect of that Proposal and entitled to vote thereon at the Special Meeting. |
| |
● |
The
approval of each of the Stock Issuance Proposal and the Adjournment Proposal and each of the Advisory Charter Amendment Proposals
will require the affirmative vote of the holders of a majority of the shares of Bannix Common Stock cast in respect of the
relevant Proposal and entitled to vote thereon at the Special Meeting. |
| |
● |
The
approval of the Charter Amendment Proposal will require the affirmative vote of a majority of the issued and outstanding shares
of the Common Stock. Accordingly, a Bannix stockholder’s failure to vote by proxy or to vote in person (which would
include presence at a virtual meeting) at the Special Meeting or an abstention will have the same effect as a vote “AGAINST”
the Charter Amendment Proposal. |
| |
● |
The
Director Election Proposal will require a plurality vote of the shares of Bannix Common Stock cast in respect of that Proposal
and entitled to vote thereon at the Special Meeting. “Plurality” means that the individuals who receive the largest
number of votes cast “FOR” are elected as directors. Consequently, any shares not voted “FOR” a particular
nominee (whether as a result of an abstention, a direction to withhold authority or a broker non-vote) will not be counted
in the nominee’s favor. |
Abstentions
and Broker Non-Votes
At
the Special Meeting, Bannix will count a properly executed proxy marked “ABSTAIN” with respect to a particular Proposal
as present for purposes of determining whether a quorum is present. Because the Proposals are “non-discretionary”
items, your broker will not be able to vote uninstructed shares for any of the Proposals. As a result, if you do not provide voting
instructions, a broker “non-vote” will be deemed to have occurred for each of the Proposals. Broker “non-votes”
will not be counted as present for purposes of determining whether a quorum is present. The failure to vote, abstentions and broker
non-votes will not be counted as votes cast and will have no effect on any of the Proposals presented at the Special Meeting.
Recommendation
of the Board
The
Board has unanimously determined that each of the Proposals is fair to and in the best interests of Bannix and its stockholders,
and has unanimously approved such Proposals. The Board unanimously recommends that stockholders:
| |
● |
vote
“FOR” the Business Combination Proposal; |
| |
● |
vote
“FOR” the Charter Amendment Proposal; |
| |
● |
vote
“FOR” each of the Advisory Charter Amendment Proposals; |
| |
● |
vote
“FOR” the Stock Issuance Proposal; |
| |
● |
vote
“FOR” the Director Election Proposal; and |
| |
● |
vote
“FOR” the Adjournment Proposal, if it is presented to the meeting. |
When
you consider the recommendation of the Board in favor of approval of the Proposals, you should keep in mind that the Sponsor,
members of the Board and officers of Bannix have interests in the Business Combination that are different from or in addition
to (or which may conflict with) your interests as a stockholder. See “Summary of the Proxy Statement — Interests
of the Sponsor and Bannix’s Directors and Officers in the Business Combination” for additional information on
interests of Bannix’s Sponsor, directors and executive officers.
Voting
Your Shares
Each
share of Bannix Common Stock that you own in your name entitles you to one vote. If you are a record owner of your shares, there
are two ways to vote your shares of Bannix Common Stock at the Special Meeting:
| |
● |
You
Can Vote By Signing and Returning the Enclosed Proxy Card. If you vote by proxy card, your “proxy,” whose
name is listed on the proxy card, will vote your shares as you instruct on the proxy card. If you sign and return the proxy
card but do not give instructions on how to vote your shares, your shares will be voted as recommended by the Board “FOR”
the Business Combination Proposal, the Charter Amendment Proposal, each of the Advisory Charter Amendment Proposals, the Stock
Issuance Proposal, the Director Election Proposal, the Incentive Plan Proposal, the ESPP Proposal and the Adjournment
Proposal (if presented). Votes received after a matter has been voted upon at the Special Meeting will not be counted. |
| |
● |
You
Can Attend the Special Meeting and Vote Through the Internet. You will be able to attend the Special Meeting online and
vote during the meeting by visiting * and entering the control number included on your proxy card or on the instructions that
accompanied your proxy materials, as applicable. |
If
your shares are held in “street name” or are in a margin or similar account, you should contact your broker to ensure
that votes related to the shares you beneficially own are properly counted. If you wish to attend the Special Meeting and vote
online and your shares are held in “street name,” you must obtain a legal proxy from your broker, bank or nominee.
That is the only way Bannix can be sure that the broker, bank or nominee has not already voted your shares.
Revoking
Your Proxy
If
you are a record owner of your shares and you give a proxy, you may change or revoke it at any time before it is exercised by
doing any one of the following:
| |
● |
submit
a new proxy card bearing a later date; |
| |
● |
give
written notice of your revocation to Bannix’s Secretary, which notice must be received by Bannix’s Secretary prior
to the vote at the Special Meeting; or |
| |
● |
vote
electronically at the Special Meeting by visiting and entering the control number found on your proxy card, voting instruction
form or notice you previously received. Please note that your attendance at the Special Meeting will not alone serve to revoke
your proxy. |
If
your shares are held in “street name” by your broker, bank or another nominee as of the close of business on the Record
Date, you must follow the instructions of your broker, bank or other nominee to revoke or change your voting instructions.
Who
Can Answer Your Questions About Voting Your Shares
If
you are a stockholder and have any questions about how to vote or direct a vote in respect of your Bannix Common Stock, you may
call contact Continental at 917-262-2373 or by email at proxy@continentalstock.com.
No
Additional Matters May Be Presented at the Special Meeting
The
Special Meeting has been called only to consider the approval of the Business Combination Proposal, the Charter Amendment Proposal,
each of the Charter Amendment Proposals, the Stock Issuance Proposal, the Director Election Proposal, and the Adjournment Proposal.
Under Bannix’s bylaws, other than procedural matters incident to the conduct of the Special Meeting, no other matters may
be considered at the Special Meeting if they are not included in this proxy statement, which serves as the notice of the Special
Meeting.
Redemption
Rights
Pursuant
to the Current Charter, any holders of Public Shares may demand that such shares be redeemed in exchange for a pro rata share
of the aggregate amount on deposit in the Trust Account, less any owed but unpaid franchise or income taxes. If demand is properly
made and the Business Combination is consummated, these shares, immediately prior to the Business Combination, will cease to be
outstanding and will represent only the right to receive a pro rata share of the aggregate amount on deposit in the Trust
Account which holds the proceeds of the Initial Public Offering (including interest earned on the funds held in the Trust Account
and not previously released to Bannix to pay its franchise and income taxes). For illustrative purposes, based on funds in the
Trust Account of $* on the Record Date, the estimated per share redemption price would have been approximately $*.
In order
to exercise your redemption rights, you must:
| |
● |
check
the box on the enclosed proxy card to elect redemption; |
| |
● |
provide,
in the written request to redeem your Public Shares for cash to Continental, a “Stockholder Certification” if
you are not acting in concert or as a “group” (as defined in Section 13d-3 of the Exchange Act) with
any other stockholder with respect to shares of Bannix Common Stock; and |
| |
● |
prior
to *, 2023 (two business days before the Special Meeting), tender your shares physically or electronically and submit a request
in writing that Bannix redeem your Public Shares for cash to Continental, Bannix’s transfer agent, at the following
address: |
| |
● |
deliver
your Public Shares either physically or electronically through DTC to Continental at least two business days before the Special
Meeting. Public Stockholders seeking to exercise their redemption rights and opting to deliver physical certificates should
allot sufficient time to obtain physical certificates from Continental and time to effect delivery. It is Bannix’s understanding
that stockholders should generally allot at least two weeks to obtain physical certificates from Continental. However, Bannix
does not have any control over this process and it may take longer than two weeks. Stockholders who hold their shares in “street”
name will have to coordinate with their bank, broker or other nominee to have the shares certificated or delivered electronically.
If you do not submit a written request and deliver your Public Shares as described above, your shares will not be redeemed. |
Any
demand for redemption, once made, may be withdrawn at any time until the deadline for exercising redemption requests (and submitting
shares to the transfer agent) and thereafter, with Bannix’s consent, until the Closing. If you delivered your shares for
redemption to Continental and decide within the required timeframe not to exercise your redemption rights, you may request that
Continental return the shares (physically or electronically). You may make such request by contacting Continental at 917-262-2373,
by email at proxy@continentalstock.com or by writing to the address listed above.
Prior
to exercising redemption rights, stockholders should verify the market price of Common Stock as they may receive higher proceeds
from the sale of their Common Stock in the public market than from exercising their redemption rights if the market price per
share is higher than the redemption price. We cannot assure you that you will be able to sell your shares of Common Stock in the
open market, even if the market price per share is higher than the redemption price stated above, as there may not be sufficient
liquidity in Common Stock when you wish to sell your shares.
If
you exercise your redemption rights, your shares of Common Stock will cease to be outstanding immediately prior to the Business
Combination and will only represent the right to receive a pro rata share of the aggregate amount on deposit in the Trust
Account. You will no longer own those shares and will have no right to participate in, or have any interest in, the future growth
of the Combined Company, if any. You will be entitled to receive cash for these shares only if you properly and timely demand
redemption.
If
the Business Combination is not approved or completed for any reason, then Public Stockholders who elected to exercise their redemption
rights will not be entitled to redeem their shares. In such case, Bannix will promptly return any Public Shares previously delivered
by the Public Stockholders.
Underwriting
Fees as a Percentage of IPO Proceeds Net of Redemptions
| |
|
No
Additional
Redemptions(2) |
|
Net
Tangible Asset Scenario(3) |
| IPO
underwriting fees(1) |
|
$ |
225.000 |
|
|
$ |
225,000 |
|
| IPO
proceeds net of redemptions |
|
$ |
32,010,195 |
|
|
$ |
22,381,590 |
|
Underwriting
fees as a percentage of IPO proceeds net of
redemptions |
|
|
0.7 |
% |
|
|
1.0 |
% |
| (0) | (1)
IPO
underwriting
fees
expected
to
comprise
(a)
$[*],
which
was
paid
at
the
time
our
Initial
Public
Offering
was
consummated,
and
(b)
$[*]
of
deferred
underwriting
fees. |
(2) This
scenario assumes that no Public Shares are redeemed.
(3) Assumes that 884,230 Public Shares are redeemed
for aggregate redemption payments of approximately $9.6 million assuming a $10.89 per share redemption price and based on funds in the
Trust Account as of January 16, 2024. The net tangible asset scenario reflects the maximum number of Bannix Public Shares that can be
redeemed without violating the conditions of the Business Combination Agreement or the requirement of Bannix’s Existing Organizational
Documents that Bannix cannot redeem Public Shares if it would result in Bannix having a minimum net tangible asset value of less than
$5,000,001 after giving effect to the payments to redeeming shareholders. This scenario is included in this proxy statement for illustrative
purposes only.
Dissenter
Rights
Bannix
stockholders do not have dissenter rights in connection with the Business Combination or the other Proposals.
Potential
Purchases of Shares
In
connection with the stockholder vote to approve the proposed Business Combination, the Sponsor, directors, officers or advisors
or their respective affiliates may privately negotiate transactions to purchase Bannix Common Stock from stockholders who would
have otherwise elected to have their shares redeemed in conjunction with a proxy solicitation pursuant to the proxy rules for
a per-share pro rata portion of the Trust Account. None of Bannix’s Sponsor, directors, officers or advisors or their
respective affiliates will make any such purchases when they are in possession of any material non-public information not disclosed
to the seller or during a restricted period under Regulation M under the Exchange Act. Such a purchase would include a contractual
acknowledgement that such stockholder, although still the record holder of Bannix Common Stock, is no longer the beneficial owner
thereof and therefore agrees not to exercise its redemption rights, and could include a contractual provision that directs such
stockholder to vote such shares in a manner directed by the purchaser. In the event that the Sponsor, directors, officers or advisors
or their affiliates purchase shares in privately negotiated transactions from Public Stockholders who have already elected to
exercise their redemption rights, such selling stockholders would be required to revoke their prior elections to redeem their
shares. Any such privately negotiated purchases may be effected at purchase prices that are below or in excess of the per-share
pro rata portion of the Trust Account.
Proxy
Solicitation
Bannix
is soliciting proxies on behalf of the Board. This solicitation is being made by mail but also may be made by telephone or in
person. Bannix and its directors, officers and employees may also solicit proxies in person. Bannix will file with the SEC all
scripts and other electronic communications that constitute proxy soliciting materials. Bannix will bear the cost of the solicitation.
Bannix
will ask banks, brokers and other institutions, nominees and fiduciaries to forward the proxy materials to their principals and
to obtain their authority to execute proxies and voting instructions. Bannix will reimburse them for their reasonable expenses.
Assistance
If
you need assistance in completing your proxy card or have questions regarding the Special Meeting, please contact Continental
at 917-262-2373 or by email at proxy@continentalstock.com.
PROPOSAL
1: THE BUSINESS COMBINlATION PROPOSAL
The
discussion in this proxy statement of the Business Combination and the principal terms of the Business Combination Agreement is
subject to, and is qualified in its entirety by reference to, the Business Combination Agreement. A copy of the Business Combination
Agreement is attached as Annex A and the amendment thereto as Annex G to this proxy statement. Unless the context
otherwise requires, all references in this subsection to “we,” “us” or “our” refer to Bannix
prior to the consummation of the Business Combination.
Headquarters;
Trading Symbols
After
completion of the transactions contemplated by the Business Combination Agreement:
| |
● |
the
corporate headquarters and principal executive offices of New Company will be located at EVIE’s current address
in the United Kingdom: Unit 7 & 8, Riverside 2, Campbell Road, Stoke-on-Trent, ST4 4RJ, Staffordshire,
United Kingdom; and |
| |
● |
New
Company common stock is expected to be traded on Nasdaq under the symbol “EVVE.” |
Background
to the Business Combination
Bannix
is a special purpose acquisition company 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 proposed Business Combination
were the result of an extensive search for a potential transaction using the network and investing and operating experience of
our management team and our Board. The terms of the Business Combination Agreement were the result of extensive negotiations between
Bannix and Company. The following is a brief description of the background of these negotiations, the proposed Business Combination
and related transactions.
On
September 10, 2021, Bannix completed its Initial Public Offering of 6,900,000 units (the “Units”), each Unit consisting
of one share of Bannix Common Stock, one redeemable warrant (“Warrant”), each whole Warrant entitling the holder thereof
to purchase one share of Common Stock for $11.50 per share and one right (“Right”), with each Right entitling the
holder to 1/10 of one share of Common Stock, generating proceeds of $69,000,000 before underwriting discounts and expenses. Simultaneously
with the closing of the Initial Public Offering, Bannix consummated the private placement (“Private Placement”) with
one of the sponsors and anchor investors of 406,000 units (the “Private Units”), generating total proceeds of $3,835,000.
Prior to the completion of the Initial Public Offering, neither Bannix, nor anyone on its behalf, had any substantive discussions,
formal or otherwise, with any business combination target with respect to a potential business combination with Bannix.
Officers
and directors of Bannix have substantial experience in evaluating the operating and financial merits of companies from a wide
range of industries. While Bannix was not limited to pursue an acquisition opportunity in any business, industry or sector, Bannix
focused on industries that complement our management team’s backgrounds, and capitalized on the ability of our management
team to identify and acquire a business, focusing on the medical technology industry. See “Information About Bannix — Introduction — Our
Management Team.” As described in our Registration Statement on Form S-1 at the time of our Initial Public Offering,
Bannix’s Sponsor, management and their respective affiliates may from time to time be engaged in other business endeavors,
including other blank check companies. However, prior to the entry into the Business Combination Agreement and the related agreements,
none of Bannix’s Sponsor, management or their respective affiliates has participated in the management or operation of any
other blank check company and none of Bannix’s Sponsor, management or their respective affiliates is participating in the
management or operation of any other blank check company that is in the process of searching for a target company.
Bannix
identified certain general, non-exclusive criteria and guidelines that it believed were important in evaluating prospective targets
for Bannix’s initial business combination. Bannix broadly focused on target businesses that it believed (i) has a leading,
growing or niche market position in an attractive underlying industry; (ii) has achieved or has the potential for significant
long-term revenue or earnings growth through a combination of organic growth, synergistic add-on acquisitions, new product markets
and geographies, increased production capacity, expense reduction and increased operating leverage; (iii) possesses significant
competitive advantages via scientific or other differentiated technology protected by intellectual property in the markets in
which it operates; (iv) has products with a clear path to commercialization, have been recently commercialized, or could
benefit from our team’s operational expertise; (v) would benefit from the leadership and strategic vision of Bannix’s
team; and (vi) would benefit from being a publicly owned company and can effectively utilize the broader access to capital
markets to help achieve the company’s business strategy and capital structure needs. Bannix believed that it was important
to look for investments that satisfied most, though not necessarily all, of these criteria.
Since
the completion of its Initial Public Offering, Bannix considered numerous potential target businesses with the objective of consummating
its initial business combination. Representatives of Bannix contacted and were contacted by numerous individuals and entities
who presented ideas for business combination opportunities. During this search process, Bannix reviewed, and entered into preliminary
discussions with respect to a number of acquisition opportunities other than Company.
Bannix’s
management team employed a comprehensive and rigorous process to identify potential business combination targets. The process
involved the following steps:
| 1. | Establish
Investment
Criteria:
Bannix
defined
clear
criteria
for
potential
targets,
focusing
on
companies
in
the
healthcare
and
technology
sectors
with
established
business
models,
strong
financial
performance,
experienced
management
teams,
and
operating
in
large,
growing
markets. |
| 2. | Generate
Target
List:
Based
on
the
established
criteria,
Bannix’s
management
team
compiled
an
initial
list
of
over
33
potential
targets.
This
list
was
drawn
from
industry
sources,
conferences,
and
networking
opportunities. |
| 3. | Initial
Screening:
Each
potential
target
was
subjected
to
an
initial
screening
to
assess
their
alignment
with
Bannix’s
investment
criteria.
This
screening
considered
factors
such
as
industry,
stage
of
development,
market
size,
financial
performance,
and
management
team. |
| 4. | Due
Diligence:
Bannix
entered
into
non-disclosure
agreements
(NDAs)
with
approximately
12
potential
targets
that
passed
the
initial
screening.
These
NDAs
allowed
for
in-depth
due
diligence,
including
thorough
financial
analysis,
technological
assessment,
market
analysis,
commercial
review,
and
operational
evaluation. |
In
the process that led to identifying Company as an attractive investment opportunity, Bannix’s management team initially
compiled over 33 potential business combination targets based on the general, non-exclusive criteria and guidelines described
above. Of these 33 companies, Bannix entered into non-disclosure agreements with approximately 12 of such potential business combination
targets (including Company – with regard to the Company, Bannix four directors out of six traveled to England to perform
due diligence, where some directors travelled more than once), none of which included standstill provisions. Of these potential
business combination targets, Bannix engaged in meaningful and detailed discussions, due diligence, and negotiations with 1 potential
business combination targets (other than Company) or their representatives. During the process described in this section, the
Board was updated at various points regarding the process and provided direction to Bannix’s management. Bannix’s
management also engaged the services of such advisors as it deemed advisable in connection with its discussions, due diligence
and negotiations with such potential business combination targets.
From
the 12 companies with which Bannix conducted due diligence, one other prospect was selected for meaningful discussions and negotiations.
The selection was based on a comprehensive evaluation of the following factors:
| ● | Product
Fit: The prospect’s core products aligned with Bannix’s
investment strategy and offered synergy and potential growth
opportunities. The products were considered innovative, well-developed,
and with a clear path to market. |
| ● | Management
Strength:
The
prospect’s
management
team
demonstrated
a
proven
track
record
of
success
in
the
healthcare
or
technology
industry.
They
exhibited
a
deep
understanding
of
the
market,
strong
leadership
skills,
and
a
clear
vision
for
the
company’s
future. |
| ● | Market
Potential:
The
prospect
operated
in
a
large
and
growing
market
with
favorable
competitive
dynamics.
The
market
was
characterized
by
strong
demand,
limited
competition,
and
technological
advancements. |
| ● | Financial
Viability:
The
prospect
exhibited
strong
financial
performance,
with
a
clear
path
to
profitability
and
sustainable
growth.
They
had
a
solid
track
record
of
revenue
growth,
positive
cash
flow,
and
a
manageable
debt
level. |
From
January 2, 2023 to June 2023, the Bannix management team engaged in varying levels of further due diligence, evaluation and analysis
and discussions with these 33 potential business combination targets. This additional due diligence, evaluation and analysis included
trips to examine the potential targets business (two of Bannix directors travelled to Canada for due diligence for one of the
targets, on top of travelling within the USA for other potential targets) access to materials in online data rooms and additional
presentations and discussions with these potential business combination targets’ management and included, in addition to
the general business and financial due diligence described in this section, as applicable with respect to each potential business
combination target:
| |
● |
a
review and evaluation of certain financial and operating information of each business combination target; |
| |
● |
technological
analyses with assessment of product development, commercial, regulatory and revenue generation success factors of each business
combination target; |
| |
● |
review
of market factors such as size (total addressable market), growth opportunity, competition, and development trends of each
business combination target; |
| |
● |
commercial
review of each business combination target, including, where relevant, interviews with key opinion leaders, customers, competitors
and industry experts; |
| |
● |
financial
evaluation including analysis of historical results and modeling of various scenarios; and |
| |
● |
review
and evaluation of operations including R&D, manufacturing, sales, and distribution. |
Bannix
did not pursue further a potential transaction with any of these 32 other potential business combination targets for a variety
of factors, including that the core products of these potential business combination targets were at too early a stage of development,
the Bannix management team lacked conviction in the product(s) of these potential business combination targets and/or the market(s)
identified by these potential business combination targets were either too small or highly competitive, Bannix’s assessment
of the target company’s public market readiness or its ability to execute its business plan, the long-term viability of
the target business or its industry, an inability to reach an agreement on valuation, the fact that fundraising was recently completed
and capital requirements were below the amount desired to be invested by Bannix or the fact that the potential business combination
target determined to pursue alternative financing transactions in the private market. More specifically, Bannix decided not to
pursue transactions with the other 32 potential targets due to various reasons, including:
| ● | Early-Stage
Development:
Some
targets’
core
products
were
at
an
early
stage
of
development,
posing
higher
risks
and
uncertainties.
Bannix
sought
companies
with
proven
products
and/or
established
market
positions. |
| | | |
| ● | Product
Uncertainty:
Bannix
lacked
conviction
in
the
marketability
or
viability
of
the
products
or
services
offered
by
some
potential
targets.
They
sought
companies
with
innovative,
differentiated
products
that
addressed
clear
market
needs. |
| ● | Market
Challenges:
Some
targets
operated
in
highly
competitive
or
fragmented
markets,
limiting
their
growth
potential.
Bannix
preferred
companies
operating
in
attractive
markets
with
favorable
competitive
dynamics. |
| ● | Valuation
Disagreements:
Bannix
was
unable
to
reach
mutually
agreeable
valuations
with
certain
potential
targets.
Valuation
differences
could
arise
due
to
differing
assessments
of
the
companies’
future
prospects
or
market
conditions. |
| ● | Fundraising
Sufficiency:
Some
targets
had
recently
completed
fundraising
rounds,
rendering
Bannix’s
investment
unnecessary.
Bannix
focused
on
companies
seeking
additional
capital
to
support
their
growth
plans. |
| ● | Alternative
Financing Options: Some targets pursued alternative financing
options, such as private equity investments, making a Bannix-led
transaction less attractive. Bannix prioritized companies
seeking a strategic partner with industry expertise and access
to resources. |
On December
23, 2022, Doug Davis (CEO of Bannix) and Steven Lake (CEO of EVIE) had their first video conference. Also in attendance were Dan
Hayes, Evie CRO; Carl Owen, Evie CTO; Craig Marshak, Bannix Director; Ari Thoroddsson, Evie CFO; and Mo Jacob, Bannix Advisor.
For the period from May 30, 2023 through August 31, 2023, Mr. Davis and Mr. Lake, along with various EVIE executives and
advisors, held an additional 10 video conferences. July 23, 2023 through September 2023, Mr. Davis and Mr. Lake and Ari Thoroddsson,
CFO of EVIE, has a weekly Thursday video conference call. Further, Mr. Davis, Mr. Thoroddsson, representatives from Calabrese
Consulting and representatives from RBSM LLP held weekly Tuesday and Friday video calls addressing accounting issues during the
period from July 2023 through August 2023. Finally, from July 2023 through September 4, 2023, Mr. Davis, Mr. Thoroddsson and a
representative from Calabrese Consulting held weekly status calls.
Independent
Director Oversight
In
connection with the Business Combination, our independent directors, Ambassador Ned L. Siegal, Jamal “Jamie” Khurshid
and Eric T. Shuss, took an active role in evaluating the proposed terms of the Business Combination, including the Business Combination
Agreement, the Ancillary Documents and the amendments to our Current Charter to take effect upon the completion of the Business
Combination. As part of their evaluation of the Business Combination, our independent directors Ambassador Ned L. Siegal, Jamal
“Jamie” Khurshid travelled to England to perform due diligence (in addition to two other non independent directors),
all were aware of the potential conflicts of interest with our Sponsor and its affiliates that could arise with regard to the
proposed terms of the Business Combination Agreement and described in this proxy statement. See the section entitled “Bannix
Management’s Discussion and Analysis of Financial Condition and Results of Operations — Executive Officers
of Bannix — Conflicts of Interests.” Each of our independent directors is a party to an independent
director transaction bonus agreement, which provide for payments to such independent directors that are contingent on Bannix’s
consummation of an initial business combination and which may be affected by the Business Combination. Our independent directors
reviewed and considered these interests during the negotiation of the Business Combination and in evaluating and approving, as
a member of the Board, the Business Combination Agreement and the transactions contemplated therein. Our independent directors
did not retain an unaffiliated representative to act solely on behalf of Bannix’s unaffiliated Public Stockholders for purposes
of negotiating the terms of the Business Combination or preparing a report concerning the fairness of the Business Combination.
Certain
Engagements in Connection with the Business Combination
On
October 24, 2022, Bannix entered into a contingent non-exclusive consulting agreement with ClearThink Capital LLC (“ClearThink”)
that was amended and finalize on August 24, 2023. Craig Marshak, a member of the Board of Directors of Bannix is a managing director
and a controlling person of ClearThink. Pursuant to the consulting agreement, ClearThink will act as non-exclusive transactional
and strategic capital markets advisor to Bannix with respect to Bannix’s contemplated initial business combination. The
consulting agreement provides that ClearThink will establish and/or manage an electronic data room to be populated by Bannix for
due diligence purposes, provide introductions and presentations to potential target companies to serve as possible parties to
a transaction with Bannix, provide introductions to firms conducting equity research potentially to provide research
coverage following the closing of the Business Combination, assist counsel with the finalization
of filings required by the United States Securities and Exchange Commission, provision of risk analysis, due diligence support,
and related analysis services with any transaction, review and analysis of the capitalization and capital structure of any transaction
and the provision of recommendations relating thereto and assistance with any transaction. All
ClearThink services are being handled by Mr. Robert Brown. Mr. Marshak does not provide any services to Bannix on behalf of ClearThink.
ClearThink will be provided a fee simultaneously with the initial closing of the Transaction in cash in the amount of $1,200,000
and $10,000,000 in market value of securities, which securities shall not be issued any earlier than six months post-transaction
closing and not any later than eleven months post transaction closing, where each date of issuance is determined by the board
of directors of Bannix, provided, however, that the effective price per share for the shares so issued shall not exceed the VWAP
for the 30 days preceding the date of issuance, and ClearThink shall have a 4.99% beneficial ownership blocker, unless waived
by ClearThink upon 61 days prior notice to Bannix, which may increased to 9.99%. Consequently, due to the compensation payable
to ClearThink at closing of the Business Combination, Mr. Marshak may be considered to have a a conflict of interest in determining
whether the terms, conditions and timing of the Business Combination are appropriate and in Bannix’s public shareholders’
best interest.
Bannix
Board’s Reasons for the Approval of the Business Combination
On
June 23, 2023, the Board (i) approved the Business Combination Agreement and related transaction agreements and the transactions
contemplated thereby, (ii) determined that the Business Combination is fair to and in the best interests of Bannix and its
stockholders, and (iii) recommended that Bannix’s stockholders approve and adopt the Business Combination. In evaluating
the Business Combination and making these determinations and this recommendation, the Bannix Board consulted with Bannix’s
management and advisors and considered a number of factors.
The
Board and the Bannix management considered the general criteria and guidelines that Bannix believed would be important in evaluating
prospective target businesses as described in the for Bannix’s Initial Public Offering. The Bannix Board also considered
that Bannix could enter into a business combination with a target business that does not meet those criteria and guidelines. In
the prospectus for its Initial Public Offering, Bannix stated that it intended to seek to acquire one or more businesses that
Bannix believes (i) has a leading, growing or niche market position in an attractive underlying industry; (ii) has achieved
or has the potential for significant long-term revenue or earnings growth through a combination of
organic
growth, synergistic add-on acquisitions, new product markets and geographies, increased production capacity, expense reduction
and increased operating leverage; (iii) possesses significant competitive advantages via scientific or other differentiated
technology protected by intellectual property in the markets in which it operates; (iv) has products with a clear path to
commercialization, have been recently commercialized, or could benefit from our team’s operational expertise; (v) would
benefit from the leadership and strategic vision of Bannix’s team; and (vi) would benefit from being a publicly owned
company and can effectively utilize the broader access to capital markets to help achieve the company’s business strategy
and capital structure needs.
In
considering the Business Combination, the Board determined that the Business Combination was an attractive business opportunity
that generally met these criteria and guidelines taken as a whole, although not weighted or in any order of significance. In addition,
the Board reviewed various industry and scientific data, including, but not limited to, Company’s existing business model
and Company’s product candidates and development pipeline, and reviewed the results of the management’s due diligence
review of Company, which took place over a period of more than 6 months beginning in April 19, 2023. 2023 and continuing through
the signing of the Business Combination on June 23, 2023, including travelling overseas to do physical due diligence, meetings
and weekly calls with Company’s management team, review of Company’s material contracts, intellectual property matters,
labor matters, litigation history, waivers of certain noteholder agreements, operations, financing and accounting due diligence,
engaging and consulting advisors, and other legal due diligence with assistance from Bannix’s legal counsel, including special
tax and intellectual property counsel, before determining that the Business Combination was in the best interests of Bannix and
its stockholders.
The
Board considered a wide variety of factors in connection with its evaluation of the Business Combination. In light of the complexity
of those factors, the Board did not consider it practicable to, nor did it attempt to, quantify or otherwise assign relative weights
to the specific factors it took into account in reaching its decision. Individual members of the Board may have given different
weight to different factors.
The
Bannix Board considered a number of factors pertaining to the Transaction as generally supporting its decision to enter into the
Business Combination Agreement and the related agreements and the transactions contemplated thereby, including but not limited
to, the following material factors:
| ● |
|
Reasonableness
of Aggregate Consideration. Following a review of the financial data provided to Bannix, including certain unaudited prospective
financial information, Bannix’s due diligence review of Evie’s business, the Bannix Board considered the aggregate
consideration to be paid and determined that the aggregate consideration was reasonable in light of such data, financial information
and current market conditions. The Bannix Board noted that public markets have recently assigned premium values to companies
associated with the adoption of electric vehicles and that have demonstrated a commitment to environmental, social and corporate
governance initiatives. |
| ● |
|
Superior
Technology Provides Opportunities for Growth. Bannix management and the Bannix Board believe that Evie is a market disruptor
in an attractive and growing industry, has innovative technology (as of the time of combination, Evie will own or have prepared
to apply for nine global patents and has plans for at least another four patent applications post-business combination. Further,
as a result of the Apollo acquisition, from Tokenize, an additional six patent applications with the USPTO will be added that
provide for better radar capability for autonomous vehicles. Evie’s plans to sell not only complete Autonomous Electric
Vehicles (AEVs), but also the branded “Cavonix” AEV control system, which other electric vehicle manufacturers
can integrate into their vehicles to make them autonomous. Evie’s technology is also ahead of the market in Bannix’
opinion; companies like Tesla, etc. have “Level 3” of 5 Levels of autonomous capability, which requires that a
human be in the driving compartment, while Evie’s technology permits operation of an autonomous vehicle at “Level
4”, i.e., without a human in the vehicle. This gives Evie strong growth prospects within the electric vehicle sector
and adjacent target markets. |
| ● |
|
Business
and Financial Condition and Prospects. After conducting extensive due diligence, the Bannix Board and Bannix management had
a better understanding of Evie’s business, financial condition, management team and future growth prospects. The Bannix
Board considered the results of the due diligence review of Evie’s business, including its innovative, validated technologies,
its current in-house manufacturing capabilities and future outsourcing of same, its combination of direct to user sales and
OEM sales models, robust product and opportunity pipeline, the untapped potential in AEV control solutions and technology
licensing, its large addressable market (defined as all off-road AEV use cases, with a goal of becoming the market leader
in that space, as opposed to the on-road passenger AEV market targeted by companies like Tesla, Google, Amazon, etc.),, as
well as the Evie management team’s track record of bringing electric vehicle technology products to market. The Bannix
Board considered how these factors will enhance Evie’s ability to scale effectively and to execute upon and achieve
its business plan. |
| ● |
|
Experienced,
Proven and Committed Management Team with a Track Record of Operational Excellence. The Bannix Board considered the fact that
the post-combination company will be led by the Chief Executive Officer and senior management team of Evie, which, with backgrounds
in the automotive, electric vehicle and technology industries, have a proven track record of operational excellence, growth
and ongoing capabilities for innovation, including experience in bringing to market the current leading AEV technology and
systems. The Bannix Board also considered Evie’s experience designing, engineering and building AEV parts and systems
using its own innovative, validated technologies and its in-house development capabilities through its platform branded “CavLab”. |
| ● |
|
Commitment
of Evie’s Owners. The Bannix Board considered the fact that Steve Lake and other current shareholders of Evie are not
selling any of their current shareholdings of Evie in connection with the Transaction, and as such, will continue to own more
than a majority of the post-combination company on a pro forma basis, which the Bannix Board believed reflects such shareholders’
belief in and commitment to the continued growth prospects of Evie going forward. |
| ● |
|
Evie
Being an Attractive Target. The Bannix Board considered the fact that, among other attractive characteristics and as assessed
by Bannix’s advisors, Evie (i) has differentiated and proprietary technology in the AEV industry (ii) has a unique product
offering given its positioning in the off-road AEV market, including its operational pod system at Heathrow Airport in the
UK (iii) has a strong existing management team, (iv) has significant growth opportunities and (vi) would benefit from the
consummation of the Transactions by obtaining access to capital to fund its business plan in the near term, thereby reducing
financing risk, and by putting it in a position to access the public capital markets in the future. |
| ● |
|
Evie’s
Commitment to U.S. Jobs. The Bannix Board considered the fact that, given Evie’s potential and the size of the AEV market
in the U.S., Evie would likely be in a position to create many new technology and manufacturing jobs in the U.S. |
| ● |
|
Other
Alternatives. Bannix has evaluated a number of businesses (30+) but has been most impressed by the Evie business. The Bannix
Board believes that, based upon the Transaction terms, the Transactions create the best available opportunity to maximize
value for Bannix stockholders. |
| ● |
|
Terms
of the Merger Agreement and the Related Agreements. The Bannix Board considered the terms and conditions of the Merger Agreement
and the related agreements and the transactions contemplated thereby, including the Merger, including each party’s representations,
warranties and covenants, the conditions to each party’s obligation to consummate the transactions contemplated thereby
and the termination provisions as well as the strong commitment by both Evie and Bannix to complete the Transactions. |
| ● |
|
Board
of Directors of the Post-Combination Company. The Bannix Board considered that the initial board of directors of Evie Group
would be comprised of Evie’s current CEO and directors nominated by Bannix and Steve Lake, as well as independent directors
nominated by Evie. |
| ● |
|
Role
of Independent Directors. The Bannix Board is comprised of 3 independent directors who are not affiliated with the Sponsor
and its affiliates. In connection with the Transaction, our independent directors, Ambassador Ned L. Siegel (Ret.), Jamie
Khurshid and Eric Shuss, took an active role in evaluating the proposed terms of the Transactions, including the Merger Agreement
and the related agreements. Bannix’s independent directors evaluated and unanimously approved, as members of the Bannix
Board, the Merger Agreement and the related agreements and the transactions contemplated thereby, including the Transactions. |
The Bannix
Board also considered a variety of uncertainties and risks and other potentially negative factors concerning the Transactions,
including, but not limited to, the following:
| ● |
|
Macroeconomic
Risks. Macroeconomic uncertainty, including the potential impact of the COVID-19 pandemic and wars in Ukraine and Gaza, and
the effects they could have on the combined company’s revenues. |
| ● |
|
Benefits
May Not Be Achieved. The risk that the potential benefits of the Transactions may not be fully achieved or may not be achieved
within the expected timeframe. |
| ● |
|
Potential
for Delay of Product Launch. The risk that Evie’s next generation of AEV vehicles may not launch within the expected
timeframe. |
| ● |
|
Regulatory
Risks. The risks of changes in Evie’s regulatory environment, including changes to autonomous vehicle standards. |
| ● |
|
Liquidation.
The risks and costs to Bannix if the business combination is not completed, including the risk of diverting management focus
and resources from other business combination opportunities, which could result in Bannix being unable to effect a business
combination within the completion window and force Bannix to liquidate. |
| ● |
|
Stockholder
Vote. The risk that Bannix’s stockholders may object to and challenge the Transactions and take action that may prevent
or delay the consummation of the Transactions, including to vote down the proposals at the special meeting or redeem their
shares. |
| ● |
|
Closing
Conditions. The fact that completion of the Transactions is conditioned on the satisfaction of certain closing conditions
that are not within Bannix’s control. |
| ● |
|
Bannix
Public Stockholders Holding a Minority Position in the Post-Combination Company. The risk that Bannix public stockholders
will hold a minority position in the post-combination company (approximately 15%, assuming that no shares of Bannix’s
Class A common stock are elected to be redeemed by Bannix stockholders and excluding the impact of the shares of Bannix’s
Class A common stock underlying the warrants), which may reduce the influence that Bannix’s current stockholders have
on the management of Bannix. |
| ● |
|
Litigation.
The possibility of litigation challenging the Transactions or that an adverse judgment granting injunctive relief could enjoin
or otherwise interfere with the consummation of the Transactions. |
| ● |
|
Fees
and Expenses. The fees and expenses associated with completing the Transactions. |
| ● |
|
Other
Risks. Various other risks associated with the business of Evie, as described in the section entitled “Risk Factors”
appearing elsewhere in this proxy statement. |
In assessing
the fairness and valuation of EVIE and Tokenize, BNIX conducted a comprehensive analysis encompassing various quantitative methodologies.
Recognizing the inherent risk associated with EVIE’s pre-revenue status and high $850 million valuation, the analysis focused
on robust methods to ensure a well-founded valuation.
Bannix
thoroughly reviewed and analyzed the Evie Economic Model, which utilized a discounted cash flow (DCF) projection methodology.
This model forecasts EVIE’s potential financial performance until 2033, incorporating detailed assumptions:
| ● | Manpower:
Staffing requirements and projected compensation for various
positions. |
| ● | Unit
Cost: Breakdown of the bill of materials (BOM) for each EVIE
Pod. |
| ● | Sales:
Projected Pod sales volume. |
| ● | Post-Sales
Revenue:
Projected
income
from
parts
and
service. |
Based
on these assumptions, the model estimated a net present value (NPV) of $3,440,895,818 with a 20% discount rate and a 198% internal
rate of return (IRR).
While
acknowledging EVIE’s unique position as a pre-revenue high-tech company, Bannix also reviewed relevant transactions to contextualize
the valuation. This included:
| ● | KYCH’s
acquisition
of
ZOOZ:
This
Israeli
start-up,
with
only
100
installed
units,
was
acquired
for
$100
million
despite
a
$20
million
market
capitalization. |
| ● | HCLTech’s
acquisition of ASAP Group: This German autonomous driving technology
provider, focused solely on engineering services, was acquired
for $280 million. |
| ● | Athena
Consumer Acquisition Corp.’s acquisition of Next e.Go
Mobile: This German company secured $75 million financing based
on a $913 million valuation. |
| ● | Knightscope,
Inc.: This publicly traded company (ticker: KSCP) operates
autonomous security robots and provides a benchmark for the
broader autonomous vehicle market. |
Leveraging
the insights from the Evie Economic Model and comparable analyses, Bannix negotiated a valuation that balanced EVIE’s potential
with the inherent risks.
| ● | Discount
Rate Justification: Bannix argued for a discount on EVIE’s
NPV, citing industry standards for bridge/IPO financing in
the 20%-35% range. This reflects the uncertainties associated
with pilot plant construction, product development, and market
penetration. |
| ● | Agreed
Valuation: Ultimately, Bannix and EVIE agreed on a 75% discount
from the NPV, resulting in a valuation of $850 million. |
Beyond
the aspects mentioned above, Bannix meticulously reviewed the following elements of the cash flow projections:
| ● | Sensitivity
Analysis:
Evaluating
the
impact
of
key
variables,
such
as
sales
volume,
unit
cost,
and
discount
rate,
on
the
projected
financial
performance. |
| ● | Scenario
Planning:
Considering
different
market
scenarios
and
their
potential
impact
on
EVIE’s
financial
trajectory. |
| ● | Operational
Assumptions: Analyzing the underlying assumptions regarding
production costs, operating expenses, and capital expenditures. |
This
comprehensive approach ensured a robust assessment of EVIE’s future cash flow potential and ultimately contributed to a
fair and well-supported valuation.
By employing
a multi-faceted quantitative analysis, Bannix carefully considered the risks and opportunities associated with EVIE’s pre-revenue
status. The analysis leveraged the Evie Economic Model, comparable transactions, and a nuanced negotiation process to arrive at
a valuation that reflects EVIE’s potential while safeguarding Bannix’s investment.
Extension
Meeting
On
February 6, 2023, Bannix filed a preliminary proxy statement with the SEC, seeking shareholder approval of the extension proposal.
The purpose of seeking approval of the amendment to Bannix’s Current Charter is to allow Bannix more time to complete the
Business Combination.
On
March 8, 2023, Bannix held the extension meeting. At the extension meeting, the stockholders approved the extension proposal.
On March 9, 2023, Bannix filed the certificate of amendment to the amended and restated certificate of incorporation to amend
the date by which Bannix was required to consummate a business combination from March 13, 2023 to March 14, 2024.
Satisfaction
of 80% Test
It
is a requirement under our Current Charter and Nasdaq listing requirements that the business or assets acquired in our initial
business combination have a fair market value equal to at least 80% of the balance of the funds in the Trust Account (excluding
the deferred underwriting commissions and taxes payable on the income earned on the Trust Account) at the time of the execution
of a definitive agreement for our initial business combination. As of June 30, 2023, the balance of the Trust Account was approximately
$31,310,191 (excluding $225,000 of deferred underwriting commissions and taxes payable on the income earned on the Trust Account)
and 80% thereof represents approximately $25,048,153 Our Board has determined that the business or assets acquired in the Business
Combination have a fair market value, as determined by the Board in good faith based upon the value of the consideration to be
received by the Company Stockholders and Company Noteholders in the aggregate at the Closing and thereafter, meets the 80%
Test.
Prospective
Financial Information
Company
does not prepare financial forecasts or projections in the ordinary course of its business.
Neither
Company’s nor Bannix’s independent auditors, or any other independent accountants, have compiled, examined, or performed
any procedures with respect to the prospective financial information contained herein, nor have they expressed any opinion or
any other form of assurance on such information or its achievability, and assume no responsibility for, and disclaim any association
with, the prospective financial information.
The
inclusion of the prospective financial information in this proxy statement should not be regarded as an indication that Bannix,
the Board or their respective affiliates, advisors or other representatives considered, or now considers, such prospective financial
information necessarily to be predictive of actual future results or to support or fail to support your decision whether to vote
for or against the Business Combination. The prospective financial information is not fact and is not necessarily indicative of
future results, which may be materially different from the prospective financial information. We do not expect to refer back to
the prospective financial information in our future periodic reports filed under the Exchange Act.
The
prospective financial information reflects numerous estimates and assumptions with respect to general business, economic, regulatory,
market and financial conditions and other future events, as well as matters specific to Company’s business, all of which
are difficult to predict and many of which are beyond Company’s and Bannix’s control. The prospective financial information
is a forward-looking statement that is inherently subject to significant uncertainties and contingencies, many of which are beyond
Company’s and Bannix’s control. The various risks and uncertainties include those set forth in the “Risk
Factors,” “Company Management’s Discussion and Analysis of Financial Condition and Results of Operations”
and “Cautionary Note Regarding Forward-Looking Statements” sections of this proxy statement. As a result, there
can be no assurance that the prospective financial information will be realized or that actual results will not be significantly
higher or lower than projected. Since the prospective financial information covers multiple years, such information by its
nature becomes less reliable with each successive year. The prospective financial information is subjective in many respects and
thus is susceptible to multiple interpretations.
Furthermore,
the prospective financial information does not take into account any circumstances or events occurring after the date it was prepared.
Nonetheless, the prospective financial information is provided in this proxy statement because they were made available to Bannix
and the Board in connection with their review of the proposed transaction.
EXCEPT
TO THE EXTENT REQUIRED BY APPLICABLE FEDERAL SECURITIES LAWS, BY INCLUDING IN THIS PROXY STATEMENT CERTAIN PROSPECTIVE FINANCIAL
INFORMATION, BANNIX UNDERTAKES NO OBLIGATIONS AND EXPRESSLY DISCLAIMS ANY RESPONSIBILITY TO UPDATE OR REVISE, OR PUBLICLY DISCLOSE
ANY UPDATE OR REVISION TO, THE PROSPECTIVE FINANCIAL INFORMATION TO REFLECT CIRCUMSTANCES OR EVENTS, INCLUDING UNANTICIPATED EVENTS,
THAT MAY HAVE OCCURRED OR THAT MAY OCCUR AFTER THE PREPARATION OF THE PROSPECTIVE FINANCIAL INFORMATION, EVEN IN THE EVENT THAT
ANY OR ALL OF THE ASSUMPTIONS UNDERLYING THE PROSPECTIVE FINANCIAL INFORMATION ARE SHOWN TO BE IN ERROR OR CHANGE.
During
the initial two years of projections, 2024 and 2025, the Company’s revenue forecast is based primarily on sales of the EVIE
technology stack (EVIE’s OEM offerings). The Company has multiple letters of intent (LOIs) under negotiation that it expects
to close in the near future that will lead to income through grants or advance payments, but has chosen not to forecast income
based on these LOIs. A typical pilot will generate a minimum of $300,000 of revenue for the Company. EVIE anticipates that 18
months will be required to produce the next version of its pod, EVIE Pod 2.0. This process will include the creation and testing
of prototypes, production design and selection of OEM partners for the actual production. During the product development period
EVIE forecasts losses of just under $14 million. Fulfilment of LOIs will however coincide with the end of the product development
period when the Company forecasts an increase in sales. The Company also anticipates the development of the market for autonomous
vehicles as projects that have been under development come to fruition. In EVIE’s first cash positive year, the Company
forecasts pod sales of $29 million and autonomy stack sales of $22 million. This represents 318 units at $91.8 thousand per unit
and 622 units at $36 thousand per unit respectively. These numbers are believed by EVIE’s management to be extremely achievable
given the size of the addressable market and existing LOIs with customers. Below are financial projections pertaining to the Company’s
income statement.
| Profit
& Loss Forecast | |
2024 | |
2025 | |
2026 | |
2027 | |
2028 |
| EVIEAutonomous | |
$ | 955,163 | | |
$ | 8,488,488 | | |
$ | 29,206,597 | | |
$ | 202,718,834 | | |
$ | 736,573,728 | |
| Cavonix | |
$ | 1,165,750 | | |
$ | 5,559,525 | | |
$ | 22,474,000 | | |
$ | 91,809,775 | | |
$ | 710,442,875 | |
| Total
Revenues | |
$ | 2,120,913 | | |
$ | 14,048.013 | | |
$ | 51,680,597 | | |
$ | 294,528,609 | | |
$ | 1,447,016,603 | |
| EVIE
Autonomous | |
$ | 740,746 | | |
$ | 6,287,692 | | |
$ | 21,447,809 | | |
$ | 155,793.282 | | |
$ | 545,543,299 | |
| Cavonix | |
$ | 610,166 | | |
$ | 2,546,069 | | |
$ | 10,396,025 | | |
$ | 44,085,531 | | |
$ | 246,241,525 | |
| Total
Direct Costs | |
$ | 1,350,933 | | |
$ | 8,833,761 | | |
$ | 31,843,834 | | |
$ | 199,878,813 | | |
$ | 791,784,824 | |
| | |
| | | |
| | | |
| | | |
| | | |
| | |
| Operating
Income | |
$ | 769,979 | | |
$ | 5,214,251 | | |
$ | 19,836,762 | | |
$ | 94,649,795 | | |
$ | 655,231,778 | |
| EVIE
Autonomous | |
$ | 6,427,508 | | |
$ | 10,394,651 | | |
$ | 11,759,515 | | |
$ | 43,110,295 | | |
$ | 117,517,359 | |
| Cavonix | |
$ | 646.250 | | |
$ | 695,000 | | |
$ | 567,768 | | |
$ | 2,214,031 | | |
$ | 7,501,532 | |
| Total
SG&A & R&D | |
$ | 7,073,758 | | |
$ | 11,089,651 | | |
$ | 12,327,283 | | |
$ | 45,324,326 | | |
$ | 125,018,891 | |
| | |
| | | |
| | | |
| | | |
| | | |
| | |
| EBITDA | |
$ | -6,303,779 | | |
$ | -5,875,400 | | |
$ | 7,509,479 | | |
$ | 49,325,469 | | |
$ | 530,212,887 | |
To
assist Bannix board with its due diligence, it hired on or about May 23, 2023 a legal team from England -- Crowell & Moring U.K. LLP.
The due diligence among other things included review of: corporate documents, issuance of securities, material contracts and agreements,
potential for litigation, employees and related parties, financial information, properties, taxation, insurance and liability,
governmental regulations and filing, which include obtaining the consent of the UK government to this business combination (granted)
and miscellaneous.
In
addition, other than researching EVIE’s presentations, the Bannix board researched the electric vehicle (EV) industry by
reviewing: (i) “The Future of Electric Vehicles: Opportunities and Challenges”
by McKinsey & Company (2022), (ii) “Global
EV Market Outlook 2022-2035” by IDTechEx
(2022) and (iii) “Autonomous Vehicle Technology: Trends and Recent Advances”
by Lux Research (2022).
Moreover,
most of Bannix board members travelled to EVIE’s corporate office to meet and interview EVIE management team, including
visiting their offices and getting their input on the EV industry.
Sources
and Uses of Funds for the Business Combination
The
following tables summarize the sources and uses for funding the Business Combination (i) assuming that no additional shares of
Common Stock are redeemed in connection with the Business Combination and (ii) assuming maximum redemptions. For an illustration
of the number of shares and percentage interests outstanding under each scenario see the section entitled “Unaudited
Pro Forma Condensed Consolidated Combined Financial Information.”
No
Additional Redemptions
Sources
of Funds
(in millions) |
|
Uses
(in millions) |
| Cash
held in Trust Account(1) |
|
$ |
31,914,538 |
|
|
Common
stock of Combined Company issued to Company Stockholders(2) |
|
$ |
850,000,000 |
|
| Committed
Financing(2) |
|
|
|
|
|
Transaction
and other costs(3) |
|
|
|
|
| Common
stock of Combined Company issued to Company Stockholders(3) |
|
|
|
|
|
Cash
to Combined Company balance sheet |
|
|
|
|
| Total
Sources |
|
$ |
31,914,538 |
|
|
Total
Uses |
|
$ |
850,000,000 |
|
(1)
As of November, , 2023, respective of the 3,960,387 Public Shares redeemed for aggregate redemption payments of approximately
41,077,189 a $10.37 per share redemption price) as part of the Special Meeting on March 8, 2023.
(2)
Shares issued to Company Stockholders are at a deemed value of $10.00 per share. Assumes [*] shares of New Company common stock
issued. See the section entitled “Unaudited Pro Forma Condensed Consolidated Combined Financial Information”
for more details.
(3)
Represents an estimated amount, inclusive of fees related to the Business Combination and related transactions.
| Net
Tangible Asset
Scenario |
Sources
of Funds
(in millions) |
|
Uses
(in millions) |
| Cash
held in Trust Account(1) 0 |
|
$ |
21,054,790 |
|
|
Common
stock of Combined Company issued to Company Stockholders(2) |
|
$ |
850,000,000 |
|
| |
|
|
|
|
|
Transaction
and other costs(3) |
|
|
|
|
| Common
stock of Combined Company issued to Company Stockholders(3) |
|
|
|
|
|
Cash
to Combined Company balance sheet |
|
|
|
|
| Total
Sources |
|
$ |
21,054,790 |
|
|
Total
Uses |
|
$ |
850,000,000 |
|
(1)
As of November, 30, 2023, respective of the 3,960,387 Public Shares redeemed for aggregate redemption payments of approximately
$41,077,189 a $10.37 per share redemption price) as part of the Special Meeting on March 88, 2023.
(2)
Shares issued to Company Stockholders are at a deemed value of $10.00 per share. Assumes 85,000,000 shares of New Company common
stock issued. See the section entitled “Unaudited Pro Forma Condensed Consolidated Combined Financial Information”
for more details.
(3)
Represents an estimated amount, inclusive of fees related to the Business Combination and related transactions.
Summary
of the Business Combination Agreement
This
subsection of the proxy statement describes the material provisions of the Business Combination Agreement, but does not purport
to describe all of the terms of the Business Combination
Agreement.
The following summary is qualified in its entirety by reference to the complete text of the Business Combination Agreement, a
copy of which is attached as Annex A and the amendment thereto as Annex G to this proxy statement. You are urged
to read the Business Combination Agreement in its entirety because it is the primary legal document that governs the Business
Combination.
The
Business Combination Agreement contains representations, warranties and covenants that the respective parties made to each other
as of the date of the Business Combination Agreement or other specific dates. The assertions embodied in those representations,
warranties and covenants were made for purposes of the contract among the respective parties and are subject to important qualifications
and limitations agreed to by the parties in connection with negotiating the Business Combination Agreement. The representations,
warranties and covenants in the Business Combination Agreement are also modified in part by the underlying disclosure schedules
delivered by each of Bannix and Company to each other (the “disclosure schedules”), which are not filed publicly and
which are subject to a contractual standard of materiality different from that generally applicable to stockholders, and were
used for the purpose of allocating risk among the parties rather than establishing matters as facts. We do not believe that the
disclosure schedules contain information that is material to an investment decision. Additionally, the representations and warranties
of the parties to the Business Combination Agreement may or may not have been accurate as of any specific date and do not purport
to be accurate as of the date of this proxy statement. Accordingly, no person should rely on the representations and warranties
in the Business Combination Agreement or the summaries thereof in this proxy statement as characterizations of the actual state
of facts about Bannix, Merger Sub, the Sponsor, Company or any other matter.
Structure
of the Business Combination
On
June 23, 2023, Bannix Acquisition Corp., a Delaware corporation (“Bannix”), EVIE Autonomous Group Ltd, a private
company formed under the Laws of England and Wales (the “Company”), and the shareholder of the Company (the “Company
Shareholder”), entered into a Business Combination Agreement (the “Business Combination Agreement”), pursuant
to which,
subject
to the satisfaction or waiver of certain conditions precedent in the Business Combination Agreement, the following transactions
will occur: the acquisition by Bannix of all of the issued and outstanding share capital of the Company from the Company Shareholder
in exchange for the issuance of eighty-five million new shares of common stock of Bannix, $0.01 par value per share (the “Common
Stock”), pursuant to which the Company will become a direct wholly owned subsidiary of Bannix (the “Share Acquisition”)
and (b) the other transactions contemplated by the Business Combination Agreement and the Ancillary Documents referred to therein
(collectively, the “Transactions”).
In
connection with the Business Combination, certain related agreements have been, or will be entered into on or prior to the Closing,
the Sponsor Support Agreement and the Company Stockholder Support Agreements. See “— Related Agreements”
for more information.
Conditions
to the Closing
Conditions
to Each Party’s Obligations
The
respective obligations of each party to the Business Combination Agreement to consummate the transactions contemplated by the
Business Combination are subject to the satisfaction (or, if permitted by applicable law, waiver by the party for whose benefit
such condition exists) of the following conditions:
| ● | no
order or law issued by any court of competent jurisdiction
or other governmental entity or other legal restraint or
prohibition preventing the consummation of the closing of
the Business Combination shall be in effect; |
| ● | the
Proxy
Statement
shall
have
become
effective
in
accordance
with
the
provisions
of
the
Securities
Act,
no
stop
order
shall
have
been
issued
by
the
SEC
and
shall
remain
in
effect
with
respect
to
the
Proxy
Statement,
and
no
proceeding
seeking
such
a
stop
order
shall
have
been
threatened
or
initiated
by
the
SEC
and
remain
pending; |
| ● | each
of the Company Shareholder Resolutions shall have been passed
by Company Shareholders holding at least the requisite number
of issued and outstanding Equity Securities of the Company; |
| ● | the
Bannix Stockholder Approval shall have been obtained; |
| ● | the
Bannix’s
initial
listing
application
with
Nasdaq
in
connection
with
the
transactions
shall
have
been
conditionally
approved
and,
immediately
following
Closing,
Bannix
shall
satisfy
any
applicable
initial
and
continuing
listing
requirements
of
Nasdaq,
and
Bannix
shall
not
have
received
any
notice
of
non-compliance
therewith
that
has
not
been
cured
prior
to,
or
would
not
be
cured
at
or
immediately
following
the
Closing;
and |
| ● | after
giving effect to the acquisition of EVIE (including the Bannix
Stockholder Redemption), Bannix or the Company shall have
at least $5,000,001 of net tangible assets (as determined
in accordance with Rule 3a51-1(g)(1) of the Exchange Act)
immediately after the Closing. |
Other
Conditions to the Obligations of the Bannix Parties
Representations
and Warranties
The
parties to the Business Combination Agreement have agreed to customary representations and warranties for transactions of this
type. In addition, the parties to the Business Combination Agreement agreed to be bound by certain customary covenants for transactions
of this type, including, among others, covenants with respect to the conduct of Company, the Company and their respective subsidiaries
during the period between execution of the Business Combination Agreement and Closing. The representations, warranties, agreements
and covenants of the parties set forth in the Business Combination Agreement will terminate at Closing, except for those covenants
and agreements that, by their terms, contemplate performance after Closing. Each of the parties to the Business Combination Agreement
has agreed to use its reasonable best efforts to take or cause to be taken all actions and things necessary to consummate and
expeditiously implement the Merger.
Material
Adverse Effect
Under
the Business Combination Agreement, certain representations and warranties of Company and the Bannix Parties are qualified in
whole or in part by materiality thresholds. In addition, certain representations and warranties of Company and the Bannix Parties
are qualified in whole or in part by certain “material adverse effect” standards for purposes of determining whether
a breach of such representations and warranties has occurred (and for purposes of determining whether certain conditions to Closing
have been satisfied, as discussed above in “— Conditions to Closing of the Business Combination”).
Pursuant
to the Business Combination Agreement, a “Company Material Adverse Effect” means.
Pursuant
to the Business Combination Agreement, a “Bannix Material Adverse Effect” means.
Covenants
of the Parties
Covenants
of Company
Company
made certain covenants under the Business Combination Agreement, including, among others, the following:
Covenants
of Bannix
Bannix
made certain covenants under the Business Combination Agreement, including, among others, the following:
Mutual
Covenants of the Parties
Board
of Directors and Executive Officers
Following
the Closing, it is expected that the New Company Board, will consist of five (5) directors, the composition of which will be determined
by the shareholders.
Following
the Closing, it is expected that the current executive officers of Company will become the executive officers of New Company.
Governing
Law
The
Business Combination Agreement is governed by and construed in accordance with the laws of the State of Delaware, without giving
effect to any choice of law or conflict of law provision or rule (whether of the State of Delaware or any other jurisdiction)
that would cause the application of the law of any jurisdiction other than the State of Delaware.
Amendments
The
Business Combination Agreement may be amended or modified only by a written agreement executed and delivered by (i) if prior
to Closing, Bannix, Merger Sub and Company, and (ii) if after the Closing, Bannix and the Sponsor.
Related
Agreements
Pursuant
to the Business Combination Agreement, on August 7, 2023, Bannix, Instant Fame LLC, a Nevada limited liability company (the “Bannix
Sponsor”), and the Company entered into the sponsor letter agreement (the “Sponsor Letter Agreement”),
pursuant to which the Bannix Sponsor agreed to, among other things, support and vote in favor of the Business Combination Agreement
and use its reasonable best efforts to take all other actions necessary to consummate the transactions contemplated thereby, on
the terms and subject to the conditions set forth in the Sponsor Letter Agreement.
Further, on
August 7, 2023, Bannix and Steven Lake, the majority shareholder of EVIE, entered into a transaction support agreement (the “Transaction
Support Agreement”), pursuant to which Mr. Lake agree to, among other things, support and provide any necessary votes
in favor of the Business Combination Agreement and ancillary agreements.
MATERIAL
U.S. FEDERAL INCOME TAX CONSIDERATIONS
This
section describes the material U.S. federal income tax considerations relevant to (i) holders of Common Stock who elect to
have their Common Stock redeemed for cash upon the Closing and (ii) the ownership and disposition of Common Stock and Warrants
(together, “New Company Securities”) following the Business Combination. This discussion applies only to holders with
respect to Common Stock and, after the completion of the Business Combination, New Company Securities, that hold such shares as
“capital assets” within the meaning of Section 1221 of the Code (generally, property held for investment).
This
discussion is based on the Code, Treasury Regulations promulgated thereunder (whether final, temporary or proposed), judicial
decisions, and published rulings and administrative pronouncements of the IRS, in each case in effect as of the date hereof. These
authorities may change or be subject to differing interpretations. Any such change or differing interpretation may be applied
retroactively in a manner that could adversely affect the tax consequences discussed below. No rulings have been or will be sought
from the IRS concerning the tax consequences of the Business Combination, the redemption or any other related matter. Accordingly,
there can be no assurance that the IRS will not take a contrary position to the tax consequences discussed below or, if challenged,
that any such contrary position would not be sustained by the courts.
The
following discussion does not address the effects of other U.S. federal tax laws, such as estate and gift tax laws or net investment
income tax, nor does it address any tax consequences arising under applicable state, local or non-U.S. tax laws.
This
discussion does not address all U.S. federal income tax consequences relevant to a holder’s particular circumstances. In
addition, it does not address consequences relevant to holders subject to special rules, including, without limitation:
| |
● |
banks, insurance companies,
and certain other financial institutions; |
| |
● |
regulated investment companies
and real estate investment trusts; |
| |
● |
brokers, dealers or traders
in securities, commodities or currencies; |
| |
● |
traders in securities
that elect to mark to market; |
| |
● |
tax-exempt organizations
or governmental organizations; |
| |
● |
persons subject to the
alternative minimum tax; |
| |
● |
U.S. expatriates and former
citizens or long-term residents of the United States; |
| |
● |
persons
subject to special tax accounting rules as a result of any item of gross income with respect to Common Stock or, following
the Business Combination, New Company Securities, being taken into account in an applicable financial statement; |
| |
● |
holders
holding Common Stock or, following the Business Combination, New Company Securities as a position in a “straddle,”
as part of a “synthetic security” or “hedge,” as part of a “conversion transaction,” or
other integrated investment or risk reduction transaction; |
| |
● |
controlled foreign corporations
or passive foreign investment companies; |
| |
● |
persons
that actually or constructively own 5% or more by vote or value of the outstanding shares of Bannix or, following the Business
Combination, New Company; |
| |
● |
S
corporations, partnerships or other entities or arrangements treated as partnerships or other flow- through entities for U.S.
federal income tax purposes (and investors therein); |
| |
● |
U.S. Holders having a
“functional currency” other than the U.S. dollar; |
| |
● |
persons
who hold or received Common Stock pursuant to the exercise of any employee stock option, tax-qualified retirement plan or
otherwise as compensation; and |
| |
● |
“qualified
foreign pension funds” as defined in Section 897(l)(2) of the Code and entities all of the interests of which are
held by qualified foreign pension funds. |
For
purposes of this discussion, a “U.S. Holder” is any beneficial owner of Common Stock or New Company Securities, as
the case may be, that is for U.S. federal income tax purposes:
| |
● |
an individual who is a
citizen or resident of the United States; |
| |
● |
a
corporation (or other entity that is classified as a corporation for U.S. federal income tax purposes) that is created or
organized in or under the laws of (1) the United States or (2) any state thereof or the District of Columbia; |
| |
● |
an estate, the income
of which is subject to U.S. federal income tax regardless of its source; or |
| |
● |
a
trust that (1) is subject to the primary supervision of a U.S. court and all substantial decisions of which are subject
to the control of one or more “United States persons” (within the meaning of Section 7701(a)(30) of
the Code), or (2) has a valid election in effect to be treated as a United States person for U.S. federal income tax
purposes. |
If
an entity or arrangement treated as a partnership for U.S. federal income tax purposes holds Common Stock or, following the Business
Combination, New Company Securities, the tax treatment of an owner of such entity will depend on the status of the owners, the
activities of the entity and certain determinations made at the owner level. Accordingly, entities and arrangements treated as
partnerships for U.S. federal income tax purposes and the partners in such partnerships should consult their tax advisors regarding
the U.S. federal income tax consequences to them of the Business Combination or the exercise of redemption rights.
HOLDERS
OF CLASS A COMMON STOCK OR, FOLLOWING THE BUSINESS COMBINATION, NEW COMPANY SECURITIES SHOULD CONSULT THEIR TAX ADVISORS WITH
RESPECT TO THE APPLICATION OF THE U.S. FEDERAL INCOME TAX LAWS TO THEIR PARTICULAR SITUATIONS AS WELL AS ANY TAX CONSEQUENCES
ARISING UNDER THE U.S. FEDERAL ESTATE OR GIFT TAX LAWS OR UNDER THE LAWS OF ANY STATE, LOCAL OR NON-U.S. TAXING JURISDICTION OR
UNDER ANY APPLICABLE INCOME TAX TREATY.
Material
Tax Considerations Related to a Redemption of Common Stock
Treatment
of Redemption of Common Stock
In
the event that a holder’s Common Stock is redeemed pursuant to the exercise of its redemption right in connection with the
shareholder vote regarding the Business Combination Proposal, the treatment of the transaction for U.S. federal income tax purposes
will depend on whether the redemption qualifies as a sale of the Common Stock under Section 302 of the Code. If the redemption qualifies
as a sale of Common Stock, U.S. Holders will be treated as described below under “— Tax Consequences to U.S. Holders — Taxation
of Redemption Treated as an Exchange of Common Stock” and Non-U.S. Holders (as defined below) will be treated as described
below under “— Tax Consequences to Non-U.S. Holders — Taxation of Redemption Treated as an Exchange
of Common Stock.” If the redemption does not qualify as a sale of Common Stock, U.S. Holders will be treated as receiving
a corporate distribution with the tax consequences described below under “— Tax Consequences to U.S. Holders — Taxation
of Redemption Treated as a Distribution” and Non-U.S. Holders will be subject to the tax consequences described below
under “— Tax Consequences to Non-U.S. Holders — Taxation of Redemption Treated as a Distribution.”
Whether a redemption qualifies for sale treatment will depend largely on the total number of shares of Common Stock treated as
held by the holder (including any Common Stock constructively owned by the holder as a result of owning Warrants) relative to
all of Bannix’s shares outstanding both before and after such redemption. The redemption of Common Stock generally will
be treated as a sale of the Common Stock (rather than as a corporate distribution) if such redemption (i) is “substantially
disproportionate” with respect to the holder, (ii) results in a “complete termination” of the holder’s
interest in Bannix or (iii) is “not essentially equivalent to a dividend” with respect to the holder (collectively,
the “302 tests”). These tests are explained more fully below.
In
determining whether any of the 302 tests is satisfied, a holder takes into account not only Bannix shares actually owned by the
holder, but also Bannix shares that are constructively owned by such holder under the relevant rules. A holder may constructively
own, in addition to shares owned directly, shares owned by certain related individuals and entities in which the holder has an
interest or that have an interest in such holder, as well as any shares the holder has a right to acquire by exercise of an option,
which would generally include Common Stock which could be acquired pursuant to the exercise of the Warrants. In order to meet
the substantially disproportionate test, the percentage of Bannix outstanding voting shares actually and constructively owned
by the holder immediately following the redemption of Common Stock must, among other requirements, be less than 80% of the percentage
of our outstanding voting shares actually and constructively owned by the holder immediately before the redemption. There will
be a complete termination of a holder’s interest if either (i) all of the Bannix shares actually and constructively
owned by the holder are redeemed or (ii) all of the Bannix shares actually owned by the holder are redeemed and the holder
is eligible to waive, and effectively waives in accordance with specific rules, the attribution of shares owned by certain family
members and the holder does not constructively own any other Bannix shares. The redemption of Common Stock will not be essentially
equivalent to a dividend if such redemption results in a “meaningful reduction” of the holder’s proportionate
interest in Bannix. Whether the redemption will result in a meaningful reduction in a holder’s proportionate interest in
Bannix will depend on the particular facts and circumstances. However, the IRS has indicated in a published ruling that even a
small reduction in the proportionate interest of a small minority shareholder in a publicly held corporation who exercises no
control over corporate affairs may constitute such a “meaningful reduction.” A holder should consult with its own
tax advisors as to the tax consequences of a redemption.
If
none of the 302 tests are satisfied, then the redemption will be treated as a corporate distribution and the tax effects will
be as described below under “— Tax Consequences to U.S. Holders — Taxation of Redemption Treated
as a Distribution” and “— Tax Consequences to Non-U.S. Holders — Taxation of Redemption
Treated as a Distribution.” After the application of those rules, any remaining tax basis of the U.S. Holder in the redeemed
Common Stock will be added to such holder’s adjusted tax basis in its remaining Bannix shares, or, if it has none, possibly
to the U.S. Holder’s adjusted tax basis in its Warrants or other shares constructively owned by such U.S. Holder.
Tax
Consequences to U.S. Holders
Taxation
of Redemption Treated as an Exchange of Common Stock
If
the redemption qualifies as an exchange of Common Stock as described above under “— Treatment of Redemption
of Common Stock,” a U.S. Holder generally will recognize capital gain or loss in an amount equal to the difference between
the amount realized and the U.S. Holder’s adjusted tax basis in the Common Stock. Any such capital gain or loss generally
will be long-term capital gain or loss if the U.S. Holder’s holding period for the Common Stock so disposed of exceeds one
year. It is unclear, however, whether the redemption rights with respect to the Common Stock may suspend the running of the applicable
holding period for this purpose. Long-term capital gains recognized by non-corporate U.S. Holders will be eligible to be taxed
at reduced rates under current law. The deductibility of capital lossescapital losses is subject to limitations.
Generally,
the amount of gain or loss recognized by a U.S. Holder is an amount equal to the difference between (i) the sum of the amount
of cash and the fair market value of any property received in such disposition and (ii) the U.S. Holder’s adjusted
tax basis in its Common Stock so disposed of. A U.S. Holder’s adjusted tax basis in its Common Stock generally will equal
the U.S. Holder’s adjusted cost less any prior distributions treated as a return of capital for U.S. federal income tax
purposes.
Taxation
of Redemption Treated as a Distribution
If
the redemption does not qualify as an exchange of Common Stock, a U.S. Holder will generally be treated as receiving a distribution
in respect of its Common Stock. Such a distribution generally will be includable in a U.S. Holder’s gross income as dividend
income to the extent that such distributions are paid out of our current or accumulated earnings and profits as determined under
U.S. federal income tax principles. Dividends will be taxable to a corporate U.S. Holder at regular rates and will generally be
eligible for the dividends-received deduction if the requisite holding period is satisfied.
For
non-corporate U.S. Holders, if the U.S. Holder satisfies certain holding period requirements and the U.S. Holder is not under
an obligation to make related payments with respect to positions in substantially similar or related property, dividends are “qualified
dividend income” taxed at the preferential applicable long-term capital gain rate.
It
is unclear whether the redemption rights with respect to the Common Stock may prevent a U.S. Holder from satisfying the applicable
holding period requirements with respect to the dividends received deduction or the preferential tax rate on qualified dividend
income, as the case may be. If the holding period requirements are not satisfied, then non-corporate U.S. Holders may be
subject to tax on such dividends at regular ordinary income tax rates instead of the preferential rate that applies to qualified
dividend income.
Distributions
in excess of our current or accumulated earnings and profits generally will be applied against and reduce the U.S. Holder’s
basis in its Common Stock (but not below zero) and, to the extent in excess of such basis, will be treated as gain from the sale
or exchange of such Common Stock in the manner described above under “— Taxation of Redemption Treated as an Exchange
of Common Stock.”
U.S.
Information Reporting and Backup Withholding
Distributions
with respect to the Common Stock to a U.S. Holder, whether or not such distributions qualify as dividends for U.S. federal income
tax purposes, and proceeds from the sale, exchange or redemption of the Common Stock by a U.S. Holder generally are subject to
information reporting to the IRS and possible U.S. backup withholding, unless the U.S. Holder is an exempt recipient. Backup withholding
(currently at a 24% rate) may apply to such payments if a U.S. Holder fails to furnish a correct taxpayer identification number,
fails to furnish a certification of exempt status or has been notified by the IRS that it is subject to backup withholding (and
such notification has not been withdrawn).
Backup
withholding is not an additional tax. Amounts withheld as backup withholding may be credited against a U.S. Holder’s U.S.
federal income tax liability, and such holder may obtain a refund of any excess amounts withheld under the backup withholding
rules by timely filing the appropriate claim for refund with the IRS and furnishing any required information.
Tax
Consequences to Non-U.S. Holders
For
purposes of this discussion, a “non-U.S. Holder” is any beneficial owner of Common Stock or New Company Securities
that is for U.S. federal income tax purposes:
| |
● |
a non-resident alien individual; |
| |
● |
a foreign corporation;
or |
| |
● |
a foreign estate or trust. |
Redemption
of Common Stock
The
characterization for U.S. federal income tax purposes of the redemption of a Non-U.S. Holder’s share of Common Stock pursuant
to the redemption provisions described in the section of this proxy statement entitled “Special Meeting of Bannix Stockholders — Redemption
Rights” generally will follow the U.S. federal income tax characterization of such a redemption as described above under
“— Treatment of Redemption of Common Stock.”
Because
the satisfaction of the 302 tests described above is dependent on matters of fact, withholding agents may presume, for withholding
purposes, that all amounts paid to non-U.S. Holders in connection with a redemption are treated as distributions in respect of
their shares. Accordingly, a Non-U.S. Holder should expect that a withholding agent will likely withhold U.S. federal income tax
on the gross proceeds payable to a non-U.S. Holder pursuant to a redemption as described below under “— Tax Consequences
to Non-U.S. Holders — Taxation of Redemption Treated as a Distribution.”
Taxation
of Redemption Treated as an Exchange of Common Stock
A
Non-U.S. Holder generally will not be subject to U.S. federal income or withholding tax in respect of any gain realized upon the
redemption of Common Stock unless:
| |
● |
the
gain is effectively connected with the Non-U.S. Holder’s conduct of a trade or business within the United States (and,
if required by an applicable income tax treaty, the non-U.S. Holder maintains a permanent establishment or fixed base maintained
by the Non-U.S. Holder in the United States to which such gain is attributable); |
| |
● |
the
non-U.S. Holder is a nonresident alien individual present in the United States for 183 days or more during the taxable
year of the disposition and certain other requirements are met; or |
| |
● |
Common
Stock constitutes a U.S. real property interest (“USRPI”) by reason of Bannix’s status as a U.S. real property
holding corporation (“USRPHC”) for U.S. federal income tax purposes, and certain other conditions are met. |
Gain
described in the first bullet point above generally will be subject to U.S. federal income tax on a net income basis at the regular
rates applicable to a U.S. Holder, unless an applicable tax treaty provides otherwise. A Non-U.S. Holder that is a corporation
also may be subject to a branch profits tax at a rate of 30% (or such lower rate specified by an applicable income tax treaty)
on such effectively connected gain, as adjusted for certain items.
A
Non-U.S. Holder described in the second bullet point above will be subject to U.S. federal income tax at a rate of 30% (or such
lower rate specified by an applicable income tax treaty) on such gain, which may be offset by U.S. source capital losses of the
non-U.S. Holder (even though the individual is not considered a resident of the United States), provided the Non-U.S. Holder has
timely filed U.S. federal income tax returns with respect to such losses.
With
respect to the third bullet above, Bannix believes that it is not and has not been at any time since its formation, and does not
expect to be immediately after the Business Combination is completed, a USRPHC.
Non-U.S.
Holders should consult their tax advisors regarding potentially applicable income tax treaties that may provide for different
rules.
Taxation
of Redemption Treated as a Distribution
If
the redemption does not qualify as an exchange of Common Stock, with respect to a non-U.S. Holder, such holder will generally
be treated as receiving a distribution in respect of Common Stock. Such a distribution to the extent paid out of Bannix’s
current or accumulated earnings and profits (as determined under U.S. federal income tax principles) will constitute a dividend
for U.S. federal income tax purposes. Amounts not treated as a dividend for U.S. federal income tax purposes will constitute a
return of capital and be applied against and reduce a Non-U.S. Holder’s adjusted tax basis in its common stock, but not
below zero, and thereafter as capital gain and will be treated as described above under “— Tax Consequences to
Non-U.S. Holders — Taxation of Redemption Treated as an Exchange of Common Stock.”
Subject
to the discussion below on effectively connected income and FATCA dividends paid to a Non-U.S. Holder of Common Stock will be
subject to U.S. federal withholding tax at a rate of 30% of the gross amount of the dividends (or such lower rate specified by
an applicable income tax treaty, provided the non-U.S. Holder furnishes a valid IRS Form W-8BEN or W-8BEN-E (or other applicable
documentation) certifying qualification for the lower treaty rate). A Non-U.S. Holder that does not timely furnish the required
documentation, but that qualifies for a reduced treaty rate, may obtain a refund of any excess amounts withheld by timely filing
an appropriate claim for refund with the IRS.
If
dividends paid to a non-U.S. Holder are effectively connected with the Non-U.S. Holder’s conduct of a trade or business
within the United States (and, if required by an applicable income tax treaty, the non-U.S. Holder maintains a permanent establishment
or fixed base maintained by the Non-U.S. Holder in the United States to which such dividends are attributable), the Non-U.S. Holder
will be exempt from the U.S. federal withholding tax described above. To claim the exemption, the non-U.S. Holder must furnish
to the applicable withholding agent a valid IRS Form W-8ECI, certifying that the dividends are effectively connected with the
Non-U.S. Holder’s conduct of a trade or business within the United States.
Any
such effectively connected dividends will be subject to U.S. federal income tax on a net income basis at the regular rates. A
Non-U.S. Holder that is a corporation also may be subject to a branch profits tax at a rate of 30% (or such lower rate specified
by an applicable income tax treaty) on such effectively connected dividends, as adjusted for certain items. Non-U.S. Holders should
consult their tax advisors regarding any applicable tax treaties that may provide for different rules.
Information
Reporting and Backup Withholding
Payments
of dividends on Common Stock will not be subject to backup withholding, provided the applicable withholding agent does not have
actual knowledge or reason to know the holder is a United States person and the holder either certifies its non-U.S. status, such
as by furnishing a valid IRS Form W-8BEN, W-8BEN-E or W-8ECI, or otherwise establishes an exemption. However, information
returns are required to be filed with the IRS in connection with any dividends on Common Stock paid to the non-U.S. Holder,
regardless
of whether any tax was actually withheld. In addition, redemption proceeds that are treated as proceeds from a sale or other taxable
disposition of Common Stock within the United States or conducted through certain U.S.-related brokers generally will not be subject
to backup withholding or information reporting if the applicable withholding agent receives the certification described above
and does not have actual knowledge or reason to know that such holder is a United States person, or the holder otherwise
establishes an exemption. Redemption proceeds that are treated as proceeds from a disposition of Common Stock conducted through
a non-U.S. office of a non-U.S. broker generally will not be subject to backup withholding or information reporting.
Copies
of information returns that are filed with the IRS may also be made available under the provisions of an applicable treaty or
agreement to the tax authorities of the country in which the non-U.S. Holder resides or is established. Backup withholding is
not an additional tax. Any amounts withheld under the backup withholding rules may be allowed as a refund or a credit against
a Non-U.S. Holder’s U.S. federal income tax liability, provided the required information is timely furnished to the IRS.
Material
Tax Considerations Related to the Ownership and Disposition of New Company Securities Following the Business Combination
Tax
Consequences to U.S. Holders
Taxation
of Dividends and Other Distributions on Common Stock
If
New Company makes a distribution of cash or other property to a U.S. Holder of Common Stock, such distribution will generally
be treated as a dividend for U.S. federal income tax purposes to the extent the distribution is paid out of New Company’s
current or accumulated earnings and profits (as determined under U.S. federal income tax principles). Dividends will be taxable
to a corporate U.S. Holder at regular rates and will generally be eligible for the dividends-received deduction if the requisite
holding period is satisfied.
For
non-corporate U.S. Holders, if the U.S. Holder satisfies certain holding period requirements and the U.S. Holder is not under
an obligation to make related payments with respect to positions in substantially similar or related property, dividends are “qualified
dividend income” taxed at the preferential applicable long-term capital gain rate. If the holding period requirements are
not satisfied, then non-corporate U.S. Holders may be subject to tax on such dividends at regular ordinary income tax rates instead
of the preferential rate that applies to qualified dividend income.
Distributions
in excess of our current or accumulated earnings and profits generally will be applied against and reduce the U.S. Holder’s
basis in its Common Stock (but not below zero) and, to the extent in excess of such basis, will be treated as gain from the sale
or exchange of such Common Stock in the manner described above under “— Taxation on the Disposition of New Company
Securities.”
Taxation
on the Disposition of New Company Securities
Upon
a sale, exchange or other taxable disposition of New Company Securities (which, in general, would include a redemption of Warrants
that is treated as a taxable exchange of such Warrants as described below under “Tax Consequences to U.S. Holders — Exercise,
Lapse or Redemption of a Warrant”), a U.S. Holder generally will recognize capital gain or loss in an amount equal to
the difference between the amount realized and the U.S. Holder’s adjusted tax basis in the New Company Securities. Any such
capital gain or loss generally will be long-term capital gain or loss if the U.S. Holder’s holding period for the New
Company Securities so disposed of exceeds one year. However, it is unclear whether the redemption rights with respect to the Common
Stock that are effective prior to the Business Combination may prevent the holding period of Common Stock from commencing prior
to the termination of such rights. Long-term capital gains recognized by non-corporate U.S. Holders will be eligible to be taxed
at reduced rates under current law. The deductibility of capital losses is subject to limitations.
Generally,
the amount of gain or loss recognized by a U.S. Holder is an amount equal to the difference between (i) the sum of the amount
of cash and the fair market value of any property received in such disposition and (ii) the U.S. Holder’s adjusted
tax basis in its New Company Securities so disposed of. A U.S. Holder’s adjusted tax basis in its New Company Securities
generally will equal the U.S. Holder’s adjusted cost less any prior distributions treated as a return of capital for U.S.
federal income tax purposes.
Exercise,
Lapse, or Redemption of a Warrant
Except
as discussed below with respect to the cashless exercise of a warrant, a U.S. Holder generally will not recognize taxable gain
or loss as a result of the acquisition of Common Stock upon exercise of a Warrant for cash. The U.S. Holder’s tax basis
in the shares of the Common Stock received upon exercise of the Warrants generally will be an amount equal to the sum of the U.S.
Holder’s initial investment in the Warrants and the exercise price of such Warrants. For U.S. federal income tax purposes,
it is unclear whether the U.S. Holder’s holding period for the Common Stock received upon exercise of the Warrants will
begin on the date following the date of exercise or on the date of exercise of the Warrants; in either case, the holding period
will not include the period during which the U.S. Holder held the Warrants. If a Warrant is allowed to lapse unexercised, a U.S.
Holder generally will recognize a capital loss equal to such holder’s tax basis in the Warrant.
The
tax consequences of a cashless exercise of a Warrant are not clear under current tax law. A cashless exercise may be tax-free,
either because the exercise is not a realization event or because the exercise is treated as a recapitalization for U.S. federal
income tax purposes. In either tax-free situation, a U.S. Holder’s tax basis in the Common Stock received would equal such
holder’s basis in the Warrants. If the cashless exercise were treated as not being a realization event, it is unclear whether
a U.S. Holder’s holding period in the Common Stock would be treated as commencing on the date following the date of exercise
or on the date of exercise of the Warrant. If the cashless exercise were treated as a recapitalization, the holding period
of the Common Stock would include the holding period of the Warrants exercised therefor.
It
is also possible that a cashless exercise could be treated in part as a taxable exchange in which gain or loss would be recognized.
In such event, a portion of the Warrants to be exercised on a cashless basis could, for U.S. federal income tax purposes, be deemed
to have been surrendered in consideration for the exercise price of the remaining Warrants, which would be deemed to be exercised.
For this purpose, a U.S. Holder would be deemed to have surrendered a number of Warrants having an aggregate value equal to the exercise
price for the number of Warrants deemed exercised. The U.S. Holder would recognize capital gain or loss in an amount equal to
the difference between the exercise price of the Warrants deemed exercised and such holder’s tax basis in the Warrants deemed
surrendered. Such gain or loss would be long-term or short-term depending on the U.S. Holder’s holding period in the Warrants
deemed surrendered. In this case, the U.S. Holder’s tax basis in the Common Stock received would equal the sum of its initial
investment in the Warrants deemed exercised and the exercise price of such Warrants. It is unclear whether a U.S. Holder’s
holding period for the Common Stock would commence on the date following the date of exercise or on the date of exercise of the
Warrant; in either case, the holding period would not include the period during which the U.S. Holder held the Warrant. Due to
the absence of authority on the U.S. federal income tax treatment of a cashless exercise, including when a U.S. Holder’s
holding period would commence with respect to the Common Stock received, there can be no assurance as to which, if any, of the
alternative tax consequences and holding periods described above would be adopted by the IRS or a court of law. Accordingly, U.S.
Holders should consult their own tax advisors regarding the tax consequences of a cashless exercise.
Possible
Constructive Distributions
The
terms of each Warrant provide for an adjustment to the number of shares of Common Stock for which the Warrant may be exercised
or to the exercise price of the Warrant on the occurrence of certain events. An adjustment which has the effect of preventing
dilution generally is not a taxable event. U.S. Holders of the Warrants would, however, be treated as receiving a constructive
distribution from New Company if, for example, the adjustment to the number of such shares or to such exercise price increases
the Warrant holders’ proportionate interest in New Company’s assets or earnings and profits (e.g., through
an increase in the number of shares of Common Stock that would be obtained upon exercise or through a decrease in the exercise
price of the Warrants), including as a result of a distribution of cash or other property to the holders of shares of Common Stock
which is taxable to such holders of such shares as a distribution. Any constructive distribution received by a U.S. Holder would
be subject to tax in the same manner as if such U.S. Holder received a cash distribution from New Company equal to the fair market
value of such increased interest resulting from the adjustment, and taxed as described above under “— Taxation
of Dividends and Other Distributions on Common Stock.” Generally, a U.S. Holder’s adjusted tax basis in its Warrants
would be increased to the extent any such constructive distribution is treated as a dividend.
U.S.
Information Reporting and Backup Withholding
Distributions
with respect to the Common Stock to a U.S. Holder (whether or not such distributions qualify as dividends for U.S. federal income
tax purposes), constructive dividends deemed paid with respect to the Warrants and proceeds from the sale, exchange or redemption
of the New Company Securities by a U.S. Holder generally are subject to information reporting to the IRS and possible U.S. backup
withholding, unless the U.S. Holder is an exempt recipient. Backup withholding (currently at a 24% rate) may apply to such payments
if a U.S. Holder fails to furnish a correct taxpayer identification number, fails to furnish a certification of exempt status
or has been notified by the IRS that it is subject to backup withholding (and such notification has not been withdrawn).
Backup
withholding is not an additional tax. Amounts withheld as backup withholding may be credited against a U.S. Holder’s U.S.
federal income tax liability, and such holder may obtain a refund of any excess amounts withheld under the backup withholding
rules by timely filing the appropriate claim for refund with the IRS and furnishing any required information.
Tax
Consequences to Non-U.S. Holders
Taxation
of Dividends and Other Distributions on Common Stock
Distributions
(other than certain pro rata distributions of Common Stock) made to a non-U.S. Holder, to the extent paid out of New Company’s
current or accumulated earnings and profits (as determined under U.S. federal income tax principles) will constitute dividends
for U.S. federal income tax purposes. Amounts not treated as a dividend for U.S. federal income tax purposes will constitute a
return of capital and be applied against and reduce a Non-U.S. Holder’s adjusted tax basis in its common stock, but not
below zero, and thereafter as capital gain and will be treated as described below under “— Tax Consequences to
Non-U.S. Holders — Taxation on the Disposition of New Company Securities.”
Subject
to the discussion below on effectively connected income and FATCA (as defined below), dividends paid to a Non-U.S. Holder of Common
Stock will be subject to U.S. federal withholding tax at a rate of 30% of the gross amount of the dividends (or such lower rate
specified by an applicable income tax treaty, provided the non-U.S. Holder furnishes a valid IRS Form W-8BEN or W-8BEN-E (or other
applicable documentation) certifying qualification for the lower treaty rate). A Non-U.S. Holder that does not timely furnish
the required documentation, but that qualifies for a reduced treaty rate, may obtain a refund of any excess amounts withheld by
timely filing an appropriate claim for refund with the IRS.
If
dividends paid to a non-U.S. Holder are effectively connected with the Non-U.S. Holder’s conduct of a trade or business
within the United States (and, if required by an applicable income tax treaty, the non-U.S. Holder maintains a permanent establishment
or fixed base maintained by the Non-U.S. Holder in the United States to which such dividends are attributable), the Non-U.S. Holder
will be exempt from the U.S. federal withholding tax described above. To claim the exemption, the non-U.S. Holder must furnish
to the applicable withholding agent a valid IRS Form W-8ECI, certifying that the dividends are effectively connected with the
Non-U.S. Holder’s conduct of a trade or business within the United States.
Any
such effectively connected dividends will be subject to U.S. federal income tax on a net income basis at the regular rates. A
Non-U.S. Holder that is a corporation also may be subject to a branch profits tax at a rate of 30% (or such lower rate specified
by an applicable income tax treaty) on such effectively connected dividends, as adjusted for certain items. Non-U.S. Holders should
consult their tax advisors regarding any applicable tax treaties that may provide for different rules.
Taxation
on the Disposition of New Company Securities
A
Non-U.S. Holder generally will not be subject to U.S. federal income or withholding tax in respect of any gain realized upon the
disposition of New Company Securities unless:
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● |
the
gain is effectively connected with the Non-U.S. Holder’s conduct of a trade or business within the United States (and,
if required by an applicable income tax treaty, the non-U.S. Holder maintains a permanent establishment or fixed base maintained
by the Non-U.S. Holder in the United States to which such gain is attributable); |
| |
● |
the
non-U.S. Holder is a nonresident alien individual present in the United States for 183 days or more during the taxable
year of the disposition and certain other requirements are met; or |
| |
● |
New
Company Securities constitute a USRPI by reason of New Company’s status as a USRPHC for U.S. federal income tax purposes,
and certain other conditions are met. |
Gain
described in the first bullet point above generally will be subject to U.S. federal income tax on a net income basis at the regular
rates applicable to a U.S. Holder, unless an applicable tax treaty provides otherwise. A Non-U.S. Holder that is a corporation
also may be subject to a branch profits tax at a rate of 30% (or such lower rate specified by an applicable income tax treaty)
on such effectively connected gain, as adjusted for certain items.
A
Non-U.S. Holder described in the second bullet point above will be subject to U.S. federal income tax at a rate of 30% (or such
lower rate specified by an applicable income tax treaty) on such gain, which may be offset by U.S. source capital losses of the
non-U.S. Holder (even though the individual is not considered a resident of the United States), provided the Non-U.S. Holder has
timely filed U.S. federal income tax returns with respect to such losses.
With
respect to the third bullet above, New Company believes that it is not and has not been at any time since its formation, and does
not expect to be immediately after the Business Combination is completed, a USRPHC.
Non-U.S.
Holders should consult their tax advisors regarding potentially applicable income tax treaties that may provide for different
rules.
Exercise,
Lapse or Redemption of a Warrant
The
U.S. federal income tax treatment of a Non-U.S. Holder’s exercise of a Warrant, or the lapse of a Warrant held by a Non-U.S.
Holder, or the redemption of a Warrant held by a Non-U.S. Holder generally will correspond to the U.S. federal income tax treatment
of the exercise, lapse or redemption of a Warrant by a U.S. Holder, as described above under “— Tax Consequences
to U.S. Holders — Exercise, Lapse or Redemption of a Warrant,” although to the extent a cashless exercise
or redemption of a Warrant results in a taxable exchange, the consequences would be similar to those described above under “—
Tax Consequences to Non-U.S. Holders — Sale, Exchange or Other Taxable Disposition of our Common Stock and
Warrants.” Information Reporting and Backup Withholding
Payments
of dividends on New Company Securities will not be subject to backup withholding, provided the applicable withholding agent does
not have actual knowledge or reason to know the holder is a United States person and the holder either certifies its non-U.S.
status, such as by furnishing a valid IRS Form W-8BEN, W-8BEN-E or W-8ECI, or otherwise establishes an exemption. However,
information returns are required to be filed with the IRS in connection with any dividends on New Company Securities paid to the
non-U.S. Holder, regardless of whether any tax was actually withheld. In addition, redemption proceeds that are treated as proceeds
from a sale or other taxable disposition of New Company Securities within the United States or conducted through certain U.S.-related
brokers generally will not be subject to backup withholding or information reporting if the applicable withholding agent receives
the certification described above and does not have actual knowledge or reason to know that such holder is a United States person,
or the holder otherwise establishes an exemption. Proceeds from the sale, exchange or other taxable disposition of New Company
Securities conducted through a non-U.S. office of a non-U.S. broker generally will not be subject to backup withholding or information
reporting.
Copies
of information returns that are filed with the IRS may also be made available under the provisions of an applicable treaty or
agreement to the tax authorities of the country in which the non-U.S. Holder resides or is established. Backup withholding is
not an additional tax. Any amounts withheld under the backup withholding rules may be allowed as a refund or a credit against
a Non-U.S. Holder’s U.S. federal income tax liability, provided the required information is timely furnished to the IRS.
Foreign
Account Tax Compliance Act
Under
Sections 1471 through 1474 of the Code (such Sections commonly referred to as “FATCA”), payments of dividends
on and the gross proceeds of dispositions of common stock or warrants of a U.S. issuer paid to (i) a “foreign financial
institution” (as specifically defined in the Code) or (ii) a “non-financial foreign entity” (as
specifically defined in the Code) will be subject to a withholding tax (separate and apart from, but without duplication of, the
withholding tax described above) at a rate of 30%, unless various U.S. information reporting and due diligence requirements (generally
relating to ownership by U.S. persons of interests in or accounts with those entities) have been satisfied or an exemption from
these rules applies. Under proposed Treasury Regulations,
the
preamble to which states that taxpayers may rely on them until final Treasury Regulations are issued, this withholding tax will
not apply to the gross proceeds from the sale or disposition of Common Stock or New Company Securities. An intergovernmental agreement
between the United States and an applicable foreign country may modify these requirements. If a dividend payment is both subject
to withholding under FATCA and subject to the withholding tax discussed above, the withholding under FATCA may be credited against,
and therefore reduce, such other withholding tax. U.S. Holders and Non-U.S. Holders should consult their tax advisors regarding
the possible implications of this withholding tax on their Common Stock and New Company Securities.
Anticipated
Accounting Treatment of the Business Combination
Notwithstanding
the legal form of the Business Combination pursuant to the Business Combination Agreement, the Business Combination will be accounted
for as a reverse recapitalization in accordance with U.S. GAAP. Under this method of accounting, Bannix will be treated as the
acquired company for financial reporting purposes; whereas, Company will be treated as the accounting acquiror. In accordance
with this accounting method, the Business Combination will be treated as the equivalent of Company issuing stock for the net assets
of Bannix, accompanied by a recapitalization. The net assets of Bannix will be stated at historical cost, with no goodwill or
other intangible assets recorded, and operations prior to the Business Combination will be those of Company. Company has been
determined to be the accounting acquiror for purposes of the Business Combination based on an evaluation of the following facts
and circumstances:
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● |
Company will control a
majority of the governing body of New Company; |
| |
● |
Company’s
existing senior management team will comprise the senior management of the Combined Company; and |
| |
● |
Company’s
operations prior to the Business Combination will comprise the ongoing operations of New Company. |
Public
Warrants
The
Public Warrants are identical to the Private Placement Warrants, except that, so long as the Private Placement Warrants are held
by the Sponsor or its permitted transferees: (1) they (including the Common Stock issuable upon exercise of these warrants) may
not, subject to certain limited exceptions, be transferred, assigned or sold by the Sponsor until 30 days after the completion
of the Business Combination; (2) they may be exercised by the holders on a cashless basis; and (3) they (including the Common
Stock issuable upon exercise of these warrants) are entitled to registration rights.
Following
the Closing, Company may redeem the Public Warrants prior to their exercise at a time that is disadvantageous to you. More specifically
the Company will have the ability to redeem outstanding Public Warrants at any time after they become exercisable and prior to
their expiration, at a price of $0.01 per Public Warrant, provided that the closing price of the New Company common stock equals
or exceeds $18.00 per share (as adjusted for adjustments to the number of shares issuable upon exercise or the exercise price
of a warrant) for any 20 trading days within a 30 trading day period ending on the third trading day prior to the date on which
the notice of redemption is sent to the warrant holders (which we refer to as the “Reference Value”), provided that
certain other conditions are met.
Redemption
of the outstanding Public Warrants could force holders (i) to exercise the public warrants and pay the exercise price therefor
at a time when it may be disadvantageous to do so, (ii) to sell the public warrants at the then-current market price when the
holder might otherwise wish to hold its warrants or (iii) to accept the nominal redemption price which, at the time the outstanding
public warrants are called for redemption, is likely to be substantially less than the market value of the public warrants.
In
the event that Company elects to redeem all of the redeemable warrants as described above, it will fix a date for the redemption.
Notice of redemption will be mailed by first class mail, postage prepaid, by Company not less than 30 days prior to the redemption
date to the registered holders of the public warrants to be redeemed at their last addresses as they appear on the registration
books. Any notice mailed in the manner provided in the Warrant Agreement shall be conclusively presumed to have been duly given
whether or not the registered holder received such notice. In addition, beneficial owners of the redeemable warrants will be notified
of such redemption via Company’s posting of the redemption notice to DTC.
Regulatory
Matters
The
Business Combination is not subject to any additional federal or state regulatory requirement or approval, except for the filings
with the State of Delaware necessary to effectuate the Business Combination and the filing of required notifications and the expiration
or termination of the required waiting periods under the HSR Act.
Required
Vote of Bannix Stockholders
The
approval of the Business Combination Proposal will require the affirmative vote of the holders of a majority of the shares of
Bannix Common Stock cast in respect of that Proposal and entitled to vote thereon at the Special Meeting, voting together as a
single class. Additionally, the Business Combination will not be consummated if Bannix has less than $5,000,001 of net tangible
assets after taking into account the redemption into cash of all Public Shares properly demanded to be redeemed by Public Stockholders.
The
approval of the Business Combination Proposal is a condition to the consummation of the Business Combination. If the Business
Combination Proposal is not approved, the other proposals (except the Adjournment Proposal, as described below) will not be presented
to the stockholders for a vote.
At
any time at or prior to the Proposed Transaction, subject to applicable securities laws (including with respect to material non-public
information), the Sponsor, the Bannix Stockholders or our or their respective directors, officers, advisors or respective affiliates
may (a) purchase Public Shares from institutional and other investors who vote, or indicate an intention to vote, against any
of the Condition Precedent Proposals, or elect to redeem, or indicate an intention to redeem, Public Shares, (b) execute agreements
to purchase such shares from such investors in the future, or (c) enter into transactions with such investors and others to provide
them with incentives to acquire Public Shares, vote their Public Shares in favor of the Condition Precedent Proposals or not redeem
their Public Shares. In the event that the Sponsor, or our or its directors, officers, advisors or affiliates purchase shares
or warrants in privately negotiated transactions from Public Stockholders, such shares and warrants that are purchased by the
Sponsor, or its directors, officers, advisors or affiliates would not be voted in favor of the Business Combination Proposal.
Such a purchase may include a contractual acknowledgement that such shareholder, although still the record holder of Bannix Common
Stock, is no longer the beneficial owner thereof and therefore agrees not to exercise its Redemption Rights. In the event that
the Sponsor, the Bannix Stockholders or our or their respective directors, officers, advisors, or respective affiliates purchase
shares in privately negotiated transactions from Public Stockholders who have already elected to exercise their Redemption Rights,
such selling shareholders would be required to revoke their prior elections to redeem their Public Shares. The purpose of such
share purchases and other transactions would be to increase the likelihood of (a) satisfaction of the requirement that holders
of a majority of the Bannix Common Stock, represented in person or by proxy and entitled to vote at the Special Meeting, vote
in favor of the Business Combination Proposal, the Charter Amendment Proposal, the Advisory Charter Amendment Proposals, the Stock
Issuance Proposal, the Director Election Proposal, and the Adjournment Proposal, (b) otherwise limiting the number of Public Shares
electing to redeem and (c) Bannix’s net tangible assets (as determined in accordance with Rule 3a51-1(g)(1) of the Exchange
Act) being at least $5,000,001. See “Risk Factors — Certain insiders may elect to purchase shares or
warrants prior to the consummation of the Business Combination, which may influence the vote on the Business Combination.”
for additional information related to the risk of voting repurchased shares.
Interests
of the Sponsor and Bannix’s Directors and Officers in the Business Combination
In
considering the recommendation of the Board to vote in favor of approval of the Business Combination Proposal, the Charter Amendment
Proposal and the other Proposals, Bannix stockholders should keep in mind that the Sponsor (which is affiliated with certain of
Bannix’s officers and directors) and Bannix’s officers and directors have interests in such Proposals that are different
from, or in addition to, your interests as a Bannix stockholder. These interests include, among other things:
| |
● |
If
the Business Combination with Company or another business combination is not consummated by March 14, 2024 (as approved by
the stockholders at the extension meeting held on March 8, 2023 and as may be further amended), Bannix will cease all operations
except for the purpose of winding up, redeeming 100% of the outstanding Public Shares for cash and, subject to the approval
of its remaining stockholders and its Board, dissolving and liquidating. In such event, (i) the 1,950,000 Founder Shares
held by the Sponsor, which were acquired by the Sponsor for a purchase price of approximately $1,119,375 per share, or $0.574
in the aggregate, prior to the Initial Public Offering, and (ii) 225,000 Private Placement Units purchased by the Sponsor
for a purchase price of $0.64 per Unit, or $14,375 in the aggregate, in the Concurrent Private Placement, would be worthless
because the holders are not entitled to participate in any redemption or distribution from the Trust Account with respect
to such securities. Such securities had an aggregate market value of approximately $* million based upon the closing
price of $* per share of Common Stock on Nasdaq on the Record Date. |
| |
● |
The
fact that given the differential in the purchase price that the Sponsor paid for the Founder Shares, as compared to the price
of the Public Shares sold in the Initial Public Offering and the shares of Common Stock that the Sponsor will receive upon
conversion of the Founder Shares in connection with the Business Combination, the Sponsor may earn a positive rate of return
on its investment even if the New Company common stock trades below the price initially paid for the Public Shares in the
Initial Public Offering and the Public Stockholders experience a negative rate of return following the completion of the Business
Combination. |
| |
● |
If
Bannix is unable to complete an initial business combination within the required time period, the Sponsor will be personally
liable under certain circumstances described herein to ensure that the proceeds in the Trust Account are not reduced by the
claims of target businesses or claims of vendors or other entities that are owed money by Bannix for services rendered or
contracted for or products sold to Bannix. If Bannix consummates an initial business combination, on the other hand, Bannix
will be liable for all such claims. |
| |
● |
The
Business Combination Agreement provides for the continued indemnification of Bannix’s current directors and officers
and the continuation of directors’ and officers’ liability insurance covering Bannix’s current directors
and officers from and after the Effective Time for a period of six years. |
| |
● |
Certain
of Bannix’s current directors and officers may be directors of New Company after the consummation of the Business Combination
and as such, in the future, they may receive cash fees, stock options, stock awards or other remuneration that the New Company
Board determines to pay to them and any other applicable compensation as described under section “Executive and Director
Compensation — Director Compensation.” None of Bannix’s officers or directors will be required
to commit his or her full time to the affairs of New Company and, accordingly, may have conflicts of interest in allocating
his or her time among various business activities. |
| |
● |
In
the course of their other business activities, Bannix’s officers and directors may become aware of investment and business
opportunities which may be appropriate for presentation to New Company as well as the other entities with which they are affiliated.
Bannix’s management may have conflicts of interest in determining to which entity a particular business opportunity
should be presented. |
| |
● |
The
Sponsor has agreed to waive its redemption rights with respect to the shares of Bannix Common Stock it holds in connection
with the Business Combination. Additionally, the Sponsor agreed to waive its redemption rights with respect to any Founder
Shares and Public Shares held by it if we fail to consummate our initial business combination within 24 months (or 30
months, if the extension proposal is approved by Bannix stockholders) after the closing of the Initial Public Offering. If
Bannix does not complete an initial business combination within such applicable time period, the proceeds of the sale of the
Private Placement Warrants held in the Trust Account will be used to fund the redemption of the Public Shares, and the Private
Placement Warrants purchased in the Concurrent Private Placement will become worthless. The Private Placement Warrants purchased
in the Concurrent Private Placement held by the Sponsor had an aggregate market value of approximately $* million based
upon the closing price of $* per share of Common Stock on Nasdaq on the Record Date. Since the Sponsor and Bannix’s
officers and directors may directly or indirectly own Bannix Common Stock following the Initial Public Offering, Bannix’s
officers and directors may have a conflict of interest in determining whether a particular target business is an appropriate
business with which to effectuate the initial business combination. |
| |
● |
Bannix’s
officers and directors may have a conflict of interest with respect to evaluating a particular business combination if the
retention or resignation of any such officers and directors was included by a target business as a condition to any agreement
with respect to such potential business combination. |
| |
● |
The
Sponsor may use the funds held by Bannix outside the trust account to pay for any expenses or liabilities of Bannix or otherwise
distributing or paying over any funds held by Bannix outside the trust account to the Sponsor or any of its affiliates, in
each case, prior to the Closing; provided, that prior to any distribution or payment of any funds to the Sponsor or any of
its affiliates pursuant to the foregoing clause, Bannix shall cause any indebtedness of Bannix payable or owing to the Sponsor
or any of its affiliates to be paid in full and discharged with no further liability or obligation of Bannix. Such amount
held outside the trust account is currently $129,264 as of Juen 30, 2023. Pursuant to the Administrative Services Agreement,
dated as of February 8, 2021, by and between Bannix and Sponsor, as expected to be amended in connection with closing (the
“Administrative Services Agreement’’), the Sponsor has the right to receive fees in an amount of $5,000
per month for office space and secretarial and administrative services provided to Bannix which is payable monthly (or, if
elected by Sponsor, payable for the ensuing three months in advance). |
| |
● |
The
Sponsor and Bannix’s officers or directors may have a conflict of interest with respect to evaluating a business combination
and financing arrangements as Bannix may obtain loans from the Sponsor or an affiliate of the Sponsor or any of Bannix’s
officers or directors to finance transaction costs in connection with an intended initial business combination. As of , 2023, no such loans are outstanding. |
Recommendation
of the Board
THE
BOARD UNANIMOUSLY RECOMMENDS THAT BANNIX STOCKHOLDERS VOTE “FOR” THE APPROVAL OF THE BUSINESS COMBINATION PROPOSAL.
The
existence of financial and personal interests of one or more of Bannix’s directors may result in a conflict of interest
on the part of such director(s) between what he or they may believe is in the best interests of Bannix and its stockholders and
what he or they may believe is best for himself or themselves in determining to recommend that stockholders vote for the Proposals.
In addition, Bannix’s directors and officers have interests in the Business Combination that may conflict with your interests
as a stockholder. See the section entitled “Proposal 1: The Business Combination Proposal — Interests
of the Sponsor and Bannix’s Directors and Officers in the Business Combination” for a further discussion of these
considerations.
UNAUDITED
PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS
Introduction
The
following unaudited pro forma condensed combined financial information presents the combination of financial information of Bannix and
EVIE, adjusted to give effect to the Business Combination.
The following unaudited pro forma condensed combined
balance sheet as of September 30, 2023, combines the historical unaudited balance sheet of EVIE as of September 30, 20232, with the historical
unaudited balance sheet of Bannix as of September 30, 2023, giving pro forma effect to the Business Combination as if it had occurred
as of September 30, 2023.
The following unaudited pro forma condensed combined
statement of operations for the nine months ended September 30, 2023, combines the historical unaudited statement of operations of EVIE
for the period from May 8, 2023 (Inception) to September 30, 2023, and the historical unaudited statement of operations of Bannix for
the nine months ended September 30, 2023 on a pro forma, basis as if the Business Combination had occurred on January 1, 2022.
The
following unaudited pro forma condensed combined statement of operations for the year ended December 31, 2022, presents the historical
audited statement of operations of Bannix for the year ended December 31, 2022 on a pro forma, basis as if the Business Combination
had occurred on January 1, 2022. EVIE was incorporated on May 8, 2023, therefore there is no historical statement of operations
for the year ended December 31, 2022 for EVIE is included in the unaudited pro forma condensed combined statement of operations
as of December 31, 2022.
The unaudited pro forma condensed combined balance
sheet as of September 30, 2023, has been derived from:
| |
● |
The
historical unaudited financial statements of Bannix as of September 30, 2023, and the related notes thereto included elsewhere in
this proxy statement; and |
| |
● |
the
historical unaudited financial statements of EVIE as of September 30, 2023, and the related notes thereto included elsewhere in this
proxy statement. |
The unaudited pro forma condensed combined statement
of operations for the nine months ended September 30, 2023, has been derived from:
| |
● |
The
historical unaudited financial statements of Bannix for the nine months ended September 30, 2023, and the related notes thereto included
elsewhere in this proxy statement; and |
| |
● |
the
historical unaudited financial statements of EVIE for the period from May 8, 2023 (Inception) to September 30, 2023, and the related
notes thereto included elsewhere in this proxy statement. |
The
unaudited pro forma condensed combined statement of operations for the year ended December 31, 2022, has been derived from:
| |
● |
The
historical audited financial statements of Bannix for the year ended December 31, 2022, and the related notes thereto included
elsewhere in this proxy statement; and |
| |
● |
EVIE was incorporated
on May 8, 2023, therefore there is no historical statement of operations for the year ended December 31, 2022 for EVIE included
in the unaudited pro forma condensed combined statement of operations as of December 31, 2022. |
The
following unaudited pro forma condensed combined financial information has been prepared in accordance with Article 11 of Regulation
S-X as in effect on the date of this proxy statement which incorporates Transaction Accounting Adjustments. EVIE and Bannix have
elected not to present any estimates related to potential synergies and other transaction effects that are reasonably expected
to occur or have already occurred and will only be presenting Transaction Accounting Adjustments in the unaudited pro forma condensed
combined financial information.
This
information should be read together with the financial statements and related notes, as applicable, of each of EVIE and Bannix
included in this proxy statement and EVIE’s and Bannix’s “Management’s Discussion and Analysis of Financial
Condition and Results of Operations” and other financial information included elsewhere in this proxy statement.
Description
of the Transactions
Business
Combination
On
June 23, 2023, Bannix, EVIE and the shareholder of the Evie Group (“Evie Group Shareholder”), entered into a Business
Combination Agreement (the “Business Combination Agreement”), pursuant to which, subject to the satisfaction or waiver
of certain conditions precedent in the Business Combination Agreement, the following transactions will occur: (a) the acquisition
by Bannix of all of the issued and outstanding share capital of Evie Group from the Evie Group Shareholder in exchange for the
issuance of eighty-five million new shares of common stock of Bannix, $0.01 par value per share (the “Common Stock”),
pursuant to which Evie Group will become a direct wholly owned subsidiary of Bannix (the “Share Acquisition”) and
(b) the other transactions contemplated by the Business Combination Agreement and the Ancillary Documents referred to therein
(collectively, the “Transactions”).
For
a description of the Business Combination and certain agreements executed in connection therewith, see “Summary of the
Proxy Statement — The Business Combination” and “Certain Agreements Related to the Business Combination.”
Special
Meeting Redemptions
In
connection with the vote to approve to extend the date by which Bannix must consummate its initial business combination from March
14, 2023 to March 14, 2024, held by Bannix on March 8, 2023, Bannix’s public stockholders elected to redeem 3,960,387 shares
of common stock at a redemption price of approximately $10.37201 per share (the “March Redemptions”), for an aggregate
redemption amount of approximately $41.1 million.
Accounting
for the Business Combination
The
Business Combination will be accounted for as a reverse recapitalization, in accordance with U.S. GAAP. Under this method of accounting,
Bannix will be treated as the “acquired” company for financial reporting purposes, and EVIE will be the accounting
“acquirer” This determination was primarily based on the assumption that:
| |
● |
EVIE’s
current shareholders will hold a majority of the voting power of Bannix post Business Combination; |
| |
● |
EVIE’s
operations will substantially comprise the ongoing operations of Bannix; |
| |
● |
EVIE’s
senior management will comprise the senior management of Bannix. |
Another
determining factor was that Bannix does not meet the definition of a “business” pursuant to ASC 805-10-55, and thus,
for accounting purposes, the Business Combination will be accounted for as a reverse recapitalization, within the scope of ASC
805. The net assets of Bannix will be stated at historical cost, with no goodwill or other intangible assets recorded.
Basis
of Pro Forma Presentation
Bannix
has elected to provide the unaudited pro forma condensed combined financial information under two different redemption scenarios
of Bannix public shares into cash as more fully described below:
| |
● |
Scenario
1 — Assuming No Additional Redemptions: This presentation assumes that, after the redemptions of 3,960,387 shares
of common stock of Bannix in March 2023 (the “March Redemptions”), no additional public stockholders of Bannix
exercise redemption rights with respect to their Public Shares upon consummation of the Business Combination. |
| |
● |
Scenario
2 — Net Tangible Asset Scenario: This presentation assumes that, after the March Redemptions, Bannix public stockholders holding
884,230 shares of Bannix shares of common stock will exercise their redemption rights for $9.6 million upon consummation of the Business
Combination at a redemption price of approximately $10.81 per share. The net tangible asset scenario amount reflects the maximum number
of Bannix Public Shares that can be redeemed without violating the conditions of the Business Combination Agreement or the requirement
of Bannix’s Existing Organizational Documents that Bannix cannot redeem Public Shares if it would result in Bannix having a minimum
net tangible asset value of less than $5,000,001 after giving effect to the payments to redeeming shareholders. This scenario includes
all adjustments contained in the “no additional redemptions” scenario and presents additional adjustments to reflect the
effect of the net tangible asset scenario. |
The following table sets out share ownership of
EVIE on a pro forma basis assuming the No Additional Redemption Scenario and the Net Tangible Asset Scenario:
| |
|
No
Additional Redemptions |
|
Net
Tangible Asset Scenario |
| Pro
Forma Ownership |
|
Number
of Shares |
|
Percent
Outstanding |
|
Number
of Shares |
|
Percent
Outstanding |
| EVIE
stockholders |
|
|
85,000,000 |
|
|
|
93.3 |
% |
|
|
85,000,000 |
|
|
|
94.2 |
% |
| Bannix
public stockholders (2) |
|
|
3,629,613 |
|
|
|
4.0 |
% |
|
|
2,745,383 |
|
|
|
3.0 |
% |
| Sponsor’s
Founders Shares (1) |
|
|
2,564,600 |
|
|
|
2.8 |
% |
|
|
2,564,600 |
|
|
|
2.8 |
% |
| Total
shares outstanding |
|
|
91,194,213 |
|
|
|
|
|
|
|
90,309,983 |
|
|
|
|
|
| |
(1) |
Includes
406,000 Private Rights converted to 40,600 shares of common stock upon consummation of the Business Combination. |
| |
(2) |
Includes
6,900,000 Public Rights converted to 690,000 shares of common stock upon consummation of the Business Combination. |
The following unaudited pro forma condensed combined
statement of financial position as of September 30, 2023, and the unaudited pro forma condensed combined statements of operations for
the nine months ended September 30, 2023 and for the year ended December 31, 2022, are based on the historical financial statements of
Bannix and EVIE. The unaudited pro forma adjustments are based on information currently available, assumptions, and estimates underlying
the pro forma adjustments and are described in the accompanying notes. Actual results may differ materially from the assumptions used
to present the accompanying unaudited pro forma condensed combined financial statements.
UNAUDITED
PRO FORMA CONDENSED COMBINED BALANCE SHEET
AS
OF SEPTEMBER 30, 2023(1)
| | |
| |
| |
Scenario
1: No Additional Redemption Scenario | |
Scenario
2: Net Tangible Asset Scenario |
| | |
EVIE
(US GAAP
Historical) | |
Bannix
(US GAAP Historical) | |
Transaction
Accounting Adjustments | |
| |
Pro
Forma Combined | |
Transaction
Accounting Adjustments | |
| |
Pro
Forma Combined |
| ASSETS | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Current
assets | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Cash
and cash equivalents | |
$ | — | | |
$ | 39,589 | | |
$ | 32,010,195 | | |
| A
| | |
$ | 25,449,169 | | |
$ | (9,628,605 | ) | |
| F | | |
$ | 15,820,564 | |
| | |
| | | |
| | | |
| (225,000 | ) | |
| B
| | |
| | | |
| | | |
| | | |
| | |
| | |
| | | |
| | | |
| (2,751,750 | ) | |
| C
| | |
| | | |
| | | |
| | | |
| | |
| | |
| | | |
| | | |
| (200,000 | ) | |
| I
| | |
| | | |
| | | |
| | | |
| | |
| | |
| | | |
| | | |
| (2,351,865 | ) | |
| J
| | |
| | | |
| | | |
| | | |
| | |
| | |
| | | |
| | | |
| (1,200,000 | ) | |
| O
| | |
| | | |
| | | |
| | | |
| | |
| | |
| | | |
| | | |
| 128,000 | | |
| P
| | |
| | | |
| | | |
| | | |
| | |
| Prepaid
expenses and other assets | |
| — | | |
| 5,933 | | |
| — | | |
| | | |
| 5,933 | | |
| — | | |
| | | |
| 5,933 | |
| Total
current assets | |
| — | | |
| 45,522 | | |
| 25,409,580 | | |
| | | |
| 25,455,102 | | |
| (9,628,605 | ) | |
| | | |
| 15,826,497 | |
| Non-current
assets | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Cash and
marketable securities held in Trust Account | |
| — | | |
| 31,906,039 | | |
| (32,010,195 | ) | |
| A
| | |
| — | | |
| — | | |
| | | |
| — | |
| | |
| | | |
| | | |
| 300,000 | | |
| G
| | |
| | | |
| | | |
| | | |
| | |
| | |
| | | |
| | | |
| (571,387 | ) | |
| M
| | |
| | | |
| | | |
| | | |
| | |
| | |
| | | |
| | | |
| 375,543 | | |
| N
| | |
| | | |
| | | |
| | | |
| | |
| Total
non-current assets | |
| — | | |
| 31,906,039 | | |
| (31,906,039 | ) | |
| | | |
| — | | |
| — | | |
| | | |
| — | |
| Total
assets | |
$ | — | | |
$ | 31,951,561 | | |
$ | (6,496,459 | ) | |
| | | |
$ | 25,455,102 | | |
$ | (9,628,605 | ) | |
| | | |
$ | 15,826,497 | |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| LIABILITIES | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Current
liabilities | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Accounts
payable and accrued expenses | |
| 55,492 | | |
| 717,404 | | |
| (350,653 | ) | |
| C
| | |
| 10,422,243 | | |
| | | |
| | | |
| 10,422,243 | |
| | |
| | | |
| | | |
| 10,000,000 | | |
| O
| | |
| | | |
| | | |
| | | |
| | |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Promissory
notes - Evie | |
| 20,000 | | |
| 726,015 | | |
| (854,015 | ) | |
| J
| | |
| 20,000 | | |
| | | |
| | | |
| 20,000 | |
| | |
| | | |
| | | |
| 128,000 | | |
| P
| | |
| | | |
| | | |
| | | |
| | |
| Excise
tax payable | |
| — | | |
| 410,772 | | |
| (410,772 | ) | |
| H
| | |
| — | | |
| — | | |
| | | |
| — | |
| Due to
related parties | |
| | | |
| 1,197,850 | | |
| 300,000 | | |
| G
| | |
| — | | |
| | | |
| | | |
| — | |
| | |
| | | |
| | | |
| (1,497,850 | ) | |
| J
| | |
| | | |
| | | |
| | | |
| | |
| Income
tax payable | |
| — | | |
| 571,387 | | |
| (571,387 | ) | |
| M
| | |
| — | | |
| — | | |
| | | |
| — | |
| Total
current liabilities | |
| 75,492 | | |
| 3,623,428 | | |
| 6,743,323 | | |
| | | |
| 10,442,243 | | |
| — | | |
| | | |
| 10,442,243 | |
| Non-current
liabilities | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Deferred
underwriting commissions | |
| — | | |
| 225,000 | | |
| (225,000 | ) | |
| B
| | |
| — | | |
| — | | |
| | | |
| — | |
| Warrant
liabilities | |
| — | | |
| 12,180 | | |
| — | | |
| | | |
| 12,180 | | |
| — | | |
| | | |
| 12,180 | |
| Total
non-current liabilities | |
| — | | |
| 237,180 | | |
| (225,000 | ) | |
| | | |
| 12,180 | | |
| — | | |
| | | |
| 12,180 | |
| Total
liabilities | |
| 75,492 | | |
| 3,860,608 | | |
| 6,518,323 | | |
| | | |
| 10,454,423 | | |
| — | | |
| | | |
| 10,454,423 | |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Common
stock subject to possible redemption | |
| — | | |
| 31,270,132 | | |
| (31,270,132 | ) | |
| F
| | |
| — | | |
| — | | |
| | | |
| — | |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| EQUITY | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| EVIE Common
stock | |
| 126 | | |
| — | | |
| (126 | ) | |
| D
| | |
| — | | |
| — | | |
| | | |
| — | |
| Bannix
preferred stock | |
| — | | |
| — | | |
| — | | |
| | | |
| — | | |
| | | |
| | | |
| — | |
| Bannix
common stock | |
| — | | |
| 39,615 | | |
| 835,625 | | |
| D
| | |
| 911,942 | | |
| (8,842 | ) | |
| F | | |
| 903,100 | |
| | |
| | | |
| | | |
| 29,396 | | |
| F
| | |
| | | |
| | | |
| | | |
| | |
| | |
| | | |
| | | |
| 7,306 | | |
| L
| | |
| | | |
| | | |
| | | |
| | |
| Accumulated
other comprehensive gain | |
| 1,420 | | |
| — | | |
| — | | |
| | | |
| 1,420 | | |
| — | | |
| | | |
| 1,420 | |
| Additional
paid-in capital | |
| — | | |
| — | | |
| (266,750 | ) | |
| C
| | |
| 25,750,440 | | |
| (9,619,763 | ) | |
| F | | |
| 16,130,677 | |
| | |
| | | |
| | | |
| (849,874 | ) | |
| D
| | |
| | | |
| | | |
| | | |
| | |
| | |
| | | |
| | | |
| (5,338,766 | ) | |
| E
| | |
| | | |
| | | |
| | | |
| | |
| | |
| | | |
| | | |
| 31,240,736 | | |
| F
| | |
| | | |
| | | |
| | | |
| | |
| | |
| | | |
| | | |
| 972,400 | | |
| K
| | |
| | | |
| | | |
| | | |
| | |
| | |
| | | |
| | | |
| (7,306 | ) | |
| L
| | |
| | | |
| | | |
| | | |
| | |
| Accumulated
deficit | |
| (77,038 | ) | |
| (3,204,419 | ) | |
| (2,134,347 | ) | |
| C
| | |
| (11,663,123 | ) | |
| — | | |
| — | | |
| (11,663,123 | ) |
| | |
| | | |
| | | |
| 5,338,766 | | |
| E
| | |
| | | |
| | | |
| | | |
| | |
| | |
| | | |
| | | |
| 410,772 | | |
| H
| | |
| | | |
| | | |
| | | |
| | |
| | |
| | | |
| | | |
| (200,000 | ) | |
| I
| | |
| | | |
| | | |
| | | |
| | |
| | |
| | | |
| | | |
| (972,400 | ) | |
| K
| | |
| | | |
| | | |
| | | |
| | |
| | |
| | | |
| | | |
| 375,543 | | |
| N
| | |
| | | |
| | | |
| | | |
| | |
| | |
| | | |
| | | |
| (11,200,000 | ) | |
| O
| | |
| | | |
| | | |
| | | |
| | |
| Bannix
Treasury stock | |
| | | |
| (14,375 | ) | |
| 14,375 | | |
| D | | |
| — | | |
| | | |
| | | |
| — | |
| Total
equity (deficit) | |
| (75,492 | ) | |
| (3,179,179 | ) | |
| 18,255,350 | | |
| | | |
| 15,000,679 | | |
| (9,628,605 | ) | |
| | | |
| 5,372,074 | |
| Total
equity and liabilities | |
$ | — | | |
$ | 31,951,561 | | |
$ | (6,496,459 | ) | |
| | | |
$ | 25,455,102 | | |
$ | (9,628,605 | ) | |
| | | |
$ | 15,826,497 | |
| (1) |
The
unaudited pro forma condensed combined balance sheet as of September 30, 2023, combines the historical unaudited balance sheet of
EVIE as of September 30, 2023, with the historical unaudited balance sheet of Bannix as of September 30, 2023. |
UNAUDITED
PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
FOR
THE NINE MONTHS ENDED SEPTEMBER 30, 2023(2)
| | |
| |
| |
Scenario 1: No Redemption Scenario | |
Scenario 2: Net Tangible Asset Scenario |
| | |
EVIE
(US GAAP
Historical) | |
Bannix
(US GAAP
Historical) | |
Transaction Accounting Adjustments | |
| |
Pro Forma Combined | |
Transaction Accounting Adjustments | |
Pro Forma Combined |
| | |
| |
| |
| |
| |
| |
| |
|
| Sales revenue | |
$ | — | | |
$ | — | | |
$ | — | | |
| | | |
$ | — | | |
$ | — | | |
$ | — | |
| Cost of sales | |
| — | | |
| — | | |
| — | | |
| | | |
| — | | |
| — | | |
| — | |
| Gross profit | |
| — | | |
| — | | |
| — | | |
| | | |
| — | | |
| — | | |
| — | |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Selling, advertising and promotional expense | |
| — | | |
| — | | |
| — | | |
| | | |
| — | | |
| — | | |
| — | |
| General and administrative expense | |
| — | | |
| — | | |
| — | | |
| | | |
| — | | |
| — | | |
| — | |
| Formation and operating costs | |
| (76,912 | ) | |
| (1,197,866 | ) | |
| 45,000 | | |
| BB | | |
| (1,229,778 | ) | |
| — | | |
| (1,229,778 | ) |
| Change in the fair value of warrants | |
| | | |
| — | | |
| | | |
| | | |
| — | | |
| — | | |
| — | |
| Interest earned on cash held in bank | |
| — | | |
| — | | |
| — | | |
| | | |
| — | | |
| — | | |
| — | |
| Interest earned on marketable securities held in Trust Account | |
| — | | |
| 1,394,123 | | |
| (1,394,123 | ) | |
| AA
| | |
| — | | |
| — | | |
| — | |
| Total operating expenses | |
| (76,912 | ) | |
| 196,257 | | |
| (1,349,123 | ) | |
| | | |
| (1,229,778 | ) | |
| — | | |
| (1,229,778 | ) |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Operating loss | |
| (76,912 | ) | |
| 196,257 | | |
| (1,349,123 | ) | |
| | | |
| (1,229,778 | ) | |
| — | | |
| (1,229,778 | ) |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Other income (expense) | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Interest expense | |
| — | | |
| — | | |
| | | |
| | | |
| — | | |
| — | | |
| — | |
| Income tax expense | |
| — | | |
| (348,105 | ) | |
| 348,105 | | |
| CC
| | |
| — | | |
| — | | |
| — | |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Net loss | |
$ | (76,912 | ) | |
$ | (151,848 | ) | |
$ | (1,001,018 | ) | |
| | | |
$ | (1,229,778 | ) | |
$ | — | | |
$ | (1,229,778 | ) |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Weight average shares outstanding, basic and diluted | |
$ | (769.12 | ) | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Basic and diluted net loss per share, common stock | |
| | | |
$ | (0.02 | ) | |
| | | |
| | | |
| | | |
| | | |
| | |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Pro forma weighted average number of shares outstanding - basic and diluted | |
| | | |
| | | |
| | | |
| | | |
| 91,194,213 | (2) | |
| | | |
| 90,309,983 | (2) |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Pro forma earnings per share - basic and diluted | |
| | | |
| | | |
| | | |
| | | |
$ | (0.01 | ) | |
| | | |
$ | (0.01 | ) |
| (1) |
Please
refer to Note 7 — “Net Earnings (Loss) per Share” for details. |
| (2) |
The
unaudited pro forma condensed combined statement of operations for the nine months ended September 30, 2023, combines the historical
unaudited statement of operations of EVIE for the period from May 8, 2023 (Inception) to September 30, 2023, with the historical
unaudited statement of operations of Bannix for the nine months ended September 30, 2023. |
UNAUDITED
PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
FOR
THE YEAR ENDED DECEMBER 31, 2022(2)
| |
|
|
|
|
|
Scenario
1: No Additional Redemption Scenario |
|
Scenario
2: Net Tangible Asset Scenario |
| |
|
EVIE
(US GAAP
Historical) |
|
Bannix
(US GAAP
Historical) |
|
Transaction
Accounting Adjustments |
|
|
|
Pro
Forma Combined |
|
Transaction
Accounting Adjustments |
|
Pro
Forma Combined |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Revenue |
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
|
|
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
| Cost
of sales |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
| Gross
profit |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| General
and administrative expense |
|
|
— |
|
|
|
— |
|
|
|
(200,000 |
) |
|
|
EE |
|
|
|
(200,000 |
) |
|
|
— |
|
|
|
(200,000 |
) |
| Share-based
compensation expense |
|
|
|
|
|
|
|
|
|
|
(972,400 |
) |
|
|
FF |
|
|
|
(972,400 |
) |
|
|
— |
|
|
|
(972,400 |
) |
| Formation
and operating costs |
|
|
— |
|
|
|
(1,000,944 |
) |
|
|
60,000 |
|
|
|
BB |
|
|
|
(940,944 |
) |
|
|
— |
|
|
|
(940,944 |
) |
| Advisory
fee |
|
|
|
|
|
|
|
|
|
|
(11,200,000 |
) |
|
|
GG |
|
|
|
(11,200,000 |
) |
|
|
— |
|
|
|
(11,200,000 |
) |
| Transaction
Costs |
|
|
— |
|
|
|
— |
|
|
|
(2,134,347 |
) |
|
|
CC |
|
|
|
(2,134,347 |
) |
|
|
— |
|
|
|
(2,134,347 |
) |
| Total
operating expenses |
|
|
— |
|
|
|
(1,000,944 |
) |
|
|
(14,446,747 |
) |
|
|
|
|
|
|
(15,447,691 |
) |
|
|
— |
|
|
|
(15,447,691 |
) |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Operating
loss |
|
|
— |
|
|
|
(1,000,944 |
) |
|
|
(14,446,747 |
) |
|
|
|
|
|
|
(15,447,691 |
) |
|
|
— |
|
|
|
(15,447,691 |
) |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Other
income (expense) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Interest
expense |
|
|
— |
|
|
|
|
|
|
|
— |
|
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
| Interest
earned on cash held in bank |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
| Change
in fair value of warrant liabilities |
|
|
— |
|
|
|
182,700 |
|
|
|
— |
|
|
|
|
|
|
|
182,700 |
|
|
|
— |
|
|
|
182,700 |
|
| Interest
income on marketable securities held in Trust Account |
|
|
— |
|
|
|
1,088,633 |
|
|
|
(1,088,633 |
) |
|
|
AA |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total
other non-operating income (expenses) |
|
|
— |
|
|
|
1,271,333 |
|
|
|
(1,088,633 |
) |
|
|
|
|
|
|
182,700 |
|
|
|
— |
|
|
|
182,700 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Income
(loss) before provision for income taxes |
|
|
— |
|
|
|
270,389 |
|
|
|
(15,535,380 |
) |
|
|
|
|
|
|
(15,264,991 |
) |
|
|
— |
|
|
|
(15,264,991 |
) |
| Provision
for income taxes |
|
|
— |
|
|
|
(223,282 |
) |
|
|
223,282 |
|
|
|
DD |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Net
income (loss) |
|
$ |
— |
|
|
$ |
47,107 |
|
|
$ |
(15,312,098 |
) |
|
|
|
|
|
$ |
(15,264,991 |
) |
|
$ |
— |
|
|
$ |
(15,264,991 |
) |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Basic
and diluted net loss per share |
|
$ |
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Basic
net income per share, common stock subject to possible redemption |
|
|
|
|
|
$ |
0.00 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Pro
forma weighted average number of shares outstanding - basic and diluted |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
91,194,213 |
(2) |
|
|
|
|
|
|
90,309,983 |
(2) |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Pro
forma loss per share - basic and diluted |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
(0.17 |
) |
|
|
|
|
|
$ |
(0.17 |
) |
| |
(1) |
Please
refer to Note 7 — “Net Earnings (Loss) per Share” for details. |
| |
(2) |
The unaudited pro forma condensed
combined statement of operations for the year ended December 31, 2022, contains the historical audited statement of operations
of Bannix for the year ended December 31, 2022. EVIE was incorporated on May 8, 2023, therefore there is no historical statement
of operations for the year ended December 31, 2022 for EVIE included in the unaudited pro forma condensed combined statement
of operations as of December 31, 2022. |
NOTES
TO UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS
Note
1 — Description of the Proposed Transactions
On
June 23, 2023, Bannix, EVIE and the shareholder of the Evie Group (“Evie Group Shareholder”), entered into a Business
Combination Agreement (the “Business Combination Agreement”), pursuant to which, subject to the satisfaction or waiver
of certain conditions precedent in the Business Combination Agreement, the following transactions will occur: (a) the acquisition
by Bannix of all of the issued and outstanding share capital of Evie Group from the Evie Group Shareholder in exchange for the
issuance of eighty-five million new shares of common stock of Bannix, $0.01 par value per share (the “Common Stock”),
pursuant to which Evie Group will become a direct wholly owned subsidiary of Bannix (the “Share Acquisition”) and
(b) the other transactions contemplated by the Business Combination Agreement and the Ancillary Documents referred to therein
(collectively, the “Transactions”).
For
a description of the Business Combination and certain agreements executed in connection therewith, see “Summary of the
Proxy Statement — The Business Combination” and “Certain Agreements Related to the Business Combination.”
Note 2 — Adjustments
to Unaudited Pro Forma Condensed Combined Balance Sheet as of September 30, 2023
The pro forma adjustments
to the unaudited pro forma condensed combined balance sheet as of September 30, 2023, are as follows:
| |
A. |
Reflects
the liquidation and reclassification of $32.0 million of funds held in the Trust Account to cash that becomes available following
the Business Combination. |
| |
|
|
| |
B. |
Reflects
the settlement of deferred underwriting commissions upon the closing of the Business Combination. |
| |
C. |
Represents
preliminary estimated transaction costs expected to be incurred by Bannix and EVIE of approximately
$2.9 million for legal, accounting, advisory, and due diligence fees incurred as part of
the Business Combination.
For the Bannix transaction costs of
$2.6 million, $0.35 million costs have been accrued and $0.11 million costs have been paid as of the pro forma balance sheet date. The
amount of $2.1 million is reflected as an adjustment to accumulated losses.
For
the EVIE transaction costs of $0.3 million, no costs have been accrued or paid as of the pro forma balance sheet date. The amount
of $0.3 million is included as an adjustment to additional paid-in capital. |
| |
|
|
| |
D. |
Represents
the exchange of outstanding EVIE shares into shares of common stock at par value of $0.01 per share upon the Business Combination. |
| |
|
|
| |
E. |
Represents
the elimination of Bannix’s historical accumulated losses after recording the transaction costs to be incurred by Bannix as
described in (C) above. |
| |
F. |
In
Scenario 1, reflects the no additional redemptions scenario. In Scenario 2, reflects the net tangible asset scenario where 884,230
Bannix shares are redeemed for aggregate redemption payments of $9.6 million at a redemption price of approximately $10.89 per share.
The net tangible asset scenario reflects the maximum number of Bannix Public Shares that can be redeemed without violating the conditions
of the Business Combination Agreement or the requirement of Bannix’s Existing Organizational Documents that Bannix cannot redeem
Public Shares if it would result in Bannix having a minimum net tangible asset value of less than $5,000,001 after giving effect
to the payments to redeeming shareholders. This scenario includes all adjustments contained in the “no additional redemptions”
scenario and presents additional adjustments to reflect the effect of the net tangible asset scenario. |
| |
G. |
Reflects
the extension payments deposited into the Trust subsequent to September 30, 2023. |
| |
H. |
Reflects
the reversal of Bannix excise taxes payable as the 85,000,000 shares issued at the consummation of the Business Combination
are in excess of the 3,960,387 Bannix shares of common stock redeemed in March 2023. |
| |
|
|
| |
I. |
Reflects the
payment for advisory services upon the closing of the Business Combination. |
| |
J. |
Reflects
the payment of the promissory notes and due to related parties at the consummation of the Business Combination. |
| |
K. |
Reflects
the share-based compensation recognized by Bannix, at the consummation of the Business Combination, for Founders shares transferred. |
| |
L. |
Reflects
the conversion of 6,900,000 Public rights into 690,000 shares of common stock, par value $0.01, and 406,000 Private rights into 40,600
shares of common stock, par value $0.01, at the consummation of the Business Combination. |
| |
M. |
Reflects
the withdrawal of interest from the Trust to pay income taxes payable upon consummation of the Business Combination. |
| |
N. |
To
record interest earned in the Trust account subsequent to September 30, 2023. |
| |
|
|
| |
P. |
Reflects
the additional draws on the EVIE promissory note subsequent to September 30, 2023. |
Note 3 — Adjustments
and Reclassifications to Unaudited Pro Forma Condensed Combined Statement of Operations for the Nine Months Ended September 30, 2023
The pro forma adjustments
included in the unaudited pro forma condensed combined statement of operations for nine months ended September 30, 2023, are as follows:
| |
AA. |
Reflects
the elimination of interest income generated from the investments held in the Trust Account after giving effect to the Business
Combination as if it had occurred on January 1, 2022. |
| |
|
|
| |
BB. |
Reflects
the elimination of administrative service fees that will be ceased paying upon closing of the Business Combination. |
| |
|
|
| |
CC. |
Reflects
the elimination of income tax expense related to investment income held in the Trust Account because this income tax expense
would not be incurred if the Business Combination was consummated on January 1, 2022. |
Note
4 — Adjustments and Reclassifications to Unaudited Pro Forma Condensed Combined Statement of Operations for the Year Ended
December 31, 2022
The
pro forma adjustments included in the unaudited pro forma condensed combined statement of operations for year ended December 31,
2022, are as follows:
| |
AA. |
Reflects
the elimination of interest income generated from the investments held in the Trust Account after giving effect to the Business
Combination as if it had occurred on January 1, 2022. |
| |
BB. |
Reflects
the elimination of administrative service fees that will be ceased paying upon closing of the Business Combination. |
| |
|
|
| |
CC. |
Reflects
the transaction costs of Bannix. |
| |
|
|
| |
DD. |
Reflects
the elimination of income tax expense related to investment income held in the Trust Account because this income tax expense would not
be incurred if the Business Combination was consummated on January 1, 2022. |
| |
|
|
| |
EE. |
Reflects
the fees for advisory services upon the closing of the Business Combination. |
| |
|
|
| |
FF. |
Reflects
the share-based compensation, for Founders shares transferred, recognized by Bannix at the consummation of the Business Combination. |
| |
|
|
| |
GG. |
Reflects
the ClearThink advisory fee at the consummation of the Business Combination. |
Note
5 — Net Earnings per Share
Represents the earnings per share calculated using
the historical weighted average shares outstanding, and the issuance of additional shares in connection with the Business Combination,
assuming the shares were outstanding since January 1, 2022. As the Business Combination is being reflected as if it had occurred
at the beginning of the period presented, the calculation of weighted average shares outstanding for basic and diluted earnings per share
assumes that the shares issued in connection with the Business Combination have been outstanding for the entire period presented. If
the number of public shares described under the “Net Tangible Asset scenario described above are redeemed, this calculation is
retroactively adjusted to eliminate such shares for the entire period.
The
unaudited pro forma condensed combined financial information has been prepared assuming two alternative levels of redemption of
Bannix’s public shares:
| |
|
For
the
Nine Months Ended
September 30, 2023 and the Year Ended December 31, 2022 |
| |
|
Minimum
Redemption Scenario |
|
Net
Tangible Asset Scenario |
| Weighted
average shares outstanding – basic and diluted |
|
|
|
|
|
|
|
|
| EVIE
shareholders |
|
|
85,000,000 |
|
|
|
85,000,000 |
|
| Bannix
public shareholders (2) |
|
|
3,629,613 |
|
|
|
2,745,383 |
|
| Sponsor
Founder shares (1) |
|
|
2,564,600 |
|
|
|
2,564,600 |
|
| Total |
|
|
91,194,213 |
|
|
|
90,309,983 |
|
| |
(1) |
Includes
406,000 Private Rights converted to 40,600 shares of common stock upon consummation of the Business Combination. |
| |
(2) |
Includes
9,600,000 Public Rights converted to 960,000 shares of common stock upon consummation of the Business Combination. |
| |
|
Nine
Months Ended
September 30, 2023 |
| |
|
Assuming
No Additional
Redemptions |
|
Net
Tangible Asset Scenario |
| Pro forma
net loss |
|
$ |
(1,229,778 |
) |
|
$ |
(1,229,778 |
) |
| Weighted
average shares outstanding of common stock – basic and diluted |
|
|
91,194,213 |
|
|
|
90,309,983 |
|
| Net
loss per share – basic and diluted |
|
$ |
(0.01 |
) |
|
$ |
(0.01 |
) |
| |
|
Year
Ended
December 31, 2022 |
| |
|
Assuming
No Additional
Redemptions |
|
Net
Tangible Asset Scenario |
| Pro forma
net loss |
|
$ |
(15,264,991 |
) |
|
$ |
(15,264,991 |
) |
| Weighted
average shares outstanding of common stock – basic and diluted |
|
|
91,194,213 |
|
|
|
90,309,983 |
|
| Net
loss per share – basic and diluted |
|
$ |
(0.17 |
) |
|
$ |
(0.17 |
) |
PROPOSAL
2: THE CHARTER AMENDMENT PROPOSAL
The
Charter Amendment Proposal, if approved, will approve the following amendments to the Current Charter to:
| |
● |
change the name of
the new public entity to “Evie Autonomous Group, Inc.
” as opposed to “Bannix Acquisition Corp.”; |
| |
● |
make
the Combined Company’s corporate existence perpetual instead of requiring Bannix to be dissolved and liquidated 24 months
(or 30 months, if the extension proposal is approved by Bannix stockholders) following the Initial Public Offering and to
remove from the Proposed Charter the various provisions applicable only to special purpose acquisition companies. |
In
the judgment of the Board, the Charter Amendment Proposal is desirable for the following reasons:
| |
● |
the
name of the new public entity is desirable to reflect the Business Combination with Company and the combined business going
forward; and |
| |
● |
it
is desirable to delete the provisions that relate to the operation of Bannix as a blank check company prior to the consummation
of its initial business combination because they would not be applicable after the Business Combination (such as the obligation
to dissolve and liquidate if a business combination is not consummated within a certain period of time). |
Notwithstanding
the foregoing, certain of the Proposed Charter amendments may make it more difficult or discourage an attempt to obtain control
of New Company and thereby protect continuity of or entrench its management, which may adversely affect the market price of New
Company’s securities. If, for example, in the due exercise of its fiduciary obligations, the New Company Board was to determine
that a takeover proposal was not in the best interests of New Company, such shares could be issued by the New Company Board without
stockholder approval in one or more private placements or other transactions that might prevent or render more difficult or make
more costly the completion of any attempted takeover transaction by diluting voting or other rights of the proposed acquiror or
insurgent stockholder group, by creating a substantial voting bloc in institutional or other hands that might support the position
of the incumbent board of directors, by effecting an acquisition that might complicate or preclude the takeover, or otherwise.
The authorization of additional shares will, however, enable New Company to have the flexibility to authorize the issuance of
shares in the future for financing its business, acquiring other businesses, forming strategic partnerships and alliances and
stock dividends and stock splits. Bannix currently has no such plans, proposals or arrangements, written or otherwise, to issue
any of the additional authorized shares for such purposes.
Under
the Business Combination Agreement, the approval of the Charter Amendment Proposal is a condition to the adoption of the Business
Combination Proposal and vice versa. Accordingly, if the Business Combination Proposal is not approved, each of the Charter Amendment
Proposals will not be presented at the Special Meeting.
The
approval of the Charter Amendment Proposal requires the affirmative vote of a majority of the issued and outstanding shares of
each of the Common Stock and Class B Common Stock, voting separately, as well as the vote of a majority of the issued and
outstanding shares of Common Stock and Class B Common Stock, voting together as a single class. Accordingly, a Bannix stockholder’s
failure to vote by proxy or to vote in person (which would include presence at a virtual meeting) at the Special Meeting or an
abstention will have the same effect as a vote “AGAINST” the Charter Amendment Proposal.
A
copy of the Proposed Charter, as will be in effect assuming approval of all of the Charter Amendment Proposal and upon consummation
of the Business Combination and filing with the Delaware Secretary of State, is attached to this proxy statement as Annex B.
Recommendation
of the Board
THE
BOARD UNANIMOUSLY RECOMMENDS THAT BANNIX STOCKHOLDERS VOTE “FOR” THE APPROVAL OF THE CHARTER AMENDMENT PROPOSAL.
The
existence of financial and personal interests of one or more of Bannix’s directors may result in a conflict of interest
on the part of such director(s) between what he, she or they may believe is in the best interests of Bannix and its stockholders
and what he, she or they may believe is best for himself, herself or themselves in determining to recommend that stockholders
vote for the Proposals. In addition, Bannix’s directors and officers have interests in the Business Combination that may
conflict with or be in addition to your interests as a stockholder. See the section entitled “Proposal 1: The Business
Combination Proposal — Interests of the Sponsor and Bannix’s Directors and Officers in the Business Combination”
for a further discussion of these considerations.
PROPOSAL
3: THE ADVISORY CHARTER AMENDMENT PROPOSALS
In
connection with the Business Combination, Bannix is asking its stockholders to vote upon, on a non-binding advisory basis, proposals
to approve certain governance provisions contained in the Proposed Charter. This separate vote is not otherwise required by Delaware
law separate and apart from the Charter Amendment Proposal. Pursuant to SEC guidance, Bannix is submitting these provisions to
its stockholders separately for approval, allowing stockholders the opportunity to present their separate views on important governance
provisions. However, the stockholder votes regarding these proposals are advisory votes, and are not binding on Bannix or the
Board (separate and apart from the approval of the Charter Amendment Proposal). In the judgment of the Board, these provisions
are necessary to adequately address the needs of the Combined Company. Furthermore, the Business Combination is not conditioned
on the separate approval of the Advisory Charter Amendment Proposals (separate and apart from approval of the Charter Amendment
Proposal).
Bannix
stockholders will be asked to approve, on a non-binding advisory basis, the following material differences between the Proposed
Charter and the Current Charter, which are being presented as seven separate sub-proposals:
| |
● |
Advisory
Charter Proposal A — to change the corporate name of the Combined Company to “[ ]” at and from
the time of the Business Combination; |
| |
● |
Advisory
Charter Proposal B — to increase the authorized shares of common stock of the Combined Company to 400,000,000
shares; |
| |
● |
Advisory
Charter Proposal C — to increase the authorized shares of preferred stock that the Combined Company’s
board of directors could issue to 10,000,000 shares; |
| |
● |
Advisory
Charter Proposal D — to remove from the Proposed Charter the various provisions applicable only to special
purpose acquisition companies; and |
Reasons
for the Charter Amendments
In
the judgment of the Board, the amendments to the Current Charter are desirable for the following reasons:
| |
● |
the
name of the new public entity is desirable to reflect the Business Combination with Company and the combined business going
forward; |
| |
● |
the
greater number of authorized number of shares of capital stock is desirable for the Combined Company to have enough additional
authorized shares for financing its business, for acquiring other businesses, for forming strategic partnerships and alliances
and for stock dividends and stock splits; |
| |
● |
it
is desirable to delete the provisions that relate to the operation of Bannix as a blank check company prior to the consummation
of its initial business combination because they would not be applicable after the Business Combination (such as the obligation
to dissolve and liquidate if a business combination is not consummated within a certain period of time). |
Notwithstanding
the foregoing, certain of the Proposed Charter amendments may make it more difficult or to discourage an attempt to obtain control
of New Company and thereby protect continuity of or entrench its management, which may adversely affect the market price of New
Company’s securities. If, for example, in the due exercise of its fiduciary obligations the New Company Board was to determine
that a takeover proposal was not in the best interests of New Company, such shares could be issued by the New Company Board without
stockholder approval in one or more private placements or other transactions that might prevent or render more difficult or make
more costly the completion of any attempted takeover transaction by diluting voting or other rights of the proposed acquiror or
insurgent stockholder group,
by
creating a substantial voting bloc in institutional or other hands that might support the position of the incumbent board of directors,
by effecting an acquisition that might complicate or preclude the takeover, or otherwise. The authorization of additional shares
will, however, enable New Company to have the flexibility to authorize the issuance of shares in the future for financing its
business, acquiring other businesses, forming strategic partnerships and alliances and stock dividends and stock splits. Bannix
currently has no such plans, proposals or arrangements, written or otherwise, to issue any of the additional authorized shares
for such purposes.
The
approval of each of the Advisory Charter Amendment Proposals requires the affirmative vote of the holders of a majority of the
shares of Bannix Common Stock cast in respect of the relevant Proposal and entitled to vote thereon at the Special Meeting, voting
together as a single class.
A
copy of the Proposed Charter, as will be in effect assuming approval of the Charter Amendment Proposal and upon consummation of
the Business Combination and filing with the Delaware Secretary of State, is attached to this proxy statement as Annex B.
Recommendation
of the Board
THE
BOARD UNANIMOUSLY RECOMMENDS THAT BANNIX STOCKHOLDERS VOTE “FOR” THE APPROVAL OF EACH OF THE ADVISORY CHARTER AMENDMENT
PROPOSALS.
The
existence of financial and personal interests of one or more of Bannix’s directors may result in a conflict of interest
on the part of such director(s) between what he, she or they may believe is in the best interests of Bannix and its stockholders
and what he, she or they may believe is best for himself, herself or themselves in determining to recommend that stockholders
vote for the Proposals. In addition, Bannix’s directors and officers have interests in the Business Combination that may
conflict with or be in addition to your interests as a stockholder. See the section entitled “Proposal 1: The Business
Combination Proposal — Interests of the Sponsor and Bannix’s Directors and Officers in the Business Combination”
for a further discussion of these considerations.
PROPOSAL
4: THE STOCK ISSUANCE PROPOSAL
For
purposes of complying with Rule 5635(a), (b) and (d) of the Nasdaq Stock Market Listing Rules, Bannix stockholders
are being asked to approve the issuance of up to 85,000,000 common shares of New Company common stock, in connection with the
Business Combination.
Under
Nasdaq Rule 5635(a), stockholder approval is required prior to the issuance of securities in connection with the acquisition
of another company if such securities are not issued in a public offering and (i) have, or will have upon issuance, voting
power equal to or in excess of 20% of the voting power outstanding before the issuance of common stock (or securities convertible
into or exercisable for common stock); or (ii) the number of shares of common stock to be issued is or will be equal to or
in excess of 20% of the number of shares of common stock outstanding before the issuance of the stock or securities. Collectively,
the shares being issued to the Company Shareholder will exceed 20% or more of the outstanding Bannix Common Stock and 20% or more
of the voting power, in each case outstanding before the issuance of such shares in connection with the Business Combination.
Under
Nasdaq Rule 5635(b), stockholder approval is required when any issuance or potential issuance will result in a “change
of control” of the issuer. Although Nasdaq has not adopted any rule on what constitutes a “change of control”
for purposes of Rule 5635(b), Nasdaq has previously indicated that the acquisition of, or right to acquire, by a single investor
or affiliated investor group, as little as 20% of the common stock (or securities convertible into or exercisable for common stock)
or voting power of an issuer could constitute a change of control. Under Nasdaq Rule 5635(b), the issuance of the Merger
Consideration and the Contingent Consideration and/or the shares issued pursuant to the Interim Financing Agreements will result
in a “change of control” of Bannix.
Under
Nasdaq Listing Rule 5635(d), stockholder approval is required for a transaction other than a public offering involving the
sale, issuance or potential issuance by an issuer of common stock (or securities convertible into or exercisable for common stock)
at a price that is less than the lower of (i) the closing price immediately preceding the signing of the binding agreement
or (ii) the average closing price of the common stock for the five trading days immediately preceding the signing of the
binding agreement, if the number of shares of common stock (or securities convertible into or exercisable for common stock) to
be issued equals 20% or more of the common stock, or 20% or more of the voting power, outstanding before the issuance. Because
shares of New Company common stock will be issued in exchange for all of the equity interests of Company, the deemed issuance
price of the shares of New Company common stock may be less than the lower of (i) the closing price immediately preceding
the signing of the Business Combination Agreement or (ii) the average closing price of the Common Stock for the five trading
days immediately preceding the signing of the Business Combination Agreement. If the Business Combination Proposal is approved,
the issuance of the shares of New Company common stock will exceed 20% of the shares of Bannix Common Stock currently outstanding.
Because the issuance price may be deemed to be below the lower of (i) the closing price immediately preceding the signing
of the Business Combination Agreement or (ii) the average closing price of the Common Stock for the five trading days immediately
preceding the signing of the Business Combination Agreement, the Nasdaq Rules may require that Bannix obtain stockholder approval
of the issuance of the shares of New Company common stock in connection with the consummation of the Business Combination.
As
a result of the foregoing, Bannix is required to obtain stockholder approval pursuant to The Nasdaq Stock Market Listing Rule 5635.
The
approval of the Stock Issuance Proposal requires the affirmative vote of the holders of a majority of the shares of Bannix Common
Stock cast in respect of the relevant Proposal and entitled to vote thereon at the Special Meeting.
If
the Business Combination Proposal is not approved, the Stock Issuance Proposal will not be presented at the Special Meeting.
Recommendation
of the Board
THE
BOARD UNANIMOUSLY RECOMMENDS THAT BANNIX STOCKHOLDERS VOTE “FOR” THE STOCK ISSUANCE PROPOSAL.
The
existence of financial and personal interests of one or more of Bannix’s directors may result in a conflict of interest
on the part of such director(s) between what he, she or they may believe is in the best interests of Bannix and its stockholders
and what he, she or they may believe is best for himself, herself or themselves in determining to recommend that stockholders
vote for the Proposals. In addition, Bannix’s directors and officers have interests in the Business Combination that may
conflict with or be in addition to your interests as a stockholder. See the section entitled “Proposal 1: The Business
Combination Proposal — Interests of the Sponsor and Bannix’s Directors and Officers in the Business Combination”
for a further discussion of these considerations.
PROPOSAL
5: THE DIRECTOR ELECTION PROPOSAL
Election
of Directors
At
the Special Meeting, it is proposed that five directors will be elected to be the directors of New Company upon consummation of
the Business Combination.
Information
regarding each nominee is set forth in the section entitled “Management of New Company After the Business Combination.”
Under
Delaware law, the election of directors requires a plurality vote of the shares of Bannix Common Stock cast in respect of that
Proposal and entitled to vote thereon at the Special Meeting. “Plurality” means that the individuals who receive the
largest number of votes cast “FOR” are elected as directors. Consequently, any shares not voted “FOR”
a particular nominee (whether as a result of an abstention, a direction to withhold authority or a broker non-vote) will not be
counted in the nominee’s favor.
Unless
authority is withheld or the shares are subject to a broker non-vote, the proxies solicited by the Board will be voted “FOR”
the election of these nominees. In case any of the nominees becomes unavailable for election to the board of directors, an event
that is not anticipated, the persons named as proxies, or their substitutes, will have full discretion and authority to vote or
refrain from voting for any other candidate in accordance with their judgment.
If
the Business Combination Proposal is not approved, the Director Election Proposal will not be presented at the Special Meeting.
Following
consummation of the Business Combination, the election of directors of the Combined Company will be governed by the Proposed Charter,
the Bylaws and the laws of the State of Delaware.
Recommendation
of the Board
THE
BOARD UNANIMOUSLY RECOMMENDS THAT BANNIX STOCKHOLDERS VOTE “FOR” EACH OF THE NOMINEES LISTED IN THIS PROXY STATEMENT.
The
existence of financial and personal interests of one or more of Bannix’s directors may result in a conflict of interest
on the part of such director(s) between what he, she or they may believe is in the best interests of Bannix and its stockholders
and what he, she or they may believe is best for himself, herself or themselves in determining to recommend that stockholders
vote for the Proposals. In addition, Bannix’s
directors
and officers have interests in the Business Combination that may conflict with or be in addition to your interests as a stockholder.
See the section entitled “Proposal 1: The Business Combination Proposal — Interests of the Sponsor and Bannix’s
Directors and Officers in the Business Combination” for a further discussion of these considerations.
PROPOSAL
5: THE ADJOURNMENT PROPOSAL
The
Adjournment Proposal allows the Board to submit a proposal to adjourn the Special Meeting to a later date or dates if Bannix is
unable to consummate the Business Combination for any reason. In no event will Bannix solicit proxies to adjourn the Special Meeting
or consummate the Business Combination beyond the date by which it may properly do so under the Business Combination Agreement
or its Current Charter and Delaware law. The purpose of the Adjournment Proposal is to provide more time to consummate the Business
Combination, if necessary and appropriate. See the section entitled “Proposal 1: The Business Combination Proposal — Interests
of the Sponsor and Bannix’s Directors and Officers in the Business Combination.”
In
addition to an adjournment of the Special Meeting upon approval of an adjournment proposal, the Board is empowered under Delaware
law to postpone the Special Meeting at any time prior to the meeting being called to order. In such event, Bannix will issue a
press release and take such other steps as it believes are necessary and practical in the circumstances to inform its stockholders
of the postponement.
Consequences
if the Adjournment Proposal is not Approved
If
the Adjournment Proposal is presented at the Special Meeting and is not approved by Bannix’s stockholders, the Board may
not be able to adjourn the Special Meeting to a later date if Bannix is unable to consummate the Business Combination (because
either the Business Combination Proposal is not approved or the conditions to consummating the Business Combination have not been
met). In such event, the Business Combination would not be completed.
Required
Vote of Bannix Stockholders
Adoption
of an Adjournment Proposal requires the affirmative vote of a majority of the issued and outstanding shares of Bannix Common Stock
cast by the stockholders represented in person (which would include presence at a virtual meeting) or by proxy at the Special
Meeting and entitled to vote thereon. Adoption of the Adjournment Proposal is not conditioned upon the adoption of any of the
other proposals.
Recommendation
of the Board
THE
BOARD UNANIMOUSLY RECOMMENDS THAT BANNIX STOCKHOLDERS VOTE “FOR” THE APPROVAL OF THE ADJOURNMENT PROPOSAL.
INFORMATION
ABOUT BANNIX
Introduction
Bannix
is a Delaware company incorporated on January 21, 2021 as a blank check company for the purpose of potentially entering into a
merger, share exchange, asset acquisition, stock purchase, recapitalization, reorganization or other similar business combination,
with one or more target businesses.
Bannix’s
original sponsors are Subash Menon and Sudeesh Yezhuvath (through their investment entity Bannix Management LLP), Suresh Yezhuvath (“Yezhuvath”)
and Seema Rao (“Rao”). On October 20, 2022, pursuant to a Securities Purchase Agreement, a copy of which is attached hereto
as Annex D, Instant Fame LLC, a Nevada limited liability company (“Instant”), acquired an aggregate of 385,000 shares
of common stock of Bannix plus 90,000 Units, from Bannix Management LLP. As a result, Doug Davis and Roey Benjamin Schnapp are the Sponsors
of Bannix through their investment entity Instant (the “Sponsors”).
On
September 14, 2021, we consummated our initial public offering (“IPO”) of 6,900,000 units at $10.00 per unit (the
“Units”). The units sold included the full exercise of the underwriters’ over-allotment. Each Unit consists
of one share of our common stock (the “Public Shares”), one redeemable warrant to purchase one share of our common
stock at a price of $11.50 per share and one right. Each right entitles the holder thereof to receive one-tenth (1/10) of one
share of our common stock upon the consummation of our initial business combination.
Simultaneously
with the closing of the IPO and the over-allotment, we consummated the issuance of 406,000 private placement units (the “Private
Placement Units”) as follows: we sold 181,000 Private Placement Units to certain investors for aggregate cash proceeds of
$2,460,000 and issued an additional 225,000 private placement units to our Sponsors in exchange for the cancellation of $1,105,000
in loans and a promissory note due to them. Each Private Placement Unit consists of one share of our common stock, one redeemable
warrant to purchase one share of our common stock at a price of $11.50 per whole share and one right. Each right entitles the
holder thereof to receive one-tenth (1/10) of one share of our common stock upon the consummation of our Business Combination.
Our management has broad discretion with respect to the specific application of the net proceeds of the IPO and the Private Placement
Units, although substantially all of the net proceeds are intended to be generally applied toward consummating our Business Combination.
Upon
the closing of the initial public offering on September 14, 2021, a total of $69,690,000 of the net proceeds from the IPO, the
Over-Allotment and the Private Placement were deposited in a trust account established for the benefit of our public stockholders.
Bannix
extended the deadline by which Bannix must complete a business combination by three months, from December 14, 2022 to March 14,
2023. In order to fund the $690,000 deposit required to allow for such extension (“extension funds”), Bannix has obtained a
loan from Instant evidenced by a non-interest-bearing promissory note that is payable only upon the consummation of a business
combination by Bannix.
As
approved by its stockholders at the Special Meeting of Stockholders of Bannix held on March 8, 2023, Bannix filed an amendment
to its Amended and Restated Certificate of Incorporation with the Delaware Secretary of State on March 9, 2023 (the “Extension
Amendment”), to extend the date (the “Extension”) by which Bannix must (1) complete a merger, share exchange,
asset acquisition, stock purchase, recapitalization, reorganization or similar business combination involving Bannix and one or
more businesses (an “initial business combination”), (2) cease its operations except for the purpose of winding up
if it fails to complete such initial business combination, and (3) redeem 100% of Bannix’s common stock (“common stock”)
included as part of the units sold in Bannix’s initial public offering that was consummated on September 14, 2021 (the “IPO”),
from March 14, 2023, and to allow Bannix, without another stockholder vote, to further extend the date to consummate a business
combination on a monthly basis up to twelve (12) times by an additional one (1) month each time after March 14, 2023 or later
extended deadline date, by resolution of Bannix’s board of directors (the “Board”), if requested by Instant,
upon five days’ advance notice prior to the applicable deadline date, until March 14, 2024, or a total of up to twelve (12)
months after March 14, 2023 (such date as extended, the “Deadline Date”), unless the closing of a business combination
shall have occurred prior thereto.
As
of June 30, 2023, a total of $31.3 million including the net proceeds from the IPO, the Private Placement and the extension funds
as well as income accrued since the date of the IPO was being held in a trust account established for the benefit of Bannix’s
public stockholders.
None
of the funds held in trust will be released from the trust account, other than interest income to pay any tax obligations until
the earlier of (i) our consummation of our initial business combination, and then only in connection with those shares of common
stock that such stockholder properly elected to redeem, subject to the limitations described herein, (ii) the redemption of our
public shares if we are unable to consummate our initial business combination within 15 months of the closing of the IPO or up
to 21 months if the time to complete the business combination is extended.
Fair
Market Value of Target Business
The
target business or businesses that Bannix acquires must collectively have a fair market value equal to at least 80% of the balance
of the funds in the trust account (excluding the deferred underwriting commissions and taxes payable on the income earned on the
trust account) at the time of the execution of a definitive agreement for its initial business combination, although Bannix may
acquire a target business whose fair market value significantly exceeds 80% of the trust account balance. The Bannix Board determined
that this test was met in connection with the proposed business combination with EVIE as described in the section titled “Proposal
No. 1 — The Business Combination Proposal.”
Voting
Restrictions in Connection with Stockholder Meeting
In
connection with any vote for a proposed business combination, including the vote with respect to the business combination proposal,
the Sponsor has agreed to vote the founder shares as well as any shares of common stock acquired in the market in favor of such
proposed business combination.
At
any time prior to the special meeting, during a period when they are not then aware of any material nonpublic information regarding
Bannix or its securities, the Sponsor, EVIE and/or their respective affiliates may purchase shares from institutional and other
investors who vote, or indicate an intention to vote, against the business combination proposal, or execute agreements to purchase
such shares from them in the future, or they may enter into transactions with such persons and others to provide them with incentives
to acquire shares of Bannix’s common stock or vote their shares in favor of the business combination proposal. The purpose
of such share purchases and other transactions would be to increase the likelihood of satisfaction of the requirements that the
business combination be approved where it appears that such requirements would otherwise not be met. All shares repurchased by
Bannix’s affiliates pursuant to such arrangements would be voted in favor of the proposed business combination.
Liquidation
if No Business Combination
We
initially had 15 months from the closing of our IPO to consummate our initial business combination. However, if we anticipate
that we may not be able to consummate our initial business combination within 15 months, we may, by resolution of our board of
directors if requested by our initial stockholders, extend the period of time to consummate a business combination up to two times,
each by an additional three months (for a total of up to 21 months to complete an initial business combination), subject to the
sponsors depositing additional funds into the trust account as set out below. Pursuant to the terms of our amended and restated
certificate of incorporation and the trust agreement entered into between us and Continental Stock Transfer & Trust Company,
in order to extend the time available for us to consummate our initial business combination, our initial stockholders or their
affiliates or designees, upon five days advance notice prior to the applicable deadline, must deposit into the trust account for
each three-month extension, $690,000 ($0.10 per share in either case) on or prior to the date of the applicable deadline, up to
an aggregate of $1,380,000, or approximately $0.20 per share. On December 13, 2022, the Company issued an unsecured promissory
note (the “Note”) in favor of Instant, in the principal amount of $690,000. The proceeds of the Note were utilized
by the Company to obtain the first three-month extension of the period for the Company to consummate a business combination. The
Note does not bear interest and matures upon closing of a business combination by the Company. If the Company fails to consummate
a business combination, the outstanding debt under the Note will be forgiven, except to the extent of any funds held outside of
the Company’s trust account after paying all other fees and expenses of the Company. The summary of the Note is qualified
in its entirety by reference to the full text of the Note, which is attached as Exhibit 10.1 and is incorporated herein by reference.
As
approved by its stockholders at the Special Meeting of Stockholders of the Company held on March 8, 2023, the Company filed the
Extension Amendment, to extend the date (the “Extension”) by which the Company must (1) complete an initial business
combination, (2) cease its operations except for the purpose of winding up if it fails to complete such initial business combination,
and (3) redeem 100% of the Company’s common stock included as part of the units sold in the Company’s IPO and to allow
the Company, without another stockholder vote, to further extend the date to consummate a business combination on a monthly basis
up to twelve (12) times by an additional one (1) month each time after March 14, 2023 or later extended deadline date, by resolution
of the Company’s Board, if requested by Instant, upon five days’ advance notice prior to the Deadline Date, until
March 14, 2024, or a total of up to twelve (12) months after March 14, 2023 unless the closing of a business combination shall
have occurred prior thereto.
On
March 13, 2023, the Board, at the request of the Sponsor, determined to implement a first Extension and to extend the Deadline
Date for an additional month to April 14, 2023. In connection with the Sponsor’s contribution for the Extension, which was
funded on March 10, 2023, on March 13, 2023, Bannix issued an unsecured promissory note to the Sponsor with a principal amount
equal to $75,000 (the “Extension Note”). The Extension Note bears no interest and is repayable in full upon the earlier
of (a) the date of the consummation of Bannix’s initial business combination, or (b) the date of Bannix’s liquidation.
If Bannix does not consummate an initial business combination by the Deadline Date, the Notes will be repaid only from funds held
outside of the trust account or will be forfeited, eliminated or otherwise forgiven.
Our
initial stockholders have agreed to waive their rights to liquidating distributions from the trust account with respect to their
founder shares if we fail to complete our initial business combination pursuant to the Extension Amendment. However, if our initial
stockholders acquire public shares in or after the IPO, they will be entitled to liquidating distributions from the trust account
with respect to such public shares if we fail to complete our initial business combination prior to the Extension.
Our
sponsors, officers and directors have agreed, pursuant to a written letter agreement with us, that they will not propose any amendment
to our amended and restated certificate of incorporation that would affect (i) the substance or timing of our obligation
to redeem 100% of our public shares if we do not complete our initial business combination within the Extension or (ii) with
respect to any other provision relating to stockholders’ rights or pre-business combination activity, unless we provide
our public stockholders with the opportunity to redeem their shares of common stock upon approval of any such amendment at a per-share price,
payable in cash, equal to the aggregate amount then on deposit in the trust account, including interest (which interest shall
be net of taxes payable) divided by the number of then outstanding public shares. However, we may not redeem our public shares
in an amount that would cause our net tangible assets to be less than $5,000,001 both immediately before and after the consummation
of our initial business combination (so that we are not subject to the SEC’s “penny stock” rules). If this optional
redemption right is exercised with respect to an excessive number of public shares such that we cannot satisfy the net tangible
asset requirement (described above), we would not proceed with the amendment or the related redemption of our public shares at
such time.
We
expect that all costs and expenses associated with implementing our plan of dissolution, as well as payments to any creditors,
will be funded from amounts remaining out of the proceeds held outside the trust account, although we cannot assure you that there
will be sufficient funds for such purpose. However, if those funds are not sufficient to cover the costs and expenses associated
with implementing our plan of dissolution, to the extent that there is any interest accrued in the trust account not required
to pay taxes, we may request the trustee to release to us an additional amount of such accrued interest to pay those costs and
expenses.
If
we were to expend all of the net proceeds of the IPO and the private placement, other than the proceeds deposited in the trust
account, and without taking into account interest, if any, earned on the trust account, the per-share redemption amount received
by stockholders upon our dissolution would be approximately $10.46 (subject to increase of up to an additional $75,000 per
month in the event that our sponsors elect to extend the period of time to consummate a business combination as set forth in the
Extension Amendment). The proceeds deposited in the trust account could, however, become subject to the claims of our creditors
which would have higher priority than the claims of our public stockholders. We cannot assure you that the actual per-share redemption
amount received by stockholders will not be substantially less than $10.46. Under Section 281(b) of the DGCL, our plan of
dissolution must provide for all claims against us to be paid in full or make provision for payments to be made in full, as applicable,
if there are sufficient assets. These claims must be paid or provided for before we make any distribution of our remaining assets
to our stockholders. While we intend to pay such amounts, if any, we cannot assure you that we will have funds sufficient to pay
or provide for all creditors’ claims.
Although
we will seek to have all vendors, service providers, prospective target businesses or other entities with which we do business
execute agreements with us waiving any right, title, interest or claim of any kind in or to any monies held in the trust account
for the benefit of our public stockholders, there is no guarantee that they will execute such agreements or even if they execute
such agreements that they would be prevented from bringing claims against the trust account including but not limited to fraudulent
inducement, breach of fiduciary responsibility or other similar claims, as well as claims challenging the enforceability of the
waiver, in each case in order to gain an advantage with respect to a claim against our assets, including the funds held in the
trust account. If any third-party refuses to execute an agreement waiving such claims to the monies held in the trust account,
our management will perform an analysis of the alternatives available to it and will only enter into an agreement with a third
party that has not executed a waiver if management believes that such third party’s engagement would be significantly more
beneficial to us than any alternative.
Examples of possible instances where we may engage a third party that
refuses to execute a waiver include the engagement of a third-party consultant whose particular expertise or skills are believed
by management to be significantly superior to those of other consultants that would agree to execute a waiver or in cases where
management is unable to find a service provider willing to execute a waiver. In addition, there is no guarantee that such entities
will agree to waive any claims they may have in the future as a result of, or arising out of, any negotiations, contracts or agreements
with us and will not seek recourse against the trust account for any reason. In order to protect the amounts held in the trust
account, our sponsors have agreed that it will be liable to us if and to the extent any claims by a vendor for services rendered
or products sold to us, or a prospective target business with which we have discussed entering into a transaction agreement, reduce
the amount of funds in the trust account to below (i) $10.46 (subject to increase of up to an additional $75,000 per month
in the event that our sponsors elect to extend the period of time to consummate a business combination as set forth in the Extension
Amendment) or (ii) such lesser amount per public share held in the trust account as of the date of the liquidation of the
trust account, due to reductions in value of the trust assets, in each case net of the amount of interest which may be withdrawn
to pay taxes, except as to any claims by a third party who executed a waiver of any and all rights to seek access to the trust
account and except as to any claims under our indemnity of the underwriters of the IPO against certain liabilities, including
liabilities under the Securities Act. In the event that an executed waiver is deemed to be unenforceable against a third party,
then our sponsors will not be responsible to the extent of any liability for such third-party claims. We have not asked our sponsors
to reserve for such indemnification obligations, and our sponsors’ only assets are securities of our company. Therefore,
we cannot assure you that our sponsors would be able to satisfy those obligations. We believe the likelihood of our sponsors having
to indemnify the trust account is limited because we will endeavor to have all vendors and prospective target businesses as well
as other entities execute agreements with us waiving any right, title, interest or claim of any kind in or to monies held in the
trust account.
In
the event that the proceeds in the trust account are reduced below (i) $10.46 per public share or (ii) such lesser amount
per public share held in the trust account as of the date of the liquidation of the trust account, due to reductions in value
of the trust assets, in each case net of the amount of interest which may be withdrawn to pay taxes, and our sponsors assert that
it is unable to satisfy its indemnification obligations or that it has no indemnification obligations related to a particular
claim, our independent directors would determine whether to take legal action against our sponsors to enforce its indemnification
obligations. While we currently expect that our independent directors would take legal action on our behalf against our sponsors
to enforce its indemnification obligations to us, it is possible that our independent directors in exercising their business judgment
may choose not to do so in any particular instance. Accordingly, we cannot assure you that due to claims of creditors the actual
value of the per-share redemption price will not be substantially less than $10.46 per share.
We
will seek to reduce the possibility that our sponsors will have to indemnify the trust account due to claims of creditors by endeavoring
to have all vendors, service providers, prospective target businesses or other entities with which we do business execute agreements
with us waiving any right, title, interest or claim of any kind in or to monies held in the trust account. Our sponsors will also
not be liable as to any claims under our indemnity of the underwriters of the IPO against certain liabilities, including liabilities
under the Securities Act. We will have access to up to $575,000 from the proceeds of the IPO with which to pay any such potential
claims (including costs and expenses incurred in connection with our liquidation, currently estimated to be no more than approximately
$100,000).
Under
the DGCL, stockholders may be held liable for claims by third parties against a corporation to the extent of distributions received
by them in a dissolution. The pro rata portion of our trust account distributed to our public stockholders upon the redemption
of our public shares in the event we do not complete our initial business combination within 15 months (or up to 21 months from
the closing of the IPO if we extend the period of time to consummate a business combination) from the closing of the IPO may be
considered a liquidation distribution under Delaware law. If the corporation complies with certain procedures set forth in Section 280
of the DGCL intended to ensure that it makes reasonable provision for all claims against it, including a 60-day notice
period during which any third-party claims can be brought against the corporation, a 90-day period during which the
corporation may reject any claims brought, and an additional 150 day waiting period before any liquidated distributions are made
to stockholders, any liability of stockholders with respect to a liquidating distribution is limited to the lesser of such stockholder’s
pro rata share of the claim or the amount distributed to the stockholder, and any liability of the stockholder would be barred
after the third anniversary of the dissolution. However, it is our intention to redeem our public shares as soon as is reasonable
as of the Extension from the closing of the IPO in the event we do not complete a business combination and, therefore, we do not
intend to comply with those procedures.
Because
we will not be complying with Section 280, Section 281(b) of the DGCL requires us to adopt a plan, based on facts known
to us at such time that will provide for our payment of all existing and pending claims or claims that may be potentially brought
against us within the subsequent 10 years. However, because we are a blank check company, rather than an operating company, and
our operations will be limited to searching for prospective target businesses to acquire, the only likely claims to arise would
be from our vendors (such as lawyers, investment bankers, etc.) or prospective target businesses. As described above, pursuant
to the obligation contained in our underwriting agreement, we will seek to have all vendors, service providers, prospective target
businesses or other entities with which we do business execute agreements with us waiving any right, title, interest or claim
of any kind in or to any monies held in the trust account.
As
a result of this obligation, the claims that could be made against us are significantly limited and the likelihood that any claim
that would result in any liability extending to the trust account is remote. Further, our sponsors may be liable only to the extent
necessary to ensure that the amounts in the trust account are not reduced below (i) $10.46 per public share or (ii) such
lesser amount per public share held in the trust account as of the date of the liquidation of the trust account, due to reductions
in value of the trust assets, in each case net of the amount of interest withdrawn to pay taxes, and will not be liable as to
any claims under our indemnity of the underwriters of against certain liabilities, including liabilities under the Securities
Act. In the event that an executed waiver is deemed to be unenforceable against a third party, our sponsors will not be responsible
to the extent of any liability for such third-party claims.
If
we file a bankruptcy petition or an involuntary bankruptcy petition is filed against us that is not dismissed, the proceeds held
in the trust account could be subject to applicable bankruptcy law, and may be included in our bankruptcy estate and subject to
the claims of third parties with priority over the claims of our stockholders. To the extent any bankruptcy claims deplete the
trust account, we cannot assure you we will be able to return $10.46 per share to our public stockholders. Additionally,
if we file a bankruptcy petition or an involuntary bankruptcy petition is filed against us that is not dismissed, any distributions
received by stockholders could be viewed under applicable debtor/creditor and/or bankruptcy laws as either a “preferential
transfer” or a “fraudulent conveyance.” As a result, a bankruptcy court could seek to recover some or all amounts
received by our stockholders. Furthermore, our board of directors may be viewed as having breached its fiduciary duty to our creditors
and/or may have acted in bad faith, and thereby exposing itself and our company to claims of punitive damages, by paying public
stockholders from the trust account prior to addressing the claims of creditors. We cannot assure you that claims will not be
brought against us for these reasons.
Our
public stockholders will be entitled to receive funds from the trust account only upon the earliest to occur of: (i) the
completion of our initial business combination, (ii) the redemption of any public shares properly tendered in connection
with a stockholder vote to amend our amended and restated certificate of incorporation (A) to modify the substance or timing
of our obligation to redeem 100% of our public shares if we do not complete our initial business combination within the Extension
or (B) with respect to any other provision relating to stockholders’ rights or pre-business combination activity,
and (iii) the redemption of all of our public shares if we are unable to complete our initial business combination within
the Extension. In no other circumstances will a stockholder have any right or interest of any kind to or in the trust account.
In the event we seek stockholder approval in connection with our initial business combination, a stockholder’s voting in
connection with the business combination alone will not result in a stockholder’s redeeming its shares to us for an applicable
pro rata share of the trust account. Such stockholder must have also exercised its redemption rights described above.
Employees
Bannix
has one executive officer. This individual is not obligated to devote any specific number of hours to Bannix’s matters and
intend to devote only as much time as they deem necessary to its affairs. Bannix does not intend to have any full-time employees
prior to the consummation of a business combination.
BANNIX
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
References
to the “Company,” “our,” “us” or “we” refer to Bannix Acquisition Corp. The following
discussion and analysis of the Company’s financial condition and results of operations should be read in conjunction with
the unaudited financial statements and the notes thereto contained elsewhere in this proxy statement. Certain information contained
in the discussion and analysis set forth below includes forward-looking statements that involve risks and uncertainties
Cautionary
Note Regarding Forward-Looking Statements
This
proxy statement includes forward-looking statements within the meaning of Section 27A of the Securities Act and Section 21E
of the Exchange Act. We have based these forward-looking statements on our current expectations and projections about future events.
These forward-looking statements are subject to known and unknown risks, uncertainties and assumptions about us that may cause
our actual results, levels of activity, performance or achievements to be materially different from any future results, levels
of activity, performance or achievements expressed or implied by such forward-looking statements. In some cases, you can identify
forward-looking statements by terminology such as “may,” “should,” “could,” “would,”
“expect,” “plan,” “anticipate,” “believe,” “estimate,” “continue,”
or the negative of such terms or other similar expressions. Such statements include, but are not limited to, the proposed Business
Combination, and related matters, as well as all other statements other than statements of historical fact included in this proxy
statement.
Overview
We
are a blank check company incorporated on January 21, 2021 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.
On
September 14, 2021, we consummated our IPO of 6,900,000 units at $10.00 per unit (the “Units”). The units sold included
the full exercise of the underwriters’ over-allotment. Each Unit consists of one share of our common stock (the “Public
Shares”), one redeemable warrant to purchase one share of our common stock at a price of $11.50 per share and one right.
Each right entitles the holder thereof to receive one-tenth (1/10) of one share of our common stock upon the consummation of the
Business Combination.
Simultaneously
with the closing of the IPO and the over-allotment, we consummated the issuance of 406,000 private placement units (the “Private
Placement Units”) as follows: we sold 181,000 Private Placement Units to certain investors for aggregate cash proceeds of
$2,460,000 and issued an additional 225,000 private placement units to our Sponsor in exchange for the cancellation of $1,105,000
in loans and a promissory note due to them. Each Private Placement Unit consists of one share of our common stock, one redeemable
warrant to purchase one share of our common stock at a price of $11.50 per whole share and one right. Each right entitles the
holder thereof to receive one-tenth (1/10) of one share of our common stock upon the consummation of our Business Combination.
Our management has broad discretion with respect to the specific application of the net proceeds of the IPO and the Private Placement
Units, although substantially all of the net proceeds are intended to be generally applied toward consummating our Business Combination.
Upon
the closing of the initial public offering on September 14, 2021, a total of $69,690,000 of the net proceeds from the IPO, the
Over-Allotment and the Private Placement were deposited in a trust account established for the benefit of our public stockholders.
The
Company held a Special Meeting of Stockholders on March 8, 2023 at 12:00 p.m. Eastern Time (the “Special Meeting”).
At the Special Meeting, the stockholder approved the filing of an amendment to its Amended and Restated Certificate of Incorporation
with the Delaware Secretary of State (the “Extension Amendment”), to extend the date (the “Extension”)
by which the Company must (1) complete a merger, share exchange, asset acquisition, stock purchase, recapitalization, reorganization
or similar business combination involving the Company and one or more businesses (an “initial business combination”),
(2) cease its operations except for the purpose of winding up if it fails to complete such initial business combination, and (3)
redeem 100% of the Company’s common stock (“common stock”) included as part of the units sold in the Company’s
initial public offering that was consummated on September
14, 2021 (the “IPO”), from March 14, 2023, and to allow the Company, without another stockholder vote, to further
extend the date to consummate a business combination on a monthly basis up to twelve (12) times by an additional one (1) month
each time after March 14, 2024 or later extended deadline date, by resolution of the Company’s board of directors (the “Board”),
if requested by Instant Fame upon five days’ advance notice prior to the applicable deadline date, until March 14, 2024,
or a total of up to twelve (12) months after March 14, 2023 (such date as extended, the “Deadline Date”), unless the
closing of a business combination shall have occurred prior thereto. The stockholders also approved an amendment (the “Trust
Amendment”) to the Company’s Investment Management Trust Agreement dated as of September 10 2021 (the “Trust
Agreement”) by and between the Company and Continental Stock Transfer & Trust Company (the “Trustee”) incorporating
the terms as set forth in the Extension Amendment.
We
extended the deadline by which we must complete a business combination from December 14, 2022 to March 14, 2023 with deposits
of $690,000 in the Trust Account. From January 1, 2023 through November 30, 2023, we have deposited $675,000 into the Trust Account
to extend the deadline by which we must complete a business combination to December 14, 2023. In order to fund deposits required
to allow for such extension, we obtained loans from Instant Fame, LLC and Evie Group evidenced by non-interest-bearing promissory
notes that are payable upon the consummation of a business combination by us. If we fail to consummate a business combination,
the outstanding debt under the promissory notes will be forgiven, except to the extent of any funds held outside of the trust
account after paying all other fees and expenses of the Company.
If
we have not completed our initial business combination by March 14, 2024, as extended, we will: (i) cease all operations except
for the purpose of winding up, (ii) as promptly as reasonably possible but not more than ten business days thereafter, redeem
the public shares, at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the trust account,
including interest (which interest shall be net of taxes payable, and less up to $100,000 of interest to pay dissolution expenses)
divided by the number of then outstanding public shares, which redemption will completely extinguish public stockholders’
rights as stockholders (including the right to receive further liquidation distributions, if any), subject to applicable law,
and (iii) as promptly as reasonably possible following such redemption, subject to the approval of our remaining stockholders
and our board of directors, dissolve and liquidate, subject in each case to our obligations under Delaware law to provide for
claims of creditors and the requirements of other applicable law.
In
connection with the vote on the Trust Amendment and the Extension Amendment at the Special Meeting on May 8, 2023, stockholders
holding a total of 3,960,387 shares of the Company’s common stock exercised their right to redeem such shares for a pro
rata portion of the funds in the Company’s trust account. As a result, $41,077,199 (approximately $10.37201 per share) was
removed from the Company’s trust account to pay such holders. Following redemptions, the Company has 5,463,613 shares outstanding.
Propose
Business Combination
On
April 17, 2023, the Company entered into a binding letter of intent (the “Letter of Intent”) with Evie and on May
8, 2023, Evie Group became a successor entity for the proposed Business Combination.
GBT
Technologies Inc. is also a party to the Letter of Intent pursuant to which the Company agreed to acquire the Apollo System which
is intellectual property covered by main patent application (publication number 2022/0405966) filed with the US Patent and Trademark
Office and enhanced by additional related synergy patents (patents). These patents application describes a machine learning driven
technology that controls radio wave transmissions, analyzes their reflections data, and constructs 2D/3D images of stationary
and moving objects. The Apollo System is based on radio waves and can detect an entity’s moving and stationary positions,
enabling imaging technology to show these movements and positions on a screen in real time. This includes an AI technology that
controls the radio waves transmission and analyzes the reflections. The goal is to integrate the Apollo System as an efficient
driver monitoring system, detecting impaired or distracted drivers, providing audible and visual alerts.
Below
is a list of the patents to be acquired in connection with the Apollo acquisition:
| Title |
App. No. |
Country |
Filing Date |
Status/Deadline |
Patent No. |
Issue Date |
| SYSTEMS AND METHODS OF FACIAL AND BODY RECOGNITION, IDENTIFICATION AND ANALYSIS |
17/212,235 |
USA |
Mar. 25, 2021 |
GRANTED |
US 11,527,104 B2 |
Dec. 13, 2022 |
| SYSTEMS AND METHODS OF MOBILE DATABASE MANAGEMENT AND SHARING |
16/155,093 |
USA |
Oct. 9, 2018 |
GRANTED |
US 10,853,327 B2 |
Dec. 1, 2020 |
| SYSTEMS AND METHODS OF MOBILE DATABASE MANAGEMENT AND SHARING |
17/104,001 |
USA |
Nov. 25, 2020 |
GRANTED (CONTINUATION) |
US 11,663,167 B2 |
May 30, 2023 |
| SYSTEMS AND METHODS OF REAL-TIME MOVEMENT, POSITION DETECTION, AND IMAGING (APOLLO) |
17/471,213 |
USA |
Sep. 10, 2021 |
GRANTED |
US 11,302,032 Bl |
Apr. 12, 2022 |
ELECTRONIC CIRCUITS FOR SECURE COMMUNICATIONS AND ASSOCIATED SYSTEMS AND METHODS
(SECURE COMM.) |
15/015,441 |
USA |
Feb. 4, 2016 |
GRANTED |
US 10,521,614 B2 |
Dec. 31, 2019 |
| SYSTEMS AND METHODS OF REAL-TIME MOVEMENT, POSITION DETECTION, AND IMAGING (APOLLO CONTINUATION) |
17/694,384 |
USA |
Mar. 14, 2022 |
PENDING (CONTINUATION) |
Publication. No.: US 2022/0405966 Al |
Dec. 22, 2022 (Publication Date) |
On
June 23, 2023, the Company, Evie Group, and the shareholder of the Evie Group Shareholder), entered into a Business Combination
Agreement (the “Business Combination Agreement”), pursuant to which, subject to the satisfaction or waiver of certain
conditions precedent in the Business Combination Agreement, the following transactions will occur: the acquisition by Bannix of
all of the issued and outstanding share capital of Evie Group from the Evie Group Shareholder in exchange for
the issuance of
eighty-five million new shares of common stock of Bannix, $0.01 par value per share (the “Common Stock”), pursuant
to which Evie Group will become a direct wholly owned subsidiary of Bannix (the “Share Acquisition”) and (b) the other
transactions contemplated by the Business Combination Agreement and the Ancillary Documents referred to therein (collectively,
the “Transactions”).
Representations
and Warranties
Under
the Business Combination Agreement, Bannix has made customary representations and warranties to Evie Group, and the Evie Group
Shareholder relating to, among other things, organization and standing, due authorization and binding agreement, governmental
approvals, non-contravention, capitalization, Securities and Exchange Commission (the “SEC”) filings, financial statements,
internal controls, absence of certain changes, compliance with laws, actions, orders and permits, taxes and returns, employees
and employee benefit plans, properties, material contracts, transactions with related persons, the U.S. Investment Company Act
of 1940, as amended (the “Investment Company Act”), and the Jumpstart Our Business Startups Act of 2012, finders’
and brokers’ fees, sanctions and certain business practices, private placements, insurance, no misleading information supplied,
the Trust Account, acknowledgement of no further representations and warranties and receipt of a fairness opinion.
Under
the Business Combination Agreement, the Evie Group has made customary representations and warranties (on behalf of itself and
its subsidiaries) to Bannix relating to, among other things, organization and standing, due authorization and binding agreement,
capitalization, company subsidiaries, governmental approvals, non-contravention, financial statements, absence of certain changes,
compliance with laws, permits, litigation, material contracts, intellectual property, taxes and returns, real property, personal
property, employee matters, benefit plans, environmental matters, transactions with related persons, insurance, material customers
and suppliers, data protection and cybersecurity, sanctions and certain business practices, the Investment Company Act, finders’
and brokers’ fees and no misleading information supplied.
Under
the Business Combination Agreement, the Evie Group Shareholder has made customary representations and warranties (with respect
to itself only) to Bannix relating to, among other things, organization and standing, due authorization and binding agreement,
share ownership, governmental approvals, non-contravention, litigation, certain investment representations, finders’ and
brokers’ fees and no misleading information supplied.
Covenants
The
Business Combination Agreement includes customary covenants of the parties including, among other things, (i) the conduct of their
respective business operations prior to the consummation of the transactions, (ii) using commercially reasonable efforts to obtain
relevant approvals and comply with all applicable listing requirements of The Nasdaq Stock Market LLC (“NASDAQ”) in
connection with the transactions and (iii) using commercially reasonable efforts to consummate the transactions and to comply
as promptly as practicable with all requirements of governmental authorities applicable to the transactions. The Business Combination
Agreement also contains additional covenants of the parties, including covenants providing for Bannix and Evie Group to use commercially
reasonable efforts to file, and to cooperate with each other to prepare the proxy statement of Bannix.
Conditions
to Closing
The
respective obligations of each party to consummate the transactions, including the Share Acquisition, are subject to the satisfaction,
or written waiver (where permissible), by Evie Group and Bannix of the following conditions:
| ● |
|
Bannix’s
shareholders having approved and adopted the Shareholder Approval Matters; and |
| ● |
|
the
absence of any law or governmental order, inquiry, proceeding or other action that would prohibit the transactions. |
Conditions
to the Obligations of Evie Group and the Evie Group Shareholder
The
obligations of Evie Group and the Evie Group Shareholder to consummate the transactions are subject to the satisfaction, or written
waiver (by Evie Group, where permissible) of the following conditions:
| ● |
|
the
representations and warranties of Bannix being true and correct as determined in accordance with the Business Combination
Agreement; |
| ● |
|
Bannix
having performed in all material respects all of its obligations and complied in all material respects with all of its agreements
and covenants under the Business Combination Agreement to be performed or complied with by it on or prior to the Closing Date; |
| ● |
|
Bannix
having delivered to Evie Group a certificate dated as of the Closing Date, signed by an officer of Bannix, certifying as to
the satisfaction of certain conditions specified in the Business Combination Agreement; |
| ● |
|
no
Material Adverse Effect shall have occurred with respect to Bannix that is continuing and uncured; |
| ● |
|
Bannix
having made all necessary and appropriate arrangements with the trustee to have all of the funds held in the Trust Account
disbursed to Bannix on the Closing Date, and all such funds released from the Trust Account be available to the surviving
company; |
| ● |
|
Bannix
having provided the public holders of Bannix shares of common stock with the opportunity to make redemption elections with
respect to their Bannix shares of common stock pursuant to their Redemption Rights; |
| ● |
|
the
Evie Group Shareholder receiving confirmation from HM Revenue & Customs that in respect of the transactions contemplated
by this Agreement (i) no counteraction notice under section 698 Income Tax Act 2007 will be given; and (ii) the provisions
of section 137 of the Taxation of Chargeable Gains Act 1992 do not apply with the result that the provisions of section 135
of that Act would not be prevented from applying; and |
| ● |
|
the
Ancillary Documents required to be executed by Bannix according to the Business Combination Agreement at or prior to the Closing
Date shall have been executed and delivered to Evie Group. |
Conditions
to the Obligations of Bannix
The
obligations of Bannix to consummate the transactions are subject to the satisfaction, or written waiver (by Bannix where permissible)
of the following conditions:
| ● |
|
the
representations and warranties of Evie Group and the Evie Group Shareholder being true and correct as determined in accordance
with the Business Combination Agreement; |
| ● |
|
each
of Evie Group and the Evie Group Shareholder having performed in all material respects all of their respective obligations
and complied in all material respects with all of their respective agreements and covenants under the Business Combination
Agreement to be performed or complied with by them on or prior to the Closing Date; |
| ● |
|
Evie
Group having delivered to Bannix a certificate dated as of the Closing Date, signed by the Company certifying as to the satisfaction
of certain conditions specified in the Business Combination Agreement but in each case, solely with respect to themselves; |
| ● |
|
no
Material Adverse Effect shall have occurred with respect to Evie Group that is continuing and uncured; and |
| ● |
|
the
Ancillary Documents required to be executed by Evie Group and the Evie Group Shareholder according to the Business Combination
Agreement at or prior to the Closing Date shall have been executed and delivered to Bannix. |
Termination
The
Business Combination Agreement may be terminated, and the transactions may be abandoned at any time prior to the Closing Date,
notwithstanding receipt of any requisite approval and adoption of the Business Combination Agreement and the transactions by the
shareholders of Bannix or any party, as follows:
| ● |
|
by
mutual written consent of Bannix and Evie Group; |
| ● |
|
by
either Bannix or Evie Group if any of the closing conditions set forth in the Business Combination Agreement have not been
satisfied or waived by December 31, 2023; provided, however, that the Business Combination Agreement may not be terminated
under such provision of the Business Combination Agreement by or on behalf of any party that either directly or indirectly
through its affiliates (or with respect to Evie Group and the Evie Group Shareholder) is in breach or violation of any representation,
warranty, covenant or obligation contained therein, with such breach or violation being the principal cause of the failure
of a condition set forth in the Business Combination Agreement on or prior to the Outside Date; |
| ● |
|
by
either Bannix or Evie Group if any governmental authority of competent jurisdiction will have issued an order or taken any
other action permanently restraining, enjoining or otherwise prohibiting the transactions contemplated by the Business Combination
Agreement, and such order or other action has become final and non-appealable; provided, however, that the right to terminate
the Business Combination Agreement pursuant to such section will not be available to a party if the failure by such party
or its affiliates (or with respect to Evie Group and the Evie Group Shareholder) to comply with any provision of the Business
Combination Agreement was the principal cause of such order, action or prohibition; |
| ● |
|
by
Evie Group upon a breach of any representation, warranty, covenant or agreement on the part of Bannix set forth in the Business
Combination Agreement, or if any representation, warranty of Bannix becomes untrue or inaccurate, in each case such that the
related closing conditions contained in the Business Combination Agreement are not satisfied, subject to customary exceptions
and cure rights; |
| ● |
|
by
Bannix upon a breach of any warranty, covenant or agreement on the part of Evie Group and the Evie Group Shareholder set forth
in the Business Combination Agreement, or if any warranty of such parties becomes untrue or inaccurate, in any case such that
the related closing conditions contained in the Business Combination Agreement are not satisfied, subject to customary exceptions
and cure rights; |
| ● |
|
by
Evie Group if Bannix or the Bannix Securities are no longer listed on the NASDAQ or another national securities exchange;
or |
| ● |
|
by
either Bannix or Evie Group if the special meeting of shareholders is held and has concluded, Bannix shareholders have duly
voted, and the Required Shareholder Approval is not obtained. |
Sponsor
Support Agreement
Within
thirty days after the execution of the Business Combination Agreement, Bannix, Instant Fame, and Evie Group shall enter into the
sponsor letter agreement (the “Sponsor Letter Agreement”), pursuant to which Instant Fame will agree to, among other
things, support and vote in favor of the Business Combination Agreement and use its reasonable best efforts to take all other
actions necessary to consummate the transactions contemplated thereby, on the terms and subject to the conditions set forth in
the Sponsor Letter Agreement.
We
cannot assure you that our plans to complete our initial business combination will be successful.
On
May 10, 2023, we engaged a law firm to assist with the proposed Business Combination with Evie Group. We agreed to pay $30,000
upon entering into the agreement, $70,000 upon Evie Group signing a definitive business combination agreement and the remaining
$500,000 is contingent upon the closing of the Business Combination with Evie Group.
On
May 19, 2023, we entered into an Executive Retention Agreement with Mr. Davis, Chief Executive Officer and Co-Chairman of the
Board of Directors, providing for an at-will employment arrangement that may be terminated by either party at any time, which
provides for the payment of an annual salary of $240,000 to Mr. Davis. Additionally, we entered into a letter agreement with Subash
Menon, a director of the Company, for services in connection with the review and advice pertaining to the proposed acquisition
of Evie providing for a payment in the amount of $200,000 upon the closing of a Business Combination.
Results
of Operations
Our entire
activity since inception up to September 30, 2023 was in preparation for our initial public offering and since the initial public
offering, the search for a suitable business combination. We will not generate any operating revenues until the closing and completion
of our initial business combination, at the earliest.
For the
three months ended September 30, 2023, we had a net loss of $101,152, which consisted of operating costs of $394,213 and provision
for income taxes of $81,847, partially offset by interest income on the trust account of $370,848 and a change in the fair value
of warrant liabilities of $4,060.
For the
nine months ended September 30, 2023, we had a net loss of $151,848, which consisted of operating costs of $1,197,866 and provision
for income taxes of $348,105, offset by interest income on the trust account of $1,394,123.
For the
three months ended September 30, 2022, we had a net income of $65,942, which consisted of operating costs of $301,455 and provision
for income taxes of $63,263, an unrealized gain from the change in fair value of Private Warrant liability of $20,300, and interest
income on the trust account of $410,360.
For the
nine months ended September 30, 2022, we had a net loss of $170,124, which consisted of operating costs of $743,647 and provision
for income taxes of $63,263, an unrealized gain from the change in fair value of Private Warrant liability of $178,640, and interest
income on the trust account of $458,146.
Liquidity,
Capital Resources, and Going Concern
As of September
30, 2023, we had $39,589 in cash and a working capital deficit of $3,577,906.
Our liquidity
needs through September 30, 2023, were satisfied through (1) a capital contribution from the Sponsors of $28,750 for common stock
(“Founder Shares”) and (2) loans from Sponsors and new Sponsors and related parties in order to pay offering costs
and other working capital needs. In addition, in order to fund transaction costs in connection with a possible Business Combination,
our new Sponsors, an affiliate of the new Sponsors, and/or certain of our officers and directors may, but are not obligated to,
provide our company Working Capital Loans. As of September 30, 2023, and December 31, 2022, there were no loans associated with
the Working Capital Loans. As of September 30, 2023, we owed $1,197,850 to Sponsors, new Sponsors and related parties.
Based on
the foregoing, management believes that we may not have sufficient funds and borrowing capacity to meet its operating needs through
the consummation of a Business Combination through the extended term of our company which expires on October 14, 2023 (as extended).
Over this time period, we will be utilizing the funds in the operating bank account to pay existing accounts payable, identifying
and evaluating prospective initial Business Combination candidates, performing due diligence on prospective target businesses,
paying for travel expenditures, selecting the target business to merge with or acquire, and structuring, negotiating and consummating
the Business Combination. As of the date of the filing of this report, management has indicated that it does intend to extend
the term of after its initial term expires.
We are within
12 months of its mandatory liquidation date as of the date of the filing of this report. In connection with our assessment of
going concern considerations, we have until January 14, 2024 (as extended) to consummate a Business Combination. It is uncertain
that the Company will be able to consummate a Business Combination by that time. If a Business Combination is not consummated
by this date, there will be a mandatory liquidation and subsequent dissolution of Bannix. Bannix has determined that the insufficient
funds to meet the operating needs of Bannix through the liquidation date as well as the mandatory liquidation, should a business
combination not occur, and potential subsequent dissolution raise substantial doubt about our ability to continue as a going concern.
These unaudited condensed financial statements do not include any adjustments relating to the recovery
of the recorded assets or the classification of the liabilities that might be necessary should the Company be unable to continue
as a going concern.
Critical
Accounting Policies
The
preparation of these condensed financial statements in conformity with US GAAP requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of expenses during the reporting period. Actual results could differ from those
estimates. We have identified the following as our critical accounting policies:
Fair
Value of Warrant Liability
The
Company accounted for the Private Placement Warrants issued in connection with the IPO and private placement in accordance with
the guidance contained in ASC Topic 815, “Derivatives and Hedging” whereby under that provision, the Private Warrants
did not meet the criteria for equity treatment and were recorded as a liability. Accordingly, the Company classified the Private
Warrants as a liability at fair value and adjusts them to fair value at each reporting period. This liability is re-measured at
each balance sheet date until the Private Warrants are exercised or expire, and any change in fair value is recognized in the
Company’s statements of operations. The Public Warrants are classified as equity.
Common
Stock Subject to Redemption
The
Company accounts for its common stock subject to possible redemption in accordance with the guidance in ASC Topic 480, “Distinguishing
Liabilities from Equity.” Common stock subject to mandatory redemption (if any) are classified as a liability instrument
and 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 and subsequently measured at redemption value. At all other times,
shares of common stock are classified as stockholders’ equity. The Company’s shares of common stock sold as part of
the IPO feature certain redemption rights that are considered to be outside of the Company’s control and subject to the
occurrence of uncertain future events. Accordingly, all shares of common stock subject to possible redemption are presented at
their net carrying value and classified as temporary equity, outside of the stockholders’ equity section of the Company’s
balance sheet. The initial carrying value of the common stock subject to redemption is recorded at an amount equal to the proceeds
of the public offering less (i) the fair value of the public warrants and less (ii) offering costs allocable to the common stock
sold as part of the units in the public offering. In accordance with the alternative methods described in ASC Subtopic 480-10-S99-3A(15),
“Classification and Measurement of Redeemable Securities.” the Company has made an accounting policy election to accrete
changes in the difference between the initial carrying amount and the redemption amount ($10.10 per share) over the period form
the IPO date to the expected redemption date. For purposes of accretion, the Company has estimated that it will take 15 months
for a business combination to occur and accordingly will accrete the carrying amount to the redemption value using the effective
interest method over that period. Such changes are reflected in additional paid in capital, or in the absence of additional paid-in
capital, in accumulated deficit.
In
December 2022 the Company changed the methodology on a go-forward basis to recognize changes in redemption value immediately as
they occur and adjusts the carrying value of redeemable common stock to equal the redemption value at the end of each reporting
period. Increases or decreases in the carrying amount of redeemable common stock are affected by charges against additional paid-in-capital
(to the extent available) and accumulated deficit.
Off-Balance Sheet
Arrangements; Commitments and Contractual Obligations
Registration
Rights
Pursuant
to a registration rights agreement entered into on September 10, 2021, the holders of the founder shares, the private placement
units and private placement units that may be issued upon conversion of working capital loans will be entitled to registration
rights pursuant to a registration rights agreement to be signed prior to or on the closing date of this offering requiring us
to register such securities for resale. The holders of these securities are entitled to make up to three demands, excluding short
form demands, that we register such securities. In addition, the holders have certain “piggy-back” registration rights
with respect to registration statements filed subsequent to the completion of our initial business combination. We will bear the
expenses incurred in connection with the filing of any such registration statements.
Underwriters
Agreement
The
underwriters are entitled to a deferred underwriting discount of $225,000 in the aggregate which will be payable to the underwriters
from the amounts to be brought in by the sponsors solely in the event that we complete a business combination, subject to the
terms of the underwriting agreement. Additionally, the underwriters will be entitled to a business combination marketing fee of
3.5% of the gross proceeds of the sale of Units in the initial public offering held in the trust account upon the completion of
the initial Business Combination subject to the terms of the underwriting agreement.
Related
Party Transactions
Quantitative
and Qualitative Disclosures About Market Risk
We
are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information
otherwise required under this item.
Executive
Officers of Bannix
Directors
and Executive Officers
As of
the date of this proxy statement, our directors and officers are as follows:
| Name | |
Age | |
Title |
| Douglas Davis | |
| 64 | | |
Co- Chairman of the Board of Directors, Chief Executive Officer, Secretary and Principal Executive, Accounting and Financial Officer |
| Craig J. Marshakz | |
| 63 | | |
Co-Chairman of the Board of Directors |
| Jamal “Jamie” Khurshid | |
| 46 | | |
Director |
| Eric T. Shuss | |
| 57 | | |
Director |
| Ned L. Siegel | |
| 71 | | |
Director |
| Subash Menon | |
| 57 | | |
Director |
Douglas
Davis is a seasoned executive with management experience across many areas including M&A, capital raising, sales
and business development. Since 2001, Mr. Davis has served as the Managing Partner of CoBuilder, Inc., a consulting organization
providing services for large and small corporate entities associated with increasing efficiencies, including increasing market
penetration, revenues and profit; also, from 2008 to 2018, Mr. Davis served as the CEO of BitSpeed LLC, an extreme file transfer
software solution. In addition, from July 2018 to April 2020 Mr. Davis served as the Chief Executive Officer of GBT Technologies,
Inc. Mr. Davis received an AB Political Science from Stanford University and an MBA (Concentration in Finance and Strategic Management)
from UCLA Anderson Graduate School of Management. Mr. Davis is a manager of Instant Fame LLC
Craig
J. Marshak has served as the Vice Chairman and Co-Founder of Moringa Acquisition since February 2021 to present.
Mr. Marshak has a 25-year track record in investment banking, private equity and venture capital, in each case with a significant
Israel-based focus. Since January 2010, Mr. Marshak has served as Managing Director at Israel Venture Partners, or IVP, a platform
used by him and investment colleagues to identify opportunistic Israel based global growth enterprises. Previously, Mr. Marshak
served as a Managing Director, and the Global Co-Head, of the Nomura Technology Investment Growth Fund, a merchant banking fund
operated from within the London offices of Nomura Securities, focused on growth-stage and venture capital investments in Israel,
Silicon Valley and North America. Prior to holding that position, he served as a Director, Investment Banking, in the Restructuring
and International Corporate Finance and Cross-Border Capital Markets groups at Schroders, for both its New York and London offices.
Mr. Marshak started his career at Morgan Stanley’s merchant banking division in New York. Mr. Marshak has played a
principal role in many investments in Israeli companies, most notably (while at the Nomura Technology Investment Growth Fund)
the first institutional round for Shopping.com (NASDAQ: SHOP) (which was sold to eBay, after its IPO) and organizing the first
institutional round for CyberArk (NASDAQ: CYBR). He earned an A.B. in Political Science and Economics from Duke University, as
well as a J.D. from Harvard Law School. From August 2016, Mr. Marshak serves as a director of Nukkleus Inc, which has announced
a pending merger with Brilliant Acquisition SPAC. Nukkleus is a financial technology company whose shares are traded publicly
in the U.S.
Jamal
“Jamie” Khurshid served as an investment banker for over 20 years at Goldman Sachs, Credit Suisse
and Royal Bank of Scotland before joining Cinnober Financial Technology, the world’s leading independent exchange and clearing
house technology provider, as a senior partner where Mr. Khurshid served from 2013 to 2018. In 2018, Mr. Khurshid co-founded
Digital RFQ, a leading digital payments service. From 2020 through 2021, Mr. Khurshid served as the COO of Droit Financial
Technology,
an enterprise technology firm. Since 2021, Mr. Khurshid joined Financial Strategies Acquisition Corp
in June 2021 as Chief Executive Officer, subsequently resigning from the position in January 2022 remaining a director of the
company. In August 2021 Mr. Khurshid was appointed Chief Operating Officer at Nukkleus Inc, which has announced a pending merger
with Brilliant Acquisition SPAC. Nukkleus is a financial technology company whose shares are traded publicly in the
U.S. In September 2021 he co-founded and is a director and Chairman of Jacobi Asset Management Holdings Limited in the United
Kingdom and parent company of Jacobi Asset Management PCC Limited, an ETF issuer in Guernsey. In November 2021 he was appointed
as Chief Operating Officer and Director of Caduceus Foundation, a blockchain technology company in Singapore. He is a Board member
of 4Phyll Private Limited, a BioPlastics technology company in Singapore and Non-Executive Director for OneCycle Group, a chemical
engineering technology provider in the UK. In 1997, Mr. Khurshid graduated from the University of Reading in the United Kingdom
with second class honours as a Bachelor of Science in Environmental Science. Mr. Khurshid was voted by financial news
as one of the top 40 under 40 in European trading and technology (2014) and ranked in the ‘Exchange invest’ Top
1000 most influential people in global financial markets in 2017.
Eric
T. Shuss has extensive knowledge and expertise in growing and running high-tech companies, from start-ups to thriving
ongoing ventures. Over his 35-year career, he has worked at mid-to-large companies as a Senior Industry Analyst, Managing Consultant,
Director of Information Systems, Director of Operations, CEO, COO, Vice President, and President. These roles have been within
high-profile businesses in AI and Robotics, I.T./ERP sales and consulting firms, high-tech manufacturers, Telecomm, retail operations,
and distributors. Most recently, from May 2019 until present, Mr. Shuss has served as a Senior Industry Analyst for Avantiico
representing the company in all customer and partner interactions for its professional services practice. Prior to his current
role, Mr. Shuss, managed and owned a consulting business, Peryton Systems, from April 2016 to May 2019 which was an independent
consulting firm engaged to facilitate the commercialization of innovative technologies in Artificial Intelligence, VR/AR, ERP,
Supply Chain and Logistics. Mr. Shuss has also held various other roles including Senior Industry Analyst/Presales for Hitachi
Corporation. Mr. Shuss is an author and futurist who serves on several advisory boards and has a keen understanding of technology
and can see the big picture to find ways for people to access and benefit from technology, which is the key to his success. Mr.
Shuss attended California State University Long Beach studying Computer Science.
Ned
L. Siegel has had a long and distinguished career as a senior U.S. government official and businessman. He was appointed
by then President George W. Bush as the U.S. Ambassador to the Commonwealth of the Bahamas from October 2007 to January 2009. He was
also appointed by President Bush to serve under Ambassador John R. Bolton at the United Nations in New York, serving as the Senior Advisor
to the U.S. Mission and as the U.S. representative to the 61st Session of the United Nations General Assembly. Prior to his ambassadorship,
he was appointed to the Board of Directors of the Overseas Private Investment Corporation (OPIC) from 2003 to 2007. Appointed by then
Governor Jeb Bush, he served as a Member of the Board of Directors of Enterprise Florida, Inc. (EFI) from 1999-2004. EFI is the state
of Florida’s primary organization promoting statewide economic development through its public-private partnership. In addition
to his public service, Ambassador Siegel has over 30 years of entrepreneurial successes. Presently, he serves as President of The Siegel
Group, a multi-disciplined international business management advisory firm specializing in real estate, energy, utilities, infrastructure,
financial services, oil and gas and cyber and secure technology. Ambassador Siegel also serves on the Board of Directors and Advisory
Boards of other numerous public and private companies, and private equity groups. He graduated Phi Beta Kappa from the University of
Connecticut in 1973 and received a juris doctorate from the Dickinson School of Law in 1976. In December 2014, he received an honorary
degree of Doctor of Business Administration from the University of South Carolina. Mr. Siegel has previously served as a member of the
Board of Directors of Healthwarehouse.com, Inc. from June 2013 to September 2016, and GBT Technologies Inc. from May 2017 to April
2020. Since July 2021 to the present, Mr. Siegel serves as director with Worksport Ltd a public company, and since November 2021 to the
present on the board of LaRosa Holding Corp, currently in the process of IPO on NASDAQ. Ambassador Siegel received a BA from the
University of Connecticut in 1973 and JD from the Dickinson School of Law in 1976. In December 2014, he received an honorary degree of
Doctor of Business Administration from the University of South Carolina.
Subash
Menon has been our Chairman of the Board of Directors and Chief Executive Officer from January 2021 until October
2022. Mr. Menon is the Chief Executive Officer of Pelatro Plc, an AIM and LSE listed entity. Pelatro Plc offers campaign management
and loyalty management solutions for telecommunication companies and these solutions are part of the overall Customer Engagement
space within the telecom industry. At Pelatro, Mr. Menon is responsible for sales, marketing, finance, legal and investor relations.
Prior to co-founding Pelatro in 2013, Mr. Menon had founded and led Subex Limited for 20 years (from 1992 to 2012). Mr. Menon
successfully took Subex from startup stage, through an IPO to a company that generated revenue of over $110 million, with 200
customers across 80 countries. During that period, Subex completed several acquisitions of companies in the U.S., UK and Canada.
Under Mr. Menon’s leadership, Subex achieved several milestones – the first software product company to list in India,
the first Indian software company to acquire an overseas company and the first Indian company to use GDR as an instrument for
acquisition. For the innovative achievements Mr. Menon achieved at Subex, he was named a “Mover & Shaker” in the
Indian software industry. Subex also won the “NASSCOM Innovation Award” and “One of the 8 Most innovative Companies”
award from NASSCOM. Mr. Menon has a graduate degree in Electrical Engineering from National Institute of Technology, Durgapur
and is a Distinguished Alumnus. Mr. Menon has presented numerous papers on business at international fora.
INFORMATION
ABOUT THE COMPANY
Unless
the context otherwise requires, all references in this subsection to “we,” “us,” or “our”
refer to Company prior to the consummation of the Business Combination.
Overview
EVIE
Autonomous Group Ltd. (the “Company” or “EVIE”) is a pre-revenue innovations group based in the United
Kingdom. EVIE brings together existing artificial intelligence and autonomous technology with decades of automotive industry expertise.
EVIE
was incorporated in May 2023 for the purpose of acquiring intellectual property and business rights owned by Aim Technologies
Ltd. (“AIM”) and Cavonix Ltd. (“Cavonix”) with the goal of further developing the related business. In
October 2022, AIM acquired the assets of Westfield Autonomous Vehicles Ltd. (“Westfield”) from its insolvency administrator.
EVIE subsequently acquired the intellectual property and business rights from AIM and Cavonix in May 2023 through separate Asset
Purchase Agreements with AIM (for the Aim and WAV IP) and Cavonix. The existing electric autonomous pod platform initially developed
by Westfield has moved 6.3 million passengers at London Heathrow T5 since 2011. EVIE has now upgraded this pod platforms with
its level four autonomous stack, enabling them to operate safely outside of a guideway. A “pod” or autonomous pod,
also known as a driverless pod or autonomous shuttle, we mean a small, self-driving vehicle designed for short-distance transportation
of people or goods in controlled environments, such as airports, smart cities, warehouses, or private developments. These pods
typically accommodate four to eight passengers and are equipped with a variety of sensors, in EVIE’s cameras and radar,
to navigate safely and independently. EVIE has its principal operations in Stoke-on-Trent, the United Kingdom.
The
Company is a pre-commercial stage advanced artificial intelligence (“AI”), robotics and autonomous mobility developer.
The Company owns an extensive library of intellectual property related to its core areas of expertise, originally developed and
sold to the Company by AIM and Cavonix. EVIE’s core product is a complete and reliable level four autonomous technology
stack that Original Equipment Manufacturers (OEM) can install on their own equipment to enable it to self-drive and operate. This
system in essence can be “Lifted and Shifted” from one vehicle type to another. We believe it is provided at a low
price point, enabled by a propriety software architecture, which is purpose built for robotics and autonomous development.
This
architecture allows EVIE to rapidly develop, deploy and test, saving time and money over traditional development approaches. It
also requires fewer processing resources reducing the cost further and improving system efficiencies. We expect to use the autonomous
technology system to generate recurrent revenues from licensing and unlock the “autonomy as a service” business models.
In
EVIE’s autonomous systems, a diverse array of Artificial Intelligence (AI) technologies are employed, encompassing Convolutional
Neural Networks (CNN), Recurrent Neural Networks (RNN), and Artificial Neural Networks (ANN). These signal-based AI’s play
a crucial role in discerning patterns and shapes within streams of sensor data, replicating the intricate processes of the human
brain. Their primary functions involve identifying the vehicle’s path, as well as classifying and ranging objects along
or near the designated route. All EVIE’s AI Neural Networks are meticulously crafted in-house, and it retains exclusive
intellectual property rights over their development. To optimize processing speed with minimal latency tailored to our specific
applications, EVIE engineered its own Neural Networks utilizing Intel FPGA chips, which are programmable and EVIE believes yield
the lowest possible latency.
Moreover,
AI is integrated into RADAR sensors, employing RNNs, ANNs, and mathematical methodologies to precisely localize the scanned RADAR
area. This AI capability extends to image processing for localization and Level 4 driving, providing redundancy in scenarios where
GPS signals are unavailable. The entire suite of “AI on a chip”
software is an internal development accomplished by EVIE’s partner companies, ensuring exclusivity
to our products. EVIE believe this holistic approach underscores our commitment to cutting-edge AI technology for the advancement
of autonomous systems.
EVIE
is developing a range of autonomous mobile platform concepts intended to transform industries such as logistics, public service,
and mass transit in off highway, controlled environments. EVIE intends to have these produced under license by established production
partners with the goal of providing global scale without the associated capital expenditure needs. The goal is to provide for
endless applications to be delivered at an unmatched, affordable price point, unlocking significant global demand.
The
Company anticipates it will take 18 - 24 months to have completed the evolution of the future mobility platforms and have a viable
commercial product ready. However, the technology stack that makes up the “autonomy”
part of the EVIE’s product (i.e. the
AI and drive by wire systems), are currently installed on customer vehicles and being tested in anticipation of commercialization.
Furthermore, while we have not sold the full technology stack except for testing purposes various parts of the technology stack
are currently offered commercially. The pod initially developed by Westfield is currently in use at Heathrow airport. The pod
however is not currently in production and EVIE does not anticipate producing any new units until it has developed the pod v2.0.
Development of the v2.0 of the pod is anticipated to take between 12 and 18 months.
Strengths
and Strategy
Highly
experienced and proven team. EVIE’s management team has significant experience in motorsport, automotive and electric
vehicle development, providing expertise and services to major blue-chip OEMs. The team has a proven track record of delivering
technical projects on time and on budget.
EVIEs
founder and Chief Executive Officer, Steven Lake, is a self-made entrepreneur who has developed a range of innovations in motorsport,
sensor technology and vehicle integration capabilities. EVIE, through Mr. Lake, has assembled a team of experienced and accomplished
industry professionals. Included is the team that has developed the proven vehicle autonomy technology with radar and sensor,
robotics and kinematic capabilities, which forms EVIE’s core technology offering. The original pod engineering lead responsible
for its production and operations is incorporated into the team along with leading electric engineering capabilities and integration
experience of electric and critical vehicle safety systems. The leadership team includes proven commercial and business turnaround
experience for large international OEMs and smaller more agile SMEs here in the UK providing a diverse blend of experiences that
can support Evie as it develops at all stages of growth.
A
complete Autonomous Technology Stack - The core autonomous technology has been the subject of over a decade of
development and has been installed on a farmer robot, autonomous passenger pods, a monster truck, a Sports Utility Vehicle and
a full-size bus as well as our own Monster Truck, Mart-e. The stack is built off a unique and proprietary software development
architecture that has been incorporated into EVIE as part of the business combination. The autonomous technology development has
been completed and the stack is commercially available at a low cost, making the system extremely affordable for OEM partners
and transforming the economics of autonomy, making it much more commercially feasible for end users today.
Intellectual
Property - Cavonix developed the source code for CavLab. This is a proprietary operating system tailored specifically
for Robotics & Autonomous applications. All the associated programming tools and languages are protected under copyrights.
EVIE has a number of patent applications covering the following:
| |
● |
Multithreading
mechanism for optimising CPU usage between applications. |
| |
● |
Graphical
programming environment for linking interpreted code modules. |
| |
● |
Localisation
during GPS/GPR denial using an AI RNN on Odometry and IMU. |
| |
● |
Digital
Twin system for integrating processing hardware in a real-time development environment. |
| |
● |
4D
AI Radar system for object detection and localisation on Autonomous Vehicles. |
The
above and the associated CavLab applications have been sold to EVIE in connection with the Asset Purchase Agreement entered between
EVIE and Cavonix. The IP and associated know-how of the Drive by Wire control (X-by-Wire) system that interfaces with a vehicles’
brakes, throttle and steering via the Controller Area Network, which is a communication protocol commonly used in vehicle control
systems, is also being transferred to EVIE from Aim. All. A of the Westfield technologies IP including the Pod IP from the acquisition
by Aim l be transferred to EVIE.
EVIE
is part of a Tier 1 automotive supply chain. EVIE has no desire to manufacture vehicles, rather it wants to design
and to work with select partners who can produce them globally. This approach is expected to significantly reduce capital expenditures,
whilst providing for instant scale.
Unlocking
recurring compounding revenues. EVIE’s systems will enable “autonomy as a service” business model, generating
revenue as the systems are used and operated. As more vehicles have the system installed, this compound and can produce exponential
growth.
Significant
Total Addressable Market - The Total Addressable Market (TAM) for autonomous future mobility platforms is forecast to
be more than $745 billion by 2030. Report by Markets and Markets - “Automated Passenger Movers and Autonomous Pods Market
by Application (Airport, Industrial, and Commercial) and Region (North America, Europe, Asia Pacific, and Rest of the World),
Forecast to 2030,” Others are reporting that the global autonomous vehicle market was valued at $76.13 billion in 2020,
and is projected to reach $2,161.79 billion by 2030, registering a CAGR of 40.1% from 2021 to 2030. Report by - https://www.alliedmarketresearch.com/autonomous-vehicle-market
The
market can be segmented into the movement of people and cargo across a range of settings and applications, such as off highway
personal rapid transit, public mass transit, ground support vehicles for logistics industry and agriculture.
Significant
opportunity to provide reliable and effective autonomy systems for off highway vehicles and equipment globally. EVIEs
autonomy technology is ready to be sold to major equipment and vehicle manufacturers enabling them to self-drive and self-operate.
This removes considerable development risk for the OEM. EVIEs universal autonomy can be installed on any off-highway vehicle running
on any power train. EVIE also provides comprehensive fleet management services, allowing assets to be utilized as needed with
remote supervision and control if needed. Mr Steven Lake has developed strong relationships with major blue-chip OEMs and is part
of a tier 1 automotive supply chain partnership, providing market access.
Strategic
Location in the middle of the UK - The UK has a strong science and technology community and is recognized as a
world leader in aerospace and motorsport, which provides the company with a base of highly skilled resources. The founder of EVIE,
Mr. Steven Lake understands the UK market well. Being based in the midlands affords EVIE with good coverage of the UK with access
to multiple universities, the engineering capabilities of Derby, Nottingham, Leicester, Birmingham and Coventry.
Key
Agreements and Partnerships
After
acquiring substantially all the assets of Westfield in May 2023, which was initially acquired by AIM in October 2022, EVIE has
received multiple enquiries for autonomous vehicles internationally. The acquisition of IP and production rights of the autonomous
pods operating at London Heathrow Terminal 5 provided a credible reference base of successful commercial operations since May
2011. Personal Rapid Transit at airports, amusement parks, zoos and other off highway environments has significant demand especially
when this can be provided without the underlying guideway structure. By updating these pods to be able to operate in the open,
outside of a guideway, this has stimulated further market interest.
Research
and Development
EVIE
is an innovations entity and has a pipeline of innovations to support its core mission to move vehicles, people and goods autonomously
improving sustainability, efficiency and safety.
EVIE
has a complete autonomous technology stack that has been installed on multiple vehicle types. This stack includes sensors, autonomous
control system, localization and integration with the vehicles throttle, steering and brakes. This is ready for commercial deployment
and can be acquired commercially by any OEM and after configuring it and calibrating it for the target vehicle enables their own
vehicles to enable them to self-drive and operate. As well as the components, EVIE owns the underlying operating system that the
stack runs on, CavLab. This software is the key to the ability to rapidly develop the capabilities and adapt the stack for each
vehicle type.
New
sensors are continuously developed along with upgraded processors. The architecture of CavLab allows EVIE to quickly integrate
and test new entrants. If superior performance is observed by components, such as sensors, then CavLab can easily incorporate
these. EVIE R&D activity will involve continuous review of market participants, benchmarking and improvement to the core autonomous
technologies in a structured manner.
These
activities are expected to relate primarily to continued research and development as EVIE produces, tests and validates engineering
and pre-production vehicles, integrates third-party components, develops its proprietary software and systems, completes pod design
work and prepares for commercial production.
EVIE
expects that most of these activities will be completed at its innovation center by its employees and intends to hire additional
research and development personnel in the near term. However, EVIE has utilized third party design and engineering firms for certain
development activities to date and may continue to do so as it continues to enter the market.
M&A
Strategy
EVIE
business plan is predicated on organic growth, however it is possible to accelerate EVIE’s go to market and product development
strategy with select acquisitions that can support our core mission, help accelerate our growth and sales, as well as securing
additional supply chain capabilities, complimentary IP and augment our innovation pipeline.
The
implementation of any acquisition will depend on EVIE’s ability to secure sufficient additional capital and stakeholder
approval. EVIE does not have any plans to implement any acquisitions at this point in time.
Business
Development
Sourcing
EVIE’s
bill of materials for its range of Evie 2.0 autonomous pods and future mobility platforms is expected to consist of a range of
components that will finalized as part of the design for production phase, with the core autonomy stack developed in house based
on the technology acquired from Cavonix. The integration capabilities, drive train (motors inverters and battery) along with the
chassis, body work and interior fit out will be acquired from third parties with existing supply arrangements in place.
A
Tier 1 supply chain network was inherited from AIM, which provides procurement supplier and technology access for EVIE. This is
key barrier for new entrants to overcome. The company will evaluate each supplier with competitive tendering to ensure that the
optimum solution is utilized.
The
automotive supply chain partnership capability will become part of Evie Autonomous Group following the business combination. This
provides significant commercial advantages in terms of pricing and availability as well as enabling the supply of our technologies
to blue chip OEMs.
Sales
and Marketing
EVIE
anticipates that its sale of its autonomous pods to fleet operators and project owners such as London Heathrow Airport. EVIE will
therefore focus on sales to projects that move people in controlled environments via the development of the market awareness of
products and capabilities. There are multiple stakeholders for any large-scale autonomous pod installation project, such as architects
and project management consultancy firms. EVIE intends to develop strong relationships with these indirect parties providing a
key channel for enquires.
For
the sale of the level 4 autonomous technology stack EVIE will focus on developing its brand awareness through direct channels
such as outreach communications, advertising, thought leadership, shows and demonstrations and offline media along with its network
of agents and representatives globally.
EVIE
has planned and budgeted to invest significantly in business development and brand awareness.
Governmental
Regulation and Support
The
regulatory framework and certification standards for autonomous vehicles are still emerging and EVIE is consulting with the authorities
on the definition of a set of acceptable standards for autonomous equipment and ground support vehicles production and their operations.
Vehicle
Safety and Testing Regulation
EVIE
will endeavor to exceed any standards and certification required for operations in the target territory along with the relevant
operational standards for those such as airports. EVIE anticipates providing two separate
products for airports, namely landside people moving pods and airside people and goods moving pods. The landside product is lightly
regulated as it is considered operation in a controlled environment. The airside product, however,
is considered Ground Handling Equipment (“GSE”)
which is tightly regulated by the relevant civil aviation authority. The International
Civil Aviation Authority is responsible for setting general standards for the operations of GSEs and these are contained in Annex
11 to the Convention on Civil Aviation. Regulations for autonomous GSEs are still being developed although various civil aviation
authorities, including the Federal Aviation Administration in the United States, have
issued special airworthiness certificates for autonomous GSEs. EVIE follows changes in the regulatory environment as they happen
but does not anticipate changes that will prevent the operation of autonomous GSEs.
Battery
Safety and Testing Regulations
Our
battery packs must conform to mandatory regulations governing the transport of “dangerous goods,” that may present
a risk in transportation, which includes lithium-ion batteries, and are subject to regulations issued by the PHMSA These regulations
are based on the UN Recommendations on the Safe Transport of Dangerous Goods Model Regulations and related UN Manual Tests and
Criteria. The regulations vary by mode of transportation when these items are shipped (e.g., by ocean vessel, rail, truck or air).
Environmental
Credits
It’s
important to note that the generation and trading of environmental credits often depend on local regulations, policies, and market
mechanisms. The specific credits that can be generated from autonomous vehicle production and operation may vary by region and
over time. Companies and organizations operating autonomous vehicle fleets may need to work with regulatory bodies and carbon
credit markets to take full advantage of these potential benefits.
Environmental
Regulations
EVIE
will comply with its environmental responsibilities in all regions it operates in, includes the compliance with all local laws
and regulations.
Government
Support
The
UK government and many international governments recognize the need to support and foster innovation that can improve productivity,
safety and sustainably. This has resulted in considerable funding and grants to be available to suitably qualified entities such
as EVIE. The board continually reviews these and will apply where there is merit and clear benefits.
Legal
Proceedings
From
time to time, EVIE may become involved in legal proceedings arising in the ordinary course of business. EVIE is currently not
a party to any legal proceedings the outcome of which, if determined adversely to EVIE, would individually or in the aggregate
have a material adverse effect on its business, financial condition, or results of operations.
Key
Trends, Opportunities, and Uncertainties
EVIE
is a pre-commercial; pre-revenue company and believes its future performance and success depend to a substantial extent on its
ability to capitalize on the following opportunities, which in turn are subject to significant risks and challenges, including
those discussed below and in the section of this proxy statement titled “Risk Factors.”
Commercialization
and Supplier Relationships
EVIE
has completed the development of the autonomous technology stack which can be easily installed to any target vehicle. The integration
and calibration for each vehicle is made more efficient from the use of CavLab. This still requires some integration activity
and engineering capability from both EVIE and the customer OEM.
In
order to reach its initial production and sales goals, EVIE plans to undertake the following actions:
EVIE
will continue and ramp up research and development activities to complete the engineering and design of the Evie 2.0 concept range,
which remains pending the identification and integration of all components into the vehicle, completion of testing and certification.
EVIE
further aims to partner with key service providers to enable EVIE to serve fleet operators and other customers efficiently and
effectively for aftermarket parts and service and charging infrastructure. EVIE management believes that most fleet operators
use service agreements with third-party service providers to maintain and repair their fleets and provide aftermarket parts, and
that an arrangement with a national service provider would be attractive to fleet customers considering purchasing pods.
EVIE’s
business model leverages existing parts and processes, which it plans to acquire through strategic relationships and other industry
leaders. Given these factors, EVIE believes it has a clear path to market penetration.
Market
Trends and Competition
The
adoption of autonomous vehicles in off-highway environments, such as agriculture, mining, construction, and forestry, is a growing
trend. These industries are increasingly turning to autonomous technology to improve efficiency, reduce costs, and enhance safety.
Here are some market trends for autonomous vehicles operating in off-highway environments:
Autonomous
vehicles, including tractors and harvesters, are being used in agriculture to optimize planting, harvesting, and irrigation. These
vehicles can operate more precisely, reducing waste and improving yields.
Autonomous
haul trucks, dozers, and excavators are becoming more common in the mining industry. They can operate 24/7 in challenging environments,
increasing productivity and reducing the risk to human operators.
Autonomous
construction equipment, such as bulldozers and graders, is being used for tasks like grading and earthmoving. These machines can
work with high precision and consistency.
One
of the key drivers for adopting autonomous technology in off-highway environments is safety. Autonomous vehicles can work in hazardous
areas, reducing the risk to human operators and improving overall workplace safety.
Labor-intensive
industries like agriculture and mining can benefit from reduced labour costs through the use of autonomous vehicles. These vehicles
can work continuously without breaks or shifts.
Autonomous
off-highway vehicles generate vast amounts of data, which can be used for analytics, maintenance, and optimization. Connectivity
plays a crucial role in transferring data between vehicles and central control systems.
Companies
are increasingly offering customized solutions to meet the unique needs of specific industries. Integrating autonomous technology
with existing equipment is also a growing trend.
Companies
often collaborate with technology providers, software developers, and autonomous system integrators to bring autonomous solutions
to the market. These partnerships help leverage expertise from multiple domains.
The
off-highway industry is under increasing pressure to reduce its environmental impact. Autonomous technology can help optimize
operations, reduce fuel consumption, and minimize emissions.
Continuous
research and development are ongoing to improve the capabilities of autonomous vehicles in off-highway environments, including
the use of advanced sensors, machine learning, and artificial intelligence.
As
these trends continue to evolve, EVIE expects increased adoption of autonomous technology in off-highway environments, driven
by the potential for increased productivity, safety, and sustainability.
EVIE’s
key market opportunities are considered to be;
| |
1. |
The
movement of people and goods in airport and ports |
| |
2. |
The
movement of people from car parks to venues such as conference centers, amusement parks, zoos, safari parks and gated
communities. |
| |
3. |
The
movement of people and goods in a smart city, fully connected environments, where the human drivers are limited or
excluded from the proposed routes. |
| |
4. |
The
movement of people and goods within industrial complexes between buildings and neighboring sites. |
| |
5. |
Autonomous
Robotic Platforms for Agricultural applications. |
| |
6. |
The
development of electric mobility platforms with autonomy built in for sale to third party OEMs. |
| |
7. |
The
sale of our autonomy technology stack to other off highway equipment manufacturers for integration into their equipment. |
Production
and Design
Scaling
to meet global demand with high quality output. EVIE plans to work with established quality production partners who have the scale
and the processed in place to build to spec our Evie 2.0 range of pods and platforms. This strategy relies on the identification
and close cooperation with select production partners.
The
core autonomy stack will be supplied by EVIE to these partners along with other critical components. This build under license
plan gives EVIE instant scale without the associated capital requirements along with access to government support for manufacturing
where the partners are located, enabling a global production footprint.
Regulatory
Landscape
The
regulatory landscape for autonomous vehicles is emerging and varies significantly from one country and region to another. EVIE
is focused on the provision of autonomous platforms for operations in controlled off highway, private environments which are subject
to normal business risk and health and safety assessment that tend to be less onerous than the emerging road-based certification
requirements. Ultimately EVIE needs to ensure its products are safe and reliable and insurable.
Regulations
often define the role of the “driver” in autonomous vehicles, and this varies from fully autonomous (no human intervention
required) to levels where human supervision may still be necessary. Liability and insurance frameworks have been established to
determine responsibility in the event of accidents or failures. EVIE systems provide for level 4 autonomy (no human driver required),
they are fully monitored and supervised with the ability to take over remotely if needed.
EVIE
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The
following discussion and analysis of our consolidated financial condition and results of operations should be read together with
our audited and unaudited consolidated financial statements and related notes appearing elsewhere in this proxy statement. Some
of the information contained in this discussion and analysis or set forth elsewhere in this proxy statement, including information
with respect to our plans, objectives, expectations, projections and strategy for our business, includes forward-looking statements
that involve risks and uncertainties. As a result of many factors, including those factors identified below and those set forth
in the “Risk Factors” section of this proxy statement, our actual results and the timing of selected events could
differ materially from the forward-looking statements contained in the following discussion and analysis. Please also see the
section titled “Forward-Looking Statements.”
Although
we have acquired intellectual property from AIM and Cavonix, we were only recently formed and we have not generated or realized
any revenues from our business operations. We will attempt to generate revenues from Pods and OEM Cavonix units. As of the date
hereof, we do not have any contracts, but are attempting to do so at this time. We have not earned any revenue to date. We anticipate
that we will have revenues through the sale of Cavonix-branded guidance systems to OEMs, spare parts, support services, and customer
pilots in 2024 and in 2025, and anticipate it will be 18 to 24 months before we have a viable second version of the Evie Pod available
as a commercial product. We do not have sufficient cash to maintain operations for the next twelve months.
If
we need additional cash and cannot raise it, we may have to suspend operations until we raise more cash, or cease operations entirely.
Other than as described in this paragraph, we have no other financing plans.
To
successfully implement its business plan EVIE will need to either retain sufficient funds in the BNIX trust account which currently
holds $31 million or raise funds elsewhere. The management of EVIE believes the proceeds of the business combination will be sufficient
to support these business development activities. Additional funding may, however, be required for a variety of reasons, including,
but not limited to, the proceeds of the Business Combination being less than anticipated due to large redemptions, delays in anticipated
schedule to complete the design of the EVIE’s products among other factors. EVIE’s budget projections may be subject
to cost overruns for reasons outside of our control and we may experience slower sales growth than anticipated, which would pose
a risk to our achieving cash flow positivity.
Should
EVIE need to raise additional funding its management believes that its combination of a working product, debt free intellectual
property and large applicable market will ensure the company’s access to finance on reasonable terms. There can, however,
be no assurance that EVIE will be able to access finance on any terms.
To
date the investment in the IP acquired by EVIE consists primarily of research and development costs such as personnel costs for
engineering and research, prototyping costs and contract and professional services. EVIE intends to incur significant additional
research and development costs as it begins production, specifically related to product development, validation, and certification.
Plan
of Operation for the next 12 Months
Our
plan of operation for the next twelve months following is to complete on the Evie 2.0 pod design transformation plan. The transformation
plan starts with the design and development of a modular, scalable, autonomous, electric platform that acts as the core for endless
applications. The team has significant expertise in EV design and development with an existing tier 1 supply chain in place. It
is vital that the design and production design
processes
are optimized to ensure that we can deliver high quality, affordable and reliable pods which exceed operating service levels and
lifespan expectations.
In
parallel Evie will further develop market awareness of its both its Evie 2.0 pod range and its Level 4 autonomy technology stack,
available for OEM partners that manufacture equipment to enable them to self-drive and self-operate.
In
order to satisfy the demand for the Evie 2.0 pods we will need to complete on strategic partnership agreements with select production
partners that have the necessary scale and capability.
Liquidity
and capital resources
As
of June 30, 2023, we have yet to generate any revenues from our business operations. As of June 30, 2023, our total assets were
$-0- and our total liabilities were $126.
Going
Concern
Our
auditors have expressed a going concern issue that notes our need for capital and/or revenues to survive as a business. The ability
of registrant to continue as a going concern is dependent on our ability to further implement its business plan and raise capital.
Our
continued existence is dependent upon our ability on additional investment capital to fund operating expenses. Through the merger
with Bannix, we intend to position itself so that it may be able to raise additional funds through the capital markets. In light
of management’s efforts, there are no assurances that the registrant will be successful in this or any of its endeavors
or become financially viable and continue as a going concern.
EXECUTIVE
AND DIRECTOR COMPENSATION
Throughout
this section, unless otherwise noted, “Company,” “EVIE,” “we,” “us,” “our”
and similar terms refer to EVIE Autonomous Group Ltd. and its subsidiary prior to the consummation of the Business Combination.
Executive
Compensation
No compensation
has been paid to the executives and director of EVIE since inception through the closing of the Business Combination.
BENEFICIAL
OWNERSHIP
The following table and accompanying
footnotes set forth information regarding the (1) actual beneficial ownership of shares of Bannix Common Stock as of October 17,
2023, and (2) expected beneficial ownership of shares of New Company common stock immediately following the consummation of the
Business Combination (assuming a “no redemption” scenario and assuming a “net tangible asset scenario” as described
below) by:
| |
● |
Bannix’s current
executive officers and directors; |
| |
● |
each
person who is expected to become one of the executive officers or directors of New Company following the Business Combination,
assuming the Director Election Proposal is approved; |
| |
● |
all
of Bannix’s current executive officers and directors as a group, and all of the executive officers and directors of
New Company, assuming the Director Election Proposal is approved, as a group; and |
| |
● |
each
person who is known to be the beneficial owner of more than 5% of the outstanding Bannix Common Stock or is expected to be
the beneficial owner of more than 5% of shares of New Company common stock following the Business Combination. |
Beneficial
ownership is determined in accordance with the rules and regulations of the SEC. A person is a “beneficial owner”
of a security if that person has or shares “voting power,” which includes the power to vote or to direct the voting
of the security, or “investment power,” which includes the power to dispose of or to direct the disposition of the
security, or has the right to acquire such powers within 60 days.
The
beneficial ownership of shares of Bannix Common Stock prior to the Business Combination is calculated based on 5,463,613 shares
of Bannix Common Stock issued and outstanding as of the Record Date. For purposes of the table below, voting power represents
the combined voting power of Common Stock owned beneficially by such person.
The
expected beneficial ownership of shares of New Company common stock following the Business Combination is calculated based on
94,713,613 shares (assuming no redemptions) of New Company common stock expected to be outstanding immediately following consummation
of the Business Combination, which include 4,250,000 Series A Preferred being converted into common.
The
expected beneficial ownership of shares of New Company common stock following the Business Combination also assumes two redemption
scenarios as follows:
| |
● |
Assuming
No Redemptions (Scenario 1): This presentation assumes that no Public Stockholders exercise their right to redeem their
Public Shares for their pro rata share of the Trust Account, and thus, the full amount held in the Trust Account as of
the Closing is available for the Business Combination; and |
| |
● |
Net
Tangible Asset Scenario (Scenario 2): This scenario assumes that 884,230 shares of Common Stock subject to redemption are redeemed
for an aggregate payment of approximately $9.6 million (based on an estimated per share redemption price of approximately $10.89)..
|
The
following table does not reflect beneficial ownership of any shares of New Company common stock issuable upon exercise of public
warrants or private placements warrants.
Unless
otherwise noted in the footnotes to the following table, and subject to applicable community property laws, the persons and entities
named in the table have sole voting and investment power with respect to their beneficially owned common stock.
New
Company Post-Business Combination
| | |
Before the Business | |
| |
After the Business Combination | |
| |
| |
|
| | |
Combination | |
| |
No redemption | |
| |
Net Tangible Asset Scenario |
| | |
Number | |
Percent | |
Number | |
Percent | |
Number | |
Perecent |
| Name and Address of Beneficial Owner | |
of Shares | |
Owned | |
of Shares | |
Owned | |
of Shares | |
Owned |
| | |
| |
| |
| |
| |
| |
|
| BETTER WORKS LLC | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| 3448 HOLLY SPRINGS PKWY, CANTON, GA 30115
(1) | |
| 281,000 | | |
| 5.14 | % | |
| 291,600 | | |
| 0.32 | % | |
| — | | |
| 0.00 | % |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| SEA OTTER HOLDINGS LLC BD SERIES | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| 107 GRAND ST FL 7, NEW YORK, NY 10013 (2) | |
| 331,250 | | |
| 6.06 | % | |
| 335,000 | | |
| 0.37 | % | |
| — | | |
| 0.00 | % |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| SIXTH BOROUGH CAPITAL FUND LP | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| 1515 N FEDERAL HWY STE 300, BOCA RATON, FL 33432 (3) | |
| 331,250 | | |
| 6.06 | % | |
| 335,000 | | |
| 0.37 | % | |
| — | | |
| 0.00 | % |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| DOUG DAVIS - CEO & DIRECTOR VIA INSTANT FAME | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| C/O BANNIX - 8265 W SUNSET # 107, WEST HOLLYWOOD, CA
90046 | |
| 475,000 | | |
| 8.69 | % | |
| 484,000 | | |
| 0.53 | % | |
| 484,000 | | |
| 0.54 | % |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| SURESH YEZHUVATH - FOR SUBASH MENON | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| FLAT NO 108, AL NABOODAH BLDG B BLOCK, OUD MEHTA, OUD
MEHTA DU | |
| 585,832 | | |
| 10.72 | % | |
| 599,332 | | |
| 0.66 | % | |
| 599,332 | | |
| 0.67 | % |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| CRAIG J. MARSHAK - DIRECTOR | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| C/O BANNIX - 8265 W SUNSET # 107, WEST HOLLYWOOD, CA
90046 | |
| — | | |
| 0.00 | % | |
| — | | |
| 0.00 | % | |
| — | | |
| 0.00 | % |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| JAMAL “JAMIE” KHURSHID - DIRECTOR | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| C/O BANNIX - 8265 W SUNSET # 107, WEST HOLLYWOOD, CA
90046 | |
| — | | |
| 0.00 | % | |
| — | | |
| 0.00 | % | |
| — | | |
| 0.00 | % |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
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| ERIC T. SHUSS - DIRECTOR | |
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| C/O BANNIX - 8265 W SUNSET # 107, WEST HOLLYWOOD, CA
90046 | |
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| NED L. SIEGEL - DIRECTOR | |
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| C/O BANNIX - 8265 W SUNSET # 107, WEST HOLLYWOOD, CA
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| SUBASH MENON - DIRECTOR | |
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| C/O BANNIX - 8265 W SUNSET # 107, WEST HOLLYWOOD, CA
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| STEVEN LAKE - Unit 7 & 8, Riverside 2, Campbell Road,
Stoke-on Trent, ST4 4RJ, Staffordshire, United Kingdom | |
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| 85,000,000 | | |
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| ALL OFFICERS & DIRECTORS | |
| 1,060,832 | | |
| 19.42 | % | |
| 1,083,332 | | |
| 1.19 | % | |
| 1,083,332 | | |
| 1.21 | % |
| (1) | Al
Lopez,
Managing
Member
of
Better
Works
LLC
holds
voting
and
dispositive
control
over
the
securities
held
by
the
shareholder. |
| (2) | Peter
Smith
the
CEO
of
Sea
Otter
Holdings
LLC
BD
Series
holds
voting
and
dispositive
control
over
the
securities
held
by
the
shareholder. |
| (3) | Robert
Keyser
CEO
of
Sixth
Borough
Capital
Fund
LP
holds
voting
and
dispositive
control
over
the
securities
held
by
the
shareholder. |
| (4) | Steven
Lake
will
serve
as
the
Chief
Executive
Officer
and
a
director
of
Bannix
following
the
closing
of
the
Business
Combination. |
CERTAIN
RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
Policies
and Procedures for Related Party Transactions
The
audit committee of our board of directors has adopted a policy setting forth the policies and procedures for its review and approval
or ratification of “related party transactions.” Pursuant to the policy, the audit committee will consider (i) the
relevant facts and circumstances of each related party transaction, including if the transaction is on terms comparable to those
that could be obtained in arm’s-length dealings with an unrelated third party, (ii) the extent of the related party’s
interest in the transaction, (iii) whether the transaction contravenes our code of ethics or other policies, (iv) whether the
audit committee believes the relationship underlying the transaction to be in the best interests of the company and its stockholders
and (v) the effect that the transaction may have on a director’s status as an independent member of the board and on his
or her eligibility to serve on the board’s committees. Management will present to the audit committee each proposed related
party transaction, including all relevant facts and circumstances relating thereto. Under the policy, we may consummate related
party transactions only if our audit committee approves or ratifies the transaction in accordance with the guidelines set forth
in the policy. The policy will not permit any director or executive officer to participate in the discussion of, or decision concerning,
a related person transaction in which he or she is the related party.
Bannix
Related Party Transactions
Founder
Shares
In
February 2021, the Sponsors subscribed for 2,875,000 shares of the Company’s common stock (the “Founder
Shares”) for $28,750, or $0.01 per share, in connection with formation. In June 2021, 1,437,500 shares of
the Founder Shares were re-purchased by the Company for a total of $14,375. In connection with the upsize of the IPO, on June
10, 2021, an additional 287,500 Founder Shares were issued via a 20% stock dividend, resulting in total Founder Shares
outstanding of 1,725,000. All share amounts and related figures were retroactively adjusted.
In
March 2021, Suresh Yezhuvath granted an aggregate of 16,668 Founder Shares to other investors (“Other Investors”)
at no costs.
On
October 20, 2022, pursuant to an SPA, the new Sponsor acquired an aggregate of 385,000 shares of common
stock of the Company from Bannix Management LLP, Balaji Venugopal Bhat, Nicholos Hellyer, Subbanarasimhaiah Arun, Vishant Vora
and Suresh Yezhuvath and 90,000 private placement units from Suresh Yezhuvath (collectively, the ”Sellers”)
in a private transaction.
The
Sponsors, new Sponsors, Other Investors, Anchor Investors, directors and officer have agreed not to transfer, assign or sell the
Founder Shares until the earlier to occur of: (A) one year after the completion of the initial Business Combination or (B) the
date on which the Company completes a liquidation, merger, stock exchange or other similar transaction after the initial Business
Combination that results in all of the public stockholders having the right to exchange their shares of common stock for cash,
securities or other property. The Company refers to such transfer restrictions as the “lock-up”. Notwithstanding the
foregoing, if the last sale price of the 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 the initial Business Combination, the Founder Shares will be released from the lock-up.
At
June 30, 2023 and December 31, 2022, there were 3,961,500 non-redeemable shares outstanding owned or controlled by the
Sponsors, new Sponsors, Other Investors, Anchor Investors, directors and officers.
Working
Capital Loans – Sponsors and New Sponsors
In
order to finance transaction costs in connection with a Business Combination, the new Sponsors or an affiliate of the new Sponsors
or certain of the Company’s officers and directors may, but are not obligated to, loan the Company funds as may be required.
If the Company completes a Business Combination, the Company would repay the loans out of the proceeds of the Trust Account released
to the Company. Otherwise, the 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 the working capital held outside the Trust Account to repay the loans
but no proceeds from the Trust Account would be used to repay the loans. On June 30, 2023 and December 31, 2022, there were no loans
outstanding under the working capital loan program.
Pre-IPO
Loans – Sponsors
Prior
to the completion of the IPO, the Company entered into an additional loan agreement with Yezhuvath to finance the expenses associated
with preparing for the IPO as follows:
The
Company entered into a loan agreement with Yezhuvath with the following terms:
| 1. |
|
|
The
Company borrowed approximately $805,000 under the loan agreement as follows: |
| |
a. |
|
Deferred offering
costs of $50,000 were directly paid by the Sponsor. |
| |
b. |
|
The
Company repurchased treasury stock of $7,375 from the Sponsor. |
| |
c. |
|
Proceeds
of approximately $747,625 was received directly into the Company from the Sponsor. |
| 2. |
|
|
Advances under
the loan agreement are unsecured and do not bear interest. |
| 3. |
|
|
Following
the consummation of the IPO, the loan was repaid/forfeited as follows: |
| |
a. |
|
Against the first
approximate $1,030,000 of the note and loan agreement (inclusive of the $300,000 note discussed above), 210,000 Private Placement
Units were issued. |
| |
b. |
|
Against
the next $75,000 of loan, 15,000 Private Placement Units were issued. |
Yezhuvath
agreed to make an additional loan to the Company of $225,000 pursuant to the exercise of the over-allotment which would only be
drawn down at the time of the Business Combination. The proceeds would be used to pay a portion of the incremental underwriting
discount on the over-allotment shares which the underwriter has agreed to defer the receipt of until a Business Combination is
consummated. Yezhuvath has agreed to forgive this amount without any additional securities being issued against it.
Company
Related Party Transactions
Unless
the context otherwise requires, all references in this subsection to the “Company,” “we,” “us”
or “our” refer to the business of Company prior to the consummation of the Business Combination, which will be the
business of New Company following the consummation of the Business Combination.
On
May 8, 2023, the Company’s stockholder contributed assets in exchange for 100 shares of common stock, par value of $1.2617,
or $126. In October 2022, AIM acquired the assets of Westfield from its insolvency administrator. EVIE, which was
incorporated in May 2023, subsequently acquired the intellectual property from AIM and Cavonix
in May 2023 through separate Asset Purchase Agreements with AIM (for the AIM and Westfield intellectual
property) and Cavonix. AIM and EVIE are currently 100% owned by Steven Lake, the CEO of both
companies. Steven Lake is the controlling shareholder of Cavonix and the remaining shareholders are expected to become directors
and shareholders of EVIE on combining with Bannix. Westfield has been liquidated and substantially all off its assets, except
for the pods operating at Heathrow Airport, transferred to EVIE. When AIM acquired the assets of Westfield it was done under an
as-is where-is contract with the Westfield’s administrators in liquidation. The consideration paid to the estate of Westfield
was GBP50,000. When AIM transferred its drive by wire system and related IP to EVIE it transferred the relevant IP and other assets
acquired from Westfield at the same time. In May 2023, AIM and Cavonix transferred all relevant IP to EVIE through Asset Purchase
Agreements.
DESCRIPTION
OF NEW COMPANY’S SECURITIES AFTER THE BUSINESS COMBINATION
As
a result of the Business Combination, Bannix stockholders who receive shares of Bannix common stock will become the stockholders
of Bannix. Your rights as New Company stockholders will be governed by Delaware law and the Proposed Charter and Proposed Bylaws,
if approved. The following description of the material terms of New Company’s securities reflects the anticipated state
of affairs upon completion of the Business Combination.
In
connection with the Business Combination, Bannix will amend and restate the Current Charter and the Current Bylaws. The following
summary of the material terms of New Company’s securities following the Business Combination is not intended to be a complete
summary of the rights and preferences of such securities. The full text of the Proposed Charter and the Proposed Bylaws are attached
as Annex B and Annex C to this proxy statement. You are encouraged to read the applicable provisions of Delaware law, the Proposed
Charter and Proposed Bylaws in their entirety for a complete description of the rights and preferences of New Company securities
following the Business Combination.
Authorized
and Outstanding Stock
The
Proposed Charter authorizes the issuance of 410,000,000 shares, consisting of 400,000,000 shares of New Company common stock,
$0.0001 par value per share and 10,000,000 shares of preferred stock, $0.0001 par value. As of the Record Date, there were 5,463,613
shares of Bannix common stock outstanding.
Common
Stock
The
Proposed Charter, which Bannix will adopt if the Charter Amendment Proposal is approved, provides the following with respect to
the rights, powers, preferences and privileges of the New Company common stock.
Voting
Power
Except
as otherwise required by law or as otherwise provided in any certificate of designation for any series of preferred stock, the
holders of New Company common stock possess all voting power for the election of New Company’s directors and all other matters
requiring stockholder action. Holders of New Company common stock are entitled to one vote per share on matters to be voted on
by stockholders.
Dividends
Holders
of New Company common stock will be entitled to receive such dividends, if any, as may be declared from time to time by the New
Company Board in accordance with applicable law. Bannix has not historically paid any cash dividends on its Common Stock or Class B
Common Stock to date and does not intend to pay cash dividends in the foreseeable future. Any payment of cash dividends in the
future will be dependent upon New Company’s revenues and earnings, if any, capital requirements and general financial conditions.
Liquidation,
Dissolution and Winding Up
In
the event of New Company’s voluntary or involuntary liquidation, dissolution or winding-up, the net assets of New Company
will be distributed pro rata to the holders of New Company common stock, subject to the rights of the holders of New Company
preferred stock, if any.
Preemptive
or Other Rights
There
are no sinking fund provisions applicable to New Company common stock.
Preferred
Stock
The
Proposed Charter provides that shares of New Company preferred stock may be issued from time to time in one or more series. The
New Company Board will be authorized to fix designations to determine and fix the number of shares of such series and such powers,
including voting powers, full or limited, or no voting powers, and such designations, preferences and relative participating,
optional or other special rights, and any qualifications, limitations or restrictions thereof, including without limitation thereof,
dividend rights, conversion rights, redemption privileges and liquidation preferences, and to increase or decrease (but not below
the number of shares of such series then outstanding) the number of shares of any series. The New Company Board will be able to,
without stockholder approval, issue preferred stock with voting and other rights that could adversely affect the voting power
and other rights of the holders of New Company common stock, which could have anti-takeover effects. The ability of the New Company
Board to issue New Company preferred stock without stockholder approval could have the effect of delaying, deferring or preventing
a change of control of New Company or the removal of existing management. Bannix has no preferred stock currently outstanding.
Anti-Takeover
Provisions
Proposed
Charter and Bylaws
Among
other things, the Proposed Charter and Proposed Bylaws (as amended from time to time) will:
| |
● |
permit
the New Company Board to issue shares of New Company preferred stock, with any rights, preferences and privileges as they
may designate; |
| |
● |
provide
that the number of directors of the New Company Board may be changed only by resolution of the New Company Board; |
| |
● |
provide
that, subject to the rights of any series of New Company preferred stock to elect directors, directors may be removed only
with cause by the holders of at least two-thirds of the voting power of all of New Company’s then-outstanding shares
of voting stock entitled to vote at an election of directors; |
| |
● |
provide
that all vacancies, subject to the rights of any series of New Company preferred stock, including newly created directorships,
may, except as otherwise required by law, be filled exclusively by the affirmative vote of a majority of directors then in
office, even if less than a quorum; |
| |
● |
provide
that stockholders seeking to present proposals before a meeting of stockholders or to nominate candidates for election as
directors at a meeting of stockholders must provide advance notice in writing, and also specify requirements as to the form
and content of a stockholder’s notice; |
| |
● |
provide
that, subject to the rights of any series of New Company preferred stock, Special Meetings of New Company’s stockholders
may be called only by or at the direction of the New Company Board, the Chairperson of the New Company Board, the Chief Executive
Officer, or the President; |
| |
● |
not
provide for cumulative voting rights, therefore allowing the holders of a majority of the shares of New Company common stock
entitled to vote in any election of directors to elect all of the directors standing for election, if they should so choose. |
The
combination of these provisions will make it more difficult for the existing stockholders to replace the New Company Board as
well as for another party to obtain control of New Company by replacing the New Company Board. Because the New Company Board will
have the power to retain and discharge its officers, these provisions could also make it more difficult for existing stockholders
or another party to effect a change in management. In addition, the authorization of undesignated preferred stock will make it
possible for the New Company Board to issue preferred stock with voting or other rights or preferences that could impede the success
of any attempt to change the control of New Company.
These
provisions are intended to enhance the likelihood of continued stability in the composition of the New Company Board and its policies
and to discourage coercive takeover practices and inadequate takeover bids. These provisions are also designed to reduce New Company’s
vulnerability to hostile takeovers and to discourage certain tactics that may be used in proxy fights. However, such provisions
could have the effect of discouraging others from making tender offers for New Company’s shares and may have the effect
of delaying changes in our control or management. As a consequence, these provisions may also inhibit fluctuations in the market
price of New Company’s stock.
Certain
Anti-Takeover Provisions of Delaware Law
Bannix
is currently subject to the provisions of Section 203 of the DGCL and New Company will also be subject to these provisions.
This statute prevents certain Delaware corporations, under certain circumstances, from engaging in a “business combination”
with: a stockholder who owns 15% or more of the pertinent corporation’s outstanding voting stock (otherwise known as an
“interested stockholder”), or an affiliate or associate of the interested stockholder, for three years following
the date that the stockholder became an interested stockholder.
Per
DGCL Section 203, “business combination” includes, among other things, a merger or sale of more than 10% of a
corporation’s assets. However, Section 203 would not apply if:
| |
● |
the
relevant board of directors approves either the business combination or the transaction that made the stockholder an “interested
stockholder” prior to the date of the business combination or transaction, as applicable; |
| |
● |
after
the completion of the transaction that resulted in the stockholder becoming an interested stockholder, that stockholder owned
at least 85% of the corporation’s voting stock outstanding at the time the transaction commenced, other than statutorily
excluded shares of common stock; or |
| |
● |
on
or subsequent to the date of the business combination, such business combination is approved by the New Company Board and
authorized at an annual or special meeting of New Company stockholders, and not by written consent, by an affirmative vote
of at least two-thirds of the outstanding voting stock not owned by the interested stockholder. |
These
provisions may have the effect of delaying, deferring, or preventing changes in control of New Company.
Redeemable
Warrants
Public
Warrants
There
are currently outstanding an aggregate of 7,306,000 warrants (406,000 private and 6,900,000 public),), which, following the consummation
of the Business Combination, will entitle the holder to acquire New Company common stock. Upon the Closing, each whole warrant
will entitle the registered holder to purchase one share of New Company common stock at a price of $11.50 per share, subject to
adjustment as discussed below, at any time commencing on the later of 12 months from the closing of Bannix’s initial
public offering and 30 days after the completion of the Business Combination, provided in each case that New Company has
an effective registration statement under the Securities Act covering the shares of New Company common stock issuable upon exercise
of the warrants and a current prospectus relating to them is available (or New Company permits holders to exercise their warrants
on a cashless basis under the circumstances specified in the warrant agreement) and such shares are registered, qualified or exempt
from registration under the securities, or blue sky, laws of the state of residence of the holder. Pursuant to the warrant agreement,
a warrant holder may exercise its warrants only
for
a whole number of shares of New Company common stock. This means only a whole warrant may be exercised at a given time by a warrant
holder. No fractional warrants will be issued upon separation of the units and only whole warrants will trade. Accordingly,
unless a holder purchases at least three units, such holder will not be able to receive or trade a whole warrant. The warrants
will expire five years after the completion of the Business Combination, at 5:00 p.m., New York City time, or earlier
upon redemption or liquidation.
New
Company will not be obligated to deliver any New Company common stock pursuant to the exercise of a warrant and will have no obligation
to settle such warrant exercise unless a registration statement under the Securities Act with respect to the shares of New Company
common stock underlying the warrants is then effective and a prospectus relating thereto is current, subject to New Company satisfying
its obligations described below with respect to registration. No warrant will be exercisable and New Company will not be obligated
to issue a share of New Company common stock upon exercise of a warrant unless the shares of New Company common stock issuable
upon such warrant exercise have been registered, qualified or deemed to be exempt under the securities laws of the state of residence
of the registered holder of the warrants.
In
the event that the conditions in the two immediately preceding sentences are not satisfied with respect to a warrant, the holder
of such warrant will not be entitled to exercise such warrant and such warrant may have no value and expire worthless. In no event
will New Company be required to net cash settle any warrant. In the event that a registration statement is not effective for the
exercised warrants, the purchaser of a unit containing such warrant will have paid the full purchase price for the unit solely
for the share of New Company common stock underlying such unit.
New
Company has agreed that as soon as practicable, but in no event later than fifteen (15) business days after the closing of the
Business Combination, New Company will use commercially reasonable efforts to file with the SEC a registration statement for the
registration, under the Securities Act, of New Company common stock issuable upon exercise of the warrants. New Company will use
commercially reasonable efforts to cause the same to become effective and to maintain the effectiveness of such registration statement,
and a current prospectus relating thereto,
until the expiration of the warrants in accordance with the provisions of the warrant
agreement. If a registration statement covering the shares of New Company common stock issuable upon exercise of the warrants
is not effective by the sixtieth (60th) business day after the closing of the Business Combination, warrant holders may, until
such time as there is an effective registration statement and during any period when New Company has failed to maintain an effective
registration statement covering the shares of New Company common stock issuable upon exercise of the warrants, exercise warrants
on a “cashless basis” in accordance with Section 3(a)(9) of the Securities Act or another exemption. Notwithstanding
the above, if New Company’s shares of common stock are at the time of any exercise of a warrant not listed on a national
securities exchange such that they satisfy the definition of a “covered security” under Section 18(b)(1) of the
Securities Act, New Company may, at its option, require holders of public warrants who exercise their warrants to do so on a “cashless
basis” in accordance with Section 3(a)(9) of the Securities Act and, in the event New Company so elects, New Company
will not be required to file or maintain in effect a registration statement, and in the event New Company does so elect, New Company
will use commercially reasonable efforts to register or qualify the shares under applicable blue sky laws to the extent an exemption
is not available. In such event, each holder would pay the exercise price by surrendering the warrants for that number of shares
of New Company common stock equal to the lesser of (A) the quotient obtained by dividing (x) the product of the number
of shares of New Company common stock underlying the warrants, multiplied by the excess of the “fair market value”
(defined below) less the exercise price of the warrants by (y) the fair market value and (B) 0.361. The “fair
market value” as used in this paragraph shall mean the volume weighted average price of New Company common stock as reported
for the ten trading days ending on the trading day prior to the date on which the notice of exercise is received by the warrant
agent.
Redemption
of warrants when the price per share of New Company common stock equals or exceeds $18.00
Once the
warrants become exercisable, New Company may redeem the outstanding warrants:
| |
● |
in whole and not in part; |
| |
● |
at a price of $0.01 per
warrant; |
| |
● |
upon
a minimum of 30 days’ prior written notice of redemption (the “30-day redemption period”) to each warrant
holder; and |
| |
● |
if,
and only if, the closing price of the New Company common stock equals or exceeds $18.00 per share (as adjusted for adjustments
to the number of shares issuable upon exercise or the exercise price of a warrant as described under the heading “—
Warrants — Public Stockholders’ Warrants — Anti-Dilution Adjustments”)
for any 20 trading days within a 30-trading day period ending three trading days before New Company sends the notice of redemption
to the warrant holders. |
New
Company will not redeem the warrants as described above unless a registration statement under the Securities Act covering the
issuance of the shares of New Company common stock issuable upon exercise of the warrants is then effective and a current prospectus
relating to those shares of New Company common stock is available throughout the 30-day redemption period. If and when the warrants
become redeemable by New Company, New Company may exercise its redemption right even if New Company is unable to register or qualify
the underlying securities for sale under all applicable state securities laws.
New
Company has established the last of the redemption criterion discussed above to prevent a redemption call unless there is at the
time of the call a significant premium to the warrant exercise price. If the foregoing conditions are satisfied and New Company
issues a notice of redemption of the warrants, each warrant holder will be entitled to exercise his, her or its warrant prior
to the scheduled redemption date. However, the price of the New Company common stock may fall below the $18.00 redemption trigger
price (as adjusted for adjustments to the number of shares issuable upon exercise or the exercise price of a warrant as described
under the heading “— Warrants — Public Stockholders’ Warrants — Anti-Dilution
Adjustments”) as well as the $11.50 (for whole shares) warrant exercise price after the redemption notice is issued.
Redemption
Procedures
A
holder of a warrant may notify New Company in writing in the event it elects to be subject to a requirement that such holder will
not have the right to exercise such warrant, to the extent that after giving effect to such exercise, such person (together with
such person’s affiliates), to the warrant agent’s actual knowledge, would beneficially own in excess of 4.9% or 9.9%
(as specified by the holder) of New Company common stock outstanding immediately after giving effect to such exercise.
Anti-Dilution
Adjustments
If
the number of issued and outstanding shares of New Company common stock is increased by a share dividend payable in New Company
common stock, or by a split-up of common stock or other similar event, then, on the effective date of such share dividend, split-up
or similar event, the number of shares of New Company common stock issuable on exercise of each warrant will be increased in proportion
to such increase in the issued and outstanding shares of common stock. Rights offering made to all or substantially all holders
of common stock entitling holders to purchase New Company common stock at a price less than the
“historical
fair market value” (as defined below) will be deemed a share dividend of a number of shares of New Company common
stock equal to the product of (i) the number of shares of New Company common stock actually sold in such rights offering
(or issuable under any other equity securities sold in such rights offering that are convertible into or exercisable for shares
of New Company common stock) and (ii) one minus the quotient of (x) the price per share of New Company common stock
paid in such rights offering divided by (y) the historical fair market value. For these purposes, (i) if the rights
offering is for securities convertible into or exercisable for New Company common stock, in determining the price payable for
New Company common stock, there will be taken into account any consideration received for such rights, as well as any additional
amount payable upon exercise or conversion and (ii) ”historical fair market value” means the volume weighted
average price of shares of New Company common stock during the ten (10) trading day period ending on the trading day prior to
the first date on which New Company common stock trades on the applicable exchange or in the applicable market, regular way, without
the right to receive such rights.
In
addition, if New Company, at any time while the warrants are outstanding and unexpired, pays a dividend or makes a distribution
in cash, securities or other assets to all or substantially all of the holders of New Company common stock on account of such
New Company common stock (or other securities into which the warrants are convertible), other than (a) as described above,
(b) any cash dividends or cash distributions which, when combined on a per share basis with the per share amounts of all
other cash dividends and cash distributions paid on New Company common stock during the 365-day period ending on the date of declaration
of such dividend or distribution, does not exceed $0.50 (as adjusted to appropriately reflect any other adjustments and excluding
cash dividends or cash distributions that resulted in an adjustment to the exercise price or to the number of shares of New Company
common stock issuable on exercise of each warrant), or (c) to satisfy the redemption rights of the holders of New Company
common stock in connection with the Business Combination, then the warrant exercise price will be decreased, effective immediately
after the effective date of such event, by the amount of cash and/or the fair market value (as determined by the New Company Board
in good faith) of any securities or other assets paid on each share of New Company common stock in respect of such event.
If
the number of issued and outstanding shares of New Company common stock is decreased by a consolidation, combination, reverse
share split or reclassification of New Company common stock or other similar event, then, on the effective date of such consolidation,
combination, reverse share split, reclassification or similar event, the number of shares of New Company common stock issuable
on exercise of each warrant will be decreased in proportion to such decrease in issued and outstanding shares of New Company common
stock.
Whenever
the number of shares of New Company common stock purchasable upon the exercise of the warrants is adjusted, as described above,
the warrant exercise price will be adjusted by multiplying the warrant exercise price immediately prior to such adjustment by
a fraction (x) the numerator of which will be the number of shares of New Company common stock purchasable upon the exercise
of the warrants immediately prior to such adjustment and (y) the denominator of which will be the number of shares of New
Company common stock so purchasable immediately thereafter.
In
case of any reclassification or reorganization of the issued and outstanding shares of New Company common stock (other than those
described above or that solely affects the par value of such New Company commons stock), or in the case of any merger or consolidation
of New Company with or into another corporation (other than a consolidation or merger in which New Company is the continuing corporation
and that does not result in any reclassification or reorganization of the issued and outstanding shares of New Company common
stock), or in the case of any sale or conveyance to another corporation or entity of the assets or other property of New Company
as an entirety or substantially as an entirety in connection with which New Company is dissolved, the holders of the warrants
will thereafter have the right to purchase and receive, upon the basis and upon the terms and conditions specified in the warrants
and in lieu of the New Company common stock immediately theretofore purchasable and receivable upon the exercise of the rights
represented thereby, the kind and amount of shares or stock or other securities or property (including cash) receivable upon such
reclassification, reorganization, merger or consolidation, or upon a dissolution following any such sale or transfer, that the
holder of the warrants would have received if such holder had exercised their warrants immediately prior to such event. If less
than 70% of the consideration receivable by the holders of New Company common stock in such a transaction is payable in the form
of common stock in the successor entity that is listed for trading on a national securities exchange or is quoted in an established
over-the-counter market, or is to be so listed for trading or quoted immediately following such an event, and if the registered
holder of the warrant properly exercises the warrant within thirty days following public disclosure of such transaction pursuant
to a Current Report on Form 8-K filed with the SEC, the warrant exercise price will be reduced as specified in the warrant agreement
based on the Black-Scholes Warrant Value (as defined in the warrant agreement) of the warrant. The purpose of such exercise price
reduction is to provide additional value to holders of the warrants when an extraordinary transaction occurs during the exercise
period of the warrants pursuant to which the holders of the warrants otherwise do not receive the full potential value of the
warrants.
The
warrants will be issued in registered form under a warrant agreement between Continental, as warrant agent, and New Company. The
warrant agreement provides that the terms of the warrants may be amended without the consent of any holder to cure any ambiguity
or correct any defective provision, to amend the definition of “ordinary cash dividend” in certain circumstances,
and to add or change any provisions that shall not adversely affect the rights of warrant holders under the warrant agreement.
All other modifications or amendments will require the vote or written consent of the holders of at least 50% of the then outstanding
public warrants, and, solely with respect to any amendment to the terms of the private placement warrants, at least 50% of the
then outstanding private placement warrants. You should review a copy of the warrant agreement, which will be filed as an exhibit
to the registration statement of which this proxy statement is a part, for a complete description of the terms and conditions
applicable to the warrants.
The
warrants may be exercised upon surrender of the warrant certificate on or prior to the expiration date at the offices of the warrant
agent, with the exercise form on the reverse side of the warrant certificate completed and executed as indicated, accompanied
by full payment of the exercise price (or on a cashless basis, if applicable), by good certified check or good bank draft payable
to the warrant agent, for each share of New Company common stock as to which the warrant is being exercised (including any and
all applicable taxes due in connection with the exercise of the warrant). The warrant holders do not have the rights or privileges
of holders of common stock, including voting rights, until they exercise their warrants and receive New Company common stock.
After the issuance of New Company common stock upon exercise of the warrants, each holder will be entitled to one vote for each
share held of record on all matters to be voted on by stockholders.
No
fractional shares will be issued upon exercise of the warrants. If, upon exercise of the warrants, a holder would be entitled
to receive a fractional interest in a share, New Company will, upon exercise, round down to the nearest whole number of the number
of shares of New Company common stock to be issued to the warrant holder.
Private
Placement Warrants
Except
as described in this section, the private placement warrants have terms and provisions that are identical to those of the public
warrants. The private placement warrants (including New Company common stock issuable upon exercise of the private placement warrants)
will not be transferable, assignable or salable until 30 days after the completion of the Business Combination (except, among
other limited exceptions, to Bannix’s officers and directors, the Sponsor, or any of its or their respective permitted transferees)
and the private placement warrants will not be redeemable by New Company so long as they are held by the Sponsor, Bannix’s
officers or directors, or its or their respective permitted transferees (except as set forth in the warrant agreement). The Sponsor,
Bannix’s officers and directors, or its or their respective permitted transferees, have the option to exercise the private
placement warrants on a cashless basis. If the private placement warrants are held by holders other than the Sponsor, Bannix’s
officers and directors, or its or their permitted transferees, the private placement warrants will be redeemable by New Company
in all redemption scenarios and exercisable by the holders on the same basis as the public warrants.
Except
as described above regarding redemption procedures and cashless exercise in respect of the warrants, if holders of the private
placement warrants elect to exercise them on a cashless basis, they would pay the exercise price by surrendering his, her or its
warrants for that number of shares of New Company common stock equal to the quotient obtained by dividing (x) the product
of the number of shares of New Company common stock underlying the warrants, multiplied by the excess of the “Sponsor fair
market value” (as defined below) less the exercise price of the warrants by (y) the Sponsor fair market value. For
these purposes, the “Sponsor fair market value” will mean the average last reported closing price of New Company common
stock for the ten trading days ending on the third trading day prior to the date on which the notice of warrant exercise is sent
to the warrant agent.
Transfer
Agent, Warrant Agent and Registrar
The
transfer agent for New Company capital stock is Continental and the warrant agent for New Company public warrants and private
placement warrants will be Continental.
Listing
of Common Stock and Warrants
Application
will be made for the shares of New Company comment stock and public warrants to be approved for listing on Nasdaq under the symbols
“*” and “*” respectively.
SECURITIES
ACT RESTRICTIONS ON RESALE OF COMMON STOCK
Rule 144
Pursuant
to Rule 144, a person who has beneficially owned restricted shares or warrants for at least six months would be entitled
to sell their securities provided that (i) such person is not deemed to have been one of New Company’s affiliates at
the time of, or at any time during the three months preceding, a sale and (ii) New Company is subject to the Exchange
Act periodic reporting requirements for at least three months before the sale and has filed all required reports under Section 13
or 15(d) of the Exchange Act during the 12 months (or such shorter period as we were required to file reports) preceding
the sale.
Persons
who have beneficially owned restricted shares for at least six months but who are New Company’s affiliates at the time
of, or at any time during the three months preceding, a sale, would be subject to additional restrictions, by which such
person would be entitled to sell within any three-month period only a number of securities that does not exceed the greater of:
| |
● |
1% of the total number
of New Company common stock then outstanding; or |
| |
● |
the
average weekly reported trading volume of the New Company common stock during the four calendar weeks preceding the filing
of a notice on Form 144 with respect to the sale. |
| |
● |
Sales
by New Company’s affiliates under Rule 144 are also limited by manner of sale provisions and notice requirements
and to the availability of current public information about New Company. |
Restrictions
on the Use of Rule 144 by Shell Companies or Former Shell Companies
Rule 144
is not available for the resale of securities initially issued by shell companies (other than business combination-related shell
companies) or issuers that have been at any time previously a shell company. However, Rule 144 also includes an important
exception to this prohibition if the following conditions are met:
| |
● |
the issuer of the securities
that was formerly a shell company has ceased to be a shell company; |
| |
● |
the
issuer of the securities is subject to the reporting requirements of Section 13 or 15(d) of the Exchange Act; |
| |
● |
the
issuer of the securities has filed all Exchange Act reports and material required to be filed, as applicable, during the preceding
12 months (or such shorter period that the issuer was required to file such reports and materials), other than Current
Reports on Form 8-K; and |
| |
● |
at least one year has
elapsed from the time that the issuer filed current Form 10 type information with the SEC reflecting its status as an entity
that is not a shell company. |
As
a result, our initial shareholder will be able to sell its Founder Shares pursuant to Rule 144 without registration one year
after we have completed our initial business combination.
COMPARISON
OF GOVERNANCE AND STOCKHOLDERS’ RIGHTS
General
Bannix
is incorporated under the laws of the State of Delaware and the rights of Bannix stockholders are governed by the laws of the
State of Delaware, including the DGCL, the Current Charter and the Current Bylaws. In connection with the Business Combination,
Bannix stockholders will vote on the Proposed Charter, which (if approved) will become effective as of the Closing. Bannix, subsequent
to the Business Combination, is referred to as New Company. Following the Business Combination, the rights of Bannix stockholders
will continue to be governed by Delaware law but will no longer be governed by the Current Charter and instead will be governed
by the Proposed Charter (if approved). Bannix will also adopt the Proposed Bylaws, which are attached to this proxy statement
as Annex C, in connection with the Closing.
Comparison
of Governance and Stockholders’ Rights
Set
forth below is a summary comparison of material differences between the rights of Bannix stockholders under the Current Charter
and the Current Bylaws (left column) and under the Proposed Charter and the Proposed Bylaws (right column). The summary set forth
below is not intended to be complete or to provide a comprehensive discussion of the governing documents described herein. The
summary below is subject to, and qualified in its entirety by reference to, the full text of the Current Charter and the Current
Bylaws and the Proposed Charter and Proposed Bylaws, which are attached to this proxy statementas Annexes B and C,
respectively, as well as the relevant provisions of the DGCL. You should carefully read this entire document and the other referenced
documents, including the governing corporate instruments, for a more complete understanding of the differences between being a
Bannix stockholder before the Business Combination and being a New Company stockholder following the completion of the Business
Combination.
For
more information on the Charter Amendment Proposal and the Advisory Charter Amendment Proposals, see the sections entitled “Proposal
2: The Charter Amendment Proposal” and “Proposal 3: The Advisory Charter Amendment Proposals.”
TRADING
SYMBOL, MARKET PRICE AND DIVIDEND POLICY
Trading
Symbol and Market Price
Bannix’s
Units, Common Stock, and Warrants originally sold as part of the Units are currently listed on Nasdaq under the symbols “BNIXU,”
“BNIX” and “BNIXW,” respectively. As of *, 2023, the Record Date for the Special Meeting, the closing
price for the Common Stock was $*.
Dividend
Policy
Bannix
has not paid any cash dividends on shares of Common Stock to date and does not intend to pay cash dividends prior to the Closing.
The payment of cash dividends in the future will be dependent upon the revenues and earnings, if any, capital requirements and
general financial condition of the Combined Company subsequent to the Closing. The payment of any dividends subsequent to the
Business Combination will be within the discretion of the New Company Board. It is the present intention of the Board to retain
all earnings, if any, for use in Bannix’s business operations and, accordingly, the Board does not anticipate declaring
any dividends in the foreseeable future. Further, if Bannix incurs any indebtedness, its ability to declare dividends may be limited
by restrictive covenants Bannix may agree to in connection therewith.
MANAGEMENT
OF BANNIX AFTER THE BUSINESS COMBINATION
In
this section, “we”, “our”, the “Company” or “Bannix” generally refers to Bannix
from and after the Business Combination.
At
the effective time of the Business Combination, in accordance with the terms of the Business Combination Agreement and assuming
the election of the director nominees set forth in the section entitled “Proposal 5: The Director Election Proposal,”
the Bannix Board and executive officers will be as follows (ages as of October 17, 2023):
| Name |
Age |
Position
Held |
| Steven
Lake |
43 |
Chief
Executive Officer and Director Nominee |
| James
Myatt |
64 |
Chief
Operating Officer and Director Nominee |
| Carl
Owen |
|
Chief
Technology Officer |
| Mike
Timmins |
|
Director
Nominee |
| Ambassador
Ned L. Siegel (Ret.) |
71 |
Director
Nominee |
| Jamal
(Jamie) Khurshid |
46 |
Director
Nominee |
Executive
Officers and Director Nominees
Steven
Lake. Steven has been a successful entrepreneur, visionary investor and developer in technology and innovation for
over 20 years. He has extensive motorsport and automotive manufacturing and supply experience. Some of his group of businesses
supply global tier 1 automotive companies such as Jaguar, Tesla, Aston Martin, Ferrari and VW/Audi. Steven and his organization
utilize emerging technologies and find applications to enhance existing products or create new products. Steven founded and has
served as the Chief Executive Officer for Aim Technologies LTD. since 2017.
He also founded Cavonix is January 2019. Steven
currently serves on the Board of AIM Technologies Ltd., Fusion Avionics Ltd., Outsim Limited, Cavonix Ltd., AIM Motorsport Ltd.,
Mahiki Racing Ltd., EVIE Autonomous Group Ltd., EVIE Autonomous Ltd., Everything Motorsport Ltd., My 247 Life Ltd., Safe 2 Race
Ltd., AIM Technologies Group Ltd. and Impact Detect Ltd.. Steven has been a successful company
director and manager of technology and engineering businesses for two decades. He is a self-taught engineer with extensive experience
in motor sport and automotive electro-mechanical, autonomous systems, the application of AI and machine learning, and electronics
and sensor engineering. Through his motor racing and business activities he has proven his
ability to lead and manage winning engineering and technology teams. He has also excelled in the development and sales of complex
technical solutions world-wide. Steven has the ability to communicate complex technical concepts
to both technical and non-technical audiences very effectively. As a result of Steven’s in depth knowledge of
the automotive and machine learning as well as his success in leading companies over the
last 20 years positions will provide Steven with the necessary experience to serve
as our Chief Executive Officer and director of Bannix.
James
Myatt. James Myatt has spent over 35 years in international business leadership roles and is a veteran of multiple
business expansions and turnarounds. He
has worked for both public, private equity and privately owned companies ranging from global transportation, manufacturing and
leasing businesses to renewable energy and financial service companies. James has held positions including Executive Chairman,
CEO, Managing Director, Sales and Marketing Director, Sourcing and Asset Management Director and a range of general management,
commercial, engineering & operational roles. His wide-ranging responsibilities have spanned full life cycle management of
up to $1.5 billion of transportation and modular accommodation equipment, over 100+ commercial & service sites in 17 countries,
an indirect workforce of over 2,000 personnel and procurement of over $300 million of transportation and vehicular products per
annum. Commercially, he has worked on establishing sales, operations, sourcing & manufacturing businesses and supply
chains on five continents. James has been the Chief Operating Officer for Aim Technologies since May 2023, providing assistance
and advice to the Chief Executive Officer and worked on the development of EVIE. Between
2018 to 2022, James was the Executive Chairman and Managing Director for Townscape Products and associated
businesses. James substantial operating experience in various corporate settings positions him well to serve as a member of our
Board. The breadth of James’ business expertise, international experience
and his in-depth experience of EVIE’s operations will position him to serve as a member of our Board.
Carl
Owen. Carl has a distinguished
career in building new companies and products, demonstrating a knack for balancing cost and deadlines effectively. With over 30
years of experience in Automation and Robotics, he has been a prominent figure in the industry, often featured in publications.
Carl approaches challenges with a motorsports mentality, ensuring tasks are completed despite adversities. Since January 2019
to the present, Carl has served as the Chief Technology Officer of Cavonix Ltd. and from June 2010 to the present a the Chief
Technology Officer of DSPRobotics (Outsim Ltd.) With a wealth of 30+ years in electronics,
Carl has held senior roles at DSPRobotics, Sydec, and Mackie Designs Inc. He holds an honours degree in electronic engineering,
specializing in digital signal processing. Carl is passionate about utilizing technology to solve real-world problems, dedicating
himself to delivering practical and innovative solutions.
Mike
Timmins. Mike Timmins was the COO and CFO of BC Partners, one of the large international global private equity houses. He served
with BC Partners for two decades. Since retiring from BC Partners in 2015, Mike has carried out significant private investing in a range
of sectors, mainly in the digital space. Mike has extensive experience in serving on a Board of Directors in various industries in technology,
electronics, satellite, digital and transportation companies. He is familiar with US capital markets and has the regulatory, investor
relations and statutory and accounting expertise to be of great value to Bannix’s Board of Directors.
Amb.
Ned L. Siegel. Ned has had a long and distinguished career as a senior U.S. government official and businessman. He was appointed
by then President George W. Bush as the U.S. Ambassador to the Commonwealth of the Bahamas from October 2007 to January 2009. President
Bush also appointed him to serve under Ambassador John R. Bolton at the United Nations in New York, serving as the Senior Advisor to
the U.S. Mission and as the U.S. Representative to the 61st Session of the United Nations General Assembly. Prior to his Ambassadorship,
he was appointed to the Board of Directors of the Overseas Private Investment Corporation (OPIC) from 2003 to 2007. Appointed by then
Governor Jeb Bush, he served as a Member of the Board of Directors of Enterprise Florida, Inc. (EFI) from 1999-2004. EFI is the state
of Florida’s primary organization promoting statewide economic development through its public-private partnership. In addition
to his public service, Ambassador Siegel has over 40 years of entrepreneurial successes. Presently, he serves as President of The Siegel
Group, a multi-disciplined international business management advisory firm specializing in real estate, energy, utilities, infrastructure,
financial services, oil and gas and cyber and secure technology. As president of The Siegel Group, Mr. Siegel played a major role in
some of South Florida’s largest commercial real estate ventures including Blue Lake office park in Boca Raton, Florida (the former
IBM campus), Miami One Centre (presently known as Met One Centre) in downtown Miami, Florida, and Boca Village, a strategic blend of
national retailers, restaurants, professional offices, a bank, fitness center and mass transit facility in Boca Raton, Florida. Prior
to 1997, his business interests focused primarily on the development of residential communities in New Jersey, Florida and California
as President of The Weingarten-Siegel Group, becoming one of the largest residential developers in the United States. Ambassador Siegel
has developed, managed and owned more than one billion dollars’ worth of real estate throughout his career. Amb. Siegel presently
serves as a Director with Worksport Ltd., Janover Inc., and LaRosa Holding Corp., all public companies, and Vocodia Holdings Corp., currently
in the process of IPO on NASDAQ. He also presently serves in an advisory capacity with U.S. Medical Glove Company and Potomac International
Partners. Amb. Siegel is Of Counsel to the law firm Wildes & Weinberg. Ambassador Siegel graduated Phi Beta Kappa from the University
of Connecticut in 1973 and received a juris doctorate from the Dickinson School of Law in 1976. In December 2014, he received an honorary
degree of Doctor of Business Administration from the University of South Carolina. The breadth of Ambassador Siegel’s business
expertise, global perspective and his holistic approach to management and board communications will position him to serve as a member
of our Board.
Jamal
(Jamie) Khurshid. Jamie is a Fintech Veteran with deep sector experience as executive director at Goldman Sachs, Credit Suisse, and
the Royal Bank of Scotland. Jamie has extensive executive and board experience in financial services and technology companies. In the
last 5 years Jamie has founded and is Chairman of Jacobi Asset Management a digital asset management company that he started in March
2021, he is also the Chief Operating Officer of Nukkleus Inc. (OTC: NUKK), a financial technology company he joined in 2021 and he commenced
as a board member & Chair in October 2022 of the audit committee for the Bannix. Known in capital markets for leading two consortium
ventures, (IHS) Markit Boat for European MiFID regulatory transparency and LSEG`s Turquoise MTF. Jamie is recognized for defining the
first voluntary transparency regime for the global bullion market on behalf of the London Bullion Market Association, authorized by the
Bank of England with oversight from the UK FCA. He has been a joint partner of Cinnober Financial Technology, a Swedish Fintech that
operated global exchanges and clearing houses and was sold to Nasdaq. He is the founder and Chairman of Jacobi Asset Management, Europe’s
first and only spot Bitcoin ETF issuer. Jamie is also co-founder of Digital RFQ, an FCA registered payments platform facilitating global
cross border payments through the use of blockchain technology. He sold Digital RFQ to Nukkleus where he is Chief Operating Officer.
He is on the board of two other Nasdaq listed businesses, Financial Strategies Acquisition Corp (FXCO) and Tingo Group Inc (TIO). Jamie
was voted by Financial News as one of the top 40 under 40 in trading and technology in 2015 and named in the ‘Exchange invest’
Top 1000 most influential people in global financial markets in 2017. Jamie’s broad executive experience in the technology and
financial sectors as well as his success in complex, regulated environments and working with corporate responsibility will position him
well as a member of our Board.
Corporate
Governance
Upon
the consummation of the business combination, EVIE anticipates the initial size of the board of directors will be five (5). Each
director nominee will be voted upon by Bannix’s stockholders at the special meeting.
Board
of Directors
Bannix’s
business and affairs will be organized under the direction of the board of directors. The board of directors of Bannix will consist
of five (5) members upon the consummation of the business combination. Ambassador
Ned L. Siegel (Ret.) will
serve as Chairman of the board of directors of Bannix. The primary responsibilities of the board of directors of Bannix will be
to provide oversight, strategic guidance, counseling and direction to management. The board of directors of Bannix will meet on
a regular basis and additionally, as required.
Director
Independence
Nasdaq
rules generally require that independent directors must comprise a majority of listed company’s board of directors. As a
controlled company, Bannix will be largely exempt from such requirements. Upon the consummation of the business combination, the
board of directors of Bannix is expected to determine that each of the directors on the board of directors of Bannix other than
Doug Davis and Steven Lake will qualify as an independent director, as defined under the listing rules of Nasdaq, and the board
of directors of Bannix will consist of a majority of independent directors, as defined under the rules of the SEC and the listing
rules of Nasdaq relating to director independence requirements.
Family
Relationships
There
are no family relationships among any of the individuals who shall serve as directors or executive officers of Bannix following
the consummation of the business combination.
Role
of Board in Risk Oversight
The
board of directors of Bannix will have extensive involvement in the oversight of risk management related to Bannix and its business
and will accomplish this oversight through the regular reporting to the board of directors by the audit committee. The audit committee
will represent the board of directors by periodically reviewing Bannix’s accounting, reporting and financial practices,
including the integrity of its financial statements, the surveillance of administrative and financial controls and its compliance
with legal and regulatory requirements. Through its regular meetings with management, including the finance, legal, internal audit
and information technology functions, the audit committee will review and discuss all significant areas of Bannix’s business
and summarize for the board of directors all areas of risk and the appropriate mitigating factors. In addition, the board of directors
will receive periodic detailed operating performance reviews from management.
Committees
of the Board of Directors
The
board of directors of Bannix will have an audit committee, a compensation committee, a nominating and corporate governance committee
and an executive committee, each of which will have the composition and responsibilities described below upon completion of the
business combination. Members will serve on these committees until their resignation or until otherwise determined by the board
of directors.
Audit
Committee
Following
the consummation of the Transactions and subject to the approval of the board of directors of Bannix, the audit committee is expected
to consist of *, with * serving as chairperson. The board of Bannix is expected to determine (i) that each of the New Company
satisfies the requirements for independence and financial literacy under the rules and regulations of Nasdaq and the SEC and (ii) that
* qualifies as an “audit committee financial expert” as defined in the SEC rules and regulations and satisfies the
financial sophistication requirements of Nasdaq. The audit committee of Bannix will be responsible for, among other things:
| ● |
|
selecting and hiring Bannix’s
registered public accounting firm; |
| ● |
|
evaluating the performance
and independence of Bannix’s registered public accounting firm; |
| ● |
|
approving
the audit and pre-approving any non-audit services to be performed by Bannix’s registered public accounting firm; |
| ● |
|
reviewing
the integrity of Bannix’s financial statements and related disclosures and reviewing Bannix’s critical accounting
policies and practices; |
| ● |
|
reviewing
the adequacy and effectiveness of Bannix’s internal control policies and procedures and Bannix’s disclosure controls
and procedures; |
| ● |
|
overseeing procedures
for the treatment of complaints relating to accounting, internal accounting controls or audit matters; |
| ● |
|
reviewing
and discussing with management and the registered public accounting firm the results of the annual audit, Bannix’s quarterly
financial statements and Bannix’s publicly filed reports; |
| ● |
|
establishing
procedures for employees to anonymously submit concerns about questionable accounting or audit matters; |
| ● |
|
reviewing and approving
in advance any proposed related-person transactions; and |
| ● |
|
preparing the audit committee
report that the SEC requires in Bannix’s annual proxy statement. |
Compensation
Committee
Following
the consummation of the Transactions and subject to the approval of the board of directors of Bannix, the compensation committee
is expected to consist of [ ], with [ ] serving as chairperson. The board of Bannix is expected to determine that each of [ ]
satisfies the requirements for independence under the rules and regulations of Nasdaq and the SEC. The compensation committee
of Bannix will be responsible for, among other things:
| ● |
|
determining,
or recommending to the board of directors for determination, the compensation of Bannix’s executive officers, including
the chief executive officer; |
| ● |
|
overseeing and setting
compensation for the members of the board of directors; |
| ● |
|
administering Bannix’s
equity compensation plans; |
| ● |
|
overseeing Bannix’s
overall compensation policies and practices, compensation plans, and benefits programs; and |
| ● |
|
preparing the compensation
committee report that the SEC will require in Bannix’s annual proxy statement. |
Nominating
and Corporate Governance Committee
Following
the consummation of the Transactions and subject to the approval of the board of directors of Bannix, the compensation committee
is expected to consist of *, with * serving as chairperson. The board of Bannix is expected to determine that each of * satisfies
the requirements for independence under the rules and regulations of Nasdaq and the SEC. The nominating and corporate governance
committee will be responsible for, among other things:
| ● |
|
evaluating
and making recommendations regarding the composition, organization and governance of the board of directors and its committees; |
| ● |
|
reviewing
and making recommendations with regard to Bannix’s corporate governance guidelines and compliance with laws and regulations; |
| ● |
|
reviewing
conflicts of interest of Bannix’s directors and officers and proposed waivers of Bannix’s corporate governance
guidelines and code of business conducts and ethics; and |
| ● |
|
evaluating the performance
of the board of directors and its committees. |
Code
of Business Conduct and Ethics
Prior
to the completion of the business combination, Bannix will adopt a code of business conduct and ethics that will apply to all
of its employees, officers, and directors, including its executive officers. Upon the completion of the business combination,
the full text of the code of business conduct and ethics will be available on the investor relations page on Bannix’s website.
Bannix intends to post any amendment to its code of business conduct and ethics, and any waivers of its requirements, on its website
or in filings under the Exchange Act to the extent required by applicable rules or regulations or listing requirements of Nasdaq.
Information on or that can be accessed through such website is not part of this proxy statement.
Compensation
Committee Interlocks and Insider Participation
None
of Bannix’s executive officers currently serves, or has served during the last year, as a member of the board of directors
or compensation committee of any entity that has one or more executive officers serving as a member of the board of directors.
Involvement
in Certain Legal Proceedings
During
the past ten years, to the registrant’s knowledge, no executive officer or person nominated to become a director or
an executive officer of Bannix:
| |
1. |
had
a petition under the federal bankruptcy laws or any state insolvency law filed by or against, or a receiver, fiscal agent
or similar officer appointed by a court for the business or property of such person, or any partnership in which he/she was
a general partner at or within two years before the time of such filing, or any corporation or business association of
which he/she was an executive officer at or within two years before the time of such filing, except as noted above; |
| |
2. |
was
convicted in a criminal proceeding or subject to a pending criminal proceeding (excluding traffic violations and other similar
minor offenses); |
| |
3. |
was
subject to any order, judgment or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction,
permanently or temporarily enjoining him/her from or otherwise limiting his/her involvement in any of the following activities: |
| |
a. |
acting
as a futures commission merchant, introducing broker, commodity trading advisor commodity pool operator, floor broker, leverage
transaction merchant, any other person regulated by the Commodity Futures Trading Commission, or an associated person of any
of the foregoing, or as an investment adviser, underwriter, broker or dealer in securities, or as an affiliated person, director
or employee of any investment company, bank, savings and loan association or insurance company, or engaging in or continuing
any conduct or practice in connection with such activity; |
| |
b. |
engaging in any type of
business practice; or |
| |
c. |
engaging
in any activity in connection with the purchase or sale of any security or commodity or in connection with any violation of
federal or state securities laws or federal commodities laws; |
| |
4. |
was
the subject of any order, judgment or decree, not subsequently reversed, suspended or vacated, of a federal or state authority
barring, suspending or otherwise limiting for more than 60 days the right of such person to engage in any activity described
in paragraph (3)(a) above, or to be associated with persons engaged in any such activity; or |
| |
5. |
was
found by a court of competent jurisdiction (in a civil action), the Securities and Exchange Commission or the Commodity Futures
Trading Commission to have violated a federal or state securities or commodities law, and for which the judgment has not been
reversed, suspended or vacated. |
APPRAISAL
RIGHTS
Bannix’s
stockholders do not have appraisal rights in connection with the Business Combination under Delaware law.
STOCKHOLDER
NOMINATIONS AND PROPOSALS
The
disclosure set forth below describes the procedures for stockholder nominations and proposals pursuant to the proposed organizational
documents of New Company. The following summary is qualified in its entirety by reference to the complete text of the Proposed
Bylaws, a copy of which is attached as Annex C to this proxy statement.
Annual
Meeting of Stockholders Notice Requirements
Nominations
of persons for election to the New Company Board or the proposal of other business to be considered by stockholders may only be
made at a meeting properly called for such purpose and only (i) by or at the direction of the New Company Board, including
by any committee or persons authorized to do so by the New Company Board or the Proposed Bylaws or (ii) by a stockholder
present in person who (A) was a record owner of shares of New Company both when the notice is delivered to the secretary
and at the time of the meeting, (B) is entitled to vote at the meeting, and (C) complies with the notice and nomination
provisions of the Proposed Bylaws.
The
Proposed Bylaws provide that, for nominations or business to be properly brought before an annual meeting by a stockholder, the
stockholder must give timely notice thereof in writing and in proper form to the secretary of New Company and must provide any
updates or supplements to such notice in accordance with the Proposed Bylaws. To be timely, the notice must be delivered to or
mailed and received at, the principal executive offices of New Company not less than 90 days nor more than 120 days
prior to the first anniversary of the date of the prior year’s annual meeting of stockholders; provided, however, that if
the date of the annual meeting is more than 30 days before or more than 60 days after such anniversary date, notice
by the stockholder to be timely must be so delivered, or mailed and received, not more than 120 days prior to such annual
meeting and not later than 90 days prior to such annual meeting, or, if later, ten days after the day on which public
disclosure of the date of such annual meeting was first made by New Company. In no event will an adjournment or postponement of
any annual meeting of stockholders, or announcement thereof, commence a new time period (or extend any time period) for the giving
of a stockholder’s notice as described above.
Special
Meeting of Stockholders Notice Requirements
Notice
of all special meetings of stockholders shall be given in the same manner as provided for annual meetings, except that the notice
of all special meetings shall state the purpose or purposes for which the special meeting has been called.
Additional
Stockholder Notice Requirements
Any
stockholder’s notice to the secretary must set forth (i) the name and address of such Proposing Person (as defined
in the Proposed Bylaws) (including, if applicable, the name and address that appear on New Company’s books and records);
and (B) the class or series and number of shares of New Company that are, directly or indirectly, owned of record or beneficially
owned (within the meaning of Rule 13d-3 under the Exchange Act) by such Proposing Person, except that such Proposing Person
shall in all events be deemed to beneficially own any shares of any class or series of New Company as to which such Proposing
Person has a right to acquire beneficial ownership at any time in the future, (ii) as to each Proposing Person, certain disclosable
interests as outlined in the Proposed Bylaws; and (iii) as to each item of business that the stockholder proposes to bring
before the meeting, a brief description of the business desired to be brought before the meeting, the reasons for conducting such
business at the meeting and any material interest in such business of each Proposing Person, the text of the proposal or business,
and certain other information as described in the Proposed Bylaws.
A
Proposing Person providing timely notice of nominations or business proposed to be brought before an annual meeting shall update
and supplement such notice, if necessary, so that the information provided or required to be provided in such notice pursuant
to the Proposed Bylaws shall be true and correct as of the record date for the meeting and as of the date that is ten business
days prior to such annual meeting or any adjournment or postponement thereof, and such update and supplement shall be delivered
to, or mailed or received by, the secretary at the principal executive offices of New Company no later than five business days
after the record date for the annual meeting (in the case of the update and supplement required to be made as of the record date),
and not later than eight business days prior to the date of the annual meeting (in the case of the update and supplement required
to be made as of ten business days prior to the meeting and any adjournment or postponement thereof).
General
The
presiding officer of the meeting shall, if the facts warrant, determine that the business or a nomination was not properly brought
before the general or special meeting in accordance with the Proposed Bylaws, and if he or she should so determine, he or she
shall so declare to the meeting and any such business not properly brought before the meeting shall not be transacted.
STOCKHOLDER
COMMUNICATIONS AND DELIVERY OF DOCUMENTS TO STOCKHOLDERS
Stockholders
and interested parties may communicate with the Board, any committee chairperson or the non-management directors as a group by
writing to the Board or committee chairperson in care of Bannix Acquisition Corp., 8265 West Sunset Blvd., Suite #107, West Hollywood,
CA 90046, Attn: Chief Executive Officer. Following the Business Combination, such communications should be sent in care of EVIE
Autonomous Group Ltd. Unit 7 & 8, Riverside 2, Campbell Road, Stoke-on-Trent, ST4 4RJ, Staffordshire,
United Kingdom, ATTN: Steven Lake. Each communication will be forwarded, depending on the subject matter, to the board
of directors, the appropriate committee chairperson or all non-management directors.
Pursuant
to the rules of the SEC, Bannix and the services that it employs to deliver communications to its stockholders are permitted to
deliver to two or more stockholders sharing the same address a single copy of this proxy statement. Upon written or oral request,
Bannix will deliver a separate copy of this proxy statement to any stockholder at a shared address to which a single copy of this
document was delivered and who wishes to receive separate copies of such document. Stockholders receiving multiple copies of such
document may likewise request that Bannix deliver single copies of such document in the future. Stockholders may notify Bannix
of their requests by calling at or writing Bannix at (323) 682-8949 or to 8265 W Sunset Blvd, West Hollywood, CA 90046. Following
the Business Combination, such requests should be made by writing EVIE Autonomous Group Ltd. Unit
7 & 8, Riverside 2, Campbell Road, Stoke-on-Trent, ST4 4RJ, Staffordshire, United Kingdom, ATTN: Steven Lake
LEGAL
MATTERS
Fleming
PLLC will pass upon the validity of the Bannix common stock issued in connection with the Business Combination and certain other
legal matters related to this proxy statement.
EXPERTS
The
consolidated financial statements of Bannix Acquisition Corp. (as restated) as of December 31, 2022 and 2021, for the years
then ended, included in this proxy statement have been audited by Marcum LLP, independent registered public accounting firm, as
stated in their report herein (which contains an explanatory paragraph relating to substantial doubt about the ability of Bannix
to continue as going concern, as described in Note 1 to the financial statements), appearing elsewhere in this proxy statement,
and are included in reliance upon such report given on the authority of such firm as experts in accounting and auditing.
The
consolidated financial statements of Bannix at December 31, 2022 and 2021, and for each of the two years in the period ended
December 31, that are included in and made part of this proxy statement, have been audited by Marcum LLP, independent registered
public accounting firm, as set forth in their report thereon (which contains an explanatory paragraph describing conditions that
raise substantial doubt about Bannix’s ability to continue as a going concern as described in Note 1 to the consolidated
financial statements) appearing elsewhere herein, and are included in reliance upon such report given on the authority of such
firm as experts in accounting and auditing.
WHERE
YOU CAN FIND MORE INFORMATION
Bannix
files reports, proxy statements and other information with the SEC as required by the Exchange Act. You may access information
on Bannix at the SEC website containing reports, proxy statements and other information at: http://www.sec.gov.
If
you are a stockholder and would like to request documents, please do so no later than five business days before the Special Meeting
in order to receive them before the Special Meeting. If you request any documents from the Company, we will mail them to you by
first class mail, or another equally prompt means.
All
information contained in this document relating to Bannix has been supplied by Bannix, and all such information relating to Company
has been supplied by Company. Information provided by one another does not constitute any representation, estimate or projection
of the other.
If
you would like additional copies of this document or if you have questions about the Business Combination, you should contact
via phone or in writing:
Bannix
Acquisition Corp.
8265 West Sunset Blvd., Suite# 107,
West
Hollywood, CA 90046,
Attn:
Chief Executive Officer
This
document is a proxy statement of Bannix for the Special Meeting. Bannix has not authorized anyone to give any information or make
any representation about the Business Combination, Bannix or the Company that is different from, or in addition to, that contained
in this proxy statement. Therefore, if anyone does give you information of this sort, you should not rely on it. The information
contained in this proxy statement speaks only as of the date of this document unless the information specifically indicates that
another date applies.
INDEX TO FINANCIAL STATEMENTS
TABLE OF CONTENTS
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING
FIRM
To the Stockholders’ and Board of Directors
of Bannix Acquisition Corp.
Opinion on the Financial Statements
We have audited the accompanying balance sheet of
Bannix Acquisition Corp. (the “Company”) as of December 31, 2022 and 2021, the related statement of operations, stockholders’
equity and cash flows for the year ended December 31, 2022 and the period from January 21, 2021 (inception) through December 31, 2021,
and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present
fairly, in all material respects, the financial position of the Company as of December 31, 2022 and 2021, and the results of its operations
and its cash flows for the year ended December 31, 2022 and the period from January 21, 2021 (inception) through December 31, 2021 in
conformity with accounting principles generally accepted in the United States of America.
Explanatory Paragraph – Going Concern
The accompanying financial statements have been prepared
assuming that the Company will continue as a going concern. As more fully described in Note 1, the Company has a limited working capital,
has incurred significant losses and needs to raise additional funds to meet its obligations and sustain its operations. Additionally,
the Company is within 12 months of its mandatory liquidation and dissolution, it is possible that a business combination might not occur
within the remaining time available. These conditions raise substantial doubt about the Company’s ability to continue as a going
concern. Management’s plans in regard to these matters are also described in Note 1. The financial statements do not include any
adjustments that might result from the outcome of this uncertainty.
Basis for Opinion
These financial statements are the responsibility
of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our
audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”)
and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable
rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards
of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements
are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform,
an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal
control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal
control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess
the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond
to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.
Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating
the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
/s/ Marcum LLP
Marcum llp
We have served as the Company’s auditor since 2022.
Saddle Brook, New Jersey
April 11, 2023
BANNIX ACQUISITION CORP.
BALANCE SHEETS
| | |
December 31, |
| | |
2022 | |
2021 |
| Assets | |
| | | |
| | |
| Current Assets: | |
| | | |
| | |
| Cash | |
$ | 19,257 | | |
$ | 429,444 | |
| Prepaid expense | |
| 26,296 | | |
| 171,616 | |
| Total Current Assets | |
| 45,553 | | |
| 601,060 | |
| Investments held in Trust Account | |
| 71,421,125 | | |
| 69,691,502 | |
| Total Assets | |
$ | 71,466,678 | | |
$ | 70,292,562 | |
| Liabilities, Redeemable Common Stock and Stockholders’ (Deficit) Equity | |
| | | |
| | |
| Current liabilities: | |
| | | |
| | |
| Accounts payable and accrued expenses | |
$ | 272,594 | | |
$ | 208,957 | |
| Income taxes payable | |
| 156,285 | | |
| — | |
| Due to Related Parties | |
| 1,002,850 | | |
| 28,890 | |
| Total Current Liabilities | |
| 1,431,729 | | |
| 237,847 | |
| Warrant liability | |
| 12,180 | | |
| 194,880 | |
| Deferred tax liability | |
| 66,997 | | |
| — | |
| Deferred underwriters’ discount | |
| 225,000 | | |
| 225,000 | |
| Total Liabilities | |
| 1,735,906 | | |
| 657,727 | |
| Commitments and Contingencies | |
| — | | |
| — | |
| Common stock subject to possible redemption 6,900,000 at redemption value on December 31, 2022 and carrying value, to be accreted to redemption value at December 31, 2021 | |
| 70,973,384 | | |
| 58,071,313 | |
| Stockholders’ (Deficit) Equity | |
| | | |
| | |
| Preferred stock, $0.01 par value; 1,000,000 shares authorized; no shares or outstanding | |
| — | | |
| — | |
| Common stock, par value $0.01; authorized 100,000,000 shares; issued 10,861,500; and outstanding 2,524,000 shares (excluding 6,900,000 shares subject to redemption and 1,437,500 Treasury Stock shares) | |
| 39,615 | | |
| 39,615 | |
| Additional paid-in capital | |
| — | | |
| 11,815,485 | |
| Accumulated deficit | |
| (1,267,852 | ) | |
| (277,203 | ) |
| Less Treasury Stock; at cost; 1,437,500 common shares | |
| (14,375 | ) | |
| (14,375 | ) |
| Total Stockholders’ (Deficit) Equity | |
| (1,242,612 | ) | |
| 11,563,522 | |
| Total Liabilities, Redeemable Common Stock and Stockholders’ (Deficit) Equity | |
$ | 71,466,678 | | |
$ | 70,292,562 | |
The accompanying notes are an integral part of these
financial statements.
BANNIX ACQUISITION CORP.
STATEMENTS OF OPERATIONS
| | |
For the Year Ended December 31, | |
For the Period from January 21, 2021 (Inception) Through December 31, |
| | |
2022 | |
2021 |
| Formation and operating costs (including $18,333 of related party expenses in 2021) | |
$ | 1,000,944 | | |
$ | 395,702 | |
| Loss from operations | |
| (1,000,944 | ) | |
| (395,702 | ) |
| | |
| | | |
| | |
| Other income (expense): | |
| | | |
| | |
| Interest income on trust account | |
| 1,088,633 | | |
| 1,502 | |
| Change in fair value of warrant liabilities | |
| 182,700 | | |
| 150,220 | |
| Offering expenses related to warrant issuance | |
| — | | |
| (33,223 | ) |
| Other income, net | |
| 1,271,333 | | |
| 118,499 | |
| | |
| | | |
| | |
| Income (Loss) before provision for income taxes | |
| 270,389 | | |
| (277,203 | ) |
| Provision for income taxes | |
| (223,282 | ) | |
| — | |
| Net income (loss) | |
$ | 47,107 | | |
$ | (277,203 | ) |
| | |
| | | |
| | |
| Basic and diluted weighted average shares outstanding | |
| 9,424,000 | | |
| 4,785,051 | |
| Basic and diluted net income (loss) per share | |
| 0.00 | | |
| (0.06 | ) |
The accompanying notes are an integral part of these
financial statements.
BANNIX ACQUISITION CORP.
STATEMENTS OF CHANGES IN STOCKHOLDERS’
EQUITY (DEFICIT)
FOR THE YEAR ENDED DECEMBER 31, 2022, AND
FOR THE PERIOD JANUARY 21, 2021 (INCEPTION) THROUGH DECEMBER 31, 2021
| |
|
Common Stock |
|
Additional Paid-in |
|
Retained |
|
Treasury |
|
Total Stockholders’ |
| |
|
Shares |
|
Amount |
|
Capital |
|
Earnings |
|
Stock |
|
Equity |
| Balance as of January 21, 2021 (Inception) |
|
|
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
| Issuance of common stock to Sponsors (1)(2)(3) |
|
|
3,162,500 |
|
|
|
31,625 |
|
|
|
(2,875 |
) |
|
|
— |
|
|
|
— |
|
|
|
28,750 |
|
| Purchase of common stock from Sponsors |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(14,375 |
) |
|
|
(14,375 |
) |
| Sale of 6,900,000 Units through initial public offering |
|
|
6,900,000 |
|
|
|
69,000 |
|
|
|
68,931,000 |
|
|
|
— |
|
|
|
— |
|
|
|
69,000,000 |
|
| Sale of 406,000 Private Placement Units |
|
|
406,000 |
|
|
|
4,060 |
|
|
|
3,561,310 |
|
|
|
— |
|
|
|
— |
|
|
|
3,565,370 |
|
| Issuance of 393,000 Representative Shares |
|
|
393,000 |
|
|
|
3,930 |
|
|
|
2,861,040 |
|
|
|
— |
|
|
|
— |
|
|
|
2,864,970 |
|
| Additional capital contribution via forfeiture of loan from Sponsor |
|
|
— |
|
|
|
— |
|
|
|
270,000 |
|
|
|
— |
|
|
|
— |
|
|
|
270,000 |
|
| Underwriters’ discount |
|
|
— |
|
|
|
— |
|
|
|
(1,845,000 |
) |
|
|
— |
|
|
|
— |
|
|
|
(1,845,000 |
) |
| Deferred underwriter discount |
|
|
— |
|
|
|
— |
|
|
|
(225,000 |
) |
|
|
— |
|
|
|
— |
|
|
|
(225,000 |
) |
| Other offering expenses |
|
|
— |
|
|
|
— |
|
|
|
(3,420,800 |
) |
|
|
— |
|
|
|
— |
|
|
|
(3,420,800 |
) |
| Offering costs related to warrants |
|
|
— |
|
|
|
— |
|
|
|
33,223 |
|
|
|
— |
|
|
|
— |
|
|
|
33,223 |
|
| Initial classification of warrant liability – private |
|
|
— |
|
|
|
— |
|
|
|
(345,100 |
) |
|
|
— |
|
|
|
— |
|
|
|
(345,100 |
) |
| Common stock subject to possible redemption, at accreted value |
|
|
(6,900,000 |
) |
|
|
(69,000 |
) |
|
|
(58,002,313 |
) |
|
|
— |
|
|
|
— |
|
|
|
(58,071,313 |
) |
| Net loss |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(277,203 |
) |
|
|
— |
|
|
|
(277,203 |
) |
| Balance as of December 31, 2021 |
|
|
3,961,500 |
|
|
|
39,615 |
|
|
|
11,815,485 |
|
|
|
(277,203 |
) |
|
|
(14,375 |
) |
|
|
11,563,522 |
|
| Accretion of common stock subject to possible redemption to redemption value |
|
|
— |
|
|
|
— |
|
|
|
(11,815,485 |
) |
|
|
(1,086,586 |
) |
|
|
— |
|
|
|
(12,902,071 |
) |
| Reversal of Delaware franchise tax |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
48,830 |
|
|
|
— |
|
|
|
48,830 |
|
| Instant Fame Securities Purchase Agreement |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(12,539,000 |
) |
|
|
— |
|
|
|
(1,253,900 |
) |
| Instant Fame Securities Purchase Agreement |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
12,539,000 |
|
|
|
— |
|
|
|
1,253,900 |
|
| Net income |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
47,107 |
|
|
|
— |
|
|
|
47,107 |
|
| Balance as of December 31, 2022 |
|
|
3,961,500 |
|
|
$ |
39,615 |
|
|
$ |
— |
|
|
$ |
(1,267,852 |
) |
|
$ |
(14,375 |
) |
|
$ |
(1,242,612 |
) |
| (1) |
Includes 1,437,500 shares classified as treasury stock (See Notes 5 and 8). |
| (2) |
Includes up to 225,000 shares subject to forfeiture if the underwriters’ over-allotment option was not exercised in full or in part by the underwriters. As a result of the underwriters’ election to fully exercise their over-allotment on September 14, 2021, the Sponsor shares are no longer subject to forfeiture. |
| (3) |
Restated for stock dividend declared during September 2021 in connection with the upsizing of the IPO. (See Note 6) |
The accompanying notes are an integral part of these
financial statements.
BANNIX ACQUISITION CORP.
STATEMENTS OF CASH FLOWS
| | |
For the Year Ended December 31, | |
For the period from January 21, 2021 (inception) through December 31, |
| Cash flows from Operating Activities: | |
2022 | |
2021 |
| Net income (loss) | |
$ | 47,107 | | |
$ | (277,203 | ) |
| Adjustments to reconcile net income (loss) to net cash used in operating activities: | |
| | | |
| | |
| Change in fair value of warrant liability | |
| (182,700 | ) | |
| (150,220 | ) |
| Unrealized gain on investments in Trust Account | |
| (239,445 | ) | |
| — | |
| Interest income on trust account | |
| (849,188 | ) | |
| (1,502 | ) |
| Offering costs allocated to warrants | |
| — | | |
| 33,223 | |
| Changes in operating assets and liabilities: | |
| | | |
| | |
| Prepaid expenses | |
| 145,320 | | |
| (167,686 | ) |
| Deferred tax payable | |
| 66,997 | | |
| — | |
| Income taxes payable | |
| 156,285 | | |
| — | |
| Accounts payable and accrued expenses | |
| 112,467 | | |
| 208,957 | |
| Due to Related Parties | |
| 60,000 | | |
| 21,890 | |
| Net cash used in operating activities | |
| (683,157 | ) | |
| (332,541 | ) |
| Cash flows from Investing Activities: | |
| | | |
| | |
| Investment of cash into Trust Account | |
| (690,000 | ) | |
| (69,690,000 | ) |
| Withdrawal from Trust Account to pay taxes | |
| 49,010 | | |
| | |
| Net cash provided by (used in) investing activities | |
| (640,990 | ) | |
| (69,690,000 | ) |
| Cash flows from Financing Activities: | |
| | | |
| | |
| Proceeds from Sellers in the Stock Purchase Agreement | |
| 200,000 | | |
| — | |
| Loans from related party | |
| 23,960 | | |
| — | |
| Proceeds from promissory note to Instant Fame | |
| 690,000 | | |
| — | |
| Proceeds from initial public offering, net of underwriters’ discount of $1,845,000 | |
| — | | |
| 67,155,000 | |
| Proceeds from issuance of Private Placement Units | |
| — | | |
| 2,460,000 | |
| Proceeds from sale of common stock to Sponsors | |
| — | | |
| 28,750 | |
| Deferred offering costs | |
| — | | |
| (509,759 | ) |
| Promissory note payable to sponsor | |
| — | | |
| 300,000 | |
| Loans from Sponsors | |
| — | | |
| 1,017,994 | |
| Net cash provided by financing activities | |
| 913,960 | | |
| 70,451,985 | |
| Net change in cash | |
| (410,187 | ) | |
| 429,444 | |
| Cash, beginning of the period | |
| 429,444 | | |
| — | |
| Cash, end of the period | |
$ | 19,257 | | |
$ | 429,444 | |
| Supplemental disclosure of noncash financing activities: | |
| | | |
| | |
| Initial value of warrant liabilities | |
$ | — | | |
$ | 345,100 | |
| Deferred underwriting commissions payable charged to additional paid in capital | |
$ | — | | |
$ | 225,000 | |
| Initial value of common stock subject to possible redemption | |
$ | — | | |
$ | 54,491,136 | |
| Accretion of common stock subject to possible redemption to redemption value | |
$ | 12,902,071 | | |
$ | 3,580,177 | |
| Repurchase of treasury stock included in due to related parties | |
$ | — | | |
$ | 7,000 | |
| Repurchase of treasury stock included in loans payable - Sponsors | |
$ | — | | |
$ | 7,375 | |
| Repayment of loans and promissory note to Sponsor through the issuance of Private Placement Units | |
$ | — | | |
$ | 1,105,369 | |
| Offering costs paid by Sponsor | |
$ | — | | |
$ | 50,000 | |
| Additional capital contribution via forfeiture of loan from Sponsor | |
$ | — | | |
$ | 270,000 | |
| Stock dividend on Founder Shares | |
$ | — | | |
$ | 2,875 | |
| Value of Representative Shares | |
$ | — | | |
$ | 2,864,970 | |
| Reverse over accrual of Delaware franchise tax | |
$ | 48,830 | | |
| — | |
The accompanying notes are an integral part of these
financial statements.
NOTE 1 — DESCRIPTION OF ORGANIZATION
AND BUSINESS OPERATIONS
Organization and General
Bannix Acquisition Corp. (the
“Company”) is a newly organized blank check company incorporated in the state of Delaware on January 21, 2021. The Company
was formed for the purpose of effecting mergers, capital stock exchange, asset acquisitions, stock purchases, reorganization or similar
business combinations with one or more businesses (“Business Combination”). The Company has not selected any specific Business
Combination target and the Company has not, nor has anyone on its behalf, initiated any substantive discussions, directly or indirectly,
with any Business Combination target with respect to the Business Combination.
As of December 31, 2022, the
Company had not commenced any operations. All activity for the period from January 21, 2021 (inception) through December 31, 2022, relates
to the Company’s formation and the initial public offering (the “IPO”) (as defined below) and the Company’s search
for a target for an initial business combination. The Company will not generate any operating revenues until after the completion of its
initial Business Combination, at the earliest. The Company will generate non-operating income in the form of interest income on cash and
cash equivalents from the proceeds derived from the IPO and non-operating income or expense from the changes in the fair value of warrant
liabilities. The Company is an early stage and emerging growth company and, as such, the Company is subject to all of the risks associated
with early stage and emerging growth companies.
Financing
The Company’s original
sponsors were Subash Menon and Sudeesh Yezhuvath (through their investment entity Bannix Management LLP), Suresh Yezhuvath (“Yezhuvath”)
and Seema Rao (“Rao”).
On October 20, 2022, pursuant
to a Securities Purchase Agreement (“SPA”), Instant Fame LLC, a Nevada limited liability company controlled by a U.S. person
(“Instant Fame”) (the “new Sponsors”), acquired an aggregate of 385,000 shares of common stock of the Company
from Bannix Management LLP, Balaji Venugopal Bhat, Nicholos Hellyer, Subbanarasimhaiah Arun, Vishant Vora and Suresh Yezhuvath and 90,000
private placement units from Suresh Yezhuvath (collectively, the “Sellers”) in a private transaction. The Sellers immediately
loaned the entire proceeds to the Company for the working capital requirements of the Company. This loan will be forfeited by the Sellers
upon liquidation or business combination. In connection with this transaction, all parties agreed that there will be certain changes to
the Board of Directors.
As a result of the above, Subash
Menon resigned as Chief Executive Officer and Chairman of the Board of Directors of the Company and Nicholas Hellyer resigned as Chief
Financial Officer, Secretary and Head of Strategy. Douglas Davis was appointed as the Chief Executive Officer of the Company. Further,
Balaji Venugopal Bhat, Subbanarasimhaiah Arun and Vishant Vora resigned as Directors of the Company. Mr. Bhat, Mr. Arun and Mr. Vora served
on the Audit Committee with Mr. Bhat serving as the committee chair. Mr. Bhat, Mr. Arun and Mr. Vora served on the Compensation Committee
with Mr. Arun serving as the committee chair.
The Board was also increased
from two to seven and Craig Marshak and Douglas Davis were appointed as Co-Chairmans of the Board of Directors effective immediately.
Further, Jamal Khurshid, Eric T. Shuss and Ned L. Siegel were appointed to the Board of Directors of the Company effective ten days after
the mailing of a Schedule 14f Information Statement. The resignations referenced above were not the result of any disagreement with management
or the Board.
On November 10, 2022, Sudeesh
Yezhuvath resigned as a director of the Company for personal reasons. The resignation was not the result of any disagreements with management
or the Board.
Due to vacancies as results of
board members departure, on November 11, 2022 the Board made the following decisions: (i) Jamie Khurshid, Ned Siegel and Eric Shuss each
have been identified as being financially literate and independent under the SEC and Nasdaq Rules shall be appointed to the Audit Committee
to serve until their successors are qualified and appointed with such appointment subject to the mailing of that certain Schedule 14F
Information Statement. Mr. Khurshid will chair the audit committee. (ii) Mr. Siegel, Mr. Shuss and Craig Marshak each have been identified
as being independent under the SEC and Nasdaq Rules shall be appointed to the Compensation Committee to serve until their successors are
qualified and appointed with such appointment subject to the mailing of that certain Schedule 14F Information Statement. (iii) Messrs.
Davis and Marshak shall be appointed as Class III directors, Subash Menon will be appointed as a Class I director and, subject to the
mailing of the Schedule 14F Information Statement, Messrs. Khurshid, Siegel and Shuss shall be appointed as the Class II directors.
The registration statements for
the Company’s IPO were declared effective on September 9, 2021 and September 10, 2021 (the “Effective Date”). On September
14, 2021, the Company consummated its IPO of 6,900,000 units at $10.00 per unit (the “Units”), which is discussed in Note
2. Each Unit consists of one share of common stock (the “Public Shares”), one redeemable warrant to purchase one share of
common stock at a price of $11.50 per share and one right. Each right entitles the holder thereof to receive one-tenth (1/10) of one share
of common stock upon the consummation of the Business Combination.
Concurrent with the IPO, the
Company consummated the issuance of 406,000 private placement units (the “Private Placement Units”) as follows: the Company
sold 181,000 Private Placement Units to certain investors for aggregate cash proceeds of $2,460,000 and issued an additional 225,000 private
placement units to the Sponsor in exchange for the cancellation of $1,105,000 in loans and a promissory note due to them (see Note 5).
Each Private Placement Unit consists of one share of common stock, one redeemable warrant to purchase one share of common stock at a price
of $11.50 per whole share and one right. Each right entitles the holder thereof to receive one-tenth (1/10) of one share of common stock
upon the consummation of the Business Combination. The Company’s management has broad discretion with respect to the specific application
of the net proceeds of the IPO and the Private Placement Units, although substantially all of the net proceeds are intended to be generally
applied toward consummating a Business Combination.
Transaction costs incurred related
to the IPO were $8,746,087, consisting of $1,845,000 in underwriter’s discount paid at the time of the offering, $225,000 in underwriting
expense to be paid in the future, $2,861,040 in fair value of representative shares to the underwriters, $3,244,453 in fair value of Anchor
Investors shares, $10,834 fair value of Associate shares and $559,760 in other offering costs. Of the total incurred, $33,223 was allocated
to the warrants and charged to expense and $8,712,864 was charged to temporary equity.
Trust Account
Following the closing of the
IPO on September 14, 2021, an amount of $69,690,000 ($10.10 per Unit) from the net proceeds of the sale of the Units in the IPO and Private
Placement Units was placed in a trust account (the “Trust Account”) and invested in U.S. government securities, within the
meaning set forth in Section 2(a)(16) of the Investment Company Act, with a maturity of 180 days or less or in any open-ended investment
company that holds itself out as a money market fund meeting the conditions of Rule 2a-7 of the Investment Company Act, as determined
by the Company. Except with respect to interest earned on the funds held in the Trust Account that may be released to the Company to pay
its franchise and income tax obligations (less up to $100,000 of interest to pay dissolution expenses), the proceeds from this offering
and the sale of the Private Placement Units will not be released from the Trust Account until the earliest of (a) the completion of the
Company’s initial Business Combination, (b) the redemption of any Public Shares properly submitted in connection with a stockholder
vote to amend the Company’s amended and restated certificate of incorporation, and (c) the redemption of the Company’s Public
Shares if the Company is unable to complete the initial Business Combination within 15 months from the closing of this offering, or within
any period of extension, subject to applicable law. The proceeds deposited in the Trust Account could become subject to the claims of
the Company’s creditors, if any, which could have priority over the claims of the Company’s public stockholders.
On December 13, 2022, the Company
issued an unsecured promissory note (the “Note”) in favor of Instant Fame, in the principal amount of $690,000. The proceeds
of the Note were utilized by the Company to obtain the first three-month extension of the period for the Company to consummate a business
combination. The Company has until March 14, 2023, unless extended, to consummate a Business Combination. The Note does not bear interest
and matures upon closing of a Business Combination by the Company. If the Company fails to consummate a Business Combination, the outstanding
debt under the Note will be forgiven, except to the extent of any funds held outside of the Company’s trust account after paying
all other fees and expenses of the Company.
On March 8, 2023, the Company
held a special meeting and approved the date by which the Company must consummate a business combination to April 14, 2023. Associated
with the extension of the deadline to consummate a business combination, $75,000 of additional funds have been deposited into the Trust
Account.
In March 2023, the Company issued
an unsecured promissory note (the “March 2023 Note”) in favor of Instant, in the principal amount of $75,000. The proceeds
of the March 2023 Note were utilized by the Company to obtain a one-month extension of the period for the Company to consummate a Business
Combination. The March 2023 Note does not bear interest and matures upon closing of a Business Combination by the Company. If the Company
fails to consummate a Business Combination, the outstanding debt under the March 2023 Note will be forgiven, except to the extent of any
funds held outside of the Company’s Trust Account after paying all other fees and expenses of the Company.
Initial Business Combination
The Company had 15 months from
the closing of the offering to consummate the initial Business Combination. However, if the Company anticipates that it may not be able
to consummate the initial Business Combination within 15 months, the Company may, by resolution of the board if requested by the initial
stockholders, extend the period of time to consummate a Business Combination up to two times, each by an additional three months (for
a total of up to 21 months to complete a Business Combination) (the “Combination Period”), subject to the new Sponsors depositing
additional funds into the Trust Account as set out below. Pursuant to the terms of the bylaws and the trust agreement entered into between
the Company and Continental Stock Transfer & Trust Company on the date of this proxy statement, in order to extend the time available
for the Company to consummate the initial Business Combination, the new Sponsors, upon five days advance notice prior to the applicable
deadline, must deposit into the Trust Account for each three-month extension, $690,000 ($0.10 per share in either case) on or prior to
the date of the applicable deadline, up to an aggregate of $1,380,000, or approximately $0.20 per share. In the event that the Company
receives notice from the new Sponsors five days prior to the applicable deadline of its wish for the Company to effect an extension, the
Company intends to issue a press release announcing such intention at least three days prior to the applicable deadline. In addition,
the Company intends to issue a press release the day after the applicable deadline announcing whether or not the funds had been timely
deposited. The new Sponsors and its affiliates or designees are not obligated to fund the Trust Account to extend the time for the Company
to complete the initial Business Combination. If the Company is unable to consummate the initial Business Combination within the applicable
time period, the Company will, promptly but not more than ten business days thereafter, redeem the Public Shares for a pro rata portion
of the funds held in the Trust Account and promptly following such redemption, subject to the approval of the remaining stockholders and
the board of directors, dissolve and liquidate, subject in each case to the obligations under Delaware law to provide for claims of creditors
and the requirements of other applicable law. In such event, the rights and warrants will be worthless. Additionally, pursuant to Nasdaq
rules, any initial Business Combination must be approved by a majority of the independent directors.
On December 13, 2022, the Company
extended the Combination period by three months from December 14, 2022 to March 14, 2023 with a deposit of $690,000 ($0.10 per share)
in the Trust Account.
On March 8, 2023, the Company
held a special meeting and approved the date by which the Company must consummate a business combination to April 14, 2023. Associated
with the extension of the deadline to consummate a business combination, $75,000 of additional funds have been deposited into the Trust
Account.
The Company anticipates structuring
the initial Business Combination so that the post-transaction company in which the public stockholders’ own shares will own or acquire
substantially all of the equity interests or assets of the target business or businesses. The Company may, however, structure the initial
Business Combination such that the post-transaction company owns or acquires less than substantially all of such interests or assets of
the target business in order to meet certain objectives of the target management team or stockholders or for other reasons, but the Company
will only complete such Business Combination if the post-transaction company owns or acquires 50% or more of the outstanding voting securities
of the target or otherwise acquires a controlling interest in the target sufficient for it not to be required to register as an investment
company under the Investment Company Act of 1940, as amended (the “Investment Company Act”). Even if the post-transaction
company owns or acquires 50% or more of the voting securities of the target, the stockholders prior to the initial Business Combination
may collectively own a minority interest in the post-transaction company, depending on valuations ascribed to the target and the Company
in the Business Combination transaction. For example, the Company could pursue a transaction in which the Company issue a substantial
number of new shares in exchange for all of the outstanding capital stock of shares or other equity interests. In this case, the Company
would acquire a 100% controlling interest in the target. However, as a result of the issuance of a substantial number of new shares, the
stockholders immediately prior to the initial Business Combination could own less than a majority of the outstanding shares subsequent
to the initial Business Combination. If less than 100% of the equity interests or assets of a target business or businesses are owned
or acquired by the post-transaction company, the portion of such business or businesses that is owned or acquired is what will be valued
for purposes of the 80% of net assets test. If the initial Business Combination involves more than one target business, the 80% of net
assets test will be based on the aggregate value of all of the target businesses even if the acquisitions of the target businesses are
not closed simultaneously.
Although the Company believes that the net proceeds of the offering will be sufficient to allow the Company to consummate a Business
Combination, because the Company has not yet identified any prospective target business, the Company cannot ascertain the capital requirements
for any particular transaction. If the net proceeds of this offering prove to be insufficient, either because of the size of the Business
Combination, the depletion of the available net proceeds in search of a target business, or because the Company becomes obligated to
redeem a significant number of the Public Shares upon consummation of the initial Business Combination, the Company will be required
to seek additional financing, in which case the Company may issue additional securities or incur debt in connection with such Business
Combination. Furthermore, the Company may issue a substantial number of additional shares of common or preferred stock to complete the
initial Business Combination or under an employee incentive plan upon or after consummation of the initial Business Combination. The
Company does not have a maximum debt leverage ratio or a policy with respect to how much debt the Company may incur. The amount of debt
the Company will be willing to incur will depend on the facts and circumstances of the proposed Business Combination and market conditions
at the time of the potential Business Combination. At this time, the Company is not party to any arrangement or understanding with any
third party with respect to raising additional funds through the sale of the securities or the incurrence of debt. Subject to compliance
with applicable securities laws, the Company would only consummate such financing simultaneously with the consummation of the initial
Business Combination.
Nasdaq rules require that the
initial Business Combination must occur with one or more target businesses that together have an aggregate fair market value of at least
80% of the assets held in the Trust Account (excluding advisory fees and taxes payable on the income earned on the Trust Account) at the
time of the agreement to enter into the initial Business Combination. If the board is not able to independently determine the fair market
value of the target business or businesses, the Company will obtain an opinion from an independent investment banking firm or an independent
accounting firm with respect to the satisfaction of such criteria. The Company does not intend to purchase multiple businesses in unrelated
industries in connection with the initial Business Combination.
The Company will provide its
public stockholders with the opportunity to redeem all or a portion of their Public Shares upon the completion of the initial Business
Combination either (i) in connection with a stockholder meeting called to approve the initial Business Combination or (ii) by means of
a tender offer. The decision as to whether the Company will seek stockholder approval of a proposed initial Business Combination or conduct
a tender offer will be made by the Company, solely at its discretion. The stockholders will be entitled to redeem their shares for a pro
rata portion of the amount then on deposit in the Trust Account (initially approximately $10.10 per share, plus any pro rata interest
earned on the funds held in the Trust Account and not previously released to the Company to pay its tax obligations plus additional deposits
to extend the Combination Period).
The initial carrying value of
the common stock subject to redemption is recorded at an amount equal to the proceeds of the public offering less (i) the fair value of
the public warrants and less (ii) offering costs allocable to the common stock sold as part of the units in the IPO. Such initial carrying
value is classified as temporary equity upon the completion of the IPO, in accordance with Accounting Standards Codification (“ASC”)
Topic 480 “Distinguishing Liabilities from Equity.”
The Company’s amended and
restated certificate of incorporation provides that in no event will it redeem the public shares in an amount that would cause the Company’s
net tangible assets to be less than $5,000,001 both immediately before and after the consummation of the Business Combination (so that
the Company is not subject to the SEC’s “penny stock” rules). Redemptions of the Company’s public shares may also
be subject to a higher net tangible asset test or cash requirement pursuant to an agreement relating to the Business Combination. For
example, the Business Combination may require: (i) cash consideration to be paid to the target or its owners, (ii) cash to be transferred
to the target for working capital or other general corporate purposes or (iii) the retention of cash to satisfy other conditions in accordance
with the terms of the Business Combination. In the event the aggregate cash consideration the Company would be required to pay for all
shares of common stock that are validly submitted for redemption plus any amount required to satisfy cash conditions pursuant to the terms
of the Business Combination exceed the aggregate amount of cash available to the Company, it will not complete the Business Combination
or redeem any shares, and all shares of common stock submitted for redemption will be returned to the holders thereof.
The new Sponsors, officers and
directors and Representative (as defined in Note 6) have agreed to (i) waive their redemption rights with respect to their Founder Shares
and Public Shares in connection with the completion of the initial Business Combination, (ii) waive their redemption rights with respect
to their Founder Shares (as defined below) and Public Shares in connection with a stockholder vote to approve an amendment to the Company’s
amended and restated certificate of incorporation, and (iii) waive their rights to liquidating distributions from the Trust Account with
respect to their Founder Shares if the Company fails to complete the initial Business Combination within the Combination Period.
The Company’s new Sponsors
have agreed that they will be liable to the Company if and to the extent any claims by a third party for services rendered or products
sold to the Company, or a prospective target business with which the Company has entered into a written letter of intent, confidentiality
or similar agreement or Business Combination agreement, reduce the amount of funds in the Trust Account to below the lesser of (i) $10.46
per Public Share (subject to increase of up to an additional $75,000 per month in the event that our sponsors elect to extend the period
of time to consummate a business combination as set forth in the Extension Amendment) and (ii) the actual amount per Public Share
held in the Trust Account as of the date of the liquidation of the Trust Account, if less than $10.46 per share due to reductions in the
value of the trust assets, less taxes payable, provided that such liability will not apply to any claims by a third party or prospective
target business who executed a waiver of any and all rights to the monies held in the Trust Account (whether or not such waiver is enforceable)
nor will it apply to any claims under the Company’s indemnity of the underwriters of this offering against certain liabilities,
including liabilities under the Securities Act. However, the Company has not asked its new Sponsors to reserve for such indemnification
obligations, nor has the Company independently verified whether its new Sponsors have sufficient funds to satisfy its indemnity obligations
and believe that the Company’s new Sponsors’ only assets are securities of the Company. Therefore, the Company cannot assure
that its new Sponsors would be able to satisfy those obligations.
Liquidity, Capital Resources, and Going Concern
As of December 31, 2022, the
Company had $19,257 in cash and a working capital deficit of $1,025,509.
The Company’s liquidity
needs through December 31, 2022, were satisfied through (1) a capital contribution from the Sponsors of $28,750 for common stock (“Founder
Shares”) and (2) loans from Sponsors and new Sponsors and related parties in order to pay offering costs and other working capital
needs. In addition, in order to fund transaction costs in connection with a possible Business Combination, the Company’s new Sponsors,
an affiliate of the new Sponsors, and/or certain of the Company’s officers and directors may, but are not obligated to, provide
the Company Working Capital Loans. As of December 31, 2022 and 2021, there were no loans associated with the Working Capital Loans. As
of December 31, 2022 and 2021, the Company owed $1,002,850 and $28,890 to Sponsors, new Sponsors and related parties. See Note 5 for further
disclosure of Sponsor, new Sponsors and related party loans.
Based on the foregoing, management
believes that the Company may not have sufficient funds and borrowing capacity to meet its operating needs through the consummation of
a Business Combination through the extended term of the Company which expires on April 14, 2023 (as extended). Over this time period,
the Company will be utilizing the funds in the operating bank account to pay existing accounts payable, identifying and evaluating prospective
initial Business Combination candidates, performing due diligence on prospective target businesses, paying for travel expenditures, selecting
the target business to merge with or acquire, and structuring, negotiating and consummating the Business Combination. As of the date of
the filing of this report, management has indicated that it does intend to extend the term of the Company after its initial term expires.
The Company is within 12 months
of its mandatory liquidation date as of the date of the filing of this report. In connection with the Company’s assessment of going
concern considerations, the Company has until April 14, 2023 (as extended) to consummate a Business Combination. It is uncertain that
the Company will be able to consummate a Business Combination by that time. If a Business Combination is not consummated by this date,
there will be a mandatory liquidation and subsequent dissolution of the Company. The Company has determined that the insufficient funds
to meet the operating needs of the Company through the liquidation date as well as the mandatory liquidation, should a business combination
not occur, and potential subsequent dissolution raise substantial doubt about our ability to continue as a going concern.
These financial statements do
not include any adjustments relating to the recovery of the recorded assets or the classification of the liabilities that might be necessary
should the Company be unable to continue as a going concern.
Risks and Uncertainties
Management is currently evaluating
the impact of the COVID-19 pandemic on the Company and has concluded that while it is reasonably possible that the virus could have a
negative effect on the Company’s financial position, results of its operations, and/or search for a target company, the specific
impact is not readily determinable as of the date of these financial statements. The financial statements do not include any adjustments
that might result from the outcome of this uncertainty.
In February 2022, the Russian
Federation and Belarus commenced a military action with the country of Ukraine. As a result of this action, various nations, including
the United States, have instituted economic sanctions against the Russian Federation and Belarus. Further, the impact of this action and
related sanctions on the world economy are not determinable as of the date of these financial statements. The specific impact on the Company’s
financial condition, results of operations, and cash flows is also not determinable as of the date of these financial statements.
Consideration of Inflation Reduction Act Excise
Tax
On August 16, 2022, the Inflation
Reduction Act of 2022 (the “IR Act”) was signed into federal law. The IR Act provides for, among other things, a new U.S.
federal 1% excise tax on certain repurchases of stock by publicly traded U.S. domestic corporations and certain U.S. domestic subsidiaries
of publicly traded foreign corporations occurring on or after January 1, 2023. The excise tax is imposed on the repurchasing corporation
itself, not its shareholders from which shares are repurchased. The amount of the excise tax is generally 1% of the fair market value
of the shares repurchased at the time of the repurchase. However, for purposes of calculating the excise tax, repurchasing corporations
are permitted to net the fair market value of certain new stock issuances against the fair market value of stock repurchases during the
same taxable year. In addition, certain exceptions apply to the excise tax. The U.S. Department of the Treasury (the “Treasury”)
has been given authority to provide regulations and other guidance to carry out and prevent the abuse or avoidance of the excise tax.
Any redemption or other repurchase
that occurs after December 31, 2022, in connection with a Business Combination, extension vote or otherwise, may be subject to the excise
tax. Whether and to what extent the Company would be subject to the excise tax in connection with a Business Combination, extension vote
or otherwise would depend on a number of factors, including (i) the fair market value of the redemptions and repurchases in connection
with the Business Combination, extension or otherwise, (ii) the structure of a Business Combination, (iii) the nature and amount of any
“PIPE” or other equity issuances in connection with a Business Combination (or otherwise issued not in connection with a Business
Combination but issued within the same taxable year of a Business Combination) and (iv) the content of regulations and other guidance
from the Treasury. In addition, because the excise tax would be payable by the Company and not by the redeeming holder, the mechanics
of any required payment of the excise tax have not been determined. The foregoing could cause a reduction in the cash available on hand
to complete a Business Combination and in the Company’s ability to complete a Business Combination.
Investment Company Act 1940
Under the current rules and regulations
of the SEC we are not deemed an investment company for purposes of the Investment Company Act; however, on March 30, 2022, the SEC proposed
new rules (the “Proposed Rules”) relating, among other matters, to the circumstances in which SPACs such as us could potentially
be subject to the Investment Company Act and the regulations thereunder. The Proposed Rules provide a safe harbor for companies from the
definition of “investment company” under Section 3(a)(1)(A) of the Investment Company Act, provided that a SPAC satisfies
certain criteria. To comply with the duration limitation of the proposed safe harbor, a SPAC would have a limited time period to announce
and complete a de-SPAC transaction. Specifically, to comply with the safe harbor, the Proposed Rules would require a company to file a
Current Report on Form 8-K announcing that it has entered into an agreement with a target company for an initial business combination
no later than 18 months after the effective date of the SPAC’s registration statement for its initial public offering. The company
would then be required to complete its initial business combination no later than 24 months after the effective date of such registration
statement. There is currently uncertainty concerning the applicability of the Investment Company Act to a SPAC, including a company like
ours. Although we entered into a definitive business combination agreement within 18 months after the effective date of our registration
statement relating to our initial public offering, there is a risk that we may not complete our initial business combination within 24
months of such date. As a result, it is possible that a claim could be made that we have been operating as an unregistered investment
company. If we were deemed to be an investment company for purposes of the Investment Company Act, we may be forced to abandon our efforts
to complete an initial business combination and instead be required to liquidate. If we are required to liquidate, our investors would
not be able to realize the benefits of owning stock in a successor operating business, including the potential appreciation in the value
of our stock and warrants following such a transaction. Currently, the funds in our trust account are held only in money market funds
investing solely in U.S. government treasury obligations and meeting certain conditions under Rule 2a-7 under the Investment Company Act.
The Investment Company Act defines an investment company as any issuer which (i) is or holds itself out as being engaged primarily, or
proposes to engage primarily, in the business of investing, reinvesting, or trading in securities; (ii) is engaged or proposes to engage
in the business of issuing face-amount certificates of the installment type, or has been engaged in such business and has any such certificate
outstanding; or (iii) is engaged or proposes to engage in the business of investing, reinvesting, owning, holding, or trading in securities,
and owns or proposes to acquire investment securities having a value exceeding 40% of the value of its total assets (exclusive of Government
securities and cash items) on an unconsolidated basis. On or immediately prior to the 24-month anniversary of the effective date of our
registration statement relating to our initial public offering, we intend to review and assess our primary line of business and the value
of our investment securities as compared to the value of our total assets to determine whether we may be deemed an investment company.
The longer that the funds in the trust account are held in money market funds, there is a greater risk that we may be considered an unregistered
investment company. In the event we are deemed an investment company under the Investment Company Act, whether based upon our activities,
the investment of our funds, or as a result of the Proposed Rules being adopted by the SEC, we may determine that we are required to liquidate
the money market funds held in our trust account and may thereafter hold all funds in our trust account in cash until the earlier of consummation
of our business combination or liquidation. As a result, if we were to switch all funds to cash, we will likely receive minimal interest,
if any, on the funds held in our trust account after such time, which would reduce the dollar amount our public stockholders would receive
upon any redemption or liquidation of our Company.
NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES
Basis of Presentation
The accompanying financial statements
are presented in conformity with accounting principles generally accepted in the United States of America (“GAAP”) and pursuant
to the rules and regulations of the SEC.
Emerging Growth Company
The Company is an “emerging
growth company,” as defined in Section 2(a) of the Securities Act of 1933, as amended, (the “Securities Act”), as modified
by the Jumpstart our Business Startups Act of 2012, (the “JOBS Act”), and it may take advantage of certain exemptions from
various reporting requirements that are applicable to other public companies that are not emerging growth companies including, but not
limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure
obligations regarding executive compensation in its periodic reports and proxy statements, and exemptions from the requirements of holding
a nonbinding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously approved.
Further, Section 102(b)(1) of
the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until
private companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a class
of securities registered under the Exchange Act) are required to comply with the new or revised financial accounting standards. The JOBS
Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging
growth companies but any such election to opt out is irrevocable. The Company has elected not to opt out of such extended transition period
which means that when a standard is issued or revised and it has different application dates for public or private companies, the Company,
as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard.
This may make comparison of the Company’s financial statements with another public company which is neither an emerging growth company
nor an emerging growth company which has opted out of using the extended transition period difficult or impossible because of the potential
differences in accounting standards used.
Use of Estimates
The preparation of these financial
statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets
and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of
expenses during the reporting period.
Making estimates requires management
to exercise significant judgement. It is at least reasonably possible that the estimate of the effect of a condition, situation or set
of circumstances that existed at the date of the financial statements, which management considered in formulating its estimate, could
change in the near term due to one or more future confirming events.
Cash and Cash Equivalents
The Company considers all short-term
investments with an original maturity of three months or less when purchased to be cash equivalents. The Company did not have any cash
equivalents as of December 31, 2022 and 2021.
Concentration of Credit Risk
Financial instruments that potentially
subject the Company to concentrations of credit risk consist of cash accounts in a financial institution, which, at times may exceed the
Federal Depository Insurance Coverage of $250,000. The Company has not experienced losses on these accounts.
Offering Costs related to the Initial Public
Offering
The Company complies with the
requirements of ASC Subtopic 340-10-S99-1, “Expenses of Offering.” Offering costs consist of legal, accounting, underwriting
fees and other costs incurred through December 31, 2022 that were directly related to the IPO. Upon consummation of the IPO, offering
costs were allocated to the separable financial instruments issued in the IPO on a relative fair value basis compared to total proceeds
received. Offering costs associated with the Private Warrant liability were expensed as incurred and presented as non-operating expenses
in the statement of operations. Offering costs associated with the shares of common stock were charged to temporary equity (common stock
subject to possible redemption) upon the completion of the IPO.
Anchor Investors and Other Investors
The Company complies with SAB
Topic 5.A to account for the valuation of the Founder Shares acquired by the Anchor Investors and Other Investors. The Founder Shares
acquired by the Anchor Investors and Other Investors represent a capital contribution for the benefit of the Company and are recorded
as offering costs and reflected as a reduction in the proceeds from the offering and offering expenses in accordance with ASC 470 and
Staff Accounting Bulletin Topic 5A. As such, upon sale of the Founder Shares to the Anchor Investors and the granting of the Founder Shares
to the Other Investors the valuation of these shares was recognized as a deferred offering cost and charged to temporary equity and the
statement of operations based on the relative fair value basis.
Fair Value of Financial Instruments
The
fair value of the Company’s cash and current liabilities approximates the carrying amounts represented in the accompanying balance
sheet, due to their short-term nature.
Fair value is defined as the
price which would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at
the measurement date. A three-tier fair value hierarchy which prioritizes the inputs used in the valuation methodologies is as follows:
Level
1 Inputs - Unadjusted quoted prices in active markets for identical assets or liabilities that the reporting entity has the ability to
access at the measurement date.
Level
2 Inputs - Inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly.
These might include quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or
liabilities in markets that are not active, inputs other than quoted prices that are observable for the asset or liability (such as interest
rates, volatilities, prepayment speeds, credit risks, etc.) or inputs that are derived principally from or corroborated by market data
by correlation or other means.
Level 3 Inputs - Unobservable
inputs for determining the fair values of assets or liabilities that reflect an entity’s own assumptions about the assumptions that
market participants would use in pricing the assets or liabilities.
Fair Value of Trust Account
As of December 31, 2022 and 2021,
the assets in the Trust Account were held in a money market fund or cash with a broker. These financial assets were accounted for at fair
value on a recurring basis within Level 1 of the fair value hierarchy.
Fair Value of Warrant Liability
The Company accounted for the
7,306,000 warrants issued in connection with the IPO and private placement in accordance with the guidance contained in ASC Topic 815,
“Derivatives and Hedging” whereby under that provision, the Private Warrants did not meet the criteria for equity treatment
and were recorded as a liability and the Public Warrants met the criteria for equity treatment. Accordingly, the Company classified the
Private Warrants as a liability at fair value upon issuance and adjusts them to fair value at each reporting period. This liability is
re-measured at each balance sheet date until the Private Warrants are exercised or expire, and any change in fair value will be recognized
in the Company’s statements of operations.
Fair Value of Shares and Private Placement Units
acquired by Instant Fame
On October 20, 2022, pursuant
to a Securities Purchase Agreement between IF and the Sellers Management of the Company determined the fair value of the shares and private
placement units acquired to be $1,453,900. The excess value of the shares and private placement units acquired of $1,253,900 is reported
as a component of stockholders’ equity.
Common Stock Subject to Possible Redemption
The Company accounts for its
common stock subject to possible redemption in accordance with the guidance in ASC Topic 480, “Distinguishing Liabilities from Equity.”
Common stock subject to mandatory redemption (if any) are classified as a liability instrument and 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
and subsequently measured at redemption value. At all other times, shares of common stock are classified as stockholders’ equity.
The Company’s shares of common stock sold as part of the IPO feature certain redemption rights that are considered to be outside
of the Company’s control and subject to the occurrence of uncertain future events. Accordingly, all 6,900,000 shares of common stock
subject to possible redemption are presented at their net carrying value and classified as temporary equity, outside of the stockholders’
equity section of the Company’s balance sheet. The initial carrying value of the common stock subject to redemption is recorded
at an amount equal to the proceeds of the public offering ($69,000,000) less (i) the fair value of the public warrants ($5,796,000) and
less (ii) offering costs allocable to the common stock sold as part of the units in the public offering ($8,712,864). In accordance with
the alternative methods described in ASC Subtopic 480-10-S99-3A(15), “Classification and Measurement of Redeemable Securities.”
The Company has made an accounting policy election to accrete changes in the difference between the initial carrying amount and the redemption
amount ($10.10 per share) over the period form the IPO date to the expected redemption date. For purposes of accretion, the Company has
estimated that it will take 15 months for a Business Combination to occur and accordingly will accrete the carrying amount to the redemption
value using the effective interest method over that period. Such changes are reflected in additional paid in capital, or in the absence
of additional paid-in capital, in accumulated deficit.
With the three-month extension
of the Combination Period and the additional funding of $690,000 ($0.10 per share) in the Trust Account the Company changed the methodology
on a go-forward basis to recognize changes in redemption value immediately as they occur and adjusts the carrying value of redeemable
common stock to equal the redemption value at the end of each reporting period. Increases or decreases in the carrying amount of redeemable
common stock are affected by charges against additional paid-in-capital (to the extent available) and accumulated deficit. During the
year ended December 31, 2022, the Company recorded an increase in the redemption value of $12,994,286 because of earnings on the Trust
Account and additional deposits that exceed amounts payable for taxes. While the Company may use earnings on the Trust Account to pay
its tax obligations, as of December 31, 2022, $49,010 has been withdrawn by the Company from the Trust Account to pay its tax obligations.
On December 31, 2022 and 2021,
the common stock reflected in the balance sheet is reconciled in the following table:
| Gross proceeds | |
$ | 69,000,000 | |
| Less: | |
| — | |
| common stock issuance costs | |
| (8,712,864 | ) |
| Proceeds allocated to Public Warrants | |
| (5,796,000 | ) |
| Plus: | |
| | |
| Remeasurement of shares subject to redemption | |
| 3,580,177 | |
| common stock subject to possible redemption on December 31, 2021 | |
$ | 58,071,313 | |
| Plus: | |
| | |
| Remeasurement of shares subject to redemption | |
| 12,902,071 | |
| common stock subject to possible redemption on December 31, 2022 | |
$ | 70,973,384 | |
Income Taxes
Income taxes are accounted for
under the asset and liability method. Deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable
to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and
operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply
to taxable income in the years in which those temporary differences are expected to be realized. The effect of a change in tax rates or
laws on deferred tax assets and liabilities is recognized in operations in the period that includes the enactment date of the rate change.
A valuation allowance is established to reduce the deferred tax assets to the amounts that are more likely than not to be realized from
operations.
ASC 740 also clarifies the accounting
for uncertainty in income taxes recognized in an enterprise’s financial statements and prescribes a recognition threshold and measurement
process for financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. For those
benefits to be recognized, a tax position must be more-likely-than-not to be sustained upon examination by taxing authorities. ASC 740
also provides guidance on derecognition, classification, interest and penalties, accounting in interim period, disclosure and transition.
The Company has identified the
United States and the State of California as its only “major” tax jurisdictions.
The Company is subject to income
tax examinations by major taxing authorities since inception. These examinations may include questioning the timing and amount of deductions,
the nexus of income among various tax jurisdictions and compliance with federal and state tax laws. The Company’s management does
not expect that the total amount of unrecognized tax benefits will materially change over the next twelve months.
Tax benefits of uncertain tax
positions are recognized only if it is more likely than not that the Company will be able to sustain a position taken on an income tax
return. The Company has no liability for uncertain tax positions as of December 31, 2022 and 2021. Interest and penalties, if any, related
to unrecognized tax benefits would be recognized as income tax expense. The Company does not have any accrued interest or penalties associated
with unrecognized tax benefits, nor was any significant interest expense recognized during the year ended December 31, 2022 and for the
period January 21, 2021 (inception) to December 31, 2021.
Net Income (Loss) Per Share
Basic net income (loss) per share
is computed by dividing net income (loss) by the weighted average number of shares of common stock outstanding during the period.
For purposes of calculating diluted
income (loss) per common stock, the denominator includes both the weighted-average number of shares of common stock outstanding during
the period and the number of common stock equivalents if the inclusion of such common stock equivalents is dilutive. Dilutive common stock
equivalents potentially include shares and warrants using the treasury stock method.
As of December 31, 2022, 7,306,000
warrants were excluded from the diluted income per share calculation since the exercise price of the warrants is greater than the average
market price of the common stock. As a result, diluted net income (loss) per share is the same as basic loss per share for the period
presented.
Reconciliation of Income (Loss) per Share of
Common Stock
Basic and diluted loss per share
for common stock is calculated as follows:
| | |
For the Year Ended December 31, | |
For the period from January 21, 2021 (inception) to December 31, 2021 |
| | |
2022 | |
2021 |
| Income per share of common stock: | |
| | | |
| | |
| Net income (loss) | |
$ | 47,107 | | |
$ | (277,203 | ) |
| | |
| | | |
| | |
| Weighted Average Shares of common stock | |
| 9,424,000 | | |
| 4,785,051 | |
| Basic and diluted income (loss) per share | |
$ | 0.00 | | |
$ | (0.06 | ) |
Recent Accounting Standards
In August 2020, the Financial
Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2020-06, Debt — “Debt
with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging — Contracts in Entity’s Own Equity”
(Subtopic 815-40) (“ASU 2020-06”) to simplify accounting for certain financial instruments. ASU 2020-06 eliminates the current
models that require separation of beneficial conversion and cash conversion features from convertible instruments and simplifies the derivative
scope exception guidance pertaining to equity classification of contracts in an entity’s own equity. The new standard also introduces
additional disclosures for convertible debt and freestanding instruments that are indexed to and settled in an entity’s own equity.
ASU 2020-06 amends the diluted earnings per share guidance, including the requirement to use the if-converted method for all convertible
instruments. ASU 2020-06 is effective January 1, 2022 and should be applied on a full or modified retrospective basis, with early adoption
permitted beginning on January 1, 2021. The Company adopted ASU 2020-06 as of January 1, 2021 and the adoption of the ASU 2020-06 did
not have a material effect on the financial statements.
Management does not believe that
any other recently issued, but not yet effective, accounting pronouncements, if currently adopted, would have a material effect on the
Company’s financial statements.
Stock Based Compensation
The Company complies with ASC
718 Compensation — Stock Compensation regarding Founder Shares granted to directors and an officer of the Company. The acquired
shares shall vest upon the Company consummating an initial Business Combination (the “Vesting Date”). The Founder Shares owned
by the directors or officer (1) may not be sold or transferred, until one year after the consummation of a Business Combination, (2) not
be entitled to redemption from the funds held in the Trust Account, or any liquidating distributions. The Company has 18 months from the
date of the IPO to consummate a Business Combination, and if a Business Combination is not consummated, the Company will liquidate and
the shares will become worthless.
The Founder Shares were issued
on September 8, 2021, and the Founder Shares vest, not upon a fixed date, but upon consummation of an initial Business Combination. Since
the approach in ASC 718 is to determine the fair value without regard to the vesting date, the Company has determined the valuation of
the Founder Shares as of September 8, 2021. The valuation resulted in a fair value of $7.48 per share as of September 8, 2021, or an aggregate
of $972,400 for the 130,000 Founder Shares. The Founder Shares were granted at no cost to the recipients. The excess fair value over the
amount paid is $972,400, which is the amount of share-based compensation expense which the Company will recognize upon consummation of
an initial business combination.
NOTE 3 — PUBLIC OFFERING
On September 14, 2021, the Company
consummated its IPO and sold 6,900,000 Units at a purchase price of $10.00 per Unit, which was inclusive of the underwriters’ full
exercise of their over-allotment option, generating gross proceeds of $69,000,000. Each Unit that the Company sold had a price of $10.00
and consisted of one share of common stock, one warrant to purchase one share of common stock and one right. Each warrant will entitle
the holder to purchase one share of common stock at a price of $11.50 per share, subject to adjustment. Each warrant will become exercisable
on the later of the completion of the initial Business Combination or 12 months from the closing of the offering and will expire five
years after the completion of the initial Business Combination, or earlier upon redemption or liquidation. Each right entitles the holder
to buy one tenth of one share of common stock. The common stock, warrants and rights comprising the Units will begin separate trading
on the 52nd day following September 13, 2021, the date of the filing of the final prospectus unless the underwriters, I-Bankers Securities,
Inc., inform the Company of their decision to allow earlier separate trading, subject to the Company’s having filed the Current
Report on Form 8-K with the accompanying audited balance sheet and having issued a press release announcing when such separate trading
will begin. At the time that the common stock, warrants and rights comprising the Units begin separate trading, holders will hold the
separate securities and no longer hold Units (without any action needing to be taken by the holders), and the Units will no longer trade.
All of the 6,900,000 shares of
common stock sold as part of the Units in the IPO contain a redemption feature which allows for the redemption of such public shares in
connection with the Company’s liquidation, if there is a stockholder vote or tender offer in connection with the Business Combination
and in connection with certain amendments to the Company’s certificate of incorporation. In accordance with SEC and its staff’s
guidance on redeemable equity instruments, which has been codified in ASC 480-10-S99, redemption provisions not solely within the control
of the Company require common stock subject to redemption to be classified outside of permanent equity.
NOTE 4 — PRIVATE PLACEMENT
Simultaneously with the closing
of the IPO and the sale of the Units, the Company sold 181,000 Private Placement Units to certain investors for aggregate cash proceeds
of $2,460,000 and issued an additional 225,000 Private Placement Units to a Sponsor in exchange for the cancellation of approximately
$1,105,000 in loans and a promissory note due to them. Each Private Placement Unit consisted of one share of common stock, one redeemable
warrant to purchase one share of common stock at a price of $11.50 per whole share and one right.
On October 20, 2022, pursuant
to the SPA, the new Sponsors acquired an aggregate of 385,000 shares of common stock and 90,000 private placement units of the Company
from the Sellers in a private transaction. Management of the Company determined the fair value of the shares and private placement units
acquired to be $1,453,900. The excess value of the shares and private placement units acquired of $1,253,900 is reported as a component
of stockholders’ equity.
NOTE 5 — RELATED PARTY TRANSACTIONS
Founder Shares
In February 2021, the Sponsors
subscribed for 2,875,000 shares of the Company’s common stock (the “Founder Shares”) for $28,750, or $0.01 per share,
in connection with formation. In June 2021, 1,437,500 shares of the Founder Shares were re-purchased by the Company for a total of $14,375.
In connection with the upsize of the IPO, on June 10, 2021, an additional 287,500 Founder Shares were issued via a 20% stock dividend,
resulting in total Founder Shares outstanding of 1,725,000. All share amounts and related figures were retroactively adjusted.
In March 2021, Suresh Yezhuvath
granted an aggregate of 16,668 Founder Shares to other investors (“Other Investors”) at no costs.
The Sponsors, new Sponsors, Other
Investors, Anchor Investors, directors and officer have agreed not to transfer, assign or sell the Founder Shares until the earlier to
occur of: (A) one year after the completion of the initial Business Combination or (B) the date on which the Company completes a liquidation,
merger, stock exchange or other similar transaction after the initial Business Combination that results in all of the public stockholders
having the right to exchange their shares of common stock for cash, securities or other property. The Company refers to such transfer
restrictions as the “lock-up”. Notwithstanding the foregoing, if the last sale price of the 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 the initial Business Combination, the Founder Shares will be released
from the lock-up.
Working Capital Loans – Sponsors and New
Sponsors
In order to finance transaction
costs in connection with a Business Combination, the new Sponsors or an affiliate of the new Sponsors or certain of the Company’s
officers and directors may, but are not obligated to, loan the Company funds as may be required. If the Company completes a Business Combination,
the Company would repay the loans out of the proceeds of the Trust Account released to the Company. Otherwise, the 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 the working capital held outside the Trust Account to repay the loans but no proceeds from the Trust Account would be used to repay
the loans. On December 31, 2022 and 2021 there were no loans outstanding under the working capital loan program.
Pre-IPO Promissory Note—Sponsor
On February 15, 2021, the Company
issued an unsecured promissory note to Yezhuvath, as and when required, pursuant to which the Company may borrow up to an aggregate principal
amount of $300,000 to be used for a portion of the expenses of this offering. The note was non-interest bearing and unsecured. As of December
31, 2022, all $300,000 of the note had been drawn down and fully repaid upon the closing of the IPO through the issuance of 30,000 Private
Placement Units.
Pre-IPO Loans – Sponsors
Prior to the completion of the
IPO, the Company entered into an additional loan agreement with Yezhuvath to finance the expenses associated with preparing for the IPO
as follows:
The Company entered into a loan
agreement with Yezhuvath with the following terms:
| 1. |
The Company borrowed approximately $805,000 under the loan agreement as follows: |
| a. |
Deferred offering costs of $50,000 were directly paid by the Sponsor. |
| b. |
The Company repurchased treasury stock of $7,375 from the Sponsor. |
| c. |
Proceeds of approximately $747,625 was received directly into the Company from the Sponsor. |
| 2. |
Advances under the loan agreement are unsecured and do not bear interest. |
| |
|
| 3. |
Following the consummation of the IPO, the loan was repaid/forfeited as follows: |
| a. |
Against the first approximate $1,030,000 of the note and loan agreement (inclusive of the $300,000 note discussed above), 210,000 Private Placement Units were issued. |
| b. |
Against the next $75,000 of loan, 15,000 Private Placement Units were issued. |
Yezhuvath agreed to make an additional
loan to the Company of $225,000 pursuant to the exercise of the over-allotment which would only be drawn down at the time of the Business
Combination. The proceeds would be used to pay a portion of the incremental underwriting discount on the over-allotment shares which the
underwriter has agreed to defer the receipt of until a Business Combination is consummated. Yezhuvath has agreed to forgive this amount
without any additional securities being issued against it.
On April 12, 2021, the Company
entered into a loan agreement with Rao for an amount of $270,000. The loan did not bear interest and was unsecured. In connection with
the successful IPO, the loan was forfeited and not repaid by the Company and was considered a capital contribution without any additional
securities being issued.
Due to Related Parties
The balance on December 31,
2022 in Due to Related Parties totaled $1,002,850 consists of the following transactions:
| 1. |
Suresh Yezhuvath loaned the Company $23,960. |
| |
|
| 2 |
Subash Menon paid expenses on behalf of the Company. As of December 31, 2022, the Company owed him $3,557 for such expenses. |
| |
|
| 3. |
As a result of a change in the size of the offering, the Company agreed to repurchase 700,000 shares of common stock from Bannix Management LLP for total consideration of $7,000. |
| |
|
| 4. |
Pursuant to the Administrative Support Agreement, the Company has accrued $78,333 for rent since September 2021 for which it was a publicly listed company. |
| |
|
| 5. |
Pursuant to a Securities Purchase Agreement, related parties loaned the Company $200,000 of which is expected to be forfeited by the lender. |
| |
|
| 6 |
Pursuant to the December 13, 2022 Note with Instant Fame the Company owes $690,000. |
The Note is non-interest bearing
and repayable on the consummation of a Business Combination. If a Business Combination is not consummated the Note will not be repaid
and all amounts owed hereunder will be forgiven except to the extent that the Company has funds available to it outside of the Trust Account.
Administrative Support Agreement
Commencing on the date of the
IPO, the Company has agreed to pay an affiliate of the Sponsor for office space, secretarial and administrative services provided to members
of the management team, in the amount of $5,000 per month. Upon completion of the initial Business Combination or the Company’s
liquidation, it will cease paying these monthly fees. For the year ended December 31, 2022, the Company had incurred $60,000 pursuant
to the agreement. For the period from January 21, 2021 (inception) through December 31, 2021, the Company had incurred $18,333 pursuant
to the agreement.
NOTE 6 — COMMITMENTS
Registration Rights
The holders of the Founder Shares,
Private Placement Units and warrants that may be issued upon conversion of related party loans will have registration rights to require
the Company to register a sale of any of its securities held by them pursuant to a registration rights agreement to be signed prior to
or on the effective date of this offering. These holders will be entitled to make up to three demands, excluding short form registration
demands, that the Company registers such securities for sale under the Securities Act. In addition, these holders will have “piggy-back”
registration rights to include their securities in other registration statements filed by the Company.
Underwriting Agreement
The Company granted the underwriters
a 30-day option from the date of the IPO to purchase up to an additional 900,000 Units to cover over-allotments, which it fully exercised
on the date of the IPO.
The underwriters were entitled
to a cash underwriting discount of 3% of the gross proceeds of the IPO, or an aggregate of $2,070,000. Of this amount, $225,000 will be
payable to the underwriters by a Sponsor solely in the event that the Company completes a Business Combination, subject to the terms of
the underwriting agreement. Additionally, the underwriters are entitled to a Business Combination marketing fee of 3.5% of the gross proceeds
of the sale of Units in the IPO upon the completion of the Company’s initial Business Combination subject to the terms of the underwriting
agreement.
The Company issued the underwriter
(and/or its designees) (the “Representative”) 393,000 shares of common stock for $0.01 per share (the “Representative
Shares”) upon the consummation of the IPO. The Company accounted for the estimated fair value ($2,861,000) of the Representative
Shares as an offering cost of the IPO and allocated such cost against temporary equity for the amount allocated to the redeemable shares
and to expense for the allocable portion relating to the warrant liability. These shares of common stock issued to the underwriter are
subject to an agreement in which the underwriter has agreed (i) not to transfer, assign or sell any such shares until the completion of
the Business Combination. In addition, the underwriter (and/or its designees) has agreed (i) to waives its redemption rights with respect
to such shares in connection with the completion of the Business Combination and (ii) to waive its rights to liquidating distributions
from the trust account with respect to such shares if it fails to complete the Business Combination within 15 months from the closing
of the IPO. Accordingly, the fair value of such shares is included in stockholders’ equity. As of December 31, 2022, the Representative
has not yet paid for these shares, and the amount owed of $3,930 is included in prepaid expenses on the balance sheets.
Other Investors
Other Investors were granted
an aggregate of 16,668 Founder Shares at no costs from Suresh Yezhuvath in March 2021. The Company valued the Founder Shares at approximately
$0.65 per share or $10,834 in the aggregate at the date of the grant.
The Other Investors have not
been granted any stockholder or other rights that are in addition to those granted to the Company’s other public stockholders. The
Other Investors will have no rights to the funds held in the Trust Account with respect to the Founder Shares held by them. The Other
Investors will have the same rights to the funds held in the Trust Account with respect to the common stock underlying the Units they
purchase at the IPO as the rights afforded to the Company’s other public stockholders.
Anchor Investors
The Anchor Investors entered
into separate letter agreements with the Company and the Sponsors pursuant to which, subject to the conditions set forth therein, the
Anchor Investors purchased, upon the closing of the IPO on September 14, 2021, 181,000 Private Placement Units and 762,500 Founder Shares
on September 9, 2021 (“Anchor Shares” in the total). The Company valued the Founder Shares at $7.48 per share at the date
of the purchase.
The Anchor Investors have not
been granted any stockholder or other rights that are in addition to those granted to the Company’s other public stockholders and
purchased the Founder Shares for nominal consideration with an excess of the fair value of $3,244,453. Each Anchor Investor has agreed
in its individually negotiated letter agreement entered into with the Company to vote its Anchor Shares to approve the Company’s
initial Business Combination. The Anchor Investors will have no rights to the funds held in the Trust Account with respect to the Anchor
Shares held by them. The Anchor Investors will have the same rights to the funds held in the Trust Account with respect to the common
stock underlying the Units they purchase at the IPO (excluding the common stock included in the Private Placement Units purchased) as
the rights afforded to the Company’s other public stockholders.
NOTE 7 — STOCKHOLDERS’ (DEFICIT) EQUITY
Preferred Stock—
On September 9, 2021, the Company amended and restated its certificate of incorporation to authorize the issuance of 1,000,000 shares
of preferred stock at par value of $0.01 each and with such designations, voting and other rights and preferences as may be determined
from time to time by the Company’s board of directors.
Common Stock—
The Company was authorized to issue a total of 10,000,000 shares of common stock with par value of $0.01 each. As of December 31, 2022
and 2021, there were 3,961,500 shares of common stock issued and 2,524,000 shares of common stock outstanding, excluding 6,900,000 shares
subject to possible redemption. Each share of common stock entitles the holder to one vote. In connection with the Company’s amended
and restated certificate of incorporation, authorized shares were increased to 100,000,000. As of the consummation of the Company’s
IPO on September 14, 2021, there were 9,424,000 shares of common stock issued, inclusive of those subject to possible redemption, consisting
of (1) 6,900,000 shares related to the Units sold in the IPO, (2) 406,000 shares related to the Private Placement Units sold concurrently
with the IPO, (3) 1,725,000 Founder Shares and (4) 393,000 Representative Shares.
Treasury Stock
— On June 21, 2021 the Sponsors agreed to deliver the Company 1,437,500 shares of common stock beneficially owned by the Sponsors.
The amount payable to Yezhuvath of $7,735 was repaid as part of the Private Placement Units issued to him (see Note 5) and the amount
of $7,000 payable to Bannix Management LLP is included in Due to Related Parties as of December 31, 2022.
Rights —
Except in cases where the Company is not the surviving company in the Business Combination, each holder of a right will automatically
receive one-tenth (1/10) of a share of common stock upon consummation of the Business Combination, even if the holder of a right converted
all shares held by him, her or it in connection with the Business Combination or an amendment to the Company’s Certificate of Incorporation
with respect to its pre-Business Combination activities. In the event that the Company will not be the surviving company upon completion
of the Business Combination, each holder of a right will be required to affirmatively convert his, her or its rights in order to receive
the one-tenth (1/10) of a share of common stock underlying each right upon consummation of the Business Combination. No additional consideration
will be required to be paid by a holder of rights in order to receive his, her or its additional share of common stock upon consummation
of Business Combination. The shares issuable upon exchange of the rights will be freely tradable (except to the extent held by affiliates
of the Company). If the Company enters into a definitive agreement for a Business Combination in which the Company will not be the surviving
entity, the definitive agreement will provide for the holders of the rights to receive the same per share consideration the holders of
shares of common stock will receive in the transaction on an as-converted into common stock basis.
NOTE 8 — WARRANTS
The Company accounted for the
7,306,000 warrants issued in connection with the IPO and private placement in accordance with the guidance contained in ASC Topic 815
“Derivatives and Hedging” whereby under that provision, the Private Warrants did not meet the criteria for equity treatment
and were recorded as a liability. Accordingly, the Company classified the Private Warrants as a liability at fair value and will adjust
them to fair value at each reporting period. This liability will be re-measured at each balance sheet date until the Private Warrants
are exercised or expire, and any change in fair value will be recognized in the Company’s statement of operations. The fair value
of the Private Warrants was estimated using a modified Black-Scholes model. The valuation models utilize inputs such as assumed share
prices, volatility, discount factors and other assumptions and may not be reflective of the price at which they can be settled. Such Private
Warrant classification is also subject to re-evaluation at each reporting period. The Public Warrants met the classification for equity
treatment.
Each warrant entitles the holder
to purchase one share of the Company’s common stock at a price of $11.50 per share, subject to adjustment as discussed herein. In
addition, if (x) the Company issues additional shares or equity-linked securities for capital raising purposes in connection with the
closing of its initial Business Combination at an issue price or effective issue price of less than $9.20 per share of common stock (with
such issue price or effective issue price to be determined in good faith by the Company’s board of directors and, in the case of
any such issuance to the Company’s new Sponsors or its affiliates, without taking into account any Founder Shares held by the Company’s
Sponsors or new Sponsors or its affiliates, prior to such issuance) (the “Newly Issued Price”), (y) the aggregate gross proceeds
from such issuances represent more than 60% of the total equity proceeds, and interest thereon, available for the funding of the initial
Business Combination on the date of the consummation of the initial Business Combination (net of redemptions), and (z) the volume weighted
average trading price of the Company’s common stock during the 20 trading day period starting on the trading day prior to the day
on which the Company consummates the initial Business Combination (such price, the “Market Value”) is below $9.20 per share,
the exercise price of the warrants will be adjusted (to the nearest cent) to be equal to 115% of the Market Value, and the $18.00 per
share redemption trigger price described below under “Redemption of warrants” will be adjusted (to the nearest cent) to be
equal to 180% of the Market Value.
The warrants will become exercisable
on the later of 12 months from the closing of this offering or upon completion of its initial Business Combination and will expire five
years after the completion of the Company’s initial Business Combination, at 5:00 p.m., Eastern Time, or earlier upon redemption
or liquidation.
Redemption of warrants
The Company may call the warrants
for redemption (excluding the private warrants, and any warrants underlying Units issued to the Sponsors, new Sponsors, initial stockholders,
officers, directors or their affiliates in payment of related party loans made to the Company), in whole and not in part, at a price of
$0.01 per warrant:
| |
● |
at any time while the warrants are exercisable, |
| |
|
|
| |
● |
upon not less than 30 days prior written notice of redemption to each warrant holder, |
| |
|
|
| |
● |
if, and only if, the reported last sale price of the common stock equals or exceeds $18.00 per share (as adjusted for stock splits, stock dividends, reorganizations and recapitalizations), for any 20 trading days within a 30-trading day period ending on the third trading business day prior to the notice of redemption to warrant holders, and |
| |
|
|
| |
● |
if, and only if, there is a current registration statement in effect with respect to the issuance of the shares underlying such warrants at the time of redemption and for the entire 30-day trading period referred to above and continuing each day until the date of redemption. |
If the Company calls the warrants
for redemption as described above, the management will have the option to require any holder that wishes to exercise its warrant to do
so on a “cashless basis.” If management takes advantage of this option, all holders of warrants would pay the exercise price
by surrendering their warrants for that number of shares of common stock equal to the quotient obtained by dividing (x) the product
of the number of shares of common stock underlying the warrants, multiplied by the excess of the “fair market value” (defined
below) over the exercise price of the warrants by (y) the fair market value. The “fair market value” shall mean the average
reported last sale price of the common stock for the 10 trading days ending on the third trading day prior to the date on which the notice
of redemption is sent to the holders of warrants.
If the Company is unable to complete
an initial Business Combination within the Combination Period and the Company liquidates the funds held in the Trust Account, holders
of warrants will not receive any of such funds with respect to their warrants, nor will they receive any distribution from the Company’s
assets held outside of the Trust Account with respect to such warrants. Accordingly, the warrants may expire worthless.
The following presents
the Company’s fair value hierarchy for the 406,000 Private Warrants issued which are classified as liabilities measured at fair
value as of December 31, 2022:
| | |
Level 1 | |
Level 2 | |
Level 3 |
| | |
| |
| |
|
| Private Warrants | |
$ | — | | |
$ | — | | |
$ | 12,180 | |
| Total | |
$ | — | | |
$ | — | | |
$ | 12,180 | |
The following presents the Company’s
fair value hierarchy for the 406,000 Private Warrants issued which are classified as liabilities measured at fair value as of the December
31, 2021:
| | |
Level 1 | |
Level 2 | |
Level 3 |
| | |
| |
| |
|
| Private Warrants | |
$ | — | | |
$ | — | | |
$ | 194,880 | |
| Total | |
$ | — | | |
$ | — | | |
$ | 194,880 | |
The following table summarizes
key inputs and the models used in the valuation of the Company’s Private Warrants as of December 31, 2022:
| | |
Private Warrants |
| | |
|
| Valuation Method Utilized | |
Modified Black Scholes |
| Stock Price | |
$ | 10.17 | |
| Exercise Price | |
$ | 11.50 | |
| Expected Term | |
| 2.7 | |
| Volatility | |
| 1.3 | % |
| Risk-free rate | |
| 3.99 | % |
The following table summarizes
key inputs and the models used in the valuation of the Company’s Private Warrants as of December 31, 2021:
| | |
Private Warrants |
| | |
|
| Valuation Method Utilized | |
Modified Black Scholes |
| Stock Price | |
$ | 9.81 | |
| Exercise Price | |
$ | 11.50 | |
| Expected Term | |
| 5.00 | |
| Volatility | |
| 9.7 | % |
| Risk-free rate | |
| 1.26 | % |
The following table presents
the changes in Level 3 liability for the year ended December 31, 2022:
| Fair value of Private Warrants on December 31, 2021 | |
$ | 194,880 | |
| Change in fair value of Private Warrants | |
| (182,700 | ) |
| Fair value of Private Warrants on December 31, 2022 | |
$ | 12,180 | |
The following table presents
the changes in the Private Warrant liability, measured on a recurring basis, classified as Level 3, for the period from January 21, 2021
(inception) to December 31, 2021:
| Fair value of Private Warrants on January 21, 2021 (Inception) | |
$ | — | |
| Initial fair value of Private Warrants on September 14, 2021 | |
| 345,100 | |
| Change in fair value of Private Warrants | |
| (150,220 | ) |
| Fair value of Private Warrants on December 31, 2021 | |
$ | 194,880 | |
NOTE 9 — INCOME TAX
The Company’s net deferred
tax assets (liability) at December 31, 2022 and 2021 are as follows:
| | |
December 31, |
| | |
2022 | |
2021 |
| Deferred tax asset | |
| | | |
| | |
| Organizational costs/Start-up costs | |
$ | 301,024 | | |
$ | 72,992 | |
| Unrealized gain/loss – Trust | |
| (66,997 | ) | |
| — | |
| Federal net operating loss | |
| — | | |
| 24,132 | |
| State net operating loss | |
| — | | |
| 5,901 | |
| Total deferred tax asset | |
| 234,027 | | |
| 103,024 | |
| Valuation allowance | |
| (301,024 | ) | |
| (103,024 | ) |
| Deferred tax asset (liability), net of allowance | |
$ | (66,997 | ) | |
$ | — | |
The income tax provision for
the year ended December 31, 2022 and for the period from January 21, 2021 (inception) through December 31, 2021 consists of the following:
| | |
December 31, |
| | |
2022 | |
2021 |
| Federal | |
| | | |
| | |
| Current | |
$ | 111,278 | | |
$ | — | |
| Deferred | |
| (92,863 | ) | |
| (82,782 | ) |
| State | |
| | | |
| | |
| Current | |
| 45,007 | | |
| — | |
| Deferred | |
| (38,139 | ) | |
| (20,242 | ) |
| Change in valuation allowance | |
| 197,999 | | |
| 103,024 | |
| Income tax provision | |
$ | 223,282 | | |
$ | — | |
The Company’s net operating
loss carryforward as of December 31, 2022 and 2021 amounted to $0 and $114,913, respectively, will be carried forward indefinitely.
In assessing the realization
of the deferred tax assets, management considers whether it is more likely than not that some portion of all of the deferred tax assets
will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during
the periods in which temporary differences representing net future deductible amounts become deductible. Management considers the scheduled
reversal of deferred tax liabilities, projected future taxable income and tax planning strategies in making this assessment. After consideration
of all of the information available, management believes that significant uncertainty exists with respect to future realization of the
deferred tax assets and has therefore established a full valuation allowance. For the year ended December 31, 2022, the change in the
valuation allowance was $197,999. For the period from January 21, 2021 (inception) through December 31, 2021, the change in the valuation
allowance was $103,024.
A reconciliation of the federal
income tax rate to the Company’s effective tax rate at December 31, 2022 and 2021 is as follows:
| | |
December 31, |
| | |
2022 | |
2021 |
| Statutory federal income tax rate | |
| 21 | % | |
| 21 | % |
| State taxes, net of federal tax benefit | |
| 7 | % | |
| 5 | % |
| Permanent book/tax differences: | |
| | | |
| | |
| Change in fair value of warrant liability | |
| (18 | )% | |
| 14 | % |
| Warrant issuance costs | |
| 0.0 | % | |
| (3 | )% |
| Change in valuation allowance | |
| 73 | % | |
| (37 | )% |
| Income tax provision | |
| 83 | % | |
| 0 | % |
The Company files income tax
returns in the U.S. federal jurisdiction in various state and local jurisdictions and is subject to examination by the various taxing
authorities, since inception.
NOTE 10 - SUBSEQUENT EVENTS
The Company evaluated subsequent
events and transactions that occurred after the balance sheet date up to the date that the financial statements were issued. Based upon
this review, other than stated below, the Company did not identify any subsequent events that would have required adjustment or disclosure
in the financial statements.
On March
8, 2023 the Company held a special meeting and approved the date by which the Company must consummate a business combination, up to March
14, 2024 with approval of the board of directors and additional deposits of funds in the Trust Account. In connection with the vote on
the Extension Amendment (described below) at the Special Meeting, stockholders holding a total of 3,960,387 shares of the Company’s
common stock exercised their right to redeem such shares for a pro rata portion of the funds in the Company’s Trust Account. As
a result, $41,077,189.13 (approximately $10.37201 per share) was removed from the Company’s Trust Account to pay such holders. Following
redemptions, the Company has 5,463,613 shares outstanding.
The
Company filed an amendment to its Amended and Restated Certificate of Incorporation with the Delaware Secretary of State on March 9, 2023
(the “Extension Amendment”), to extend the date (the “Extension”) by which the Company must (1) complete a merger,
share exchange, asset acquisition, stock purchase, recapitalization, reorganization or similar business combination involving the Company
and one or more businesses (an “initial business combination”), (2) cease its operations except for the purpose of winding
up if it fails to complete such initial business combination, and (3) redeem 100% of the Company’s common stock (“common stock”)
included as part of the units sold in the Company’s initial public offering that was consummated on September 14, 2021 (the “IPO”),
from March 14, 2023, and to allow the Company, without another stockholder vote, to further extend the date to consummate a Business Combination
on a monthly basis up to twelve (12) times by an additional one (1) month each time after March 14, 2023 or later extended deadline date,
by resolution of the Company’s board of directors (the “Board”), if requested by IF, upon five days’ advance notice
prior to the applicable deadline date, until March 14, 2024, or a total of up to twelve (12) months after March 14, 2023 (such date as
extended, the “Deadline Date”), unless the closing of a Business Combination shall have occurred prior thereto.
The
new Sponsor has requested to extend the period of time to consummate a Business Combination by an additional one month (to April 14, 2023)
and has deposited $75,000 in additional funds into the Trust Account as set forth in the Company’s charter.
In March
2023, the Company issued an unsecured promissory note (the “March 2023 Note”) in favor of IF, in the principal amount of $75,000.
The proceeds of the March 2023 Note were utilized by the Company to obtain a one-month extension of the period for the Company to consummate
a Business Combination. The March 2023 Note does not bear interest and matures upon closing of a Business Combination by the Company.
If the Company fails to consummate a Business Combination, the outstanding debt under the March 2023 Note will be forgiven, except to
the extent of any funds held outside of the Company’s Trust Account after paying all other fees and expenses of the Company.
As disclosed
by the Company in its proxy statement filed on March 6, 2023 with respect to the remaining funds held in the Trust Account following the
special meeting and the related redemptions, the Company stated it plans to maintain the remaining amount in its trust account in an interest-bearing
demand deposit account at a bank.
On April
6, 2023 the Company’s trustee setup and funded a bank account with Citibank for all remaining funds from the Trust Account, post-redemption,
including interest accrued in the amount of $30,744,828.
EVIE AUTONOMOUS GROUP LTD
Financial Statements
For the Period from May 8, 2023 (Inception) to June
30, 2023
BANNIX ACQUIlSITION
CORP.
CONDENSED BALANCE
SHEETS
| | |
September 30, 2023 | |
December 31, 2022 |
| | |
(Unaudited) | |
|
| Assets | |
| | | |
| | |
| Current Assets: | |
| | | |
| | |
| Cash | |
$ | 39,589 | | |
$ | 19,257 | |
| Prepaid expense and other | |
| 5,933 | | |
| 26,296 | |
| Total Current Assets | |
| 45,522 | | |
| 45,553 | |
| | |
| | | |
| | |
| Cash and Investments held in Trust Account | |
| 31,906,039 | | |
| 71,421,125 | |
| Total Assets | |
$ | 31,951,561 | | |
$ | 71,466,678 | |
| | |
| | | |
| | |
| Liabilities, Redeemable
Common Stock and Stockholders’ Deficit | |
| | | |
| | |
| Current liabilities: | |
| | | |
| | |
| Accounts payable and accrued expenses | |
$ | 717,404 | | |
$ | 272,594 | |
| Income taxes payable | |
| 571,387 | | |
| 156,285 | |
| Excise tax payable | |
| 410,772 | | |
| — | |
| Promissory notes - Evie | |
| 726,015 | | |
| — | |
| Due to related parties | |
| 1,197,850 | | |
| 1,002,850 | |
| Total Current Liabilities | |
| 3,623,428 | | |
| 1,431,729 | |
| | |
| | | |
| | |
| Warrant liability | |
| 12,180 | | |
| 12,180 | |
| Deferred tax liability | |
| — | | |
| 66,997 | |
| Deferred underwriters’ discount | |
| 225,000 | | |
| 225,000 | |
| Total Liabilities | |
| 3,860,608 | | |
| 1,735,906 | |
| | |
| | | |
| | |
| Commitments and Contingencies | |
| — | | |
| — | |
| | |
| | | |
| | |
| Common stock subject to possible redemption
2,939,613 and 6,900,000 at redemption value on September 30, 2023 and December 31, 2022, respectively | |
| 31,270,132 | | |
| 70,973,384 | |
| | |
| | | |
| | |
| Stockholders’ Deficit | |
| | | |
| | |
| Preferred stock, $0.01 par value; 1,000,000
shares authorized; no shares issued or outstanding | |
| — | | |
| — | |
| Common stock, par value $0.01; authorized 100,000,000 shares;
issued 6,901,113 and 10,861,500 shares; and outstanding 2,524,000 shares (excluding 2,939,613 and 6,900,000 shares
subject to redemption and 1,437,500 Treasury Stock shares), respectively | |
| 39,615 | | |
| 39,615 | |
| Additional paid-in capital | |
| — | | |
| — | |
| Accumulated deficit | |
| (3,204,419 | ) | |
| (1,267,852 | ) |
| Less Treasury Stock; at cost; 1,437,500 common
shares | |
| (14,375 | ) | |
| (14,375 | ) |
| Total Stockholders’
Deficit | |
| (3,179,179 | ) | |
| (1,242,612 | ) |
| Total Liabilities, Redeemable
Common Stock and Stockholders’ Deficit | |
$ | 31,951,561 | | |
$ | 71,466,678 | |
The accompanying
notes are an integral part of these unaudited condensed financial statements.
BANNIX ACQUISITION
CORP.
UNAUDITED CONDENSED STATEMENTS OF OPERATIONS
| | |
Three Months Ended
September
30, | |
Nine Months Ended
September
30, |
| | |
2023 | |
2022 | |
2023 | |
2022 |
| Operating costs | |
$ | 394,213 | | |
$ | 301,455 | | |
$ | 1,197,866 | | |
$ | 743,647 | |
| Loss from operations | |
| (394,213 | ) | |
| (301,455 | ) | |
| (1,197,866 | ) | |
| (743,647 | ) |
| | |
| | | |
| | | |
| | | |
| | |
| Other income(expense): | |
| | | |
| | | |
| | | |
| | |
| Interest income on trust account | |
| 370,848 | | |
| 410,360 | | |
| 1,394,123 | | |
| 458,146 | |
| Change in fair value of warrant liabilities | |
| 4,060 | | |
| 20,300 | | |
| — | | |
| 178,640 | |
| Total other income, net | |
| 374,908 | | |
| 430,660 | | |
| 1,394,123 | | |
| 636,786 | |
| | |
| | | |
| | | |
| | | |
| | |
| (Loss) income before provision for income taxes | |
| (19,305 | ) | |
| 129,205 | | |
| 196,257 | | |
| (106,861 | ) |
| Provision for income taxes | |
| (81,847 | ) | |
| (63,263 | ) | |
| (348,105 | ) | |
| (63,263 | ) |
| Net income (loss) | |
$ | (101,152 | ) | |
$ | 65,942 | | |
$ | (151,848 | ) | |
$ | (170,124 | ) |
| | |
| | | |
| | | |
| | | |
| | |
| Basic and diluted weighted average shares outstanding | |
| 5,463,613 | | |
| 9,424,000 | | |
| 6,435,576 | | |
| 9,424,000 | |
| Basic and diluted net income
(loss) per share | |
$ | (0.02 | ) | |
$ | 0.01 | | |
$ | (0.02 | ) | |
$ | (0.02 | ) |
The accompanying
notes are an integral part of these unaudited condensed financial statements.
BANNIX ACQUISITION CORP.
UNAUDITED CONDENSED STATEMENTS OF CHANGES IN STOCKHOLDERS’ (DEFICIT) EQUITY
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER
30, 2023
| | |
Common stock | |
| |
| |
| |
|
| | |
Share
(1) | |
Amount | |
Additional Paid-in Capital | |
Accumulated Deficit | |
Treasury Stock | |
Total
Stockholders’
Deficit |
| Balance as of January 1, 2023 | |
| 3,961,500 | | |
$ | 39,615 | | |
$ | — | | |
$ | (1,267,852 | ) | |
$ | (14,375 | ) | |
$ | (1,242,612 | ) |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Net income | |
| — | | |
| — | | |
| — | | |
| 188,713 | | |
| — | | |
| 188,713 | |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Excise tax imposed on common stock redemptions | |
| — | | |
| — | | |
| — | | |
| (410,772 | ) | |
| — | | |
| (410,772 | ) |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Accretion of common stock subject to possible
redemption to redemption value | |
| — | | |
| — | | |
| — | | |
| (497,072 | ) | |
| — | | |
| (497,072 | ) |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Balance as of March 31, 2023 | |
| 3,961,500 | | |
$ | 39,615 | | |
$ | — | | |
$ | (1,986,983 | ) | |
$ | (14,375 | ) | |
$ | (1,961,743 | ) |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Net loss | |
| — | | |
| — | | |
| — | | |
| (239,409 | ) | |
| — | | |
| (239,409 | ) |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Accretion of common stock subject to possible
redemption to redemption value | |
| — | | |
| — | | |
| — | | |
| (445,274 | ) | |
| — | | |
| (445,274 | ) |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Balance as of June 30, 2023 | |
| 3,961,500 | | |
$ | 39,615 | | |
$ | — | | |
$ | (2,671,666 | ) | |
$ | (14,375 | ) | |
$ | (2,646,426 | ) |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Net loss | |
| — | | |
| — | | |
| — | | |
| (101,152 | ) | |
| — | | |
| (101,152 | ) |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Accretion of common stock subject to possible
redemption to redemption value | |
| — | | |
| — | | |
| — | | |
| (431,601 | ) | |
| — | | |
| (431,601 | ) |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Balance as of September 30, 2023 | |
| 3,961,500 | | |
$ | 39,615 | | |
$ | — | | |
$ | (3,204,419 | ) | |
$ | (14,375 | ) | |
$ | (3,179,179 | ) |
FOR THE THREE AND
NINE MONTHS ENDED SEPTEMBER 30, 2022
| | |
Common stock | |
| |
| |
| |
|
| | |
Shares
(1) | |
Amount | |
Additional Paid-in Capital | |
Accumulated Deficit | |
Treasury Stock | |
Total Stockholders’
Equity |
| Balance as of January 1, 2022 | |
| 3,961,500 | | |
$ | 39,615 | | |
$ | 11,815,485 | | |
$ | (277,203 | ) | |
$ | (14,375 | ) | |
$ | 11,563,522 | |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Net loss | |
| — | | |
| — | | |
| — | | |
| (89,744 | ) | |
| — | | |
| (89,744 | ) |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Accretion of common stock subject to possible
redemption to redemption value | |
| — | | |
| — | | |
| (3,039,773 | ) | |
| — | | |
| — | | |
| (3,039,773 | ) |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Balance as of March 31, 2022 | |
| 3,961,500 | | |
$ | 39,615 | | |
$ | 8,775,712 | | |
$ | (366,947 | ) | |
$ | (14,375 | ) | |
$ | 8,434,005 | |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Net loss | |
| — | | |
| — | | |
| — | | |
| (146,322 | ) | |
| — | | |
| (146,322 | ) |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Accretion of common stock subject to possible
redemption to redemption value | |
| — | | |
| — | | |
| (3,039,773 | ) | |
| — | | |
| — | | |
| (3,039,773 | ) |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Balance as of June 30, 2022 | |
| 3,961,500 | | |
$ | 39,615 | | |
$ | 5,735,939 | | |
$ | (513,269 | ) | |
$ | (14,375 | ) | |
$ | 5,247,910 | |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Net income | |
| — | | |
| — | | |
| — | | |
| 65,942 | | |
| — | | |
| 65,942 | |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Accretion of common stock subject to possible
redemption to redemption value | |
| — | | |
| — | | |
| (3,039,773 | ) | |
| — | | |
| — | | |
| (3,039,773 | ) |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Balance as of September 30, 2022 | |
| 3,961,500 | | |
$ | 39,615 | | |
$ | 2,696,166 | | |
$ | (447,327 | ) | |
$ | (14,375 | ) | |
$ | 2,274,079 | |
| (1) |
Includes 1,437,500
shares classified as treasury stock (See Notes 5 and 8). |
The accompanying
notes are an integral part of these unaudited condensed financial statements.
BANNIX ACQUISITION
CORP.
UNAUDITED CONDENSED STATEMENTS OF CASH FLOWS
| | |
For the nine months ended
September 30, | |
For the nine months ended
September 30, |
| | |
2023 | |
2022 |
| Cash flows from Operating
Activities: | |
| | | |
| | |
| Net loss | |
$ | (151,848 | ) | |
$ | (170,124 | ) |
| Adjustments to reconcile net loss to net cash
used in operating activities: | |
| | | |
| | |
| Change in fair value of warrant liability | |
| — | | |
| (178,640 | ) |
| Interest income on Trust Account | |
| (1,394,123 | ) | |
| (458,146 | ) |
| Changes in current assets and current liabilities: | |
| | | |
| | |
| Prepaid expenses | |
| 20,363 | | |
| 109,102 | |
| Deferred tax payable | |
| (66,997 | ) | |
| — | |
| Income taxes payable | |
| 415,102 | | |
| 27,060 | |
| Accounts payable and accrued expenses | |
| 444,810 | | |
| 135,472 | |
| Due to Related Parties | |
| 45,000 | | |
| 245,000 | |
| Net cash used in operating
activities | |
| (687,693 | ) | |
| (254,073 | ) |
| | |
| | | |
| | |
| Cash flows from Investing
Activities: | |
| | | |
| | |
| Investment of cash into Trust Account | |
| (525,000 | ) | |
| — | |
| Redemptions from Trust Account | |
| 41,077,199 | | |
| — | |
| Withdrawal from Trust Account to pay taxes | |
| 357,010 | | |
| 49,010 | |
| Net cash provided by investing
activities | |
| 40,909,209 | | |
| 49,010 | |
| | |
| | | |
| | |
| Cash flows from Financing
Activities: | |
| | | |
| | |
| Redemption of Class A common stock subject
to possible redemption | |
| (41,077,199 | ) | |
| — | |
| Promissory notes - Evie | |
| 726,015 | | |
| — | |
| Proceeds from promissory note to new Sponsors | |
| 150,000 | | |
| — | |
| Net cash used in financing
activities | |
| (40,201,184 | ) | |
| — | |
| | |
| | | |
| | |
| Net change in cash | |
| 20,332 | | |
| (205,063 | ) |
| Cash, beginning of the period | |
| 19,257 | | |
| 429,444 | |
| Cash, end of the period | |
$ | 39,589 | | |
$ | 224,381 | |
| | |
| | | |
| | |
| Supplemental disclosure
of noncash financing activities: | |
| | | |
| | |
| Accretion of common stock subject to possible
redemption to redemption value | |
$ | 1,373,947 | | |
$ | 9,119,319 | |
| Excise tax liability accrued for common stock
redemptions | |
$ | 410,772 | | |
$ | — | |
The accompanying
notes are an integral part of these unaudited condensed financial statements.
BANNIX ACQUISITION
CORP.
NOTES TO UNAUDITED
CONDENSED FINANCIAL STATEMENTS
Note 1—Organization
and Business Operations
Organization
and General
Bannix Acquisition
Corp. (the “Company”) is a blank check company incorporated in the state of Delaware on January 21, 2021. The Company
was formed for the purpose of effecting mergers, capital stock exchange, asset acquisitions, stock purchases, reorganization or
similar business combinations with one or more businesses (“Business Combination”). The Company has not selected any
specific Business Combination target and the Company has not, nor has anyone on its behalf, initiated any substantive discussions,
directly or indirectly, with any Business Combination target with respect to the Business Combination.
As of September
30, 2023, the Company had not commenced any operations. All activity for the period from January 21, 2021 (inception) through
September 30, 2023 relates to the Company’s formation and the initial public offering (the “IPO”) (as defined
below) and the Company’s search for a target for an initial Business Combination. The Company will not generate any operating
revenues until after the completion of its initial Business Combination, at the earliest. The Company will generate non-operating
income in the form of interest income on cash and cash equivalents from the proceeds derived from the IPO and non-operating income
or expense from the changes in the fair value of warrant liabilities. The Company is an early stage and emerging growth company
and, as such, the Company is subject to all of the risks associated with early stage and emerging growth companies.
Financing
The Company’s
original sponsors were Subash Menon and Sudeesh Yezhuvath (through their investment entity Bannix Management LLP), Suresh Yezhuvath
(“Yezhuvath”) and Seema Rao (“Rao”).
On October 20,
2022, pursuant to a Securities Purchase Agreement (“SPA”), Instant Fame LLC, a Nevada limited liability company controlled
by a U.S. person (“Instant Fame”) (the “new Sponsors”), acquired an aggregate of 385,000 shares of common
stock of the Company from Bannix Management LLP, Balaji Venugopal Bhat, Nicholos Hellyer, Subbanarasimhaiah Arun, Vishant Vora
and Suresh Yezhuvath and 90,000 private placement units from Suresh Yezhuvath (collectively, the “Sellers”) in a private
transaction. The Sellers immediately loaned the entire proceeds to the Company for the working capital requirements of the Company.
This loan will be forfeited by the Sellers upon liquidation or business combination. In connection with this transaction, all
parties agreed to certain changes to the Board of Directors.
As a result of
the above, Subash Menon resigned as Chief Executive Officer and Chairman of the Board of Directors of the Company and Nicholas
Hellyer resigned as Chief Financial Officer, Secretary and Head of Strategy. Douglas Davis was appointed as the Chief Executive
Officer of the Company. Further, Balaji Venugopal Bhat, Subbanarasimhaiah Arun and Vishant Vora resigned as Directors of the Company.
Mr. Bhat, Mr. Arun and Mr. Vora served on the Audit Committee with Mr. Bhat serving as the committee chair. Mr. Bhat, Mr. Arun
and Mr. Vora served on the Compensation Committee with Mr. Arun serving as the committee chair.
The Board was
also increased from two to seven and Craig Marshak and Douglas Davis were appointed as Co-Chairmans of the Board of Directors
effective immediately. Further, Jamal Khurshid, Eric T. Shuss and Ned L. Siegel were appointed to the Board of Directors of the
Company. The resignations referenced above were not the result of any disagreement with management or the Board.
On November 10,
2022, Sudeesh Yezhuvath resigned as a director of the Company for personal reasons. The resignation was not the result of any
disagreements with management or the Board.
Due to vacancies
as results of board members departure, on November 11, 2022 the Board made the following decisions: (i) Jamie Khurshid, Ned Siegel
and Eric Shuss each have been identified as being financially literate and independent under the SEC and Nasdaq Rules have been
appointed to the Audit Committee to serve until their successors are qualified and appointed with such appointment subject to
the mailing of that certain Schedule 14F Information Statement. Mr. Khurshid chairs the audit committee. (ii) Mr. Siegel, Mr.
Shuss and Craig Marshak each have been identified as being independent under the SEC and Nasdaq Rules were appointed to the Compensation
Committee to serve until their successors are qualified and appointed with such appointment subject to the mailing of that certain
Schedule 14F Information Statement. (iii) Messrs. Davis and Marshak have been appointed as Class III directors, Subash Menon has
been appointed as a Class I director and, subject to the mailing of the Schedule 14F Information Statement, Messrs. Khurshid,
Siegel and Shuss have been appointed as the Class II directors. The Schedule 14F Information Statement was mailed on or about
November 15, 2022.
The registration
statements for the Company’s IPO were declared effective on September 9, 2021 and September 10, 2021 (the “Effective
Date”). On September 14, 2021, the Company consummated its IPO of 6,900,000 units at $10.00 per unit (the “Units”),
which is discussed in Note 2. Each Unit consists of one share of common stock (the “Public Shares”), one redeemable
warrant to purchase one share of common stock at a price of $11.50 per share and one right. Each right entitles the holder thereof
to receive one-tenth (1/10) of one share of common stock upon the consummation of the Business Combination.
Concurrent with
the IPO, the Company consummated the issuance of 406,000 private placement units (the “Private Placement Units”) as
follows: the Company sold 181,000 Private Placement Units to certain investors for aggregate cash proceeds of $2,460,000 and issued
an additional 225,000 private placement units to the Sponsor in exchange for the cancellation of $1,105,000 in loans and a promissory
note due to them (see Note 5). Each Private Placement Unit consists of one share of common stock, one redeemable warrant to purchase
one share of common stock at a price of $11.50 per whole share and one right. Each right entitles the holder thereof to receive
one-tenth (1/10) of one share of common stock upon the consummation of the Business Combination. The Company’s management
has broad discretion with respect to the specific application of the net proceeds of the IPO and the Private Placement Units,
although substantially all of the net proceeds are intended to be generally applied toward consummating a Business Combination.
Trust Account
Following the
closing of the IPO on September 14, 2021, an amount of $69,690,000 ($10.10 per Unit) from the net proceeds of the sale of the
Units in the IPO and Private Placement Units was placed in a trust account (the “Trust Account”) and invested in U.S.
government securities, within the meaning set forth in Section 2(a)(16) of the Investment Company Act, with a maturity of 180
days or less or in any open-ended investment company that holds itself out as a money market fund meeting the conditions of Rule
2a-7 of the Investment Company Act, as determined by the Company. The Company has since divested its investments in the Trust
Account and placed the funds in an interest-bearing demand deposit account. Except with respect to interest earned on the funds
held in the Trust Account that may be released to the Company to pay its franchise and income tax obligations (less up to $100,000
of interest to pay dissolution expenses), the proceeds from this offering and the sale of the Private Placement Units will not
be released from the Trust Account until the earliest of (a) the completion of the Company’s initial Business Combination,
(b) the redemption of any Public Shares properly submitted in connection with a stockholder vote to amend the Company’s
amended and restated certificate of incorporation, and (c) the redemption of the Company’s Public Shares if the Company
is unable to complete the initial Business Combination within 15 months from the closing of this offering, or within any period
of extension, subject to applicable law. The proceeds deposited in the Trust Account could become subject to the claims of the
Company’s creditors, if any, which could have priority over the claims of the Company’s public stockholders.
The Company held
a Special Meeting of Stockholders on March 8, 2023 at 12:00 p.m. Eastern Time (the “Special Meeting”). At the Special
Meeting, the stockholder approved the filing of an amendment to its Amended and Restated Certificate of Incorporation with the
Delaware Secretary of State (the “Extension Amendment”), to extend the date (the “Extension”) by which
the Company must (1) complete a merger, share exchange, asset acquisition, stock purchase, recapitalization, reorganization or
similar business combination involving the Company and one or more businesses (an “initial business combination”),
(2) cease its operations except for the purpose of winding up if it fails to complete such initial business combination, and (3)
redeem 100% of the Company’s common stock (“common stock”) included as part of the units sold in the Company’s
initial public offering that was consummated on September 14, 2021 (the “IPO”), from March 14, 2023, and to allow
the Company, without another stockholder vote, to further extend the date to consummate a Business Combination on a monthly basis
up to twelve (12) times by an additional one (1) month each time after March 14, 2023 or later extended deadline date, by resolution
of the Company’s board of directors (the “Board”), if requested by Instant Fame upon five days’ advance
notice prior to the applicable deadline date, until March 14, 2024, or a total of up to twelve (12) months after March 14, 2023
(such date as extended, the “Deadline Date”), unless the closing of a Business Combination shall have occurred prior
thereto.
For the three
and nine months ended September 30, 2023, the Company has deposited $225,000 and $525,000 into the Trust Account to extend the
Deadline Date to October 14, 2023. For the three and nine months ended September 30, 2022, $0 was deposited in the Trust Account.
At the Special
Meeting, stockholders holding a total of 3,960,387 shares of the Company’s common stock exercised their right to redeem
such shares for a pro rata portion of the funds in the Company’s Trust Account. As a result, $41,077,199 (approximately
$10.37201 per share) was removed from the Company’s Trust Account to pay such holders. Following redemptions, the Company
has 5,463,613 shares outstanding.
As disclosed by
the Company in its additional materials to its proxy statement filed on March 6, 2023 with respect to the remaining funds held
in the Trust Account following the Special Meeting and the related redemptions, the Company stated it plans to maintain the remaining
amount in its Trust Account in an interest-bearing demand deposit account at a bank.
On April 6, 2023,
Continental Stock Transfer & Trust Company established and funded a bank account with Citibank for all remaining funds from
the Trust Account, post-redemption, including interest accrued in the amount of $30,744,828.
Initial Business
Combination
The Company had
until December 13, 2022 to consummate the initial Business Combination. Pursuant to the terms of the bylaws and the trust agreement
entered into between the Company and Continental Stock Transfer & Trust Company, in order to extend the time available for
the Company to consummate the initial Business Combination, the new Sponsors, upon five days advance notice prior to the applicable
deadline, must deposit into the Trust Account for each three-month extension, $690,000 ($0.10 per share in either case) on or
prior to the date of the applicable deadline, up to an aggregate of $1,380,000, or approximately $0.20 per share. On December
13, 2022, the Company issued an unsecured promissory note (the “December 2022 Note”) in favor of Instant Fame, in
the principal amount of $690,000. The proceeds of the December 2022 Note were utilized by the Company to obtain the first three-month
extension of the period for the Company to consummate a business combination. As a result, the Deadline Date was extended until
March 14, 2023. The Company, as approved at the stockholder meeting on March 8, 2023, without another stockholder vote, may further
extend the date to consummate a Business Combination on a monthly basis up to twelve (12) times by an additional one (1) month
each time after March 14, 2023 or later extended deadline date, by resolution of the Board, if requested by Instant Fame upon
five days’ advance notice prior to the applicable deadline date, until March 14, 2024, or a total of up to twelve (12) months
after March 14, 2023, unless the closing of a business combination shall have occurred prior thereto. If an Extension is implemented,
Instant Fame will deposit into the Trust Account, as a loan, the lesser of (x) $75,000 or (y) $0.07 per public share multiplied
by the number of public shares outstanding (the “Contribution”), in connection with each Extension.
Since the stockholder
meeting on March 8, 2023, the Company has deposited $525,000 in the Trust Account to extend the Deadline Date to October 14, 2023.
After September 30, 2023 and as of the filing of this Form 10-Q, the Company has deposited an additional $150,000 in the Trust
Account to extend the Deadline Date to December 14, 2023.
In the event that
the Company receives notice from Instant Fame five days prior to the applicable deadline of its wish for the Company to effect
an extension, the Company intends to issue a press release announcing such intention at least three days prior to the applicable
deadline. In addition, the Company intends to issue a press release the day after the applicable deadline announcing whether or
not the funds had been timely deposited. Instant Fame and its affiliates or designees are not obligated to fund the Trust Account
to extend the time for the Company to complete the initial Business Combination. If the Company is unable to consummate the initial
Business Combination within the applicable time period, the Company will, promptly but not more than ten business days thereafter,
redeem the Public Shares for a pro rata portion of the funds held in the Trust Account and promptly following such redemption,
subject to the approval of the remaining stockholders and the board of directors, dissolve and liquidate, subject in each case
to the obligations under Delaware law to provide for claims of creditors and the requirements of other applicable law. In such
event, the rights and warrants will be worthless. Additionally, pursuant to Nasdaq rules, any initial Business Combination must
be approved by a majority of the independent directors.
The Company anticipates
structuring the initial Business Combination so that the post-transaction company in which the public stockholders’ own
shares will own or acquire substantially all of the equity interests or assets of the target business or businesses. The Company
may, however, structure the initial Business Combination such that the post-transaction company owns or acquires less than substantially
all of such interests or assets of the target business in order to meet certain objectives of the target management team or stockholders
or for other reasons, but the Company will only complete such Business Combination if the post-transaction company owns or acquires
50% or more of the outstanding voting securities of the target or otherwise acquires a controlling interest in the target sufficient
for it not to be required to register as an investment company under the Investment Company Act of 1940, as amended (the “Investment
Company Act”). Even if the post-transaction company owns or acquires 50% or more of the voting securities of the target,
the stockholders prior to the initial Business Combination may collectively own a minority interest in the post-transaction company,
depending on valuations ascribed to the target and the Company in the Business Combination transaction. For example, the Company
could pursue a transaction in which the Company issue a substantial number of new shares in exchange for all of the outstanding
capital stock of shares or other equity interests. In this case, the Company would acquire a 100% controlling interest in the
target. However, as a result of the issuance of a substantial number of new shares, the stockholders immediately prior to the
initial Business Combination could own less than a majority of the outstanding shares subsequent to the initial Business Combination.
If less than 100% of the equity interests or assets of a target business or businesses are owned or acquired by the post-transaction
company, the portion of such business or businesses that is owned or acquired is what will be valued for purposes of the 80% of
net assets test. If the initial Business Combination involves more than one target business, the 80% of net assets test will be
based on the aggregate value of all of the target businesses even if the acquisitions of the target businesses are not closed
simultaneously.
Although the Company
believes that the net proceeds of the offering will be sufficient to allow the Company to consummate a Business Combination the
Company cannot ascertain the capital requirements for any particular transaction. If the net proceeds of this offering prove to
be insufficient, either because of the size of the Business Combination, the depletion of the available net proceeds in search
of a target business, or because the Company becomes obligated to redeem a significant number of the Public Shares upon consummation
of the initial Business Combination, the Company will be required to seek additional financing, in which case the Company may
issue additional securities or incur debt in connection with such Business Combination. Furthermore, the Company may issue a substantial
number of additional shares of common or preferred stock to complete the initial Business Combination or under an employee incentive
plan upon or after consummation of the initial Business Combination. The Company does not have a maximum debt leverage ratio or
a policy with respect to how much debt the Company may incur. The amount of debt the Company will be willing to incur will depend
on the facts and circumstances of the proposed Business Combination and market conditions at the time of the potential Business
Combination. At this time, the Company is not party to any arrangement or understanding with any third party with respect to raising
additional funds through the sale of the securities or the incurrence of debt. Subject to compliance with applicable securities
laws, the Company would only consummate such financing simultaneously with the consummation of the initial Business Combination.
Nasdaq rules require
that the initial Business Combination must occur with one or more target businesses that together have an aggregate fair market
value of at least 80% of the assets held in the Trust Account (excluding advisory fees and taxes payable on the income earned
on the Trust Account) at the time of the agreement to enter into the initial Business Combination. If the board is not able to
independently determine the fair market value of the target business or businesses, the Company will obtain an opinion from an
independent investment banking firm or an independent accounting firm with respect to the satisfaction of such criteria. The Company
does not intend to purchase multiple businesses in unrelated industries in connection with the initial Business Combination.
The Company will
provide its public stockholders with the opportunity to redeem all or a portion of their Public Shares upon the completion of
the initial Business Combination either (i) in connection with a stockholder meeting called to approve the initial Business Combination
or (ii) by means of a tender offer. The decision as to whether the Company will seek stockholder approval of a proposed initial
Business Combination or conduct a tender offer will be made by the Company, solely at its discretion. The stockholders will be
entitled to redeem their shares for a pro rata portion of the amount then on deposit in the Trust Account (initially approximately
$10.10 per share, plus any pro rata interest earned on the funds held in the Trust Account and not previously released to the
Company to pay its tax obligations plus additional deposits to extend the Combination Period).
The initial carrying
value of the common stock subject to redemption is recorded at an amount equal to the proceeds of the public offering less (i)
the fair value of the public warrants and less (ii) offering costs allocable to the common stock sold as part of the units in
the IPO. Such initial carrying value is classified as temporary equity upon the completion of the IPO, in accordance with Accounting
Standards Codification (“ASC”) Topic 480 “Distinguishing Liabilities from Equity.”
The Company’s
amended and restated certificate of incorporation provides that in no event will it redeem the public shares in an amount that
would cause the Company’s net tangible assets to be less than $5,000,001 both immediately before and after the consummation
of the Business Combination (so that the Company is not subject to the SEC’s “penny stock” rules). Redemptions
of the Company’s public shares may also be subject to a higher net tangible asset test or cash requirement pursuant to an
agreement relating to the Business Combination. For example, the Business Combination may require: (i) cash consideration to be
paid to the target or its owners, (ii) cash to be transferred to the target for working capital or other general corporate purposes
or (iii) the retention of cash to satisfy other conditions in accordance with the terms of the Business Combination. In the event
the aggregate cash consideration the Company would be required to pay for all shares of common stock that are validly submitted
for redemption plus any amount required to satisfy cash conditions pursuant to the terms of the Business Combination exceed the
aggregate amount of cash available to the Company, it will not complete the Business Combination or redeem any shares, and all
shares of common stock submitted for redemption will be returned to the holders thereof.
The new Sponsors,
officers and directors and Representative (as defined in Note 6) have agreed to (i) waive their redemption rights with respect
to their Founder Shares and Public Shares in connection with the completion of the initial Business Combination, (ii) waive their
redemption rights with respect to their Founder Shares (as defined below) and Public Shares in connection with a stockholder vote
to approve an amendment to the Company’s amended and restated certificate of incorporation, and (iii) waive their rights
to liquidating distributions from the Trust Account with respect to their Founder Shares if the Company fails to complete the
initial Business Combination within the Combination Period.
The Company’s
new Sponsors have agreed that they will be liable to the Company if and to the extent any claims by a third party for services
rendered or products sold to the Company, or a prospective target business with which the Company has entered into a written letter
of intent, confidentiality or similar agreement or Business Combination agreement,
reduce the amount
of funds in the Trust Account to below the lesser of (i) $10.46 per Public Share (subject to increase of up to an additional $75,000
per month in the event that our sponsors elect to extend the period of time to consummate a business combination as set forth
in the Extension Amendment) and (ii) the actual amount per Public Share held in the Trust Account as of the date of the liquidation
of the Trust Account, if less than $10.46 per share due to reductions in the value of the trust assets, less taxes payable, provided
that such liability will not apply to any claims by a third party or prospective target business who executed a waiver of any
and all rights to the monies held in the Trust Account (whether or not such waiver is enforceable) nor will it apply to any claims
under the Company’s indemnity of the underwriters of this offering against certain liabilities, including liabilities under
the Securities Act. However, the Company has not asked its new Sponsors to reserve for such indemnification obligations, nor has
the Company independently verified whether its new Sponsors have sufficient funds to satisfy its indemnity obligations and believe
that the Company’s new Sponsors’ only assets are securities of the Company. Therefore, the Company cannot assure that
its new Sponsors would be able to satisfy those obligations.
On May 10, 2023,
the Company engaged a law firm to assist with the proposed Business Combination with Evie Group. The Company has agreed to pay
$30,000 upon entering into the agreement, $70,000 upon Evie Group signing a definitive Business Combination agreement and the
remaining $500,000 is contingent upon the closing of the Business Combination with Evie Group.
On May 19, 2023,
the Company entered into an Executive Retention Agreement with Mr. Davis, Chief Executive Officer and Co-Chairman of the Board
of Directors, providing for an at-will employment arrangement that may be terminated by either party at any time, which provides
for the payment of an annual salary of $240,000 to Mr. Davis. Additionally, the Company entered into a letter agreement with Subash
Menon, a director of the Company, for services in connection with the review and advice pertaining to the proposed acquisition
of Evie Group providing for a payment in the amount of $200,000 upon the closing of a Business Combination.
Propose Business
Combination
On April 17, 2023,
the Company entered into a binding letter of intent (the “Letter of Intent”) with Evie Autonomous Ltd. (“Evie
Autonomous”), and on May 8, 2023, Evie Autonomous Group Ltd (“Evie Group”) became a successor entity for the
proposed Business Combination.
GBT Technologies
Inc. is also a party to the Letter of Intent pursuant to which the Company agreed to acquire the Apollo System which is intellectual
property covered by patent application (publication number 2022/0405966) filed with the US Patent and Trademark Office, and enhanced
by additional related synergy patents (patents). These patent applications describes a machine learning driven technology that
controls radio wave transmissions, analyzes their reflections data, and constructs 2D/3D images of stationary and moving objects.
The Apollo System is based on radio waves and can detect an entity’s moving and stationary positions, enabling imaging technology
to show these movements and positions on a screen in real time. This includes an AI technology that controls the radio waves transmission
and analyzes the reflections. The goal is to integrate the Apollo System as an efficient driver monitoring system, detecting impaired
or distracted drivers, providing audible and visual alerts.
Below is a list
of the patents to be acquired in connection with the Apollo acquisition:
| Title |
App.
No. |
Country |
Filing
Date |
Status/Deadline |
Patent
No. |
Issue
Date |
| SYSTEMS
AND METHODS OF FACIAL AND BODY RECOGNITION, IDENTIFICATION AND ANALYSIS |
17/212,235 |
USA |
Mar.
25, 2021 |
GRANTED |
US
11,527,104 B2 |
Dec.
13, 2022 |
| SYSTEMS
AND METHODS OF MOBILE DATABASE MANAGEMENT AND SHARING |
16/155,093 |
USA |
Oct.
9, 2018 |
GRANTED |
US
10,853,327 B2 |
Dec.
1, 2020 |
| SYSTEMS
AND METHODS OF MOBILE DATABASE MANAGEMENT AND SHARING |
17/104,001 |
USA |
Nov.
25, 2020 |
GRANTED
(CONTINUATION) |
US
11,663,167 B2 |
May
30, 2023 |
| SYSTEMS
AND METHODS OF REAL-TIME MOVEMENT, POSITION DETECTION, AND IMAGING (APOLLO) |
17/471,213 |
USA |
Sep.
10, 2021 |
GRANTED |
US
11,302,032 Bl |
Apr.
12, 2022 |
ELECTRONIC
CIRCUITS FOR SECURE COMMUNICATIONS AND ASSOCIATED SYSTEMS AND METHODS
(SECURE COMM.) |
15/015,441 |
USA |
Feb.
4, 2016 |
GRANTED |
US
10,521,614 B2 |
Dec.
31, 2019 |
| SYSTEMS
AND METHODS OF REAL-TIME MOVEMENT, POSITION DETECTION, AND IMAGING (APOLLO CONTINUATION) |
17/694,384 |
USA |
Mar.
14, 2022 |
PENDING
(CONTINUATION) |
Publication.
No.: US 2022/0405966 Al |
Dec.
22, 2022 (Publication Date) |
On June 23, 2023,
the Company, Evie Group, and the shareholder of the Evie Group (“Evie Group Shareholder”), entered into a Business
Combination Agreement (the “Business Combination Agreement”), pursuant to which, subject to the satisfaction or waiver
of certain conditions precedent in the Business Combination Agreement, the following transactions will occur: the acquisition
by Bannix of all of the issued and outstanding share capital of Evie Group from the Evie Group Shareholder in exchange for the
issuance of eighty-five million new shares of common stock of Bannix, $0.01 par value per share (the “Common Stock”),
pursuant to which Evie Group will become a direct wholly owned subsidiary of Bannix (the “Share Acquisition”) and
(b) the other transactions contemplated by the Business Combination Agreement and the Ancillary Documents referred to therein
(collectively, the “Transactions”).
Representations
and Warranties
Under the Business
Combination Agreement, Bannix has made customary representations and warranties to Evie Group, and the Evie Group Shareholder
relating to, among other things, organization and standing, due authorization and binding agreement, governmental approvals, non-contravention,
capitalization, Securities and Exchange Commission (the “SEC”) filings, financial statements, internal controls, absence
of certain changes, compliance with laws, actions, orders and permits, taxes and returns, employees and employee benefit plans,
properties, material contracts, transactions with related persons, the U.S. Investment Company Act of 1940, as amended (the “Investment
Company Act”), and the Jumpstart Our Business Startups Act of 2012, finders’ and brokers’ fees, sanctions and
certain business practices, private placements, insurance, no misleading information supplied, the Trust Account, acknowledgement
of no further representations and warranties and receipt of a fairness opinion.
Under the Business
Combination Agreement, the Evie Group has made customary representations and warranties (on behalf of itself and its subsidiaries)
to Bannix relating to, among other things, organization and standing, due authorization and binding agreement, capitalization,
company subsidiaries, governmental approvals, non-contravention, financial statements, absence of certain changes, compliance
with laws, permits, litigation, material contracts, intellectual property, taxes and returns, real property, personal property,
employee matters, benefit plans, environmental matters, transactions with related persons, insurance, material customers and suppliers,
data protection and cybersecurity, sanctions and certain business practices, the Investment Company Act, finders’ and brokers’
fees and no misleading information supplied.
Under the Business
Combination Agreement, the Evie Group Shareholder has made customary representations and warranties (with respect to itself only)
to Bannix relating to, among other things, organization and standing, due authorization and binding agreement, share ownership,
governmental approvals, non-contravention, litigation, certain investment representations, finders’ and brokers’ fees
and no misleading information supplied.
Covenants
The Business Combination
Agreement includes customary covenants of the parties including, among other things, (i) the conduct of their respective business
operations prior to the consummation of the transactions, (ii) using commercially reasonable efforts to obtain relevant approvals
and comply with all applicable listing requirements of The Nasdaq Stock Market LLC (“NASDAQ”) in connection with the
transactions and (iii) using commercially reasonable efforts to consummate the transactions and to comply as promptly as practicable
with all requirements of governmental authorities applicable to the transactions. The Business Combination Agreement also contains
additional covenants of the parties, including covenants providing for Bannix and Evie Group to use commercially reasonable efforts
to file, and to cooperate with each other to prepare the proxy statement of Bannix.
Conditions
to Closing
The respective
obligations of each party to consummate the transactions, including the Share Acquisition, are subject to the satisfaction, or
written waiver (where permissible), by Evie Group and Bannix of the following conditions:
●
Bannix’s shareholders having approved and adopted the Shareholder Approval Matters; and
●
the absence of any law or governmental order, inquiry, proceeding or other action that would prohibit the transactions.
Conditions
to the Obligations of Evie Group and the Evie Group Shareholder
The obligations
of Evie Group and the Evie Group Shareholder to consummate the transactions are subject to the satisfaction, or written waiver
(by Evie Group, where permissible) of the following conditions:
●
the representations and warranties of Bannix being true and correct as determined in accordance with the Business Combination
Agreement;
●
Bannix having performed in all material respects all of its obligations and complied in all material respects with all of its
agreements and covenants under the Business Combination Agreement to be performed or complied with by it on or prior to the Closing
Date;
●
Bannix having delivered to Evie Group a certificate dated as of the Closing Date, signed by an officer of Bannix, certifying as
to the satisfaction of certain conditions specified in the Business Combination Agreement;
●
no Material Adverse Effect shall have occurred with respect to Bannix that is continuing and uncured;
●
Bannix having made all necessary and appropriate arrangements with the trustee to have all of the funds held in the Trust Account
disbursed to Bannix on the Closing Date, and all such funds released from the Trust Account be available to the surviving company;
●
Bannix having provided the public holders of Bannix shares of common stock with the opportunity to make redemption elections with
respect to their Bannix shares of common stock pursuant to their Redemption Rights;
●
the Evie Group Shareholder receiving confirmation from HM Revenue & Customs that in respect of the transactions contemplated
by this Agreement (i) no counteraction notice under section 698 Income Tax Act 2007 will be given; and (ii) the provisions of
section 137 of the Taxation of Chargeable Gains Act 1992 do not apply with the result that the provisions of section 135 of that
Act would not be prevented from applying; and
●
the Ancillary Documents required to be executed by Bannix according to the Business Combination Agreement at or prior to the Closing
Date shall have been executed and delivered to Evie Group.
Conditions
to the Obligations of Bannix
The obligations
of Bannix to consummate the transactions are subject to the satisfaction, or written waiver (by Bannix where permissible) of the
following conditions:
●
the representations and warranties of Evie Group and the Evie Group Shareholder being true and correct as determined in accordance
with the Business Combination Agreement;
●
each of Evie Group and the Evie Group Shareholder having performed in all material respects all of their respective obligations
and complied in all material respects with all of their respective agreements and covenants under the Business Combination Agreement
to be performed or complied with by them on or prior to the Closing Date;
●
Evie Group having delivered to Bannix a certificate dated as of the Closing Date, signed by the Company certifying as to the satisfaction
of certain conditions specified in the Business Combination Agreement but in each case, solely with respect to themselves;
●
no Material Adverse Effect shall have occurred with respect to Evie Group that is continuing and uncured; and
●
the Ancillary Documents required to be executed by Evie Group and the Evie Group Shareholder according to the Business Combination
Agreement at or prior to the Closing Date shall have been executed and delivered to Bannix.
Termination
The Business Combination
Agreement may be terminated, and the transactions may be abandoned at any time prior to the Closing Date, notwithstanding receipt
of any requisite approval and adoption of the Business Combination Agreement and the transactions by the shareholders of Bannix
or any party, as follows:
●
by mutual written consent of Bannix and Evie Group;
●
by either Bannix or Evie Group if any of the closing conditions set forth in the Business Combination Agreement have not been
satisfied or waived by December 31, 2023; provided, however, that the Business Combination Agreement may not be terminated under
such provision of the Business Combination Agreement by or on behalf of any party that either directly or indirectly through its
affiliates (or with respect to Evie Group and the Evie Group Shareholder) is in breach or violation of any representation, warranty,
covenant or obligation contained therein, with such breach or violation being the principal cause of the failure of a condition
set forth in the Business Combination Agreement on or prior to the Outside Date;
●
by either Bannix or Evie Group if any governmental authority of competent jurisdiction will have issued an order or taken any
other action permanently restraining, enjoining or otherwise prohibiting the transactions contemplated by the Business Combination
Agreement, and such order or other action has become final and non-appealable; provided, however, that the right to terminate
the Business Combination Agreement pursuant to such section will not be available to a party if the failure by such party or its
affiliates (or with respect to Evie Group and the Evie Group Shareholder) to comply with any provision of the Business Combination
Agreement was the principal cause of such order, action or prohibition;
●
by Evie Group upon a breach of any representation, warranty, covenant or agreement on the part of Bannix set forth in the Business
Combination Agreement, or if any representation, warranty of Bannix becomes untrue or inaccurate, in each case such that the related
closing conditions contained in the Business Combination Agreement are not satisfied, subject to customary exceptions and cure
rights;
●
by Bannix upon a breach of any warranty, covenant or agreement on the part of Evie Group and the Evie Group Shareholder set forth
in the Business Combination Agreement, or if any warranty of such parties becomes untrue or inaccurate, in any case such that
the related closing conditions contained in the Business Combination Agreement are not satisfied, subject to customary exceptions
and cure rights;
●
by Evie Group if Bannix or the Bannix Securities are no longer listed on the NASDAQ or another national securities exchange; or
●
by either Bannix or Evie Group if the special meeting of shareholders is held and has concluded, Bannix shareholders have duly
voted, and the Required Shareholder Approval is not obtained.
Sponsor Support
Agreement
On August 7, 2023,
Instant Fame entered into a sponsor letter agreement with the Company, whereby Instant Fame agree to, among other things, support
and vote in favor of the Business Combination Agreement and use its reasonable best efforts to take all other actions necessary
to consummate the transactions contemplated thereby, on the terms and subject to the conditions set forth in the Sponsor Letter
Agreement.
Deadline Date
and Trust Account Funding
In July 2023,
August 2023, and September 2023, the Board, at the request of the Sponsor, decided to implement a fifth, sixth and seventh Extension
with deposits aggregating $225,000 in the Trust Account to extend the Deadline Date to October 14, 2023. In October and November
2023, the Board, at the request of the Sponsor, determined to implement a eighth and ninth Extension and to extend the Deadline
Date for an additional two months to December 14, 2023. The Company has deposited $75,000 for each extension or an aggregate of
$150,000.
Transaction
Support Agreement
On August 7, 2023,
Evie Group entered into a transaction support agreement pursuant to which Evie Group’s shareholder agreed to, among other
things, support and provide any necessary votes in favor of the Business Combination Agreement and ancillary agreements.
Patent Purchase
Agreement
On August 8, 2023
the Company entered into a Patent Purchase Agreement (“PPA”) with GBT Tokenize Corp. (“Tokenize”), which
is 50% owned by GBT Technologies Inc., which provided its consent, to acquire the entire rights, title, and interest of certain
patents and patent applications providing an intellectual property basis for a machine learning driven technology that controls
radio wave transmissions, analyzes their reflections data, and constructs 2D/3D images of stationary and in motion objects, (the
“Patents”). The closing date of the PPA will immediately follow the closing of the Transaction described in the Proposed
Business Combination Agreement. The Purchase Price is set at 5% of the consideration that the Company is paying to the shareholders
of Evie Group under the Business Combination Agreement (“BCA”). The BCA sets the consideration to be paid by the Company
at $850 million and, in turn, the consideration in the PPA to be paid to Tokenize is $42.5 million.
The Company and
Tokenize agree that the final Purchase Price at closing will be equal to 5% of the total consideration that the Company is paying
under the BCA to the Evie Group Shareholder. If the final Purchase Price is less than $30 million, Tokenize has the option to
cancel the PPA. In accordance therewith, the Company agrees to pay, issue and deliver to Tokenize, $42,500,000 in series a preferred
stock to Tokenize, which such terms will be more fully set forth in the Series A Preferred Stock Certificate of Designation to
be filed with the Secretary of State prior to the Closing Date. The Series A Preferred Stock will have stated value of $1,000
per share and is convertible, at the option of the Seller, into shares of common stock of Purchaser at a 5% discount to the VWAP
during the 20 trading days prior to conversion, and in any event not less than $1.00. The Series A Preferred Stock will not have
voting rights and will be entitled to dividends only in the event of liquidation. The Series A Preferred Stock will have a 4.99%
beneficial ownership limitation.
Series A Preferred
Stock and the shares of common stock issuable upon conversion of the Series A Preferred Stock (the “Conversion Shares”)
shall be subject to a lock-up beginning on the Closing Date and ending on the earliest of (i) the six (6) months after such date,
(ii) a Change in Control, or (iii) written consent of Purchaser (the “Seller Lockup Period”).
Below is a list
of the patents to be acquired in connection with the Apollo acquisition:
| Title |
App.
No. |
Country |
Filing
Date |
Status/Deadline |
Patent
No. |
Issue
Date |
| SYSTEMS
AND METHODS OF FACIAL AND BODY RECOGNITION, IDENTIFICATION AND ANALYSIS |
17/212,235 |
USA |
Mar.
25, 2021 |
GRANTED |
US
11,527,104 B2 |
Dec.
13, 2022 |
| SYSTEMS
AND METHODS OF MOBILE DATABASE MANAGEMENT AND SHARING |
16/155,093 |
USA |
Oct.
9, 2018 |
GRANTED |
US
10,853,327 B2 |
Dec.
1, 2020 |
| SYSTEMS
AND METHODS OF MOBILE DATABASE MANAGEMENT AND SHARING |
17/104,001 |
USA |
Nov.
25, 2020 |
GRANTED
(CONTINUATION) |
US
11,663,167 B2 |
May
30, 2023 |
| SYSTEMS
AND METHODS OF REAL-TIME MOVEMENT, POSITION DETECTION, AND IMAGING (APOLLO) |
17/471,213 |
USA |
Sep.
10, 2021 |
GRANTED |
US
11,302,032 Bl |
Apr.
12, 2022 |
ELECTRONIC
CIRCUITS FOR SECURE COMMUNICATIONS AND ASSOCIATED SYSTEMS AND METHODS
(SECURE COMM.) |
15/015,441 |
USA |
Feb.
4, 2016 |
GRANTED |
US
10,521,614 B2 |
Dec.
31, 2019 |
| SYSTEMS
AND METHODS OF REAL-TIME MOVEMENT, POSITION DETECTION, AND IMAGING (APOLLO CONTINUATION) |
17/694,384 |
USA |
Mar.
14, 2022 |
PENDING
(CONTINUATION) |
Publication.
No.: US 2022/0405966 Al |
Dec.
22, 2022 (Publication Date) |
Nasdaq Notice
On August 22,
2023, the Company received a notice (the “Notice”) from The Nasdaq Stock Market LLC (“Nasdaq”) stating
that because the Company has not yet filed its Form 10-Q for the quarter ended September 30, 2023, the Company is no longer in
compliance with Nasdaq Listing Rule 5250(c)(1), which requires listed companies to timely file all required periodic financial
reports with the Securities and Exchange Commission (the “SEC”).
This notification
has no immediate effect on the listing of the Company’s shares on Nasdaq. However, if the Company fails to timely regain
compliance with the Nasdaq Listing Rule, the Company’s common stock will be subject to delisting from Nasdaq. Under Nasdaq
rules, the Company has 60 calendar days to submit to Nasdaq a plan to regain compliance with the Nasdaq Listing Rule. If Nasdaq
accepts the Company’s plan, then Nasdaq may grant the Company up to 180 days from the prescribed due date for filing the
Form 10-K to regain compliance. If Nasdaq does not accept the Company’s plan, then the Company will have the opportunity
to appeal that decision to a Nasdaq Hearings Panel.
The Company filed
its Form 10-Q for the quarter ended June 30, 2023 on October 4, 2023 and regained compliance with the Nasdaq.
New Auditors
On September 7,
2023, the Board of Directors (the “Board”) of the Company approved the engagement of RBSM LLP (“RBSM”)
as the Company’s new independent registered public accounting firm for the fiscal year ending December 31, 2023, effective
September 7, 2023. In connection with the selection of RBSM, the Company dismissed Marcum LLP (“Marcum”) as the Company’s
independent registered public accounting firm on September 8, 2023.
Liquidity,
Capital Resources, and Going Concern
As of September
30, 2023, the Company had $39,589 in cash and a working capital deficit of $3,577,906.
The Company’s
liquidity needs through September 30, 2023, were satisfied through (1) a capital contribution from the Sponsors of $28,750 for
common stock (“Founder Shares”) and (2) loans from Sponsors and new Sponsors and related parties in order to pay offering
costs and other working capital needs. In addition, in order to fund transaction costs in connection with a possible Business
Combination, the Company’s new Sponsors, an affiliate of the new Sponsors, and/or certain of the Company’s officers
and directors may, but are not obligated to, provide the Company Working Capital Loans. As of September 30, 2023, and December
31, 2022, there were no loans associated with the Working Capital Loans. As of September 30, 2023, the Company owed $1,197,850
to Sponsors, new Sponsors and related parties. See Note 5 for further disclosure of Sponsor, new Sponsors and related party loans.
Based on the foregoing,
management believes that the Company may not have sufficient funds and borrowing capacity to meet its operating needs through
the consummation of a Business Combination through the extended term of the Company which expires on October 14, 2023 (as extended).
Over this time period, the Company will be utilizing the funds in the operating bank account to pay existing accounts payable,
identifying and evaluating prospective initial Business Combination candidates, performing due diligence on prospective target
businesses, paying for travel expenditures, selecting the target business to merge with or acquire, and structuring, negotiating
and consummating the Business Combination. As of the date of the filing of this report, management has indicated that it does
intend to extend the term of the Company after its initial term expires.
The Company is
within 12 months of its mandatory liquidation date as of the date of the filing of this report. In connection with the Company’s
assessment of going concern considerations, the Company has until December 14, 2023 (as extended) to consummate a Business Combination.
It is uncertain that the Company will be able to consummate a Business Combination by that time. If a Business Combination is
not consummated by this date, there will be a mandatory liquidation and subsequent dissolution of the Company. The Company has
determined that the insufficient funds to meet the operating needs of the Company through the liquidation date as well as the
mandatory liquidation, should a business combination not occur, and potential subsequent dissolution raise substantial doubt about
our ability to continue as a going concern.
These unaudited
condensed financial statements do not include any adjustments relating to the recovery of the recorded assets or the classification
of the liabilities that might be necessary should the Company be unable to continue as a going concern.
Risks and
Uncertainties
Management is
currently evaluating the impact of the COVID-19 pandemic on the Company and has concluded that while it is reasonably possible
that the virus could have a negative effect on the Company’s financial position, results of its operations, and/or search
for a target company, the specific impact is not readily determinable as of the date of these unaudited condensed financial statements.
The unaudited condensed financial statements do not include any adjustments that might result from the outcome of this uncertainty.
In February 2022,
the Russian Federation and Belarus commenced a military action with the country of Ukraine. And in October 2023, the Hamas Terror
Organization attacked the Southern part of Israel, which in turn, commenced a military action with Gaza Strip. As a result, these
actions, have created and are expected to create global economic consequences. The specific impact on the Company’s financial
condition, results of operations, and cash flows is also not determinable as of the date of these unaudited condensed financial
statements.
Consideration
of Inflation Reduction Act Excise Tax
On August 16,
2022, the Inflation Reduction Act of 2022 (the “IR Act”) was signed into federal law. The IR Act provides for, among
other things, a 1% federal excise tax on certain repurchases of stock by publicly traded U.S. domestic corporations and certain
U.S. domestic subsidiaries of publicly traded foreign corporations occurring on or after January 1, 2023. The excise tax is imposed
on the repurchasing corporation itself, not its shareholders from which shares are repurchased. The amount of the excise tax is
generally 1% of the fair market value of the shares repurchased at the time of the repurchase. However, for purposes of calculating
the excise tax, repurchasing corporations are permitted to net the fair market value of certain new stock issuances against the
fair market value of stock repurchases during the same taxable year. In addition, certain exceptions apply to the excise tax.
The U.S. Department of the Treasury (the “Treasury”) has been given authority to provide regulations and other guidance
to carry out and prevent the abuse or avoidance of the excise tax.
On December 27,
2022, the Treasury published Notice 2023-2, which provided clarification on some aspects of the application of the excise tax.
The notice generally provides that if a publicly traded U.S. corporation completely liquidates and dissolves, distributions in
such complete liquidation and other distributions by such corporation in the same taxable year in which the final distribution
in complete liquidation and dissolution is made are not subject to the excise tax. Although such notice clarifies certain aspects
of the excise tax, the interpretation and operation of aspects of the excise tax (including its application and operation with
respect to SPACs) remain unclear and such interim operating rules are subject to change.
Because the application
of this excise tax is not entirely clear, any redemption or other repurchase effected by the Company, in connection with a Business
Combination, extension vote or otherwise, may be subject to this excise tax. Because any such excise tax would be payable by the
Company and not by the redeeming holders, it could cause a reduction in the value of the Company’s Class A common stock,
cash available with which to effectuate a Business Combination or cash available for distribution in a subsequent liquidation.
Whether and to what extent the Company would be subject to the excise tax in connection with a Business Combination will depend
on a number of factors, including (i) the structure of the Business Combination, (ii) the fair market value of the redemptions
and repurchases in connection with the Business Combination, (iii) the nature and amount of any “PIPE” or other equity
issuances in connection with the Business Combination (or any other equity issuances within the same taxable year of the Business
Combination) and (iv) the content of any subsequent regulations, clarifications, and other guidance issued by the Treasury. Further,
the application of the excise tax in respect of distributions pursuant to a liquidation of a publicly traded U.S. corporation
is uncertain and has not been addressed by the Treasury in regulations, and it is possible that the proceeds held in the Trust
Account could be used to pay any excise tax owed by the Company in the event the Company is unable to complete a Business Combination
in the required time and redeem 100% of the remaining Class A common stock in accordance with the Company’s amended and
restated certificate of incorporation, in which case the amount that would otherwise be received by the public stockholders in
connection with the Company’s liquidation would be reduced.
Investment
Company Act 1940
Under the current
rules and regulations of the SEC we are not deemed an investment company for purposes of the Investment Company Act; however,
on March 30, 2022, the SEC proposed new rules (the “Proposed Rules”) relating, among other matters, to the circumstances
in which SPACs such as the Company could potentially be subject to the Investment Company Act and the regulations thereunder.
The Proposed Rules provide a safe harbor for companies from the definition of “investment company” under Section 3(a)(1)(A)
of the Investment Company Act, provided that a SPAC satisfies certain criteria. To comply with the duration limitation of the
proposed safe harbor, a SPAC would have a limited time period to announce and complete a de-SPAC transaction. Specifically, to
comply with the safe harbor, the Proposed Rules would require a company to file a Current Report on Form 8-K announcing that it
has entered into an agreement with a target company for an initial Business Combination no later than 18 months after the effective
date of the SPAC’s registration statement for its IPO. The Company would then be required to complete its initial Business
Combination no later than 24 months after the effective date of such registration statement. There is currently uncertainty concerning
the applicability of the Investment Company Act to a SPAC, including this Company. Although the Company entered into a definitive
Business Combination agreement within 18 months after the effective date of the registration statement relating to the IPO, there
is a risk that the Company may not complete an initial Business Combination within 24 months of such date. As a result, it is
possible that a claim could be made that the Company has been operating as an unregistered investment company. If the Company
were deemed to be an investment company for purposes of the Investment Company Act,
the Company may
be forced to abandon its efforts to complete an initial Business Combination and instead be required to liquidate. If the Company
is required to liquidate, the investors would not be able to realize the benefits of owning stock in a successor operating business,
including the potential appreciation in the value of our stock and warrants following such a transaction.
The Investment
Company Act defines an investment company as any issuer which (i) is or holds itself out as being engaged primarily, or proposes
to engage primarily, in the business of investing, reinvesting, or trading in securities; (ii) is engaged or proposes to engage
in the business of issuing face-amount certificates of the installment type, or has been engaged in such business and has any
such certificate outstanding; or (iii) is engaged or proposes to engage in the business of investing, reinvesting, owning, holding,
or trading in securities, and owns or proposes to acquire investment securities having a value exceeding 40% of the value of its
total assets (exclusive of Government securities and cash items) on an unconsolidated basis. The Company has assessed its primary
line of business and the value of its investment securities as compared to the value of total assets to determine whether the
Company may be deemed an investment company. The longer that the funds in the Trust Account are held in money market funds, there
is a greater risk that the Company may be considered an unregistered investment company. As a result, the Company has switched
all funds to cash, will likely receive minimal interest, if any, on the funds held in the Trust Account after such time, which
would reduce the dollar amount our public stockholders would receive upon any redemption or liquidation of our Company. Currently,
the funds in the Trust Account are held in a demand deposit account and meeting certain conditions under Rule 2a-7 under the Investment
Company Act.
Note 2—Significant
Accounting Policies
Basis of Presentation
The accompanying
financial statements of the Company are presented in U.S. dollars in conformity with accounting principles generally accepted
in the United States of America for interim financial information (“US GAAP”) and pursuant to Rule 8-03 of Regulation
S-X promulgated by the U.S. Securities and Exchange Commission (“SEC”). Accordingly, they do not include all of the
information and footnotes required by US GAAP. In the opinion of management, the unaudited condensed financial statements reflect
all adjustments, which include only normal recurring adjustments necessary for the fair statement of the balances and results
for the period presented. Operating results for the three and nine months ended September 30, 2023 are not necessarily indicative
of the results that may be expected through December 31, 2023.
Certain information
and footnote disclosures normally included in the annual financial statements prepared in accordance with U.S. GAAP have been
condensed or omitted. These unaudited condensed financial statements should be read in conjunction with the Company’s audited
financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the period through December
31, 2022 filed with the SEC on April 11, 2023. The balance sheet as of September 30, 2023 contained herein has been derived from
the audited financial statements as of December 31, 2022, but does not include all disclosures required by U.S. GAAP.
Emerging Growth Company Status
The Company is an “emerging growth
company,” as defined in Section 2(a) of the Securities Act of 1933, as amended, (the “Securities Act”),
as modified by the Jumpstart our Business Startups Act of 2012, (the “JOBS Act”), and it may take advantage of certain
exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies
including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the
Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in its periodic reports and proxy statements,
and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and shareholder approval
of any golden parachute payments not previously approved.
Further, Section 102(b)(1) of the JOBS
Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private
companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a class
of securities registered under the Exchange Act) are required to comply with the new or revised financial accounting standards.
The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that
apply to non-emerging growth companies but any such election to opt out is irrevocable. The Company has elected not to opt out
of such extended transition period which means that when a standard is issued or revised and it has different application dates
for public or private companies, the Company, as an emerging growth company, can adopt the new or revised standard at the time
private companies adopt the new or revised standard. This may make comparison of the Company’s financial statements with
another public company which is neither an emerging growth company nor an emerging growth company which has opted out of using
the extended transition period difficult or impossible because of the potential differences in accounting standards used.
Use of Estimates
The preparation
of these unaudited condensed financial statements in conformity with US GAAP requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at
the date of the unaudited condensed financial statements and the reported amounts of expenses during the reporting period.
Making estimates
requires management to exercise significant judgement. It is at least reasonably possible that the estimate of the effect of a
condition, situation or set of circumstances that existed at the date of the financial statements, which management considered
in formulating its estimate, could change in the near term due to one or more future confirming events. Significant estimates
include assumptions made in the valuation of our Private Placement Warrants. Accordingly, the actual results could differ from
those estimates.
Cash and Cash Equivalents
The Company considers all short-term investments
with an original maturity of three months or less when purchased to be cash equivalents. The Company did not have any cash equivalents
as of September 30, 2023 and December 31, 2022 other than its investments held in the Trust Account.
Concentration
of Credit Risk
Financial instruments
that potentially subject the Company to concentrations of credit risk consist of cash accounts in a financial institution, which,
at times may exceed the Federal Depository Insurance Coverage of $250,000. The Company has not experienced losses on these accounts.
Offering Costs related to the Initial
Public Offering
The Company complies with the requirements
of ASC Subtopic 340-10-S99-1, “Expenses of Offering.” Offering costs consist of legal, accounting, underwriting fees
and other costs incurred that were directly related to the IPO. Upon consummation of the IPO, offering costs were allocated to
the separable financial instruments issued in the IPO on a relative fair value basis compared to total proceeds received. Offering
costs associated with the Private Warrant liability were expensed as incurred and presented as non-operating expenses in the statement
of operations. Offering costs associated with the shares of common stock were charged to temporary equity (common stock subject
to possible redemption) upon the completion of the IPO.
Anchor Investors
and Other Investors
The Company complies
with SAB Topic 5A to account for the valuation of the Founder Shares acquired by the Anchor Investors and Other Investors. The
Founder Shares acquired by the Anchor Investors and Other Investors represent a capital contribution for the benefit of the Company
and are recorded as offering costs and reflected as a reduction in the proceeds from the offering and offering expenses in accordance
with ASC 470 and Staff Accounting Bulletin Topic 5A. As such, upon sale of the Founder Shares to the Anchor Investors and the
granting of the Founder Shares to the Other Investors the valuation of these shares was recognized as a deferred offering cost
and charged to temporary equity and the statement of operations based on the relative fair value basis.
Fair Value of Financial Instruments
The fair value of the Company’s cash
and current liabilities approximates the carrying amounts represented in the accompanying balance sheets, due to their short-term nature.
Fair value is defined as the price which
would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the
measurement date. A three-tier fair value hierarchy which prioritizes the inputs used in the valuation methodologies is as follows:
Level 1 Inputs - Unadjusted quoted prices
in active markets for identical assets or liabilities that the reporting entity has the ability to access at the measurement date.
Level 2 Inputs - Inputs other than quoted
prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. These might include
quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities
in markets that are not active, inputs other than quoted prices that are observable for the asset or liability (such as interest
rates, volatilities, prepayment speeds, credit risks, etc.) or inputs that are derived principally from or corroborated by market
data by correlation or other means.
Level 3 Inputs - Unobservable inputs for
determining the fair values of assets or liabilities that reflect an entity’s own assumptions about the assumptions that
market participants would use in pricing the assets or liabilities.
Fair Value
of Trust Account
As of September
30, 2023 and December 31, 2022, the assets in the Trust Account were held in a demand deposit account at a bank and money market
fund with a broker, respectively. These financial assets were accounted for at fair value on a recurring basis within Level 1
of the fair value hierarchy.
Fair Value of Warrant Liability
The Company accounted for the 7,306,000
warrants issued in connection with the IPO and private placement in accordance with the guidance contained in ASC Topic 815, “Derivatives
and Hedging” whereby under that provision, the Private Warrants did not meet the criteria for equity treatment and were
recorded as a liability and the Public Warrants met the criteria for equity treatment. Accordingly, the Company classified the
Private Warrants as a liability at fair value upon issuance and adjusts them to fair value at each reporting period. This liability
is re-measured at each balance sheet date until the Private Warrants are exercised or expire, and any change in fair value will
be recognized in the Company’s statements of operations.
Fair Value
of Shares and Private Placement Units acquired by Instant Fame
On October 20,
2022, pursuant to a Securities Purchase Agreement between IF and the Sellers, management of the Company determined the fair value
of the shares and private placement units acquired to be $1,453,900. The excess value of the shares and private placement units
acquired of $1,253,900 is reported as a component of stockholders’ equity.
Common Stock Subject to Redemption
The Company accounts for its common stock
subject to possible redemption in accordance with the guidance in ASC Topic 480, “Distinguishing Liabilities from Equity.”
Common stock subject to mandatory redemption (if any) are classified as a liability instrument and 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 and subsequently measured at redemption value. At all other times,
shares of common stock are classified as
stockholders’ equity. The Company’s shares of common stock sold as part of the IPO feature certain redemption rights
that are considered to be outside of the Company’s control and subject to the occurrence of uncertain future events. Accordingly,
shares of common stock subject to possible redemption are presented at their net carrying value and classified as temporary equity,
outside of the stockholders’ equity section of the Company’s balance sheet. The initial carrying value of the common
stock subject to redemption is recorded at an amount equal to the proceeds of the public offering ($69,000,000) less (i) the fair
value of the public warrants ($5,796,000) and less (ii) offering costs allocable to the common stock sold as part of the units
in the public offering ($8,712,864). In accordance with the alternative methods described in ASC Subtopic 480-10-S99-3A(15), “Classification
and Measurement of Redeemable Securities.” The Company has made an accounting policy election to accrete changes in the
difference between the initial carrying amount and the redemption amount ($10.10 per share) over the period form the IPO date
to the expected redemption date. For purposes of accretion, the Company has estimated that it will take 15 months for a Business
Combination to occur and accordingly will accrete the carrying amount to the redemption value using the effective interest method
over that period. Such changes are reflected in additional paid in capital, or in the absence of additional paid-in capital, in
accumulated deficit.
In December 2022, the Company changed the
methodology on a go-forward basis to recognize changes in redemption value immediately as they occur and adjusts the carrying
value of redeemable common stock to equal the redemption value at the end of each reporting period. Increases or decreases in
the carrying amount of redeemable common stock are affected by charges against additional paid-in-capital (to the extent available)
and accumulated deficit. The Company recorded an increase in the redemption value because of earnings on the Trust Account and
additional deposits that exceed amounts payable for taxes. While the Company may use earnings on the Trust Account to pay its
tax obligations, during the three and nine months ended September 30, 2023, $0 and $357,010 has been withdrawn by the Company
from the Trust Account to pay its tax obligations. During the three and nine months ended September 30, 2022, $49,010 has been
withdrawn by the Company from the Trust Account to pay its tax obligations.
In March 2023 in connection with the Special
Meeting, stockholders holding a total of 3,960,387 shares of the Company’s common stock exercised their right to redeem
such shares for a pro rata portion of the funds in the Company’s Trust Account. As a result, $41,077,199 (approximately
$10.37201 per share) was removed from the Company’s Trust Account to pay such holders. Following redemptions, the Company
has 5,463,613 shares outstanding.
On September 30, 2023 and December 31,
2022, the common stock reflected in the balance sheet is reconciled in the following table:
| Common stock
subject to possible redemption on December 31, 2022 | |
$ | 70,973,384 | |
| Less: | |
| | |
| Redemptions from Trust Account | |
| (41,077,199 | ) |
| Plus: | |
| | |
| Remeasurement of shares subject to redemption | |
| 497,072 | |
| Common stock subject to
possible redemption on March 31, 2023 | |
$ | 30,393,257 | |
| Plus: | |
| | |
| Remeasurement of shares subject to redemption | |
| 445,274 | |
| Common stock subject to
possible redemption on June 30, 2023 | |
$ | 30,838,531 | |
| Plus: | |
| | |
| Remeasurement of shares subject to redemption | |
| 431,601 | |
| Common stock subject to
possible redemption on September 30, 2023 | |
$ | 31,270,132 | |
Net Loss Per
Share
Basic net loss
per share is computed by dividing net loss by the weighted average number of shares of common stock outstanding during the period.
For purposes of
calculating diluted loss per common stock, the denominator includes both the weighted-average number of shares of common stock
outstanding during the period and the number of common stock equivalents if the inclusion of such common stock equivalents is
dilutive. Dilutive common stock equivalents potentially include shares and warrants using the treasury stock method.
As of September
30, 2023 and December 31, 2022, 7,306,000 warrants were excluded from the diluted loss per share calculation since the exercise
price of the warrants is greater than the average market price of the common stock. As a result, this would have been anti-dilutive
and therefore net loss per share is the same as basic loss per share for the period presented.
Reconciliation of Loss per Share of
Common Stock
Basic and diluted loss per share for common
stock is calculated as follows:
| | |
Three months ended September
30, | |
Nine Months Ended September
30, |
| | |
2023 | |
2022 | |
2023 | |
2022 |
| Loss per share of common stock: | |
| | | |
| | | |
| | | |
| | |
| Net (Loss) Income | |
$ | (101,152 | ) | |
$ | 65,942 | | |
$ | (151,848 | ) | |
$ | (170,124 | ) |
| | |
| | | |
| | | |
| | | |
| | |
| Weighted Average Shares of common stock | |
| 5,463,613 | | |
| 9,424,000 | | |
| 6,435,576 | | |
| 9,424,000 | |
| Basic and diluted (loss) income per share | |
$ | (0.02 | ) | |
$ | 0.01 | | |
$ | (0.02 | ) | |
$ | (0.02 | ) |
Income Taxes
The Company accounts
for income taxes under ASC 740, “Income Taxes.” ASC 740, Income Taxes, requires the recognition of deferred tax assets
and liabilities for both the expected impact of differences between the unaudited condensed financial statements and tax basis
of assets and liabilities and for the expected future tax benefit to be derived from tax loss and tax credit carry forwards. ASC
740 additionally requires a valuation allowance to be established when it is more likely than not that all or a portion of deferred
tax assets will not be realized. As of September 30, 2023 and December 31, 2022, the Company’s deferred tax asset had a
full valuation allowance recorded against it. The Company’s effective tax rate was (423.97)% and (48.96)% for the three
months ended September 30, 2023 and 2022, respectively, and 177.37% and (59.20)% for the nine months ended September 30, 2023
and 2022, respectively. The effective tax rate differs from the statutory tax rate of 21% for the three and nine months ended
September 30, 2023 and 2022, due to state taxes, permanent differences related to Business Combination expenses, and changes in
the valuation allowance on the deferred tax assets.
ASC 740 also clarifies
the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements and prescribes a recognition
threshold and measurement process for financial statement recognition and measurement of a tax position taken or expected to be
taken in a tax return. For those benefits to be recognized, a tax position must be more-likely-than-not to be sustained upon examination
by taxing authorities. ASC 740 also provides guidance on derecognition, classification, interest and penalties, accounting in
interim period, disclosure and transition.
The Company recognizes
accrued interest and penalties related to unrecognized tax benefits as income tax expense. There were no unrecognized tax benefits
and no amounts accrued for interest and penalties as of September 30, 2023 and December 31, 2022. The Company is currently not
aware of any issues under review that could result in significant payments, accruals or material deviation from its position.
The Company has
identified the United States and the State of California as its only “major” tax jurisdiction. The Company is subject
to income taxation by major taxing authorities since inception. These examinations may include questioning the timing and amount
of deductions, the nexus of income among various tax jurisdictions and compliance with federal and state tax laws. The Company’s
management does not expect that the total amount of unrecognized tax benefits will materially change over the next twelve months.
Recent Accounting Pronouncements
Management does not believe that any other
recently issued, but not yet effective, accounting pronouncements, if currently adopted, would have a material effect on the Company’s
financial statements.
Stock Based
Compensation
The Company complies
with ASC 718 Compensation — Stock Compensation regarding Founder Shares granted to directors and an officer of the Company.
The acquired shares shall vest upon the Company consummating an initial Business Combination (the “Vesting Date”).
The Founder Shares owned by the directors or officer (1) may not be sold or transferred, until one year after the consummation
of a Business Combination, (2) not be entitled to redemption from the funds held in the Trust Account, or any liquidating
distributions. The Company has until December 14, 2023 (as extended) to consummate a Business Combination, and if a Business Combination
is not consummated, the Company will liquidate and the shares will become worthless.
The Founder Shares
were issued on September 8, 2021, and the Founder Shares vest, not upon a fixed date, but upon consummation of an initial Business
Combination. Since the approach in ASC 718 is to determine the fair value without regard to the vesting date, the Company has
determined the valuation of the Founder Shares as of September 8, 2021. The valuation resulted in a fair value of $7.48 per share
as of September 8, 2021, or an aggregate of $972,400 for the 130,000 Founder Shares. The Founder Shares were granted at no cost
to the recipients. The excess fair value over the amount paid is $972,400, which is the amount of share-based compensation expense
which the Company will recognize upon consummation of an initial business combination.
Note 3— Initial
Public Offering
On September 14,
2021, the Company consummated its IPO and sold 6,900,000 Units at a purchase price of $10.00 per Unit, which was inclusive of
the underwriters’ full exercise of their over-allotment option, generating gross proceeds of $69,000,000. Each Unit that
the Company sold had a price of $10.00 and consisted of one share of common stock, one warrant to purchase one share of common
stock and one right. Each warrant will entitle the holder to purchase one share of common stock at a price of $11.50 per share,
subject to adjustment. Each warrant will become exercisable on the completion of the initial Business Combination and will expire
five years after the completion of the initial Business Combination, or earlier upon redemption or liquidation. Each right entitles
the holder to buy one tenth of one share of common stock. The common stock, warrants and rights comprising the Units have begun
separate trading. At the time that the common stock, warrants and rights comprising the Units began separate trading, holders
will hold the separate securities and no longer hold Units (without any action needing to be taken by the holders), and the Units
will no longer trade.
All of the shares
of common stock sold as part of the Units in the IPO contain a redemption feature which allows for the redemption of such public
shares in connection with the Company’s liquidation, if there is a stockholder vote or tender offer in connection with the
Business Combination and in connection with certain amendments to the Company’s certificate of incorporation. In accordance
with SEC and its staff’s guidance on redeemable equity instruments, which has been codified in ASC 480-10-S99, redemption
provisions not solely within the control of the Company require common stock subject to redemption to be classified outside of
permanent equity.
At the Special
Meeting, stockholders holding a total of 3,960,387 shares of the Company’s common stock exercised their right to redeem
such shares for a pro rata portion of the funds in the Company’s Trust Account. Following redemptions, the Company has 5,463,613
shares outstanding.
Note 4—Private
Placement
Simultaneously
with the closing of the IPO and the sale of the Units, the Company sold 181,000 Private Placement Units to certain investors for
aggregate cash proceeds of $2,460,000 and issued an additional 225,000 Private Placement Units to a Sponsor in exchange for the
cancellation of approximately $1,105,000 in loans and a promissory note due to them. Each Private Placement Unit consisted of
one share of common stock, one redeemable warrant to purchase one share of common stock at a price of $11.50 per whole share and
one right.
On October 20,
2022, pursuant to the SPA, the new Sponsors acquired an aggregate of 385,000 shares of common stock and 90,000 private placement
units of the Company from the Sellers in a private transaction. Management of the Company determined the fair value of the shares
and private placement units acquired to be $1,453,900. The excess value of the shares and private placement units acquired of
$1,253,900 is reported as a component of stockholders’ equity.
Note 5—
Promissory Note to Evie Autonomous LTD and Evie Autonomous Group Ltd.
On April 19, 2023, May 12, 2023, and June 14, 2023 the Company
issued unsecured promissory notes to Evie Autonomous LTD with a principal amount of $436,040 (the “Evie Autonomous Extension
Notes”). The Evie Autonomous Extension Notes bear no interest and are repayable in full upon the earlier of (a) the date
of the consummation of the Company’s initial Business Combination, or (b) the date of the Company’s liquidation. If
the Company does not consummate an initial Business Combination by the Deadline Date, the Evie Autonomous Extension Notes will
be repaid only from funds held outside of the Trust Account or will be forfeited, eliminated or otherwise forgiven.
Promissory
Notes
On August 4, 2023
and August 8, 2022, the Company issued to Evie Group unsecured promissory notes in the aggregate principal amount of $189,975
(the “Notes”). The Notes bears no interest and are repayable in full upon the earlier of (a) the date of the consummation
of the Company’s initial Business Combination, or (b) the date of the Company’s liquidation. If the Company does not
consummate an initial Business Combination by the Deadline Date, the Notes will be repaid only from funds held outside of the
Trust Account or will be forfeited, eliminated or otherwise forgiven.
In accordance
with the Business Combination Agreement, on September 18, 2023 and in consideration of $100,000, the Company issued to EVIE Group,
an unsecured promissory note in the aggregate principal amount of $100,000 (the “September Note”). The September Note
bears no interest and is repayable in full upon the earlier of (a) the date of the consummation of the Company’s initial
business combination, or (b) the date of the Company’s liquidation. If the Company does not consummate an initial business
combination by the Deadline Date, the September Note will be repaid only from funds held outside of the Trust Account or will
be forfeited, eliminated or otherwise forgiven.
At September 30,
2023 and December 31, 2023 the Company owes Evie Autonomous and Evie Group $726,015 and $0 and reports this as promissory notes
– Evie on the condensed balance sheets.
Note 6—Related
Party Transactions
Founder Shares
In February 2021,
the Sponsors subscribed for 2,875,000 shares of the Company’s common stock (the “Founder Shares”) for $28,750,
or $0.01 per share, in connection with formation. In June 2021, 1,437,500 shares of the Founder Shares were re-purchased by the
Company for a total of $14,375. In connection with the upsize of the IPO, on June 10, 2021, an additional 287,500 Founder Shares
were issued via a 20% stock dividend, resulting in total Founder Shares outstanding of 1,725,000. All share amounts and related
figures were retroactively adjusted.
In March 2021,
Suresh Yezhuvath granted an aggregate of 16,668 Founder Shares to other investors (“Other Investors”) at no costs.
On October 20,
2022, pursuant to an SPA, the new Sponsor acquired an aggregate of 385,000 shares of common stock of the Company from Bannix Management
LLP, Balaji Venugopal Bhat, Nicholos Hellyer, Subbanarasimhaiah Arun, Vishant Vora and Suresh Yezhuvath and 90,000 private placement
units from Suresh Yezhuvath (collectively, the “Sellers”) in a private transaction.
The Sponsors,
new Sponsors, Other Investors, Anchor Investors, directors and officer have agreed not to transfer, assign or sell the Founder
Shares until the earlier to occur of: (A) one year after the completion of the initial Business Combination or (B) the date on
which the Company completes a liquidation, merger, stock exchange or other similar transaction after the initial Business Combination
that results in all of the public stockholders having the right to exchange their shares of common stock for cash, securities
or other property. The Company refers to such transfer restrictions as the “lock-up”. Notwithstanding the foregoing,
if the last sale price of the 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 the initial Business Combination, the Founder Shares will be released from the lock-up.
At September 30,
2023 and December 31, 2022, there were 3,961,500 non-redeemable shares outstanding owned or controlled by the Sponsors, new Sponsors,
Other Investors, Anchor Investors, directors and officers (including 1,437,500 shares classified as treasury stock).
Working Capital
Loans – Sponsors and New Sponsors
In order to finance
transaction costs in connection with a Business Combination, the new Sponsors or an affiliate of the new Sponsors or certain of
the Company’s officers and directors may, but are not obligated to, loan the Company funds as may be required. If the Company
completes a Business Combination, the Company would repay the loans out of the proceeds of the Trust Account released to the Company.
Otherwise, the 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 the working capital held outside the Trust Account to repay the loans but no
proceeds from the Trust Account would be used to repay the loans. On September 30, 2023 and December 31, 2022, there were no loans
outstanding under the working capital loan program.
Pre-IPO Loans
– Sponsors
Prior to the completion
of the IPO, the Company entered into an additional loan agreement with Yezhuvath to finance the expenses associated with preparing
for the IPO as follows:
The Company entered
into a loan agreement with Yezhuvath with the following terms:
| 1. |
The
Company borrowed approximately $805,000 under the loan agreement as follows: |
| a. |
Deferred offering
costs of $50,000 were directly paid by the Sponsor. |
| b. |
The
Company repurchased treasury stock of $7,375 from the Sponsor. |
| c. |
Proceeds
of approximately $747,625 was received directly into the Company from the Sponsor. |
| 2. |
Advances under
the loan agreement are unsecured and do not bear interest. |
| |
|
| 3. |
Following
the consummation of the IPO, the loan was repaid/forfeited as follows: |
| a. |
Against the
first approximate $1,030,000 of the note and loan agreement (inclusive of the $300,000 note discussed above), 210,000 Private
Placement Units were issued. |
| b. |
Against
the next $75,000 of loan, 15,000 Private Placement Units were issued. |
Yezhuvath agreed
to make an additional loan to the Company of $225,000 pursuant to the exercise of the over-allotment which would only be drawn
down at the time of the Business Combination. The proceeds would be used to pay a portion of the incremental underwriting discount
on the over-allotment shares which the underwriter has agreed to defer the receipt of until a Business Combination is consummated.
Yezhuvath has agreed to forgive this amount without any additional securities being issued against it.
Due to Related
Parties
The balance on
September 30, 2023 and December 31, 2022 in Due to Related Parties totaled $1,197,850 and $1,002,850, respectively, consists of
the following transactions:
| | |
September 30, 2023 | |
December 31, 2022 |
| Borrowings from Suresh Yezhuvath | |
$ | 23,960 | | |
$ | 23,960 | |
| Expenses paid by Subash Menon | |
| 3,557 | | |
| 3,557 | |
| Repurchase 700,000 shares of common stock from
Bannix Management LLP | |
| 7,000 | | |
| 7,000 | |
| Administrative Support Agreement | |
| 123,333 | | |
| 78,333 | |
| Securities Purchase Agreement | |
| 200,000 | | |
| 200,000 | |
| Promissory Notes with Instant Fame | |
| 840,000 | | |
| 690,000 | |
| | |
| | | |
| | |
| | |
$ | 1,197,850 | | |
$ | 1,002,850 | |
On December 13,
2022, the Company issued an unsecured promissory note in favor of Instant Fame, in the principal amount of $690,000. In March
and April 2023 the Company issued additional unsecured promissory notes to Instant Fame for $75,000 for each promissory note.
At September 30, 2023 and December 31, 2022, there was $840,000 and $690,000 outstanding on these promissory notes.
The promissory
notes are non-interest bearing and repayable on the consummation of a Business Combination. If a Business Combination is not consummated
the promissory notes will not be repaid and all amounts owed hereunder will be forgiven except to the extent that the Company
has funds available to it outside of the Trust Account.
Administrative
Support Agreement
The Company has
agreed to pay an affiliate of the Sponsor for office space, secretarial and administrative services provided to members of the
management team, in the amount of $5,000 per month. Upon completion of the initial Business Combination or the Company’s
liquidation, it will cease paying these monthly fees. For the three and nine months period ended September 30, 2023 and 2022,
the Company had incurred $15,000 and $45,000 pursuant to the agreement, respectively.
Note 7—Commitments
Registration
Rights
The holders of
the Founder Shares, Private Placement Units and warrants that may be issued upon conversion of related party loans will have registration
rights to require the Company to register a sale of any of its securities held by them pursuant to a registration rights agreement
to be signed prior to or on the effective date of this offering. These holders will be entitled to make up to three demands, excluding
short form registration demands, that the Company registers such securities for sale under the Securities Act. In addition, these
holders will have “piggy-back” registration rights to include their securities in other registration statements filed
by the Company.
Underwriters
Agreement
The underwriters
are entitled to a deferred underwriting discount of $225,000 payable to the underwriters by a Sponsor solely in the event that
the Company completes a Business Combination, subject to the terms of the underwriting agreement. Additionally, the underwriters
are entitled to a Business Combination marketing fee of 3.5% of the gross proceeds of the sale of Units in the IPO upon the completion
of the Company’s initial Business Combination subject to the terms of the underwriting agreement.
The Company issued
the underwriter (and/or its designees) (the “Representative”) 393,000 shares of common stock for $0.01 per share (the
“Representative Shares”) upon the consummation of the IPO. The Company accounted for the estimated fair value ($2,861,000)
of the Representative Shares as an offering cost of the IPO and allocated such cost against temporary equity for the amount allocated
to the redeemable shares and to expense for the allocable portion relating to the warrant liability. These shares of common stock
issued to the underwriter are subject to an agreement in which the underwriter has agreed (i) not to transfer, assign or sell
any such shares until the completion of the Business Combination. In addition, the underwriter (and/or its designees) has agreed
(i) to waives its redemption rights with respect to such shares in connection with the completion of the Business Combination
and (ii) to waive its rights to liquidating distributions from the trust account with respect to such shares if it fails to complete
the Business Combination by June 14, 2023. Accordingly, the fair value of such shares is included in stockholders’ equity.
As of September 30, 2023 and December 31, 2022, the Representative has not yet paid for these shares, and the amount owed of $3,930
and $3,930, respectively, are included in prepaid expenses on the condensed balance sheets.
Excise Tax
In connection
with the vote to approve the Charter Amendment Proposal, holders of 3,960,387 shares of Common Stock properly exercised their
right to redeem their shares of Common Stock for an aggregate redemption amount of $41,077,199. As such the Company has recorded
a 1% excise tax liability in the amount of $410,772 on the condensed balance sheet as of September 30, 2023. The liability does
not impact the condensed statements of operations and is offset against additional paid-in capital or accumulated deficit if additional
paid-in capital is not available.
This excise tax
liability can be offset by future share issuances within the same fiscal year which will be evaluated and adjusted in the period
in which the issuances occur. Should the Company liquidate prior to December 31, 2023, the excise tax liability will not be due.
Other Investors
Other Investors
were granted an aggregate of 16,668 Founder Shares at no costs from Suresh Yezhuvath in March 2021. The Company valued the Founder
Shares at approximately $0.65 per share or $10,834 in the aggregate at the date of the grant.
The Other Investors
have not been granted any stockholder or other rights that are in addition to those granted to the Company’s other public
stockholders. The Other Investors will have no rights to the funds held in the Trust Account with respect to the Founder Shares
held by them. The Other Investors will have the same rights to the funds held in the Trust Account with respect to the common
stock underlying the Units they purchase at the IPO as the rights afforded to the Company’s other public stockholders.
Anchor Investors
The Anchor Investors
entered into separate letter agreements with the Company and the Sponsors pursuant to which, subject to the conditions set forth
therein, the Anchor Investors purchased, upon the closing of the IPO on September 14, 2021, 181,000 Private Placement Units and
762,500 Founder Shares on September 9, 2021 (“Anchor Shares” in the total). The Company valued the Founder Shares
at $7.48 per share at the date of the purchase.
The Anchor Investors
have not been granted any stockholder or other rights that are in addition to those granted to the Company’s other public
stockholders and purchased the Founder Shares for nominal consideration with an excess of the fair value of $3,244,453. Each Anchor
Investor has agreed in its individually negotiated letter agreement entered into with the Company to vote its Anchor Shares to
approve the Company’s initial Business Combination. The Anchor Investors will have no rights to the funds held in the Trust
Account with respect to the Anchor Shares held by them. The Anchor Investors will have the same rights to the funds held in the
Trust Account with respect to the common stock underlying the Units they purchase at the IPO (excluding the common stock included
in the Private Placement Units purchased) as the rights afforded to the Company’s other public stockholders.
Note 8 —
Stockholders’ (Deficit) Equity
Preferred Stock—
The Company is authorized to issue 1,000,000 shares of preferred stock, par value $0.01 per share, with such designations, voting
and other rights and preferences as may be determined from time to time by the Company’s board of directors. As of September 30,
2023 and December 31, 2022, there were no shares of preferred stock issued or outstanding.
Common Stock—
The Company is authorized to issue 100,000,000 shares of common stock with par value of $0.01 each. As of September 30, 2023 and December
31, 2022, there were 3,961,500 shares of common stock issued and 2,524,000 shares of common stock outstanding, excluding 2,939,613 and
6,900,000 shares subject to possible redemption, respectively. Each share of common stock entitles the holder to one vote.
Treasury
Stock — On June 21, 2021 the Sponsors agreed to deliver the Company 1,437,500 shares of common stock beneficially
owned by the Sponsors. The amount payable to Yezhuvath of $7,735 was repaid as part of the Private Placement Units issued to him
(see Note 5) and the amount of $7,000 payable to Bannix Management LLP is included in Due to Related Parties as of September 30,
2023 and December 31, 2022.
Rights
— Except in cases where the Company is not the surviving company in the Business Combination, each holder of a right will
automatically receive one-tenth (1/10) of a share of common stock upon consummation of the Business Combination, even if the holder
of a right converted all shares held by him, her or it in connection with the Business Combination or an amendment to the Company’s
Certificate of Incorporation with respect to its pre-Business Combination activities. In the event that the Company will not be
the surviving company upon completion of the Business Combination, each holder of a right will be required to affirmatively convert
his, her or its rights in order to receive the one-tenth (1/10) of a share of common stock underlying each right upon consummation
of the Business Combination. No additional consideration will be required to be paid by a holder of rights in order to receive
his, her or its additional share of common stock upon consummation of Business Combination. The shares issuable upon exchange
of the rights will be freely tradable (except to the extent held by affiliates of the Company). If the Company enters into a definitive
agreement for a Business Combination in which the Company will not be the surviving entity, the definitive agreement will provide
for the holders of the rights to receive the same per share consideration the holders of shares of common stock will receive in
the transaction on an as-converted into common stock basis.
Note 9 — Warrant
Liability
The Company accounted
for the 7,306,000 warrants issued in connection with the IPO and private placement in accordance with the guidance contained in
ASC Topic 815 “Derivatives and Hedging” whereby under that provision, the Private Warrants did not meet the criteria
for equity treatment and were recorded as a liability. Accordingly, the Company classified the Private Warrants as a liability
at fair value and adjusts them to fair value at each reporting period. This liability is re-measured at each balance sheet date
until the Private Warrants are exercised or expire, and any change in fair value will be recognized in the Company’s statement
of operations. The fair value of the Private Warrants was estimated using a modified Black-Scholes model. The valuation models
utilize inputs such as assumed share prices, volatility, discount factors and other assumptions and may not be reflective of the
price at which they can be settled. Such Private Warrant classification is also subject to re-evaluation at each reporting period.
The Public Warrants met the classification for equity treatment.
Each warrant entitles
the holder to purchase one share of the Company’s common stock at a price of $11.50 per share, subject to adjustment as
discussed herein. In addition, if (x) the Company issues additional shares or equity-linked securities for capital raising
purposes in connection with the closing of its initial Business Combination at an issue price or effective issue price of less
than $9.20 per share of common stock (with such issue price or effective issue price to be determined in good faith by the Company’s
board of directors and, in the case of any such issuance to the Company’s Sponsors or its affiliates, without taking into
account any Founder Shares held by the Company’s Sponsors or its affiliates, prior to such issuance) (the “Newly Issued
Price”), (y) the aggregate gross proceeds from such issuances represent more than 60% of the total equity proceeds,
and interest thereon, available for the funding of the initial Business Combination on the date of the consummation of the initial
Business Combination (net of redemptions), and (z) the volume weighted average trading price of the Company’s common
stock during the 20 trading day period starting on the trading day prior to the day on which the Company consummates the initial
Business Combination (such price, the “Market Value”) is below $9.20 per share, the exercise price of the warrants
will be adjusted (to the nearest cent) to be equal to 115% of the Market Value, and the $18.00 per share redemption trigger price
described below under “Redemption of warrants” will be adjusted (to the nearest cent) to be equal to 180% of the Market
Value.
The warrants will
become exercisable on the later of 12 months from the closing of this offering or upon completion of its initial Business
Combination and will expire five years after the completion of the Company’s initial Business Combination, at 5:00 p.m.,
Eastern Time, or earlier upon redemption or liquidation.
Redemption
of warrants
The Company may
call the warrants for redemption (excluding the private warrants, and any warrants underlying Units issued to the Sponsors, initial
stockholders, officers, directors or their affiliates in payment of related party loans made to the Company), in whole and not
in part, at a price of $0.01 per warrant:
| ● |
at any time while the
warrants are exercisable, |
| |
|
| ● |
upon not less than 30 days prior
written notice of redemption to each warrant holder, |
| |
|
| ● |
if, and only
if, the reported last sale price of the common stock equals or exceeds $18.00 per share (as adjusted for stock splits, stock
dividends, reorganizations and recapitalizations), for any 20 trading days within a 30-trading day period ending on the third
trading business day prior to the notice of redemption to warrant holders, and |
| |
|
| ● |
if, and only
if, there is a current registration statement in effect with respect to the issuance of the shares underlying such warrants
at the time of redemption and for the entire 30-day trading period referred to above and continuing each day until the date
of redemption. |
If the Company
calls the warrants for redemption as described above, the management will have the option to require any holder that wishes to
exercise its warrant to do so on a “cashless basis.” If management takes advantage of this option, all holders of
warrants would pay the exercise price by surrendering their warrants for that number of shares of common stock equal to the quotient
obtained by dividing (x) the product of the number of shares of common stock underlying the warrants, multiplied by the excess
of the “fair market value” (defined below) over the exercise price of the warrants by (y) the fair market value.
The “fair market value” shall mean the average reported last sale price of the common stock for the 10 trading days
ending on the third trading day prior to the date on which the notice of redemption is sent to the holders of warrants.
If the Company
is unable to complete an initial Business Combination within the Combination Period and the Company liquidates the funds held
in the Trust Account, holders of warrants will not receive any of such funds with respect to their warrants, nor will they receive
any distribution from the Company’s assets held outside of the Trust Account with respect to such warrants. Accordingly,
the warrants may expire worthless.
The
following presents the Company’s fair value hierarchy for the 406,000 Private Warrants issued which are classified as liabilities
measured at fair value as of September 30, 2023:
| | |
Level 1 | |
Level 2 | |
Level 3 |
| | |
| | | |
| | | |
| | |
| Private Warrants | |
$ | — | | |
$ | — | | |
$ | 12,180 | |
| Total | |
$ | — | | |
$ | — | | |
$ | 12,180 | |
The following
presents the Company’s fair value hierarchy for the 406,000 Private Warrants issued which are classified as liabilities
measured at fair value as of the December 31, 2022:
| | |
Level 1 | |
Level 2 | |
Level 3 |
| | |
| |
| |
|
| Private Warrants | |
$ | — | | |
$ | — | | |
$ | 12,180 | |
| Total | |
$ | — | | |
$ | — | | |
$ | 12,180 | |
The following
table summarizes key inputs and the models used in the valuation of the Company’s Private Warrants as of September 30, 2023:
| | |
Private Warrants |
| | |
|
| Valuation Method Utilized | |
Modified Black Scholes |
| Stock Price | |
$ | 10.66 | |
| Exercise Price | |
$ | 11.50 | |
| Expected Term | |
| 1.12 | |
| Volatility | |
| 2.52 | % |
| Risk-free rate | |
| 4.60 | % |
The following table summarizes key inputs and the models used
in the valuation of the Company’s Private Warrants as of December 31, 2022:
| | |
Private Warrants |
| | |
|
| Valuation Method Utilized | |
Modified Black Scholes |
| Stock Price | |
$ | 10.17 | |
| Exercise Price | |
$ | 11.50 | |
| Expected Term | |
| 2.7 | |
| Volatility | |
| 1.3 | % |
| Risk-free rate | |
| 3.99 | % |
The following
table presents the changes in Level 3 liability for the three and nine months ended September 30, 2023:
| | |
Level 3 |
| Fair value of Private Warrants at December 31, 2022 | |
$ | 12,180 | |
| Change in fair value of Private Warrants | |
| — | |
| Fair value of Private Warrants at March 31, 2023 | |
$ | 12,180 | |
| Change in fair value of Private Warrants | |
| 4,060 | |
| Fair value of Private Warrants at June 30, 2023 | |
$ | 16,240 | |
| Change in fair value of Private Warrants | |
| (4,060 | ) |
| Fair value of Private Warrants at September 30, 2023 | |
$ | 12,180 | |
The following
table presents the changes in Level 3 liabilities for the three and nine months ended September 30, 2022:
| Fair value of Private Warrants at December 31, 2021 | |
$ | 194,880 | |
| Change in fair value of Private Warrants | |
| (93,380 | ) |
| Fair value of Private Warrants at March 31, 2022 | |
$ | 101,500 | |
| Change in fair value of Private Warrants | |
| (64,960 | ) |
| Fair value of Private Warrants at June 30, 2022 | |
$ | 36,540 | |
| Change in fair value of Private Warrants | |
| (20,300 | ) |
| Fair value of Private Warrants at September 30, 2022 | |
$ | 16,240 | |
Note 10—Subsequent
Events
The Company evaluated
subsequent events and transactions that occurred after the balance sheet date up to the date of the filing of this report. The
Company did not identify any subsequent events, other than noted below, that would have required adjustment or disclosure in these
unaudited condensed financial statements.
On October 17,
2023, the Board, at the request of the Sponsor, determined to implement a eighth Extension and to extend the Deadline Date for
an additional month to November 14, 2023. The Company has deposited $75,000 into the Trust Account with funds provided by EVIE
Autonomous Ltd.
On October 26,
2023, the Company filed preliminary form 14A (“Proxy statement”) with the Security and Exchange Committee (“SEC”),
pursuing among other topics shareholder’s approval for its business combination. Said Proxy Statement is subject to SEC
comment letter which was not received by the Company yet.
On November 14,
2023, the Board, at the request of the Sponsor, determined to implement a ninth Extension and to extend the Deadline Date for
an additional month to December 14, 2023. The Company has deposited $75,000 into the Trust Account with funds provided by EVIE
Autonomous Ltd.
In October and
November 2023, the Company borrowed $128,000 from Evie.
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING
FIRM
To the Board of Directors and Stockholders of EVIE Autonomous Group Ltd
Opinion on the Financial Statements
We have audited the accompanying balance
sheet of EVIE Autonomous Group Ltd (the Company) as of June 30, 2023, and the related
statement of operations, stockholder’s equity, and cash flows for the period from May 8, 2023 (inception) to June 30, 2023
and the related notes (collectively referred to as the financial statements). In our opinion, the financial statements present
fairly, in all material respects, the financial position of the Company as of June 30, 2023 and the results of its operations
and its cash flows for the period from May 8, 2023 (inception) to June 30, 2023, in conformity with accounting principles generally
accepted in the United States of America.
Emphasis of Matter Regarding Going Concern
The accompanying financial statements have been prepared
assuming that the Company will continue as a going concern. As discussed in Note 1 to the financial statements, the Company has not started
operations yet, that raises substantial doubt about its ability to continue as a going concern. Management’s plans in regard to
these matters are also described in Note 1. The financial statements do not include any adjustments that might result from the outcome
of this uncertainty.
Basis for Opinion
These financial statements are the responsibility
of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based
on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB)
and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable
rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with
the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have,
nor were we engaged to perform an audit of its internal control over financial reporting. As part of our audit, we are required
to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the
effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audit included performing procedures to assess
the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond
to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.
Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating
the overall presentation of the financial statements. We believe that our audit provides a reasonable basis for our opinion.
| /s/RBSM LLP |
|
| |
|
| We have served as the Company’s auditor since 2023. |
|
| |
|
| PCAOB ID 587 |
|
| |
|
| New York, NY |
|
| |
|
| October 6, 2023 |
|
EVIE AUTONOMOUS GROUP LTD
BALANCE SHEET
| | |
June 30, 2023 |
| Assets | |
| | |
| Total current assets | |
$ | — | |
| Total assets | |
$ | — | |
| Liability and Stockholder’s Equity | |
| | |
| Current liabilities: | |
| | |
| Total liabilities | |
$ | — | |
| Stockholder’s Equity: | |
| | |
| Common stock, $1.2617 par value; 100 shares authorized, issued and outstanding | |
| 126 | |
| Additional paid-in capital | |
| — | |
| Accumulated deficit | |
| (126 | ) |
| Total stockholder’s equity | |
| — | |
| Total Liabilities and Stockholder’s Equity | |
$ | — | |
The accompanying notes are an integral part of these
financial statements.
EVIE AUTONOMOUS GROUP LTD
STATEMENT OF OPERATIONS
| | |
For the Period from May 8, 2023 (Inception) to June 30, 2023 |
| Operating expenses | |
$ | 126 | |
| Net loss | |
$ | (126 | ) |
| Weighted average shares outstanding, basic and diluted | |
| 100 | |
| Basic and diluted net loss per common share | |
$ | (1.26 | ) |
The accompanying notes are an integral part of these
financial statements.
EVIE AUTONOMOUS GROUP LTD
STATEMENT OF CHANGES IN STOCKHOLDER’S EQUITY
FOR THE PERIOD FROM MAY 8, 2023, (INCEPTION) TO
JUNE 30, 2023
| | |
Shares | |
Amount | |
Additional paid In Capital | |
Accumulated Deficit | |
Total Stockholder’s Equity |
| Balance as of May 8, 2023 (inception) | |
| — | | |
$ | — | | |
$ | — | | |
$ | — | | |
$ | — | |
| Issuance of common stock upon inception | |
| 100 | | |
| 126 | | |
| — | | |
| — | | |
| 126 | |
| Net loss | |
| — | | |
| — | | |
| — | | |
| (126 | ) | |
| (126 | |
| Balance as of June 30, 2023 | |
| 100 | | |
$ | 126 | | |
$ | — | | |
$ | (126 | ) | |
$ | — | |
The accompanying notes are an integral part of these
financial statements.
EVIE AUTONOMOUS GROUP LTD
STATEMENT OF CASH FLOWS
| | |
For the Period from May 8, June 30, 2023 (Inception) to |
| Cash Flows from Operating Activities: | |
| | |
| Net loss | |
$ | (126 | ) |
| Adjustments to reconcile net loss to net cash used in operating activities: | |
| | |
| Founder shares issued | |
| 126 | |
| Changes in operating assets and liabilities: | |
| | |
| Changes in current assets and current liabilities | |
| — | |
| Net cash used in operating activities | |
| — | |
| Net change in cash | |
| — | |
| Cash, beginning of the year | |
| — | |
| Cash, end of the year | |
$ | — | |
The accompanying notes are an integral part of these
financial statements.
Evie Autonomous Group Ltd
Notes to Financial Statements
Description of Business
Evie
Autonomous Group Ltd(“EAG” or the “Company”) was incorporated in England and Wales on May 8, 2023 and
has its principal operations in Stoke-on-Trent, the United Kingdom.
The
Company is a pre-commercial stage advanced artificial intelligence (“AI”), robotics and autonomous mobility developer.
The Company owns an extensive library of intellectual property related to its core areas of expertise, originally developed and
sold to the Company by Aim Technologies Group Ltd (“AIM”), a company registered in England and Wales and Cavonix Ltd(“Cavonix”),
a company registered in England and Wales. The Company’s primary focus is developing, marketing, and servicing autonomous
vehicles. EAG does not intend to be a manufacturer of autonomous vehicles and plans to outsource the assembly and manufacturing
of the vehicles to 3rd parties. The Company anticipates it will take 18 months to have a viable commercial product.
EAG
also intends to develop its combination of AI and sensor technology that enables vehicles to operate autonomously(“autonomy
stack”) as a separate product to be sold to 3rd party producers of autonomous vehicles. This product is already available
for marketing and the Company anticipates that its revenues will initially come from selling the autonomy stack.
Proposed Business Combination
On
June 23, 2023, the Company entered into a Business Combination Agreement (“BCA”) with Bannix Acquisition Corp. (the
“Bannix”), a blank check company incorporated in the state of Delaware on January 21, 2021. Bannix was formed for
the purpose of effecting mergers, capital stock exchange, asset acquisitions, stock purchases, reorganization or similar business
combinations with one or more businesses (“Business Combination”). Under the BCA, Bannix will acquire all the issued
and outstanding shares of EAG in exchange for the issuance of 85 million shares of Class A common stock, $0.01 par value per share
of Bannix, pursuant to which the Company will become a direct wholly owned subsidiary of Bannix. The agreement is subject to a
number of conditions precedent including the approval of the shareholders of both companies. The Company’s proceeds from
the business combination, after deducting underwriting discounts and commissions is to be determined and will largely depend upon
the willingness of Bannix’s existing shareholders to remain as shareholders.
Under
the BCA, Bannix has made customary representations and warranties to the Company, and the Company Shareholder relating to, among
other things, organization and standing, due authorization and binding agreement, governmental approvals, non-contravention, capitalization,
Securities and Exchange Commission (the “SEC”) filings, financial statements, internal controls, absence of certain
changes, compliance with laws, actions, orders and permits, taxes and returns, employees and employee benefit plans, properties,
material contracts, transactions with related persons, the U.S. Investment Company Act of 1940, as amended (the “Investment
Company Act”), and the Jumpstart Our Business Startups Act of 2012, finders’ and brokers’ fees, sanctions and
certain business practices, private placements, insurance, no misleading information supplied, the Trust Account, acknowledgement
of no further representations and warranties and receipt of a fairness opinion.
Under
the Business Combination Agreement, the Company has made customary representations and warranties (on behalf of itself and its
subsidiaries) to Bannix relating to, among other things, organization and standing, due authorization and binding agreement, capitalization,
company subsidiaries, governmental approvals, non-contravention, financial statements, absence of certain changes, compliance
with laws, permits, litigation, material contracts, intellectual property, taxes and returns, real property, personal property,
employee matters, benefit plans, environmental matters, transactions with related persons, insurance, material customers and suppliers,
data protection and cybersecurity, sanctions and certain business practices, the Investment Company Act, finders’ and brokers’
fees and no misleading information supplied.
Under the Business
Combination Agreement, each Company Shareholder has made customary representations and warranties (with respect to itself only) to Bannix
relating to, among other things, organization and standing, due authorization and binding agreement, share ownership, governmental approvals,
non- contravention, litigation, certain investment representations, finders’ and brokers’ fees and no misleading information
supplied.
The Company
was incorporated in May 2023 for the purpose of acquiring intellectual property and business rights owned by Aim Technologies
Ltd. (“AIM”) and Cavonix Ltd. (“Cavonix”) and further developing the related business. In October 2022,
AIM acquired the assets of Westfield Autonomous Vehicles Ltd. (“Westfield”) from its insolvency administrator. The
Company subsequently acquired the intellectual property from AIM and Cavonix in May 2023 through separate Asset Purchase Agreements
with AIM (for the Aim and WAV IP) and Cavonix. The existing electric autonomous pod platform initially developed by Westfield
has moved 6.3 million passengers at London Heathrow T5 since 2011. The Company has now upgraded this pod platforms with its level
four autonomous stack, enabling them to operate safely outside of a guideway. A “pod” or autonomous pod, also known
as a driverless pod or autonomous shuttle, we mean a small, self-driving vehicle designed for short-distance transportation of
people or goods in controlled environments, such as airports, smart cities, warehouses, or private developments. These pods typically
accommodate four to eight passengers and are equipped with a variety of sensors, in EVIE’s cameras and radar, to navigate
safely and independently. EVIE has its principal operations in Stoke-on-Trent, the United Kingdom.
Risks and Uncertainties
Covid-19
Management
is currently evaluating the impact of the COVID-19 pandemic on the Company and has concluded that while it is reasonably possible
that the virus could have a negative effect on the Company’s financial position, results of its operations, and/or search
for a target company, the specific impact is not readily determinable as of the date of these financial statements. The financial
statements do not include any adjustments that might result from the outcome of this uncertainty.
Impact of the Russia-Ukraine War and Israel-Hamas
War
In February
2022, the Russian Federation and Belarus commenced a military action with the country of Ukraine. As a result of this action,
various nations, including the United States, have instituted economic sanctions against the Russian Federation and Belarus.
On October
7, 2023, Hamas and Gaza initiated military operations against the country of Israel. As a result of these actions, various nations,
including United States, are considering political and economic policies concerning these nations.
Further,
the impact of these actions and related sanctions and policies on the world economy are not determinable as of the date of these
financial statements. The specific impact on the Company’s financial condition, results of operations, and cash flows is
also not determinable as of the date of these financial statements.
Impact of the Worldwide Supply-Chain Disruption and Climate
Change
Management
is currently evaluating the impact of the worldwide supply-chain disruption and climate change and has concluded that while it
is reasonably possible that this supply disruption could have a negative effect on the Company’s financial position, results
of its operations, the specific impact is not readily determinable as of the date of the financial statement. Management considered
the effect of climate change and arrived at the same conclusion, no effect or changes to the attached financial statements as
presented. The accompanying financial statements do not include any adjustments that might result from the outcome of these uncertainties.
Liquidity, Capital Resources and Going Concern
The Company was
formed on May 8, 2023, with a capital contribution of assets from the shareholder at par value of $1.2617 or $126. As of June 30, 2023,
the Company had no cash in its bank account or any working capital.
The accompanying
financial statements have been prepared on a basis which assumes the Company is a going concern and do not include any adjustments to
reflect the Company’s need to raise funding to implement its business plan. Up until the completion of the business combination
with Bannix, the Company is entirely dependent on its shareholders for operational funds estimated to be $250,000 per month. After the
completion of the business combination with Bannix, the Company will be dependent upon A) the amount of cash left in Bannix’s trust
account, and B) its ability to raise further funding. Withdrawal of support by the Company’s shareholders or failure to raise funding
could have material effect on the Company.
If the Company’s
is unable to consummate its business combination with Bannix or is unable to secure additional funding to implement its business plan,
the Company may have insufficient funds available to operate the business. Moreover, in addition to the access to funding from shareholders,
the Company may need to obtain other financing to implement its business plan. If the Company is unable to implement its business plan
because the Company does not have sufficient funds available, the Company will be forced to cease operations and liquidate.
Management
has determined that should its business combination with Bannix not occur as well as the Company’s working capital deficiency
raises substantial doubt about the Company’s ability to continue as a going concern for a reasonable period of time, which
is considered to be one year from the issuance of the financial statements.
There can be
no assurance that the Company will achieve or sustain positive cash flows from operations or profitability. The Company is in the process
of seeking additional debt and equity financing. However, such funding may not be available on a timely basis on terms acceptable to the
Company, or at all. If the Company is unable to raise additional capital when required or on acceptable terms, the Company may be required
to further scale back or discontinue the advancement of product candidates, further reduce headcount, reorganize, merge with another entity,
or cease operations.
| |
2. |
Basis of Presentation and Summary of Significant Accounting Policies |
Basis of Presentation
The accompanying
financial statements are presented in conformity with accounting principles generally accepted in the United States of America (“GAAP”)
and pursuant to the rules and regulations of the SEC.
Currency and currency translation
The
Company’s functional currency is the Great British Pound and reporting currency is the United States Dollar.
The
Company’s financial statements are translated from its functional currency to its reporting currency in accordance with
Accounting Standards Codification (“ASC”) 830 – “Foreign Currency Matters”. Assets and liabilities
are translated at the exchange rate at the end of the reporting period. The statement of operations is translated based on the
weighted average exchange rate during the period. Shareholder’s equity is translated at the historical exchange rates at
the date the entry to shareholders’ equity was recorded, except for the change in retained earnings during the year, which
is translated using the historical exchange rates used to translate each period’s income statement. Changes in reporting
currency amounts that result from the translation process are called translation adjustments and are included in the cumulative
translation adjustment(CTA) account, which is a component of shareholder’s equity.
The exchange rates used to translate amounts in GBP into USD
for the purposes of preparing the financial statement were as follows:
Balance sheet:
| | |
June 30, 2023 |
| Period-end GBP: USD exchange rate | |
$ | 1.2617 | |
Statement of operations:
| | |
For the Period from May 8, 2023 (Inception) to June 30, 2023 |
| Average for the period from May 8, 2023 (inception) to June 30, 2023 GBP: USD exchange rate | |
$ | 1.2615 | |
Use of Estimates
The
preparation of these financial statements inconformity with USGAAP requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of expenses during the reporting period.
Making
estimates requires management to exercise significant judgement. It is at least reasonably possible that the estimate of the effect
of a condition, situation or set of circumstances that existed at the date of the financial statements, which management considered
in formulating its estimate, could change in the near term due to one or more future confirming events.
Cash and Cash Equivalents
The Company considers
all short-term investments with an original maturity of three months or less when purchased to be cash equivalents. The Company did not
have any cash or cash equivalents as of June 30, 2023.
Fair Value of Financial Instruments
Fair value is defined
as the price which would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants
at the measurement date. A three-tier fair value hierarchy which prioritizes the inputs used in the valuation methodologies is as follows:
Level 1 Inputs
- Unadjusted quoted prices in active markets for identical assets or liabilities that the reporting entity has the ability to access at
the measurement date.
Level
2 Inputs - Inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly
or indirectly. These might include quoted prices for similar assets or liabilities in active markets, quoted prices for identical
or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the asset
or liability (such as interest rates, volatilities, prepayment speeds, credit risks, etc.) or inputs that are derived principally
from or corroborated by market data by correlation or other means.
Level 3 Inputs
- Unobservable inputs for determining the fair values of assets or liabilities that reflect an entity’s own assumptions about the
assumptions that market participants would use in pricing the assets or liabilities.
Value of Acquired Assets
In
May 2023, the Company’s sole stockholder, acquired intellectual property (“IP”) and other assets from AIM and
Cavonix and on May 8, 2023 contributed those assets to the Company in return for 100 shares of the Company at par value of $1.2617,
or $126. The Company reviews the value of the contributed assets for impairment upon events or changes in circumstances that warrants
a review. As of the date of the audit of these financial statements, the stockholder had not paid AIM or Cavonix for the assets
acquired. The Company complies with ASC 845 “Nonmonetary Transactions” and Staff Accounting Bulletin Topic 5.G. and
reports the value of the contributed assets at the same value the stockholder paid for those assets. As such, the Company took
an impairment for $126 and reported it as a component of the statement of operations.
Recently Issued Accounting Pronouncements
The Company has
reviewed recently issued accounting pronouncements and plans to adopt those that are applicable to it. The Company does not expect the
adoption of any recently issued pronouncements to have a material impact on its results of operations or financial position.
Net Loss Per Share
Basic net loss
per share is computed by dividing net loss by the weighted average number of shares of common stock outstanding during the period.
For purposes of
calculating diluted loss per common stock, the denominator includes both the weighted- average number of shares of common stock outstanding
during the period and the number of common stock equivalents if the inclusion of such common stock equivalents is dilutive.
Reconciliation of Loss per Share of Common Stock
Basic and diluted income per share for common stock is calculated
as follows:
| | |
For the Period from May 8, 2023 (Inception) to June 30, 2023 |
| Loss per share of common stock: | |
| | |
| Net loss | |
$ | (126 | ) |
| | |
| | |
| Weighted Average Shares of common stock | |
| 100 | |
| Basic and diluted loss per share | |
$ | (1.26 | ) |
| |
3. |
Related Party Transactions |
On May 8, 2023,
the Company’s stockholder contributed assets in exchange for 100 shares of common stock, par value of $1.2617, or $126.
Common stock
The Company is authorized to issue a total of 100 shares of
common stock with par value of $1.2617 each.
As of June 30, 2023, there were 100 shares of common stock issued
and outstanding.
Each share of common stock entitles the holder to one vote.
| |
5. |
Commitments and Contingencies |
Indemnification Agreements
In the
ordinary course of business, the Company may provide indemnification of varying scope and terms to its vendors, lessors, contract
research organizations, business partners and other parties with respect to certain matters including, but not limited to, losses
arising out of breach of such agreements or from intellectual property infringement claims made by third parties. In addition,
the Company has entered into indemnification agreements with members of its board of directors that will require the Company,
among other things, to indemnify them against certain liabilities that may arise by reason of their status or service as directors.
The maximum potential amount of future payments the Company could be required to make under these indemnification agreements is,
in many cases, unlimited. The Company has not incurred any material costs as a result of such indemnifications and is not currently
aware of any indemnification claims.
Legal Proceedings
The Company is
not currently party to any material legal proceedings. At each reporting date, the Company evaluates whether or not a potential loss amount
or a potential range of loss is probable and reasonably estimable under the provisions of the authoritative guidance that addresses accounting
for contingencies. The Company expenses as incurred the costs related to such legal proceedings.
The Company evaluated
subsequent events and transactions that occurred after the balance sheet date up to the date of the filing of this report. The Company
did not identify any subsequent events, other than noted below, that would have required adjustment or disclosure in these financial statements.
On
August 4, 2023, August 8, 2023, and September 18, 2023, the Company entered into unsecured promissory notes with Bannix in the
aggregate principal amount of$289,975 (the “Notes”).Upon funding of these Note, Evie Autonomous LTD,
a related company, provided the funds to Bannix.
The
Notes bear no interest and are repayable in full upon the earlier of (a) the date of the consummation of Bannix’s initial
business combination, or(b) the date of Bannix’s liquidation. If Bannix does not consummate an initial business combination
by Bannix’s deadline date, the Notes will be repaid only from funds held outside of Bannix’s trust account or will
be forfeited, eliminated or otherwise forgiven.
On September
27, 2023, these Notes with EAG were voided and Evie Autonomous LTD. became the counterparty to these transactions.
As discussed in Note 1, the Company entered into a BCA with
Bannix.
EVIE
AUTONOMOUS GROUP LTD
CONDENSED BALANCE SHEET
| | |
September
30, 2023
(Unaudited) | |
June
30,2023 |
| Assets | |
| | | |
| | |
| Total current assets | |
$ | — | | |
$ | — | |
| | |
| | | |
| | |
| Total assets | |
$ | — | | |
$ | — | |
| | |
| | | |
| | |
| Liability and Stockholder's Deficit | |
| | | |
| | |
| Accounts payable | |
$ | 55,492 | | |
$ | — | |
| Due to related party | |
| 20,000 | | |
| — | |
| Total current liabilities | |
| 75,492 | | |
| — | |
| | |
| | | |
| | |
| Total liabilities | |
| 75,492 | | |
| — | |
| | |
| | | |
| | |
| Stockholder's Deficit: | |
| | | |
| | |
| Common stock, $1.2617 par value; 100 shares
authorized, issued and outstanding | |
| 126 | | |
| 126 | |
| Accumulated other comprehensive gain | |
| 1,420 | | |
| — | |
| Additional paid-in capital | |
| — | | |
| — | |
| Accumulated deficit | |
| (77,038 | ) | |
| (126 | ) |
| Total stockholder's deficit | |
| (75,492 | ) | |
| — | |
| | |
| | | |
| | |
| Total Liabilities and Stockholder's
Deficit | |
$ | — | | |
$ | — | |
The accompanying notes
are an integral part of these unaudited condensed financial statements.
EVIE AUTONOMOUS
GROUP LTD
UNAUDITED CONDENSED STATEMENT OF
OPERATIONS AND OTHER
COMPREHENSIVE LOSS
| | |
Three Months
Ended
September 30,
2023 |
| Operating expenses | |
$ | 76,912 | |
| Net loss | |
$ | (76,912 | ) |
| | |
| | |
| Foreign currency translation adjustment | |
$ | 1,420 | |
| Comprehensive loss | |
$ | (75,492 | ) |
| | |
| | |
| Weighted average shares outstanding, basic and diluted | |
| 100 | |
| Basic and diluted net loss per
common share | |
$ | (769.12 | ) |
T he accompanying
notes are an integral part of these unaudited condensed financial statements.
EVIE AUTONOMOUS
GROUP LTD UNAUDITED
CONDENSED STATEMENT OF CHANGES IN
STOCKHOLDER’S
DEFICIT
FOR THE THREE MONTH
ENDED SEPTEMBER 30, 2023
| | |
Shares | |
Amount | |
Additional paid in capital | |
Accumulated other comprehensive
gain | |
Accumulated deficit | |
Total stockholder's deficit |
| Balance as of June 30,2023 | |
| 100 | | |
$ | 126 | | |
$ | — | | |
$ | — | | |
$ | (126 | ) | |
$ | — | |
| Foreign currency translation adjustment | |
| — | | |
| — | | |
| — | | |
| 1,420 | | |
| — | | |
| 1,420 | |
| Net loss | |
| — | | |
| — | | |
| — | | |
| — | | |
| (76,912 | ) | |
| (76,912 | ) |
| Balance as of September 30, 2023 | |
| 100 | | |
$ | 126 | | |
$ | — | | |
$ | 1,420 | | |
$ | (77,038 | ) | |
| (75,492 | ) |
The accomp anying
notes are an integral part of these unaudi ted condensed financial statements.
EVIE AUTONOMOUS
GROUP LTD
UNAUDITED CONDENSED
STATEMENT OF CASH FLOWS
| | |
For the Three |
| | |
Month Ended |
| | |
September 30, |
| | |
2023 |
| Cash Flows from Operating Activities: | |
| | |
| Net loss | |
$ | (76,912 | ) |
| Adjustments to reconcile net loss to net cash used
in operating activities: | |
| | |
| Changes in operating assets and liabilities: | |
| | |
| Due to related party | |
| 20,000 | |
| Accounts Payable | |
| 55,492 | |
| Net cash used in operating activities | |
| (1,420 | ) |
| | |
| | |
| Net cash provided by investing activities | |
| — | |
| | |
| | |
| Net cash provided by financing activities | |
| — | |
| Effect on exchange rate change on cash | |
| 1,420 | |
| | |
| | |
| Net change in cash | |
| — | |
| Cash, beginning of the period | |
| — | |
| Cash, end of the period | |
$ | — | |
The accompanying notes
are an integral part of these unaudited condensed financial statements.
Evie
Autonomous Group Ltd
Notes to Unaudited
Condensed Financial Statements
Description of
Business
Evie
Autonomous Group Ltd (“E AG” or the “Company”) was incorporated
in England and Wales on May 8, 2023 and has its principal operations in Stoke-on-Trent,
the United Kingdom.
The
Company is a pre-commercial stage advanced artificial intelligence (“AI”), robotics and autonomous mobility developer.
The Company owns an extensive library of intellectual property related to its core areas of expertise, originally developed and
sold to the Company by Aim Technologies Group Ltd (“AIM “), a company registered
in England and Wales and Cavonix Ltd (“Cavonix” ), a company registered in England
and Wales. The Company’s primary focus is developing, marketing, and servicing autonomous vehicles. EAG does not
intend to be a manufacturer of autonomous vehicles and plans to outsource the assembly and manufacturing of the vehicles to 3rd
parties. The Company anticipates it will take 18 months to have a viable commercial product.
EAG
also intends to develop its combination of AI and sensor technology that enables vehicles to operate autonomously (“autonomy
stack”) as a separate product to be sold to 3rd party producers of autonomous vehicles. This product is available for marketing
and the Company anticipates that its revenues will initially come from selling the autonomy stack.
Proposed Business Combination
On June 23, 2023, the Company
entered into a Business Combination Agreement (“BCA”) with Bannix Acquisition Corp. (the “Bannix”), a
blank check company incorporated in the state of Delaware on January 21, 2021. Bannix was formed for the purpose of effecting
mergers , capital stock exchange, asset acquisi tions, stock purch ases,
reorganization or similar business combinations with one or more businesses (“Business Combinat io n” ). Under
the BCA, Bannix will acquire all the issued and outstanding shares of EAG in exchange
for the issuance of 85 million new shares of Class A common stock, $0.01 par value per share of Bann ix, pursuant to which the
Company will become a direct wholly owned subsidiary ofBannix. The agreement is subject to a number of conditions precedent including
the approval of the shareholders of both companies. The Company’s proceeds from the business comb ination , after deducting
underwriting discounts and commissions is to be determined and will largely depend upon the willingness of Bannix’s existing
shareholders to remain as shareholders.
Under
the BCA, Bannix has made customary representations and warranties to the Company,
and the Company Shareholder relating to, among other things, organization and standing,
due authorization and binding agreement, governmental approvals , non-cont ravention,
capitalization, Securities and Exchange Commission (the “SEC”) filings, financial statements, internal controls, absence
of certain changes, compliance with laws, actions, orders and permits, taxes and returns,
employees and employee benefit plans , propert ies , material contracts, transactions with related persons, the U.S. Investment
Company Act of 1940, as amended (the “Investment Company Act”), and the Jumpstart Our Business Startups Act of 2012,
finders’ and brokers’ fees, sanctions and certain business pract ices , private placements, insu
rance, no misleading information supp lie d, the Trust Account, acknowledgement
of no further representations and warranties and receipt of a fairness op inion.
Under
the BCA, the Company has made customary representations and warranties (on behalf
of itself and its subsidiaries) to Bannix relating to, among other things, organization and standing, due authorization and binding
agreement , capitali zation, company subs idiaries
, governmental approvals, non-contravention, financial statements , absence of certain changes, compliance with laws,
perm its, li tigation , material contracts, intellectual proper ty, taxes and returns, real prope rty, personal property,
employee matters, benefit plans, environmental ma tters, transactions with related
persons, insurance, material customers and suppliers, data protection and cybersec urity , sanctions and certain business practices
, the Investment Company Act, finders’ and brokers’ fees and no misleading information supplied.
Under the BCA, each Company Shareholder has made
customary representations and warranties (with respect to itself only) to Bann ix relating to, among other things, organization
and stand ing, due authorization and binding agreement, share ownership, governmental approvals , non-cont ravention , litigation,
certain investment representations, finders ‘ and brokers ‘ fees and no misleading information supplied.
Risks and Uncertainties
Covid-19
Management
is currently evaluating the impact of the COVID-19 pandemic on the Company and has concluded that while it is reasonably possible
that the virus could have a negative effect on the Company’ s financial position, results of its operations, and /or search
for a target company , the specific impact is not readily determinable as of the date of these financial statements. The financial
statements do not include any adjustments that might result from the outcome of this uncertainty.
Geopolitical Milita,y Conflicts
Geopolitical military conflicts
including the Russian invasion of Ukraine and the lsrael-Hamas war, have had a material adverse effect on financial and business
conditions in Europe and the middle-East and could materially and adversely affect the business and prospects of potential targets
for the Company’s business combination. These circumstances could reduce the prospects for the Company to generate revenues
in the future.
With
the Russian Federation’ s invasion of Ukraine in February 2022 and Israel’ s
declared war against Hamas in October 2023, these conflicts have continued to escalate without any resolution foreseeable in the
near future with the short and long-term impact on financial and business conditions in Europe remaining highly uncertain.
Various
nations, including the United States, have instituted economic sanctions against the
Russian Federation and Belarus. Further, the impact of this action and related sanctions
on the world economy are not determinable as of the date of these financial statements. The specific impact on the Company’
s financial condition, results of operations, and cash flows is also not determinable
as of the date of these financial statements.
Add ition ally , the continuing
geopolitical uncertainty relating to the Israel-Hamas war could cause further damage or disruption to international commerce and
the global economy , and thus have a material adverse effect on the business , the cost and availability of capital and prospects
of technology companies.
Impact of the Worldwide Supply-Chain Disruption
and Climate Change
Management
is currently evaluating the impact of the worldwide supply-chain disruption and climate change and has concluded that while it
is reasonably possible that this supply disruption could have a negative effect on the Company’ s financial position, results
of its operations , the specific impact is not readily determinable as of the date of the financial statement. Management considered
the effect of climate change and arrived at the same conclus ion, no effect or changes
to the attached financial statements as presented. The accompanying financial statements do not include any adjustments that might
result from the outcome of these uncertainties.
Liquidity, Capital Resources
and Going Concern
The
Company was formed on May 8, 2023, with a capital contribution of assets from the shareholder at par value of $1.2617 or $126.
As of September 30, 2023, the Company had no cash in its bank account or any working capital.
The
accompanying unaudited condensed financial statements have been prepared on a basis which assumes the Company is a going concern
and do not include any adjustments to reflect the Company’s need to raise funding to implement its business plan. Up until
the completion of the business combination with Bannix, the Company is entirely dependent on its shareholders for operational
funds estimated to be $250,000 per month. After the completion of the business combination with Bann ix, the Company will be dependent
upon A) the amount of cash left in Bannix’ s trust account , and B) its ability to raise further funding. Withdrawal of
support by the Company’s shareholders or failure to raise funding could have material effect on the Company.
If
the Company ‘ s is unable to consummate its business combination with Bannix or is unable to secure additional funding to
implement its business plan, the Company may have insufficient funds available to operate the business. Moreover, in addition
to the access to funding from shareho lders, the Company may need to obtain
other
financing to implement its business plan. If the Company is unable to implement its business plan because the Company does not
have sufficient funds available , the Company will be forced to cease operations and liquidate.
Management
has determined that should its business combination with Bannix not occur as well as the Company’s working capital deficiency
raises substantial doubt about the Company ‘ s ability to continue as a going concern for a reasonable period of time ,
which is considered to be one year from the issuance of the unaudited condensed financial statements.
There
can be no assurance that the Company will achieve or sustain positive cash flows from operations or profitability. The Company
is in the process of seeking additional debt and equity financing. However, such funding may not be available on a timely basis
on terms acceptable to the Company, or at all. If the Company is unable to raise additional capital when required or on acceptable
terms, the Company may be required to further scale back or discontinue the advancement of product candidates, further reduce
headcount, reor ganize, merge with another entity, or cease operations.
| 2. | Basis of Presentation
and Summary of Significant
Accounting Policies |
Basis of Presentation
The
accompanying unaudited interim condensed financial statements are presented in conformity with accounting principles generally
accepted in the United States of America (“GAAP”) and pursuant to the rules and regulations of the SEC. Accordingly,
they do not include all of the information and footnotes required by US GAAP. In the opinion of management , the unaudited condensed
financial statements reflect all adjustments , which include only normal recurring adjustments necessary for the fair statement
of the condensed balance sheets, statements of operations and other comprehensive loss, statements of stockholders’ deficit
and cash flows for the period presented. Operating results for the three months ended September 30, 2023 are not necessarily indicative
of the results that may be expected through June 30, 2024.
Certain
information and footnote disclosures normally included in the annual financial statements prepared in accordance with U.S. GAAP
have been condensed or omitted. These unaudited condensed financial statements should be read in conjunction with the Company’
s audited financial statements and notes thereto.
The
company incorporated on May 8, 2023 therefore no comparative balance for the three months ended September 30, 2022 are presented
for the statement of operation, statement of stockholder’s deficit and statement of cash flows .
Currency and currency translation
The
Company’ s functional currency is the Great British Pound and reporting currency is the United States Dollar.
The
Company’s financial statements are translated from its functional currency to its reporting currency in accordance with
Accounting Standards Codification (“ASC”) 830 - “Foreign Currency
Matters” . Assets and liabilities are translated at the exchange rate at the end of the reporting period. The statement
of operations is translated based on the weighted average exchange rate during the period. Shareholder’s equity is translated
at the historical exchange rates at the date the entry to shareholders ‘ equity was recorded, except for the change in retained
earnings during the year , which is translated using the historical exchange rates used to translate each period’ s income
statement. Changes in reporting currency amounts that result from the translation process are called translation adjustments and
are included in the cumulative translation adjustment (CTA) account, which is a component of shareholde r’ s equity.
The exchange rates used
to translate amounts in GBP into USD for the purposes of preparing the financial statement were as follows:
Balance sheet:
| | |
September 30, 2023 |
| Period-end GBP: USD exchange rate | |
$ | 1.2197 | |
Statement
of operations:
| | |
For the Three
Months Ended
September 30, 2023 |
| Average for the period from July 1, 2023
to September 30,2023 GBP: USD exchange rate | |
$ | 1.2662 | |
Use of Estimates
The
preparation of these financial statements in conformity with US GAAP requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of expenses during the reporting period.
Making
estimates requires management to exercise significant judgement. It is at least reasonably possible that the estimate of the effect
of a condi tion, situation or set of circumstances that existed at the date of the
financial statements , which management considered in formulating its estimate, could change in the near term due to one or more
future confirming events.
Cash and Cash Equivalents
The
Company considers all short-term investments with an original maturity of three months or less when purchased to be cash equivalents.
The Company did not have any cash or cash equivalents as of September 30, 2023.
Fair Value of Financial Instruments
Fair
value is defined as the price which would be received to sell an asset or paid to transfer a liability in an orderly transaction
between market participants at the measurement date. A three-tier fair value hierarchy which prioritizes the inputs used in the
valuation methodologies is as follows:
Level
l Inputs - Unadjusted quoted prices in active markets for identical assets or liabilities that the reporting entity has the ability
to access at the measurement date.
Level
2 Inputs - Inputs other than quoted prices included in Level l that are observable for the asset or li abilit y,
either directly or indirectly. These might include quoted prices for similar assets or liabilities in active markets, quoted
prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are
observable for the asset or liability (such as interest rates, vo latili ties , prepayment speeds, credit risks, etc.) or inputs
that are derived principally from or corroborated by market data by correlation or other means.
Level
3 Inputs - Unobservable inputs for determining the fair values of assets or liabilities that reflect an entity’s own assumptions
about the assumptions that market participants would use in pricing the assets or liabi Iities.
Value of Acquired Assets
In
May 2023, the Company’ s sole stockholder, acquired intellectual property (“IP”)
and other assets from AIM and Cavonix and on May 8, 2023 contributed those
assets to the Company in return for 100 shares of the Company at par value of $1.2617, or $126. The Company reviews the value
of the contributed assets for impairment upon events or changes in circumstances that warrants a review. As of the date of the
audit of these financial statements, the stockholder had not paid AIM or Cavonix for the assets acquired. The Company complies
with ASC 845 “Nonmonetary Transactions” and Staff Accounting Bulletin Topic 5.G. and reports the value of the contributed
assets at the same value the stockholder paid for those assets. As such, the Company
took an impairment for $126 and reported it as a component of the statement of operations.
Recently Issued Accounting Pronouncements
The
Company has reviewed recently issued accounting pronouncements and plans to adopt those that are applicable to it. The Company
does not expect the adoption of any recently issued pronouncements to have a material impact on its results of operations or financial
position.
Net Loss Per Share
Basic
net loss per share is computed by dividing net loss by the weighted average number of shares of common stock outstanding during
the period.
For
purposes of calculating diluted loss per common stock, the denominator includes both the weighted average number of shares of
common stock outstanding during the period and the number of common stock equivalents if the inclusion of such common stock equivalents
is dilutive.
Reconciliation of Loss
per Share of Common Stock
Basic and diluted income per share for common stock
is calculated as follows:
| | |
For the Three Months
Ended September 30, 2023 |
| Loss per share of common stock: | |
| | |
| Net loss | |
$ | (76,912 | ) |
| | |
| | |
| Weighted Average Shares of common stock | |
| 100 | |
| Basic and diluted loss per share | |
$ | (769.12 | ) |
| 3. | Related Party Transactions |
The
Company ‘ s shareholder has paid $20,000 in expenses on behalf of the Company and is expected to continue to pay other costs
in the future. As of September, 30, 2023, no formal arrangement has been consummated indicating the amount of future borrowings
or the terms of the repayment.
On
August 4, 2023, August 8, 2023, and September 18, 2023, the Company entered into unsecured promissory notes with Bannix in the
aggregate principal amount of$289,975 (the “Notes”). Upon funding of these Note, Evie Autonomous LTD, a related company,
provided the funds to Bannix.
On
September 27, 2023, these Notes with the Company were voided and Evie Autonomous LTD became the counterparty to these transactions.
Given the intent of these transactions were to be with Evie Autonomous LTD and not with the Company, none of these transactions
are included as part of the Company’s financial statements for the three months ended September 30, 2023.
Common stock
The Company is authorized to issue a total of 100
shares of common stock with par value of $1.2617 each.
As of September 30, 2023, there were 100 shares
of common stock issued and outstanding.
Each share of common stock entitles the holder to
one vote.
| 5. | Commitments and Contingencies |
Indemnification Agreements
In
the ordinary course of business, the Company may provide indemnification of varying scope and terms to its vendors, lesso rs,
contract research organizations , business partners and other parties with respect to certain matters including, but not limited
to, losses arising out of breach of such agreements or from intellectual property infringement claims made by third parties. In
addition, the Company has entered into indemnification agreements with members of its board of directors that will require the
Company, among other things , to indemnify them against certain liabilities that may
arise by reason of their status or service as directors. The maximum potential amount of future payments the Company could be
required to make under these indemnification agreements is, in many cases, unlimited. The Company has not incurred any material
costs as a result of such indemnifications and is not currently aware of any indemnification claims.
Legal Proceedings
The
Company is not currently party to any material legal proceedings. At each reporting date , the Company evaluates whether or not
a potential loss amount or a potential range of loss is probable and reasonably estimable under the provisions of the authoritative
guidance that addresses accounting for contingencies. The Company expenses as incurred the costs related to such legal proceedings.
The
Company evaluated subsequent events and transactions that occurred after the balance sheet date up to the date of the financial
statements are available to be issued. The Company did not identify any subsequent events that would have required adjustment
or disclosure in these unaudited condensed financial statements.
Annex A
BUSINESS COMBINATION AGREEMENT
This BUSINESS COMBINATION
AGREEMENT (this “Agreement”) as it may be amended, supplemented or otherwise
modified from time to time, dated as of June 23, 2023, is made by and among Bannix Acquisition Corp., a Delaware corporation
(“Bannix”), EVIE Autonomous Group Ltd, incorporated and registered in England and Wales with company number
14853080 (the “Company”) each of the parties set forth on Exhibit A hereto (each, a “Transferor”
and, collectively, the “Transferors”). Bannix, the Company and the Transferors shall be referred to herein from
time to time individually as a “Party” and collectively as the “Parties”. Capitalized terms
used but not otherwise defined herein have the meanings set forth in Section 1.1.
WHEREAS, Bannix is a blank
check company incorporated as a Delaware corporation on January 21, 2021 for the purpose of effecting a merger, capital stock exchange,
asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses;
WHEREAS, as of the date
of this Agreement, Instant Fame LLC, a Nevada limited liability company (the “Bannix Sponsor”), owns 385,000
Bannix Common Stock;
WHEREAS, within thirty (30)
days after the execution of this Agreement, Bannix, the Bannix Sponsor, and the Company shall enter into the sponsor letter agreement
(the “Sponsor Letter Agreement”), pursuant to which the Bannix Sponsor will agree to, among other things, support
and vote in favor of this Agreement and use its reasonable best efforts to take all other actions necessary to consummate the transactions
contemplated hereby, on the terms and subject to the conditions set forth in the Sponsor Letter Agreement;
WHEREAS, on or
prior to the Transaction Support Agreement Deadline, the Transferors will duly enter into, execute and deliver to Bannix a transaction
support agreement (collectively, the “Transaction Support Agreements”), pursuant to which each Transferor will
agree to, among other things, (a) support and provide any necessary votes in favor of this Agreement, the Ancillary Documents to
which the Company is or will be a party and the transactions contemplated hereby and thereby, and (b) take, or cause to be taken,
any actions necessary or advisable to cause certain agreements to be terminated effective as of the Closing;
WHEREAS, pursuant to the
Governing Documents of Bannix, Bannix is required to provide an opportunity for its stockholders to have their outstanding Bannix
Common Stock redeemed on the terms and subject to the conditions set forth therein in connection with obtaining the Bannix Stockholder
Approval;
WHEREAS, on the Closing
Date, the Transferors shall sell the Company Ordinary Shares to Bannix, and Bannix shall acquire the Company Ordinary Shares from
the Transferors, free and clear of all Liens, in consideration for an aggregate of 85,000,000 shares of Bannix Common Stock;
WHEREAS, the board of directors
of Bannix (the “Bannix Board”) has (a) determined that it is in the best interests of Bannix and the stockholders
of Bannix, and declared it advisable, to enter into this Agreement, the Ancillary Documents to which Bannix is or will be a party
and the transactions contemplated hereby and thereby, (b) approved this Agreement, the Ancillary Documents to which Bannix is or
will be a party and the transactions contemplated hereby and thereby and (c) recommended, among other things, approval of this
Agreement and the transactions contemplated by this Agreement by the holders of Bannix Common Stock entitled to vote thereon;
WHEREAS, the board of directors
of the Company (the “Company Board”) has (a) determined that it is in the best interests of the Company and
the Company Shareholders and declared it advisable, to enter into this Agreement, the Ancillary Documents to which the Company
is or will be a party and the transactions contemplated hereby and thereby, (b) approved this Agreement, the Ancillary Documents
to which the Company is or will be a party and the transactions contemplated hereby and thereby (c) recommended, among other things,
the approval of this Agreement, the Ancillary Documents to which the Company is or will be a party and the transactions contemplated
hereby and thereby by the Company Shareholders and (d) provided to Bannix a certified true copy of the resolutions of the Company
Board authorizing the execution of this Agreement, the Ancillary Documents to which the Company is or will be a party and the transactions
contemplated hereby and thereby; and
WHEREAS, each of the Parties intends
that, for U.S. federal income tax purposes, this Agreement constitutes, and is hereby adopted as, a “plan of reorganization”
within the meaning of Section 368 of the Code and Treasury Regulations promulgated thereunder (the “Intended Tax Treatment”)1.
NOW, THEREFORE, in consideration
of the premises and the mutual promises set forth herein and for other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the Parties, each intending to be legally bound, hereby agree as follows:
Article
1
CERTAIN DEFINITIONS
Section 1.1 Definitions.
As used in this Agreement, the following terms have the respective meanings set forth below.
“Additional Bannix
SEC Reports” has the meaning set forth in Section 4.7.
“Affiliate”
means, with respect to any Person, any other Person who directly or indirectly, through one or more intermediaries, controls, is
controlled by, or is under common control with, such Person. The term “control” means the possession, directly or indirectly,
of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting
securities, by contract or otherwise, and the terms “controlled” and “controlling” have meanings correlative
thereto.
“Agreement”
has the meaning set forth in the introductory paragraph to this Agreement.
“Ancillary Documents”
means the Sponsor Letter Agreement, the Transaction Support Agreements, the Letter of Transmittal and each other agreement, document,
instrument and/or certificate contemplated by this Agreement executed or to be executed in connection with the transactions contemplated
hereby.
“Anti-Corruption
Laws” means, collectively, (a) the U.S. Foreign Corrupt Practices Act (FCPA), (b) the UK Bribery Act 2010 and (c) any
other anti-bribery or anti-corruption Laws or Orders related to combatting bribery, corruption and money laundering as may be applicable
to the relevant Party.
“Bannix”
has the meaning set forth in the introductory paragraph to this Agreement.
“Bannix Acquisition
Proposal” means any direct or indirect acquisition (or other business combination), in one or a series of related transactions,
involving Bannix or all or substantially all of the assets, Equity Securities or businesses of Bannix, in each case, whether by
merger, consolidation, recapitalization, purchase or issuance of Equity Securities, purchase of assets, tender offer or otherwise).
Notwithstanding the foregoing or anything to the contrary herein, none of this Agreement, the Ancillary Documents or the transactions
contemplated hereby or thereby shall constitute a Bannix Acquisition Proposal.
“Bannix Board”
has the meaning set forth in the recitals to this Agreement.
“Bannix Closing
Certificate” has the set forth in Section 6.3(e).
“Bannix Common Stock”
means shares of common stock, par value $0.01 per share, of Bannix.
“Bannix Disclosure
Schedules” means the disclosure schedules to this Agreement delivered to the Company by Bannix on the date of this Agreement.
“Bannix Expenses”
means, as of any determination time, the aggregate amount of all fees, expenses, commissions or other amounts incurred by or on
behalf of, and that are due and payable (and not otherwise expressly allocated to a Group Company or any holder of Company Ordinary
Shares pursuant to the terms of this Agreement or any Ancillary Document) by Bannix in connection with the negotiation, preparation
or execution of this Agreement or any Ancillary Documents, the performance of its covenants or agreements in this Agreement or
any Ancillary Document or the consummation of the transactions contemplated hereby or thereby, including (a) the fees and expenses
of outside legal counsel, accountants, advisors, brokers, investment bankers, consultants, or other agents or service providers
of Bannix and (b) any other fees, expenses, commissions or other amounts that are expressly allocated to Bannix pursuant to this
Agreement or any Ancillary Document. Notwithstanding the foregoing or anything to the contrary herein, Bannix Expenses shall not
include any Company Expenses.
“Bannix Financial
Statements” means all of the financial statements of Bannix included in the Bannix SEC Reports.
“Bannix Fundamental
Representations” means the representations and warranties set forth in Section 4.1 (Organization and Qualification),
Section 4.2 (Authority), Section 4.4 (Brokers) and Section 4.6 (Capitalization of Bannix).
“Bannix Material
Adverse Effect” means any change, event, effect or occurrence that, individually or in the aggregate with any other change,
event, effect or occurrence, (a) has had or would reasonably be expected to have a material adverse effect on the business, assets,
liabilities, properties, conditions (financial or otherwise) or results of operations of Bannix, or (b) is reasonably likely to,
individually or in the aggregate, prevent or materially delay (or has so prevented or materially delayed) the ability of Bannix
to consummate the transactions contemplated hereby in accordance with the terms of this Agreement or the transactions contemplated
by the Ancillary Documents; provided, however, that, in the case of clause (a), none of the following shall
be taken into account in determining whether a Bannix Material Adverse Effect has occurred or is reasonably likely to occur: any
adverse change, event, effect or occurrence arising after the date of this Agreement from or related to (i) general business or
economic conditions in or affecting the United States, the United Kingdom or any other country, or changes therein, or the global
economy generally, (ii) any national or international political or social conditions in the United States, the United Kingdom or
any other country, including the engagement by the United States, the United Kingdom or any other country in hostilities, whether
or not pursuant to the declaration of a national emergency or war, or the occurrence in any place of any military or terrorist
attack, sabotage or cyberterrorism, (iii) changes in conditions of the financial, banking, capital or securities markets generally
in the United States, the United Kingdom or any other country or region in the world, or changes therein, including changes in
interest rates in the United States, the United Kingdom or any other country and changes in exchange rates for the currencies of
any countries, (iv) changes in any applicable Laws, (v) any actions taken by Bannix or such other events, which are specifically
required to be taken or are otherwise contemplated by this Agreement or any Ancillary Document, (vi) the execution or public announcement
of this Agreement or the pendency or consummation of the transactions contemplated by this Agreement or the Ancillary Documents,
including the impact thereof on the relationships, contractual or otherwise, of Bannix with employees, customers, investors, contractors,
lenders, suppliers, vendors, partners, licensors, licensees, payors or other third parties related thereto (provided that
the exception in this clause (vi) shall not apply to the representations and warranties set forth in Section 4.3(b)
to the extent that its purpose is to address the consequences resulting from the public announcement or pendency or consummation
of the transactions contemplated by this Agreement or the condition set forth in Section 6.3(a) to the extent it relates
to such representations and warranties), (vii) any failure by Bannix to meet, or changes to, any internal or published budgets,
projections, forecasts, estimates or predictions (although the underlying facts and circumstances resulting in such failure may
be taken into account to the extent not otherwise excluded from this definition pursuant to clauses (i) through (vi)
or (viii) through (x)), (viii) any hurricane, tornado, flood, earthquake, tsunami, natural disaster, mudslides, wild
fires, epidemics, pandemics (including COVID-19) or quarantines, acts of God or other natural disasters or comparable events in
the United States, United Kingdom or any other country or region in the world, or any escalation of the foregoing; (ix) any pending
or initiated action against Bannix or any of its officers or directors, in each case, arising out of or relating to the execution
of this Agreement, the Ancillary Documents or the transactions contemplated hereby or thereby (other than any action commenced
by any Party hereto to enforce its rights under this Agreement or any Ancillary Document to which it is a party); or (x) any action
taken by, or expressly at the request and/or with the consent of, the Company; provided, however, that any change,
event, effect or occurrence resulting from a matter described in any of the foregoing clauses (i) through (vi) or
(viii) through (x) may be taken into account in determining whether a Bannix Material Adverse Effect has occurred
or is reasonably likely to occur to the extent such change, event, effect or occurrence has or has had a disproportionate adverse
effect on Bannix relative to other participants operating in the industries or markets in which Bannix operates.
“Bannix Related
Parties” has the meaning set forth in Section 4.9.
“Bannix Related
Party Transactions” has the meaning set forth in Section 4.9.
“Bannix SEC Reports”
has the meaning set forth in Section 4.7.
“Bannix Stockholder
Approval” means the approval of the Bannix Transaction Proposals by the affirmative vote of the holders of the requisite
number of Bannix Shares entitled to vote thereon, whether in person or by proxy at the Bannix Stockholders Meeting (or any adjournment
or postponement thereof), in accordance with the Governing Documents of Bannix and applicable Law.
“Bannix Stockholder
Redemption” means the right of the holders of Bannix Common Stock to redeem all or a portion of their Bannix Common Stock
(in connection with the transactions contemplated by this Agreement or otherwise) as set forth in Governing Documents of Bannix.
“Bannix Stockholders
Meeting” has the meaning set forth in Section 5.8.
“Bannix Stockholders”
means the holders of Bannix Shares as of any determination time.
“Bannix Shares”
means, collectively, the Bannix Common Stock.
“Bannix Sponsor”
has the meaning set forth in the recitals to this Agreement.
“Bannix Transaction
Proposals” has the meaning set forth in Section 5.8.
“Bannix Warrant”
means each warrant to purchase one share of Bannix Common Stock at a price of $11.50 per share, subject to adjustment in accordance
with the Warrant Agreement.
“Business Day”
means a day, other than a Saturday or Sunday, on which commercial banks in New York, New York and London, United Kingdom are open
for the general transaction of business.
“CARES Act”
means the Coronavirus Aid, Relief and Economic Security Act (CARES Act), as amended, and the rules and regulations promulgated
thereunder.
“CBA”
means (a) any collective bargaining agreement, or similar instrument or order authorized by Law, that regulates employment either
generally or with respect to one or more specific subjects that is binding upon an employer or groups of employers with respect
to some or all of their employees, and (b) any collective bargaining agreement or other similar Contract with any labor union,
labor organization, works council, or similar employee-representative body.
“Change of Control
Payment” means (a) any success, change of control, retention, transaction bonus or other similar payment or amount to
any Person or (b) any payments made or required to be made pursuant to or in connection with or upon termination of, or any fees,
expenses or other payments owing or that will become owing, in each case, in connection with or otherwise related to the transactions
contemplated by this Agreement (in the case of each of clause (a) and (b), regardless of whether paid or payable prior to, at or
after the Closing).
“Closing”
has the meaning set forth in Section 2.3.
“Closing Company
Financial Statements” has the meaning set forth in Section 3.4(b).
“Closing Date”
has the meaning set forth in Section 2.3.
“Closing Filing”
has the meaning set forth in Section 5.4(b).
“Closing Press
Release” has the meaning set forth in Section 5.4(b).
“COBRA”
means Part 6 of Subtitle B of Title I of ERISA, Section 4980B of the Code and any similar state or other health or welfare plan
continuation coverage Law.
“Code”
means the U.S. Internal Revenue Code of 1986, as amended.
“Company”
has the meaning set forth in the introductory paragraph to this Agreement.
“Company Acquisition
Proposal” means any direct or indirect acquisition, in one or a series of transactions, or any proposal, transaction
or offer by any Person (other than Bannix or any of its Affiliates) for any acquisition, of all or any material part of the assets,
Equity Securities or businesses of any Group Company, or any transaction involving any material debt or equity financing (other
than pursuant to the terms of any debt or equity financing instrument in effect on the date hereof, or any amendment or extension
thereof), of any Group Company. Notwithstanding the foregoing or anything to the contrary herein, none of this Agreement, the Ancillary
Documents or the transactions contemplated hereby or thereby shall constitute a Company Acquisition Proposal.
“Company Board”
has the meaning set forth in the recitals to this Agreement.
“Company Board
Recommendation” has the meaning set forth in Section 5.9.
“Company Closing
Certificate” has the meaning set forth in Section 6.2(e).
“Company Disclosure
Schedules” means the disclosure schedules to this Agreement delivered to Bannix by the Company on the date of this Agreement.
“Company Expenses”
means, as of any determination time, the aggregate amount of all fees, expenses, commissions or other amounts incurred by or on
behalf of, and that are due and payable (and not otherwise expressly allocated to Bannix pursuant to the terms this Agreement or
any Ancillary Document) by any Group Company in connection with the negotiation, preparation or execution of this Agreement or
any Ancillary Documents, the performance of its covenants or agreements in this Agreement or any Ancillary Document or the consummation
of the transactions contemplated hereby or thereby, including (a) the fees and expenses of outside legal counsel, accountants,
advisors, brokers, investment bankers, consultants, or other agents or service providers of any Group Company, and (b) any other
fees, expenses, commissions or other amounts that are expressly allocated to any Group Company pursuant to this Agreement or any
Ancillary Document. Notwithstanding the foregoing or anything to the contrary herein, Company Expenses shall not include any Bannix
Expenses.
“Company Fundamental
Representations” means the representations and warranties set forth in Section 3.1(a) and Section 3.1(b)
(Organization and Qualification), Sections 3.2(a) through (d) (Capitalization of the Group Companies), Section
3.3 (Authority), Section 3.8(a) and Section 3.8(b)(ii) (Absence of Changes), Section 3.16 (Tax Matters),
Section 3.17 (Brokers) and Section 3.19 (Transactions with Affiliates).
“Company IT Systems”
means all Company Products, computer systems, Software and hardware, communication systems, servers, network equipment and databases
(including that are used to Process Data), information, and functions contained therein or transmitted thereby, and related documentation,
including any outsourced systems and processes, in each case, relied on, owned, licensed or leased by a Group Company.
“Company Licensed
Intellectual Property” means all Intellectual Property used or held for use by any of the Group Companies, excluding
Owned Intellectual Property.
“Company Material
Adverse Effect” means any change, event, effect or occurrence that, individually or in the aggregate with any other change,
event, effect or occurrence, (a) has had or would reasonably be expected to have a material adverse effect on the business, assets,
liabilities, properties, conditions (financial or otherwise) or results of operations of the Group Companies taken as a whole,
or (b) is reasonably likely to, individually or in the aggregate, prevent or materially delay (or has so prevented or materially
delayed) the ability of the Company to consummate the transactions contemplated hereby in accordance with the terms of this Agreement
or the transactions contemplated by the Ancillary Documents; provided, however, that, in the case of clause (a),
none of the following shall be taken into account in determining whether a Company Material Adverse Effect has occurred or is reasonably
likely to occur: any adverse change, event, effect or occurrence arising after the date of this Agreement from or related to (i)
general business or economic conditions in or affecting the United States, the United Kingdom or any other country, or changes
therein, or the global economy generally, (ii) any national or international political or social conditions in the United States,
the United Kingdom or any other country, including the engagement by the United States,
the United Kingdom or any other country
in hostilities, whether or not pursuant to the declaration of a national emergency or war, or the occurrence in any place of any
military or terrorist attack, sabotage or cyberterrorism, (iii) changes in conditions of the financial, banking, capital or securities
markets generally in the United States, the United Kingdom or any other country or region in the world, or changes therein, including
changes in interest rates in the United States, the United Kingdom or any other country and changes in exchange rates for the currencies
of any countries, (iv) changes in any applicable Laws, (v) any actions taken by any Group Company or such other events, which are
specifically required to be taken or are otherwise contemplated by this Agreement or any Ancillary Document, (vi) the execution
or public announcement of this Agreement or the pendency or consummation of the transactions contemplated by this Agreement or
the Ancillary Documents, including the impact thereof on the relationships, contractual or otherwise, of any Group Company with
employees, customers, investors, contractors, lenders, suppliers, vendors, partners, licensors, licensees, payors or other third
parties related thereto (provided that the exception in this clause (vi) shall not apply to the representations and
warranties set forth in Section 3.5(b) to the extent that its purpose is to address the consequences resulting from the
public announcement or pendency or consummation of the transactions contemplated by this Agreement or the condition set forth in
Section 6.2(a) to the extent it relates to such representations and warranties), (vii) any failure by any Group Company
to meet, or changes to, any internal or published budgets, projections, forecasts, estimates or predictions (although the underlying
facts and circumstances resulting in such failure may be taken into account to the extent not otherwise excluded from this definition
pursuant to clauses (i) through (vi) or (viii) through (x)), (viii) any hurricane, tornado, flood,
earthquake, tsunami, natural disaster, mudslides, wild fires, epidemics, pandemics (including COVID-19) or quarantines, acts of
God or other natural disasters or comparable events in the United States or any other country or region in the world, or any escalation
of the foregoing; (ix) any pending or initiated action against the Company, any of the Group Companies or any of their respective
officers or directors, in each case, arising out of or relating to the execution of this Agreement, the Ancillary Documents or
the transactions contemplated hereby or thereby (other than any action commenced by any Party hereto to enforce its rights under
this Agreement or any Ancillary Document to which it is a party); or (x) any action taken by, or expressly at the request and/or
with the consent of, Bannix; provided, however, that any change, event, effect or occurrence resulting from a matter
described in any of the foregoing clauses (i) through (vi) or (viii) through (x) may be taken into
account in determining whether a Company Material Adverse Effect has occurred or is reasonably likely to occur to the extent such
change, event, effect or occurrence has or has had a disproportionate adverse effect on the Group Companies, taken as a whole,
relative to other participants operating in the industries or markets in which any Group Company operates.
“Company Ordinary
Shares” means the ordinary shares of £1.00 each in the capital of the Company.
“Company Owned
Intellectual Property” means all Intellectual Property Rights that are owned or purported to be owned by any of the Group
Companies.
“Company Product”
means any goods, services, products, tools, or applications, either complete or under development, (a) that have been, are currently,
or are currently intended to be, developed, marketed, sold, licensed, leased, hired, distributed, hosted, performed, made available,
or otherwise commercialized by any Group Company, or (b) from which any Group Company recognizes any revenue (including revenue
associated with maintenance or service agreements).
“Company Registered
Intellectual Property” means all Registered Intellectual Property owned or purported to be owned by, or filed by or in
the name of, any Group Company.
“Company Related
Party” has the meaning set forth in Section 3.19.
“Company Related
Party Transactions” has the meaning set forth in Section 3.19.
“Company Shareholder
Written Resolutions” has the meaning set forth in Section 5.9(b).
“Company Shareholders”
means the Transferors.
“Confidentiality
Agreement” means that certain Mutual Confidentiality Agreement to be entered between the Company and Bannix.
“Consent”
means any notice, authorization, qualification, registration, filing, notification, waiver, order, consent or approval to be obtained
from, filed with or delivered to, a Governmental Entity or other Person.
“Contract”
or “Contracts” means any agreement, contract, license, lease, obligation, undertaking or other commitment or
arrangement that is legally binding upon a Person or any of his, her or its properties or assets.
“Copyrights”
has the meaning set forth in the definition of Intellectual Property Rights.
“COVID-19”
means SARS-CoV-2 or COVID-19 and any evolutions thereof or related or associated epidemics, pandemic or disease outbreaks.
“Creator”
has the meaning set forth in Section 3.13(d).
“Data”
means data, databases, data repositories, data lakes and collections of data.
“Designated Material
Contracts” has the meaning set forth in Section 5.1(b)(vii).
“D&O Indemnified Persons”
has the meaning set forth in Section 5.14(a).
“Effective Time”
means, the moment in time on the Closing Date at which Closing occurs.
“Employee Benefit
Plan” means (a) each “employee benefit plan” (as such term is defined in Section 3(3) of ERISA, whether or
not subject to ERISA), (b) each pension, retirement, lump-sum, profit-sharing, savings, health, welfare, bonus, incentive, commission,
stock option, equity or equity-based, phantom equity, deferred compensation, severance, retention, accident, death, ill-health,
disability, employment, change of control, stock purchase, restricted stock, separation, consulting, vacation paid time off, fringe
benefit plan, program, policy or Contract not described in clause (a), and (c) each other benefit or compensatory plan, program,
policy or Contract, in each case, that any Group Company maintains, participates in, sponsors or contributes to, or under or with
respect to which any Group Company has any Liability or participates, including through a current or former ERISA Affiliate or
other Affiliate or pursuant to TUPE.
“Environmental
Laws” means all Laws and Orders concerning pollution, protection of the environment, or human health or safety.
“Equity Securities”
means any share, share capital, capital stock, partnership, membership, joint venture or similar interest in any Person (including
any stock appreciation, phantom stock, profit participation or similar rights), and any option, warrant, right or security (including
debt securities) convertible, exchangeable or exercisable therefor.
“ERISA”
means the U.S. Employee Retirement Income Security Act of 1974.
“ERISA Affiliate”
means any trade or business, whether or not incorporated, that is treated or was at any time in the most recent six (6) years treated
as a single employer with any Group Company under Section 4001(b) of ERISA or Section 414(b), (c), (m) or (o) of the Code.
“Event”
includes (without limitation) the expiry of a period of time, the Company becoming or ceasing to be associated with any other person
for any Tax purpose or ceasing to be or becoming resident in any country for any Tax purpose, the death, winding up or dissolution
of any Person, the earning, receipt or accrual for any Tax purpose of any income, profit or gains, the incurring of any loss or
expenditure, and any transaction (including the execution and completion of this Agreement), event, act or omission whatsoever,
and any reference to an Event occurring on or before a particular date shall include Events that, for Tax purposes, are deemed
to have, or are treated or regarded as having, occurred on or before that date.
“Exchange Act”
means the Securities Exchange Act of 1934.
“Federal Securities
Laws” means the Exchange Act, the Securities Act and the other U.S. federal securities laws and the rules and regulations
of the SEC promulgated thereunder or otherwise.
“Financial Statements”
has the meaning set forth in Section 3.4(aa).
“Foreign Benefit
Plan” means each Employee Benefit Plan maintained by any of the Group Companies for its current or former employees,
officers, directors, workers or other individual service providers or contractors located outside of the U.S.
“GAAP”
means (a) with respect to a U.S. Person, generally accepted accounting principles in the United States and (b) with respect to
or as relating to the Group Companies, the generally accepted accounting principles in the United Kingdom.
“Governing Documents”
means, in the case of (i) Bannix, its certificate or articles of incorporation and by-laws, and (ii) each Group Company, its memorandum
and articles of association.
“Governmental Entity”
means any United States or non-United States (a) federal, state, local, municipal or other government, (b) governmental or quasi-governmental
entity of any nature (including any governmental agency, branch, department, official, or entity and any court or other tribunal)
or (c) body exercising or entitled to exercise any administrative, executive, judicial, legislative, police, regulatory, or taxing
authority or power of any nature, including any arbitral tribunal (public or private).
“Group Company”
and “Group Companies” means, collectively, the Company and its Subsidiaries.
“Hazardous Substance”
means any material, substance or waste that is regulated by, or may give rise to standards of conduct or Liability pursuant to,
any Environmental Law, including any petroleum products or byproducts, asbestos, lead, polychlorinated biphenyls, per- and poly-fluoroalkyl
substances, mold, noise, odor or radon.
“IFRS”
means the international financing reporting standards issued by the International Accounting Standards Board.
“Indebtedness”
means, as of any time, without duplication, with respect to any Person, the outstanding principal amount of, accrued and unpaid
interest on, fees and expenses arising under or in respect of (a) indebtedness for borrowed money, (b) other obligations evidenced
by any note, bond, debenture or other debt security, (c) obligations for the deferred purchase price of property or assets, including
“earn-outs” and “seller notes” (but excluding any trade payables arising in the ordinary course of business
which are not past due in accordance with their terms), (d) reimbursement and other obligations with respect to letters of credit,
bank guarantees, bankers’ acceptances or other similar instruments, in each case, solely to the extent drawn, (e) derivative,
hedging, swap, foreign exchange or similar arrangements, including swaps, caps, collars, hedges or similar arrangements, and (f)
any of the obligations of any other Person of the type referred to in clauses (a) through (e) above directly or indirectly guaranteed
by such Person or secured by any assets of such Person, whether or not such Indebtedness has been assumed by such Person (save
in respect of intra-group transactions between Group Companies).
“Intellectual Property
Rights” means any and all intellectual and industrial property rights and other similar proprietary rights in any jurisdiction
throughout the world, whether registered or unregistered, including all rights pertaining to or deriving from: (a) patents and
patent applications, industrial designs and design patent rights, including any continuations, divisionals, continuations-in-part
and provisional applications and statutory invention registrations, and any patents issuing on any of the foregoing and any reissues,
reexaminations, substitutes, supplementary protection certificates, extensions of any of the foregoing (collectively, “Patents”);
(b) trademarks, service marks, trade names, service names, brand names, trade dress rights, logos, Internet domain names, social
media accounts, corporate names and other source or business identifiers, together with the goodwill associated with any of the
foregoing, and all applications, registrations, extensions and renewals of any of the foregoing (collectively, “Marks”);
(c) copyrights, works of authorship, Data, design rights, mask work rights and moral rights, whether or not registered or published,
and all registrations, applications, renewals, extensions and reversions of any of any of the foregoing (collectively, “Copyrights”);
(d) trade secrets, know-how, confidential or proprietary information, invention disclosures, inventions, idea, algorithms, formulae,
processes, methods, techniques, and models, whether patentable or not; (e) Software or other technology, and all rights therein
or thereto; and (f) any other intellectual or proprietary rights.
“Intended Tax Treatment”
has the meaning set forth in the recitals to this Agreement.
“Investment Company
Act” means the Investment Company Act of 1940.
“IPO”
has the meaning set forth in Section 8.18.
“JOBS Act”
means the Jumpstart Our Business Startups Act of 2012.
“Law”
means any federal, state, local, foreign, national or supranational statute, law (including common law), act, statute, ordinance,
treaty, rule, code, regulation or other binding directive or guidance issued, promulgated or enforced by a Governmental Entity.
“Leased Real Property”
has the meaning set forth in Section 3.18(b).
“Letter of Transmittal”
means the letter of transmittal, in a customary form to be agreed upon between the Parties.
“Liability”
or “liability” means any and all debts, liabilities and obligations, whether accrued or fixed, absolute or contingent,
known or unknown, matured or unmatured or determined or determinable, including those arising under any Law (including any Environmental
Law), Proceeding or Order and those arising under any Contract, agreement, arrangement, commitment or undertaking.
“Liability for
Tax” means (i) any liability or increase in any liability of a Group Company to make a payment of or in respect of Tax,
(ii) the non-availability of any relief treated as an asset of a Group Company in the Financial Statements or otherwise taken into
account in computing any provision for Tax in the Financial Statements (an “Accounts Relief”), and (iii) the
use or set-off of an Accounts Relief, any relief of any Group Company arising after Closing, or any relief of Bannix whenever arising,
against a liability to Tax of a Group Company where such liability to Tax would have been capable of being the subject of a claim
under Section 5.5(c) of this Agreement.
“Lien”
means any mortgage, pledge, security interest, encumbrance, lien, assignment, hypothecation, title retention, license or sub-license,
charge, or other similar encumbrance or interest (including, in the case of any Equity Securities, any voting, transfer or similar
restrictions).
“Malicious Code”
means any (a) “back door”, “drop dead device”, “time bomb”, “Trojan horse”, “virus”,
“ransomware”, or “worm” (as such terms are commonly understood in the software industry), or (b) other
code designed or intended to have, or capable of performing, any of the following functions: (i) disrupting, disabling, harming,
interfering with or otherwise impeding in any manner the operation of, or providing unauthorized access to, a Company IT System
on which such code is stored, used or installed; or (ii) damaging or destroying any Data or file without the user’s consent.
“Marks”
has the meaning set forth in the definition of Intellectual Property Rights.
“Material Contracts”
has the meaning set forth in Section 3.7(a).
“Material Permits”
has the meaning set forth in Section 3.6.
“Multiemployer
Plan” has the meaning set forth in Section (3)37 or Section 4001(a)(3) of ERISA.
“NASDAQ”
means the Nasdaq Capital Market.
“Off-the-Shelf
Software” means any Software that is made generally and widely available to the public on a commercial basis and is licensed
to any of the Group Companies on a non-exclusive basis under standard terms and conditions with a replacement cost of less than
$100,000 in the aggregate per annum.
“Order”
means any outstanding writ, order, judgment, injunction, decision, determination, award, ruling, subpoena, verdict or decree entered,
issued or rendered by any Governmental Entity.
“Owned Real Property”
has the meaning set forth in Section 3.18(a).
“Parties”
has the meaning set forth in the introductory paragraph to this Agreement.
“Patents”
has the meaning set forth in the definition of Intellectual Property Rights.
“PCAOB”
means the Public Company Accounting Oversight Board.
“PEO”
has the meaning set forth in Section 3.7(a)(xi).
“Permits”
means any approvals, authorizations, clearances, licenses, registrations, permits or certificates of a Governmental Entity.
“Permitted Liens”
means (a) mechanic’s, materialmen’s, carriers’, repairers’ and other similar statutory Liens arising or
incurred in the ordinary course of business for amounts that are not yet delinquent or are being contested in good faith by appropriate
proceedings and for which sufficient reserves have been established in accordance with GAAP, (b) Liens for Taxes not yet due and
payable as of the Closing Date or which are being contested in good faith by appropriate proceedings and for which sufficient reserves
have been established in accordance with GAAP, (c) encumbrances and restrictions on real property (including easements, covenants,
conditions, rights of way and similar restrictions) that do not prohibit or materially interfere with any of the Group Companies’
use or occupancy of such real property, (d) zoning, building codes and other land use Laws regulating the use or occupancy of real
property or the activities conducted thereon which are imposed by any Governmental Entity having jurisdiction over such real property
and which are not violated by the use or occupancy of such real property or the operation of the businesses of the Group Company
and do not prohibit or materially interfere with any of the Group Companies’ use or occupancy of such real property, (e)
cash deposits or cash pledges to secure the payment of workers’ compensation, unemployment insurance, social security benefits
or obligations arising under similar Laws or to secure the performance of public or statutory obligations, surety or appeal bonds,
and other obligations of a like nature, in each case in the ordinary course of business and which are not yet due and payable,
(f) grants by any Group Company of non-exclusive rights in non-material Intellectual Property Rights in the ordinary course of
business consistent with past practice and (g) other Liens that do not materially and adversely affect the value, use or operation
of the asset subject thereto.
“Person”
means an individual, partnership, corporation, limited liability company, joint stock company, unincorporated organization or association,
trust, joint venture or other similar entity, whether or not a legal entity.
“Personal Data”
means any Data or information that (a) alone or when combined with other information, identifies, relates to, describes, is capable
of being associated with, or could reasonably be linked, directly or indirectly, with an identified or identifiable individual
or natural person, consumer or household, or (b) is otherwise subject to applicable Laws or any privacy policies of any Group Company
governing personal information.
“Privacy and Security
Requirements” means any of the following to the extent relating to the Processing of Personal Data or otherwise relating
to consumer protection, consumer Contracts, or Data-related notifications: (a) all applicable Laws; (b) each Group Company’s
own internal and external-facing privacy policies; (c) the Payment Card Industry Data Security Standard, if applicable, and any
other industry standard to which any Group Company is bound; and (d) applicable provisions of Contracts to which any Group Company
is a party or is otherwise bound.
“Proceeding”
means any lawsuit, litigation, action, audit, examination or investigation, claim, complaint, charge, proceeding, inquiry, suit
or arbitration (in each case, whether civil, criminal or administrative and whether public or private) pending by or before or
otherwise involving any Governmental Entity.
“Process”
(or “Processing” or “Processes”) means the collection, use, storage, processing, recording,
distribution, transfer, import, export, protection (including security measures), disposal or disclosure, performance of operations
or set of operations on Data or on sets of Data, or other activity regarding Data (whether electronically or in any other form
or medium).
“Pro Rata Share”
means, with respect to a Transferor, the percentage set forth on Schedule A opposite such Transferor’s name under
the heading “Pro Rata Share”.
“Prospectus”
has the meaning set forth in Section 8.18.
“Proxy Statement”
means a definitive proxy statement on Schedule 14A of Bannix relating to the transactions contemplated by this Agreement and the
Ancillary Documents.
“Public Stockholders”
has the meaning set forth in Section 8.18.
“Public Software”
means any Software that contains, includes, incorporates, or has instantiated therein, or is derived in any manner (in whole or
in part) from, any Software that is distributed as free software, open source software (e.g., Linux) or similar licensing
or distribution models, including under any terms or conditions that impose any requirement that any Software using, linked with,
incorporating, distributed with or derived from such Public Software (a) be made available or distributed in source code form;
(b) be licensed for purposes of making derivative works; or (c) be redistributable at no, or a nominal, charge.
“Real Property”
has the meaning set forth in Section 3.18(a).
“Real Property
Leases” means all leases, sub-leases, licenses, concessions or other agreements, in each case, pursuant to which any
Group Company leases or sub-leases any real property.
“Registered Intellectual
Property” means all issued Patents, pending Patent applications, registered Marks, pending applications for registration
of Marks, registered Copyrights, pending applications for registration of Copyrights and Internet domain name registrations.
“Related Persons”
means any officer, director, manager, employee of any Party or any of its Affiliates, or any immediate family member of any of
the foregoing which includes spouse, domestic partner, cohabitant, child, stepchild, grandchild, parent, stepparent, mother-in-law,
father-in-law, son-in-law, daughter-in-law, grandparent, great grandparent, brother, sister, half-brother, half-sister, stepsibling,
brother-in-law and sister-in-law.
“Representatives”
means (a) with respect to any Party or other Person (in each case, other than the Company prior to the Closing), such Party’s
or Person’s, as applicable, Affiliates and its and such Affiliates’ respective directors, officers, employees, members,
owners, accountants, consultants, advisors, attorneys, agents and other representatives, and (b) with respect to the Company prior
to the Closing, the Company’s Affiliates and the Company’s and its Affiliates’ respective equity holders, directors,
officers, employees, members, owners, accountants, consultants, advisors, attorneys, agents and other representatives.
“Sanctions and
Export Control Laws” means any Law or Order related to (a) import and export controls, including the U.S. Export Administration
Regulations, the International Traffic in Arms Regulations such other controls administered by the U.S. Customs and Border Protection,
(b) economic sanctions, including those administered by the Office of Foreign Assets Control of the U.S. Department of the Treasury,
the U.S. Department of State, the European Union, any European Union Member State, the United Nations, and His Majesty’s
Treasury of the United Kingdom or (c) anti-boycott measures.
“Sarbanes-Oxley
Act” means the Sarbanes-Oxley Act of 2002.
“Schedules”
means, collectively, the Company Disclosure Schedules and the Bannix Disclosure Schedules (and it being understood and agreed that
information disclosed in any section of any such Schedule shall be deemed to be disclosed with respect to any other section of
such Schedule if its relevance to such other section is reasonably apparent on the face of such disclosure).
“SEC”
means the U.S. Securities and Exchange Commission.
“Securities Act”
means the U.S. Securities Act of 1933.
“Securities Laws”
means Federal Securities Laws and other applicable foreign and domestic securities or similar Laws.
“Security Incident”
means actions that result in an actual, suspected, alleged or potentially likely cyber or security incident that could have an
adverse effect on a Company IT System, Personal Data or any Group Company trade secret (including any Processed thereby or contained
therein), including an occurrence that actually or potentially likely jeopardizes the confidentiality, integrity, or availability
of a Company IT System, Personal Data or any Group Company trade secret. A Security Incident includes incidents of security breaches
or intrusions, denial of service, or unauthorized entry, access, collection, use, processing, storage, sharing, distribution, transfer,
disclosure, or destruction of, any Company IT Systems, Personal Data or Group Company trade secrets, or any loss, distribution,
compromise or unauthorized disclosure of any of the foregoing.
“Signing Filing”
has the meaning set forth in Section 5.4(b).
“Signing Press
Release” has the meaning set forth in Section 5.4(b).
“Software”
shall mean any and all (a) computer programs and software, including any and all software implementations of algorithms, models
and methodologies, whether in source code or object code; (b) Data and compilations, whether machine readable or otherwise; (c)
descriptions, flowcharts and other work product used to design, plan, organize and develop any of the foregoing, screens, user
interfaces, report formats, firmware, development tools, templates, menus, buttons and icons; and (d) all documentation, including
user manuals and other training documentation, related to any of the foregoing.
“Sponsor Letter
Agreement” has the meaning set forth in the recitals to this Agreement.
“Subsidiary”
means, with respect to any Person, any corporation, limited liability company, partnership or other legal entity of which (a) if
a corporation, a majority of the total voting power of shares of stock entitled (without regard to the occurrence of any contingency)
to vote in the election of directors, managers or trustees thereof is at the time owned or controlled, directly or indirectly,
by such Person or one or more of the other Subsidiaries of such Person or a combination thereof, or (b) if a limited liability
company, partnership, association or other business entity (other than a corporation), a majority of the partnership or other similar
ownership interests thereof is at the time owned or controlled, directly or indirectly, by such Person or one or more Subsidiaries
of such Person or a combination thereof and for this purpose, a Person or Persons own a majority ownership interest in such a business
entity (other than a corporation) if such Person or Persons shall be allocated a majority of such business entity’s gains
or losses or shall be a, or control any, managing director or general partner of such business entity (other than a corporation).
The term “Subsidiary” shall include all Subsidiaries of such Subsidiary. In the case of the Company, its Subsidiary’s
shall be deemed to include (i) Cavonix Ltd, a company incorporated and registered in England and Wales with company number 11747463
and (ii) EVIE Autonomous Ltd, a company incorporated and registered in England and Wales with company number 14420680.
“Supplemental Confidentiality
Agreement” has the meaning set forth in Section 5.3(a).
“Tax” means any
federal, state, local or non-United States income, gross receipts, franchise, estimated, alternative minimum, sales, use, transfer,
value added, excise, stamp, customs, duties, ad valorem, real property, personal property (tangible and intangible), capital stock,
social security, national insurance, unemployment, payroll, Medicare, wage, employment, severance, occupation, registration, environmental,
communication, mortgage, profits, license, lease, service, goods and services, withholding, premium, unclaimed property, escheat,
turnover, windfall profits or other taxes of any kind whatever, whether computed on a separate or combined, unitary or consolidated
basis or in any other manner, together with any interest, deficiencies, penalties, additions to tax, or additional amounts imposed
by any Governmental Entity with respect thereto, whether disputed or not, and including any secondary Liability for any of the
aforementioned.
“Tax Authority”
means any Governmental Entity responsible for the collection or administration of Taxes or Tax Returns.
“Tax Return”
means returns, information returns, statements, declarations, claims for refund, schedules, attachments and reports relating to
Taxes filed or required to be filed with any Governmental Entity, including any amendment of any of the foregoing.
“Termination Date”
has the meaning set forth in Section 7.1(d).
“Transaction Support
Agreements” has the meaning set forth in the recitals to this Agreement.
“Transaction Support
Agreement Deadline” has the meaning set forth in Section 5.9(a).
“Transfer Taxes”
has the meaning set forth in Section 5.5(d).
“Trust Account”
has the meaning set forth in Section 8.18.
“Trust Account
Released Claims” has the meaning set forth in Section 8.18.
“Trust Agreement”
has the meaning set forth in Section 4.8.
“Trustee”
has the meaning set forth in Section 4.8.
“TUPE”
means the United Kingdom’s Transfer of Undertakings (Protection of Employment) Regulations 2006.
“Unpaid Bannix
Expenses” means the Bannix Expenses that are unpaid as of immediately prior to the Closing.
“Unpaid Company
Expenses” means the Company Expenses that are unpaid as of immediately prior to the Closing.
“WARN”
means the Worker Adjustment Retraining and Notification Act of 1988, as well as similar foreign, state or local Laws.
“Warrant Agreement”
means the Warrant Agreement, dated as of September 10, 2021, by and between Bannix and Continental Stock Transfer & Trust Company,
a New York corporation.
Article
2
TRANSACTIONS
Section 2.1 Acquisition
of the Shares. On the terms and subject to the conditions of this Agreement, at the Closing,
the Transferors shall sell the Company Ordinary Shares to Bannix, and Bannix shall acquire the Company Ordinary Shares from the
Transferors, free and clear of all Liens, together with all rights that attach (or may in the future attach) to the Company Ordinary
Shares including, in particular, the right to receive all dividends and distributions declared, made or paid on or after the Closing
Date. Bannix is not obliged to complete the purchase of any of the Company Ordinary Shares unless the purchase of all the Company
Ordinary Shares is completed simultaneously.
Section 2.2 Purchase
Price. The purchase price for all of the Company Ordinary Shares shall be 85,000,000 shares
of Bannix Common Stock in the aggregate (the “Purchase Price”), to be issued by Bannix at Closing in accordance
with Section 2.4. Each Transferor shall receive its Pro Rata Share of the Bannix Common Stock payable hereunder in respect of the
Purchase Price.
Section 2.3 Closing
of the Transactions Contemplated by this Agreement.
(a) The closing of the transactions
contemplated by this Agreement (the “Closing”) shall take place electronically by exchange of the closing deliverables
by the means provided in Section 8.11 as promptly as reasonably practicable, but in no event later than the third (3rd)
Business Day, following the satisfaction (or, to the extent permitted by applicable Law, waiver) of the conditions set forth in
Article 6 (other than those conditions that by their nature are to be satisfied at the Closing, but subject to satisfaction
or waiver of such conditions) (the “Closing Date”) or at such other place, date and/or time as Bannix and the
Company may agree in writing.
(b) At Closing the Transferors
shall deliver (or cause to be delivered) to Bannix: (i) transfers of the Company Ordinary Shares duly signed by the registered
holders in favour of Bannix; (ii) the share certificates for the Company Ordinary Shares or an indemnity, in the form to be agreed
upon by the Parties, for any lost certificates; (iii) an irrevocable power of attorney, in the form to be agreed upon by the Parties,
given by each Transferor in favour of Bannix to secure Bannix’s interest in the Company Ordinary Shares pending registration
of their transfer in the Company’s register of members, and (iv) other closing deliverables subject to due diligence as determined
by the Parties.
(c) At Closing the Company
shall (A) procure that the Company Board resolves to: (i) approve the registration of the transfers of the Company Ordinary Shares
to Bannix, subject only to the transfers being duly stamped; (ii) other board approvals subject to due diligence as determined
by the Parties, and (B) delivers to Bannix (i) signed minutes or written resolutions of the Company Board, approving the matters
required by Section 2.3(c)(A), (ii) the Company Closing Certificate and (iii) other closing deliverables subject to due diligence
as determined by the Parties.
(d) At Closing, Bannix shall
(A) procure that the Bannix Board resolves to: (i) accept the resignations of the directors and officers of Bannix submitted in
the letters delivered in accordance with Section 6.3(d) with effect from Closing, and (ii) appoint such persons as the Company
shall nominate in writing no later than two Business Days prior to Closing as directors and officers of Bannix with effect from
Closing, and (B) deliver to the Company (i) signed minutes or written resolutions of the Bannix Board, approving the matters required
by Section 2.3(d)(A), (ii) the Bannix Closing Certificate and (iii) other closing deliverables subject to due diligence as determined
by the Parties.
Section 2.4 Delivery
of Consideration. The Purchase Price shall be paid to the Transferors at Closing as follows: Bannix shall issue to each
Transferor a stock certificate evidencing such Transferor’s Pro Rata Share of the number of shares of Bannix Common Stock
Shares equal to the Purchase Price. Payments pursuant to this Section 2.4 shall be made after giving effect to any required tax
withholdings under Section 2.5.
Section 2.5 Withholding.
Bannix and the Company and their respective Affiliates shall be entitled to deduct and withhold (or cause to be deducted and withheld)
from any consideration payable pursuant to this Agreement such amounts as are required to be deducted and withheld under applicable
Tax Law. To the extent that amounts are so required to be withheld and deducted, the Transferors shall promptly, but in no event
later than three (3) days after demand for payment therefor, remit the required amount of withholding in cash to Bannix for remittance
to the appropriate Tax Authority. Such withheld amounts shall be treated for all purposes of this Agreement as having been paid
to the Person in respect of which such deduction and withholding was made. The Parties shall cooperate in good faith to eliminate
or reduce any such deduction or withholding (including through the request and provision of any statements, forms or other documents
to reduce or eliminate any such deduction or withholding).
Article
3
REPRESENTATIONS AND WARRANTIES REGARDING THE GROUP COMPANIES AND TRANSFERORS
Subject to Section 8.8,
except as set forth in the Company Disclosure Schedules, the Company and Steven Lake hereby jointly and severally represent and
warrant to Bannix, in each case, and, with respect to Section 3.22, the Company and Transferors hereby jointly and severally represent
to and warrant to Bannix, in each case, as of the date hereof, as follows:
Section 3.1 Organization,
Qualification and UK Takeover Code.
(a) Each Group Company is
a corporation, limited liability company or other applicable business entity duly incorporated, organized or formed, as applicable,
validly existing and in good standing (or the equivalent thereof, if applicable, in each case, with respect to the jurisdictions
that recognize the concept of good standing or any equivalent thereof) under the Laws of its jurisdiction of incorporation, formation
or organization (as applicable). Section 3.1(a) of the Company Disclosure Schedules sets forth the jurisdiction of incorporation,
formation or organization (as applicable) for each Group Company. Each Group Company has the requisite power and authority to own,
lease and operate its properties and to carry on its businesses as presently conducted, except where the failure to have such power
or authority would not have a Company Material Adverse Effect.
(b) True and complete copies
of the Governing Documents of each Group Company have been made available to Bannix, in each case, as amended and in effect as
of the date of this Agreement and have attached to them copies of all resolutions and agreements required by Law to be so attached.
The Governing Documents of each Group Company are in full force and effect, and no Group Company is in material breach or violation
of any provision set forth in its Governing Documents. The Governing Documents fully set out all the rights and restrictions attaching
to each class of shares in the capital of each Group Company. No Group Company nor any holder of Equity Securities in any Group
Company is a party to any shareholders’ agreement, investment agreement or joint venture agreement (or similar agreement,
howsoever named) relating to any Group Company.
(c) Each Group Company is
duly qualified or licensed to transact business and is in good standing (or the equivalent thereof, if applicable, in each case,
with respect to the jurisdictions that recognize the concept of good standing or any equivalent thereof) in each jurisdiction in
which the property and assets owned, leased or operated by it, or the nature of the business conducted by it, makes such qualification
or licensing necessary, except where the failure to be so duly qualified or licensed and in good standing would not have a Company
Material Adverse Effect.
(d) The Company is not subject
to the UK Takeover Code.
Section 3.2 Capitalization
of the Group Companies.
(a) Except for any changes
to the extent permitted by Section 5.1(b) or resulting from the issuance, grant, transfer or disposition of Equity Securities
of the Company in accordance with Section 5.1(b), Section 3.2(a) of the Company Disclosure Schedules sets forth a
true and complete statement as of the date of this Agreement of (i) the number and class or series (as applicable) of all of the
Equity Securities of the Company issued and outstanding, (ii) the identity of the Persons that are the registered holders thereof,
and the number of each class of Equity Securities of the Company owned by each such Person and (iii) with respect to each Company
Option, (A) the date of grant, (B) any applicable exercise (or similar) price, (C) any applicable expiration (or similar) date,
(D) any applicable vesting schedule (including acceleration provisions) and (E) whether such Company Option is an Incentive Stock
Option , and (iv) with respect to each Restricted Share, (A) the applicable vesting schedule (including acceleration provisions),
and (B) whether the holder thereof has made a valid election with respect to the Restricted Shares under Section 83(b) of the Code
or Section 430 or 431 of the U.K. Income Tax (Earnings and Pensions) Act 2003. All of the Equity Securities of the Company have
been duly authorized and validly issued and are fully paid and non-assessable. The Equity Securities of the Company (1) were not
issued in violation of the Governing Documents of the Company or any other Contract to which the Company is party or bound, (2)
were not issued in violation of any preemptive rights, call option, right of first refusal or first offer, subscription rights,
transfer restrictions or similar rights of any Person, (3) have been offered, sold and issued in compliance with applicable Law,
including Securities Laws and (4) are free and clear of all Liens created by, involving, or known to, the Company. Except for the
Company Options and Restricted Shares set forth on Section 3.2(a) of the Company Disclosure Schedules, those either permitted
by Section 5.1(b) or issued, granted or entered into in accordance with Section 5.1(b), the Company has no outstanding
(x) equity appreciation, phantom equity or profit participation rights or (y) options, restricted stock, restricted stock units,
phantom stock, warrants, purchase rights, subscription rights, conversion rights, exchange rights, calls, puts, rights of first
refusal or first offer or other Contracts that could require the Company to allot, issue, grant, create, sell or otherwise cause
to become outstanding or to acquire, repurchase or redeem any Equity Securities or securities convertible into or exchangeable
for Equity Securities of the Company. There are no voting trusts, proxies or other Contracts with respect to the voting or transfer
of the Company’s Equity Securities involving or known to the Company. Each Company Equity Award granted under the Company
Equity Plans was issued in accordance with the terms of such plan and the applicable award agreement and all applicable Laws, including
all Securities Laws. With respect to each Company Option granted to a U.S. taxable individual: (i) each Company Option was granted
with an exercise price of no less than the fair market value of the underlying Company Ordinary Shares on the date of grant, as
determined under Section 409A of the Code; and (ii) each Company Option intended to qualify as an Incentive Stock Option meets
the requirements of Section 422 of the Code.
(b) The Company is the sole
legal and beneficial owner, free from all Liens, of the whole allotted and issued share capital of each of its Subsidiaries and
any other Equity Securities of each Group Company. Section 3.2(b) of the Company Disclosure Schedules sets forth a true
and complete statement of the number and class or series (as applicable) of all of the Equity Securities of each Subsidiary of
the Company. Except as set forth on Section 3.2(b) of the Company Disclosure Schedules, there are no outstanding (A) equity
appreciation, phantom equity or profit participation rights or (B) options, restricted stock, restricted stock units, phantom stock,
warrants, purchase rights, subscription rights, conversion rights, exchange rights, calls, puts, rights of first refusal or first
offer or other Contracts that could require any Subsidiary of the Company to allot, issue, grant, create, sell or otherwise cause
to become outstanding or to acquire, repurchase or redeem any Equity Securities or securities convertible into or exchangeable
for Equity Securities of the Subsidiaries of the Company. There are no voting trusts, proxies or other Contracts with respect to
the voting or transfer of any Equity Securities of any Subsidiary of the Company involving or known to the Company. The issued
shares of each Group Company are fully paid or credited as fully paid.
(c) Except as set forth
on Section 3.2(c) of the Company Disclosure Schedules, none of the Group Companies owns or holds, or has ever owned or held,
(of record, beneficially, legally or otherwise), directly or indirectly, any Equity Securities in any other Person or the right
to acquire any such Equity Security, and except as set forth on Section 3.2(c) of the Company Disclosure Schedules, none
of the Group Companies are a partner or member of any partnership, limited liability company, joint venture or other unincorporated
association, or otherwise controls or takes part in the management of any other Person or business organization (other than another
Group Company).
(d) Immediately after the
Closing, all of the issued and outstanding Company Ordinary Shares: (A) will be duly authorized, validly issued, fully paid or
credited as fully paid and nonassessable, (B) will have been issued and transferred (as the case may be) in compliance with applicable
Law and the Governing Documents of the Company and (C) will not have been issued nor transferred in breach or violation of any
preemptive rights or Contract to which the Company is a party or bound.
(e) Section 3.2(e)
of the Company Disclosure Schedules sets forth a list of all Change of Control Payments of the Group Companies.
(f) Section 3.2(f)
of the Company Disclosure Schedules sets forth a list of all Indebtedness of the Group Companies as of the date of this Agreement,
including the principal amount of such Indebtedness, the outstanding balance as of the date of this Agreement, and the debtor(s)
and the creditor(s) thereof.
(g) No Group Company has
at any time (i) purchased, redeemed, reduced, forfeited or repaid any of its own share capital; (ii) given any financial assistance
in contravention of any Law; or (iii) allotted or issued any securities that are convertible into shares.
(h) The register of members,
register of people with significant control (PSC Register) and all other statutory books and registers of each Group Company (i)
have been properly kept in accordance with all Laws; (ii) are correctly written up to date; and (iii) contain a true, complete
and accurate record of all matters and information which should be contained in them. No Group Company has received any notice
or allegation has been received that any such registers or books are incorrect or should be rectified.
(i) All returns, particulars,
resolutions and other documents that any Group Company is required by Law to file with, or deliver to, any authority in any jurisdiction
(including, in particular, the Registrar of Companies in England and Wales) have been correctly made up and duly filed or delivered.
(j) All dividends or distributions
declared, made or paid by any Group Company have been declared, made or paid in accordance with its memorandum and articles of
association, all Laws and any agreements or arrangements made with any third party regulating the payment of dividends and distributions.
Section 3.3 Authority.
The Company has the requisite corporate, company or other similar power and authority to execute and deliver this Agreement and
each Ancillary Document to which it is or will be a party, to perform its obligations hereunder and thereunder and to consummate
the transactions contemplated hereby and thereby. The execution and delivery of this Agreement, the Ancillary Documents to which
the Company is or will be a party and the consummation of the transactions contemplated hereby and thereby have been (or, in the
case of any Ancillary Document entered into after the date of this Agreement, will be upon execution thereof) duly authorized by
all necessary corporate (or other similar) action on the part of the Company. This Agreement and each Ancillary Document to which
the Company is or will be a party has been or will be, upon execution thereof, as applicable, duly and validly executed and delivered
by the Company and constitutes or will constitute, upon execution and delivery thereof, as applicable, a valid, legal and binding
agreement of the Company (assuming that this Agreement and the Ancillary Documents to which the Company is or will be a party are
or will be upon execution thereof, as applicable, duly authorized, executed and delivered by the other Persons party thereto),
enforceable against the Company in accordance with its terms (subject to applicable bankruptcy, insolvency, reorganization, moratorium
or other Laws affecting generally the enforcement of creditors’ rights and subject to general principles of equity). The
Company Board has approved this Agreement and the transactions contemplated hereby. To the knowledge of the Company, no other domestic
or foreign takeover Law is applicable to the transactions contemplated hereby.
Section 3.4 Financial
Statements; Undisclosed Liabilities; Solvency.
(a) The Company has made
available to Bannix a true and complete copy of the unaudited micro-entity accounts for Cavonix Ltd for the financial years ended
January 31, 2021 and January 31, 2022, comprising a micro-entity balance sheet and the notes thereon. Such financial statements
of Cavonix Ltd are attached as Section 3.4(a) of the Company Disclosure Schedule, have been prepared in accordance with
GAAP and Law, and show a true and fair view of the state of affairs of Cavonix Ltd as at such respective dates.
(aa) The Company has made
available to Bannix a true and complete copy of the unaudited consolidated or aggregated balance sheets of the Group Companies
as of March 31, 2023 and the related consolidated or aggregated, as applicable, income statement, statement of shareholders’
equity and statement of cash flows of the Group Companies as at and for the three month period then ended (the “Financial
Statements”), which are attached as Section 3.4(aa) of the Company Disclosure Schedules. The Financial Statements
(including the notes thereto) (A) were prepared in accordance with IFRS, (B) fairly present, in all material respects, the financial
position, profits and losses, shareholders’ equity and cash flows of the Group Companies as at the date thereof and for the
period indicated therein, and (C) comply in all material respects with the applicable accounting requirements and with the rules
and regulations of the SEC, the Exchange Act and the Securities Act in effect as of the date of the Agreement (including Regulation
S-X or Regulation S-K, as applicable).
(b) Each of the other financial
statements or similar reports required to be included in the Proxy Statement or any other filings to be made by the Group Companies
with the SEC in connection with the transactions contemplated in this Agreement or any other Ancillary Document (the financial
statements described in this clause (y), the “Closing Company Financial Statements”), when delivered following
the date of this Agreement in accordance with Section 5.15, (i) will be prepared in accordance with US GAAP applied on a
consistent basis throughout the periods indicated (except, in the case of any audited financial statements, as may be specifically
indicated in the notes thereto and subject to, in the case of any unaudited financial statements, normal year end audit adjustments
(none of which are individually or in the aggregate material) and the absence of notes thereto), (ii) will fairly present, in all
material respects, the financial position, results of operations, shareholders equity and cash flows of the Group Companies as
at the date thereof and for the period indicated therein (subject to, in the case of any unaudited financial statements, normal
year end audit adjustments (none of which are, individually or in the aggregate, material), (iii) in the case of any audited financial
statements, will be audited in accordance with the standards of the PCAOB and contain an unqualified report of the Company’s
auditors and (iv) will comply in all material respects with the applicable accounting requirements and with the rules and regulations
of the SEC, the Exchange Act and the Securities Act in effect as of the date of such delivery (including Regulation S-X or Regulation
S-K, as applicable).
(c) Except (i) as set forth
on the face of the Financial Statements, (ii) for Liabilities incurred in the ordinary course of business since the date of the
Financial Statements (none of which are Liabilities directly or indirectly related to a breach of Contract, breach of warranty,
tort, infringement, misappropriation, Proceeding or violation of, or non-compliance with, Law), (iii) for Liabilities incurred
in connection with the negotiation, preparation or execution of this Agreement or any Ancillary Documents, the performance by the
Company of its covenants or agreements in this Agreement or any Ancillary Document to which it is or will be a party or the consummation
of the transactions contemplated hereby or thereby and (iv) for Liabilities that are not and would not reasonably be expected to
be, individually or in the aggregate, material to the Group Companies, taken as a whole, no Group Company has any Liabilities.
(d) The Group Companies
have established and maintain systems of internal accounting controls that are designed to provide, in all material respects, reasonable
assurance that (i) all transactions are executed in accordance with management’s authorization and (ii) all transactions
are recorded as necessary to permit preparation of proper and accurate financial statements in accordance with IFRS and to maintain
accountability for the Group Companies’ assets. The Group Companies maintain and, for all periods since incorporation, have
maintained books and records of the Group Companies in the ordinary course of business that are accurate and complete and reflect
the revenues, expenses, assets and liabilities of the Group Companies in all material respects.
(e) Since its incorporation,
no Group Company has received any written complaint, allegation, assertion or claim that there is (i) “significant deficiency”
in the internal controls over financial reporting of the Group Companies, (ii) a “material weakness” in the internal
controls over financial reporting of the Group Companies or (iii) fraud, whether or not material, that involves management or other
employees of the Group Companies who have a significant role in the internal controls over financial reporting of the Group Companies.
(f) No Group Company
is insolvent or unable to pay its debts within the meaning of the United Kingdom’s Insolvency Act 1986 or any other applicable
insolvency legislation; or has stopped paying its debts as they fall due.
(g) No step has been
taken or proposal made in any applicable jurisdiction to initiate any process by or under which (i) the ability of the creditors
of any Group Company to take any action to enforce their debts is suspended, restricted or prevented, including (without limitation)
pursuant to a moratorium under Part A1 of the United Kingdom’s Insolvency Act 1986, (ii) some or all of the creditors of
any Group Company accept, by agreement or in pursuance of a court order, an amount less than the sums owing to them in satisfaction
of those sums, or make any other compromise or arrangement with any Group Company (including, without limitation, a company voluntary
arrangement under Part 1 of the United Kingdom’s Insolvency Act 1986, a scheme of arrangement under Part 26 of the United
Kingdom’s Companies Act 2006 or a restructuring plan under Part 26A of such Act); (iii) a person is appointed to manage the
affairs, business and assets of any Group Company on behalf of their creditors; or (iv) the holder of a charge over any of the
assets of any Group Company is appointed to control the business and/or any assets of any Group Company.
(h) In relation to each
Group Company: (i) no administrator has been appointed, (ii) no documents have been filed with, and no application has been
made to, the court for the appointment of an administrator, and (iii) no notice of an intention to appoint an administrator has
been given by the relevant company, its directors or by a qualifying floating charge holder (as defined in paragraph 14 of Schedule
B1 to the United Kingdom’s Insolvency Act 1986).
(i) No petition has been
presented or order made for the winding up of any Group Company, no resolution has been passed or proposed for the winding up of
any Group Company and no other process has been initiated which could lead to any Group Company being wound up or its assets being
distributed among its creditors, shareholders or other contributors, or any Group Company being dissolved. No distress, execution
or other process has been commenced, levied or enforced on, and no creditor or encumbrancer has taken possession or control of,
any goods or assets of any Group Company.
(j) No event has occurred,
and no proceedings have been taken, in relation to any Group Company in any jurisdiction other than the United Kingdom, which has
an effect equivalent or similar to any of the matters referred to in Section 3.4(f) to Section 3.4(i) (inclusive) above.
Section 3.5 Consents
and Requisite Governmental Approvals; No Violations.
(a) No consent, approval
or authorization of, or designation, declaration or filing with, any Governmental Entity is required on the part of the Company
with respect to the Company’s execution, delivery or performance of its obligations under this Agreement or the Ancillary
Documents to which the Company is or will be party or the consummation of the transactions contemplated hereby or thereby, except
for (i) the filing with the SEC of (A) the Proxy Statement and the declaration of the effectiveness thereof by the SEC and (B)
such reports under Section 13(a) or 15(d) of the Exchange Act as may be required in connection with this Agreement, the Ancillary
Documents or the transactions contemplated hereby or thereby, or (ii) any other consents, approvals, authorizations, designations,
declarations, waivers or filings, the absence of which would not have a Company Material Adverse Effect.
(b) None of the execution
or delivery by the Company of this Agreement or any Ancillary Documents to which it is or will be a party, the performance by the
Company of its obligations hereunder or thereunder or the consummation of the transactions contemplated hereby or thereby will,
directly or indirectly (with or without due notice or lapse of time or both) (i) result in a violation or breach of any provision
of the Company’s Governing Documents, (ii) result in a violation or breach of, or constitute a default or give rise to any
right of termination, Consent, cancellation, amendment, modification, suspension, revocation or acceleration under, any of the
terms, conditions or provisions of (A) any Material Contract to which any Group Company is a party or (B) any Material Permits,
(iii) violate, or constitute a breach under, any Order or applicable Law to which any Group Company or any of its properties or
assets are subject or bound or (iv) result in the creation of any Lien upon any of the assets or properties (other than any Permitted
Liens) or Equity Securities of any Group Company, except, in the case of any of clauses (ii) through (iv) above,
for such violations, breaches, defaults or other occurrences which would not, or would not reasonably be expected to, result in
a Company Material Adverse Effect.
Section 3.6 Permits.
Each of the Group Companies has all Permits (the “Material Permits”) that are required to own, lease or operate
its properties and assets and to conduct its business as currently conducted, except as is not and would not reasonably be expected
to be, individually or in the aggregate, material to the Group Companies, taken as a whole. Except as is not and would not reasonably
be expected to be material to all of the Group Companies, taken as a whole, (i) each Material Permit is in full force and effect
in accordance with its terms and (ii) no written notice of revocation, cancellation or termination of any Material Permit has been
received by any Group Company.
Section 3.7 Material
Contracts.
(a) Section 3.7(a)
of the Company Disclosure Schedules sets forth a list of the following Contracts to which a Group Company is, as of the date of
this Agreement, a party (each Contract required to be set forth on Section 3.7(a) of the Company Disclosure Schedules, together
with each Contract entered into after the date of this Agreement that would be required to be set forth on Section 3.7(a)
of the Company Disclosure Schedules if entered into prior to the execution and delivery of this Agreement, collectively, the “Material
Contracts”):
(i) any Contract relating
to Indebtedness of any Group Company in excess of $500,000 or to the placing of a Lien (other than a Permitted Lien) on any material
assets or properties of any Group Company;
(ii) any Contract under
which any Group Company is lessee of or holds or operates, in each case, any tangible property (other than real property), owned
by any other Person, except for any lease or agreement under which the aggregate annual rental payments do not exceed $50,000;
(iii) any Contract under
which any Group Company is lessor of or permits any third party to hold or operate, in each case, any tangible property (other
than real property), owned or controlled by such Group Company, except for any lease or management agreement under which the annual
rental payments or management fee payments do not exceed $25,000;
(iv) any corporate joint
venture, profit-sharing, partnership or other similar Contract (pertaining to more than one particular site operated by the Group);
(v) (A) any Contract that
(1) limits or purports to limit, in any material respect, the freedom of any Group Company to engage or compete in any line of
business or with any Person or in any area or that would so limit or purport to limit, in any material respect, the operations
of any Group Company (including Bannix or any of their respective Affiliates after the Closing) or (2) contains any exclusivity,
“most favored nation” or similar provisions, obligations or restrictions, or (B) any Contract, other than leases for
real property, that contains any other provisions restricting or purporting to restrict the ability of any Group Company to sell
or develop, directly or indirectly through third parties, or to solicit any potential employee or customer in any material respect
or that would so limit or purports to limit, in any material respect, any Group Company (including Bannix or any of their respective
Affiliates after the Closing);
(vi) any Contract, other
than leases for real property, requiring any future capital commitment or capital expenditure (or series of capital expenditures)
by any Group Company in an amount in excess of (A) $50,000 annually or (B) $100,0000 over the life of the agreement;
(vii) any Contract requiring
any Group Company to guarantee the Liabilities of any Person (other than the Company or a Subsidiary) or pursuant to which any
Person (other than the Company or a Subsidiary) has guaranteed the Liabilities of a Group Company, in each case in excess of $50,000;
(viii) any Contract under
which any Group Company has, directly or indirectly, made or agreed to make any loan, advance, or assignment of payment to any
Person (other than the Company or a Subsidiary) or made any capital contribution to, or other investment in, any Person (other
than the Company or a Subsidiary), in each case in excess of $50,000;
(ix) any
Contract required to be disclosed on Section 3.19 of the Company Disclosure Schedules;
(x) any
Contract, other than leases for real property, with any Person (A) pursuant to which any Group Company (including Bannix or any
of their respective Affiliates after the Closing) may be required to pay “earn-out”, milestones, royalties or other
contingent payments or (B) under which any Group Company grants to any Person any right of first refusal, right of first negotiation,
option to purchase, option to license or any other similar rights with respect to any Company Product or any Intellectual Property
Rights;
(xi) any
CBA, or any Contract (A) governing the terms of, or otherwise related to, the employment, engagement or services of any current
director, manager, officer, employee, worker, individual independent contractor or other service provider of a Group Company whose
annual base salary (or, in the case of an independent contractor, annual base compensation) is in excess of $25,000, (B) with a
temporary or leasing agency, labor contractor or professional employer organization (“PEO”), or (C) providing
for any Change of Control Payment of the type described in clause (a) of the definition thereof;
(xii) any
Contract for the disposition of any portion of the assets or business of any Group Company or for the acquisition by any Group
Company of the assets or business of any other Person (other than acquisitions or dispositions made in the ordinary course of business),
or under which any Group Company has any continuing obligation with respect to an “earn-out”, contingent purchase price
or other contingent or deferred payment obligation;
(xiii) any
settlement, conciliation or similar Contract (A) the performance of which would be reasonably likely to involve payment in excess
of $25,000 after the date of this Agreement, (B) with a Governmental Entity and of a value in excess of $25,000 or (C) that imposes
or is reasonably likely to impose, at any time in the future, any material, non-monetary obligations on any Group Company (including
Bannix or any of their respective Affiliates after the Closing);
(xiv) any
other Contract, other than leases for real property, the performance of which requires either (A) annual payments to or from any
Group Company in excess of $100,000 or (B) aggregate payments to or from any Group Company in excess of $250,000 over the life
of the agreement and, in each case, that is not terminable by the applicable Group Company without penalty upon less than thirty
(30) days’ prior written notice;
(xv) any
(A) license, royalty, indemnification, covenant not to sue, escrow, co-existence, concurrent use, consent to use or other Contract
relating to any Intellectual Property Rights of a value in excess of $25,000 per annum (including any Contracts relating to the
licensing of Intellectual Property Rights by any Group Company to a Third Party or by a Third Party to any Group Company) and (B)
other Contracts of a value in excess of $25,000 per annum affecting any Group Company’s ability to own, enforce, use, license
or disclose any Intellectual Property Rights or providing for the development or, acquisition of any Intellectual Property Rights
(including any Data), other than Off-the-Shelf-Software licenses; and
(xvi) any
legally binding commitment to enter into any Contract of the type described in subsections (i) through (xv) of this Section
3.7(a).
(b) (i)
Each Material Contract is valid and binding on the applicable Group Company and, to the Company’s knowledge, the counterparties
thereto, and is in full force and effect and enforceable in accordance with its terms against such Group Company and, to the Company’s
knowledge, the counterparties thereto (subject to applicable bankruptcy, insolvency, reorganization, moratorium or other Laws affecting
generally the enforcement of creditors’ rights and subject to general principles of equity), (ii) the applicable Group Company
and, to the Company’s knowledge, the counterparties thereto are not in material breach of, or default under, any Material
Contract and (iii) to the Company’s knowledge, no event has occurred that (with or without due notice or lapse of time or
both) would result in a breach of, or default under, any Material Contract by the applicable Group Company or, to the Company’s
knowledge, the counterparties thereto that would be, individually or in the aggregate, material to the Group Companies, taken as
a whole. No Group Company has received written notice of the intention of any counterparty to any Material Contract to cancel,
terminate or modify in any material respect the terms of any such Material Contract, or materially accelerate the obligations of
any Group Company thereunder. The Company has made available to Bannix true and complete copies of all Material Contracts in effect
as of the date hereof.
Section 3.8 Absence
of Changes. Since the date of incorporation of each applicable Group Company, (a) no Company Material Adverse Effect has
occurred and (b) except as expressly contemplated by this Agreement, any Ancillary Document or in connection with the transactions
contemplated hereby and thereby, (i) the Group Companies have conducted their businesses in the ordinary course in all material
respects and (ii) no Group Company has taken any action that would require the consent of Bannix if taken during the period from
the date of this Agreement until the Closing pursuant to Section 5.1(b)(i), Section 5.1(b)(vii), Section 5.1(b)(viii),
Section 5.1(b)(ix), Section 5.1(b)(ix), Section 5.1(b)(xii), Section 5.1(b)(xv) or Section 5.1(b)(xvi)
(to the extent related to any of the foregoing).
Section 3.9 Litigation.
There is (and since the date of incorporation of each applicable Group Company there has been) no Proceeding pending or, to the
Company’s knowledge, threatened against or involving any Group Company that, if adversely decided or resolved, has been or
would reasonably be expected to be, individually or in the aggregate, material to all of the Group Companies, taken as a whole.
Neither the Group Companies nor any of their respective properties or assets is subject to any material Order. As of the date of
this Agreement, there are no material Proceedings by a Group Company pending against any other Person.
Section 3.10 Compliance
with Applicable Law. Except as set forth at Section 3.10 of the Company Disclosure Schedules, each Group Company (a) conducts
(and since its incorporation date has conducted) its business in accordance with all Laws and Orders applicable to such Group Company
and is not in violation of any such Law or Order and (b) has not received any written communications from a Governmental Entity
that alleges that such Group Company is not in compliance with any Law or Order, except in each case of clauses (a) and (b), as
is not and would not reasonably be expected to be, individually or in the aggregate, material to all of the Group Companies, taken
as a whole.
Section 3.11 Employee
Plans.
(a) Section
3.11(a) of the Company Disclosure Schedules sets forth a true and complete list of all material Employee Benefit Plans (including,
for each such Employee Benefit Plan, its jurisdiction). With respect to each material Employee Benefit Plan, the Group Companies
have provided Bannix with true and complete copies of the material documents pursuant to which the plan is maintained, funded and
administered.
(b) Except
as set forth on Section 3.11(b) of the Company Disclosure Schedules, no Group Company or any ERISA Affiliate has, since
its date of incorporation, sponsored or contributed to or been required to contribute to, and no Group Company has any Liability
with respect to or under: (i) a Multiemployer Plan; (ii) a “defined benefit plan” (as defined in Section 3(35) of ERISA,
whether or not subject to ERISA), or any arrangement, including a “defined contribution plan,” as defined in Section
3(34) of ERISA, where pension benefits are predetermined from the outset (rather than based on investment return) or where the
sponsor or participating employer guarantees any particular rate of investment return; (iii) a plan that is or was subject to Title
IV of ERISA or Section 412 of the Code; (iv) a “multiple employer plan” within the meaning of Section of 413(c) of
the Code or Section 210 of ERISA; or (v) a “multiple employer welfare arrangement” as defined in Section 3(40) of ERISA
or any Employee Benefit Plan in which more than one employer participates. No Group Company has any material Liabilities to provide
any retiree or post-termination or post-ownership health or life insurance or other welfare-type benefits to any Person other than
health continuation coverage pursuant to COBRA or similar Law and for which the recipient pays the full premium or other cost of
coverage. All death and disability benefits provided to the employees of any Group Company are fully insured by an insurance policy
with an insurer of good repute. To the Company’s knowledge there is no reason why these policies might be invalidated, or
why the insurer might try to set them aside.
(c) Each
Employee Benefit Plan has been established, maintained, funded, operated and administered, in all material respects, in compliance
with its terms and all applicable Laws, whether as a matter of substantive Law or as required to obtain any intended Tax qualification.
No Employee Benefit Plan is intended to be qualified under Section 401(a) of the Code. To the Company’s knowledge, none of
the Group Companies has incurred (whether or not assessed) any penalty or Tax under Section 4980H, 4980B, 4980D, 6721 or 6722 of
the Code, including any Liability incurred as a result of a current or former association with an ERISA Affiliate. No Employee
Benefit Plan has been subject to examination or audit by any Government Entity.
(d) Each
Employee Benefit Plan that constitutes in any part a “nonqualified deferred compensation plan” (as defined under Section
409A(d)(1) of the Code) subject to Section 409A of the Code has been operated and administered in all material respects in operational
compliance with, and is in all material respects in documentary compliance with, Section 409A of the Code and its purpose, and
no amount under any such plan, agreement or arrangement is or has been subject to the interest and additional Tax set forth under
Section 409A(a)(1)(B) of the Code.
(e) There
are no pending or, to the Company’s knowledge, threatened, material claims or Proceedings or, to the Company’s knowledge,
any circumstances which could reasonably give rise to such claims or Proceedings with respect to any Employee Benefit Plan (other
than routine claims for benefits). All contributions, insurance premiums, tax and expenses due to and in respect of each Employee
Benefit Plan have been duly paid. There are no liabilities outstanding in respect of any Employee Benefit Plans at the date of
this Agreement. The contributions in respect of each Employee Benefit Plan have been paid at the rates set out in the most recent
schedule of contributions or the most recent payment schedule. No contribution notices or financial support directions within the
meaning of the UK Pensions Act 2004 have been issued to any Group Company and there are no circumstances that could reasonably
give rise to their issue. To the Company’s knowledge, there have been no non-exempt “prohibited transactions”
within the meaning of Section 4975 of the Code or Sections 406 or 407 of ERISA and no breaches of fiduciary duty (as determined
under ERISA or otherwise) with respect to any Employee Benefit Plan. With respect to each Employee Benefit Plan, all contributions,
distributions, reimbursements, expenses and premium payments that are due have been timely made, except as is not and would not
reasonably be expected to be, individually or in the aggregate, material to the Group Companies, taken as a whole. No Employee
Benefit Plan that is a group health plan is self-insured.
(f) Except
as otherwise contemplated herein or as set forth on Section 3.11(f) of the Company Disclosure Schedules, the execution and
delivery of this Agreement and the consummation of the transactions contemplated by this Agreement will not materially (alone or
in combination with any other event) (i) result in any payment or benefit becoming due to or result in the forgiveness of any indebtedness
of any current or former director, manager, officer, employee, worker, individual independent contractor or other service providers
of any of the Group Companies, (ii) increase the amount or value of any compensation or benefits payable to any current or former
director, manager, officer, employee, worker, individual independent contractor or other service providers of any of the Group
Companies, (iii) result in the acceleration of the time of payment or vesting, or trigger any payment or funding of any compensation
or benefits to any current or former director, manager, officer, employee, worker, individual independent contractor or other service
providers of any of the Group Companies, or (iv) otherwise increase the financial obligations of any Group Company to any Employee
Benefits Plan.
(g) No
amount that could be received (whether in cash or property or the vesting of property) by any “disqualified individual”
of any of the Group Companies under any Employee Benefit Plan or otherwise as a result of the consummation of the transactions
contemplated by this Agreement could, separately or in the aggregate, be nondeductible under Section 280G of the Code or subjected
to an excise tax under Section 4999 of the Code.
(h) The
Group Companies have no obligation to make a “gross-up” or similar payment in respect of any taxes that may become
payable under Section 4999 or 409A of the Code.
(i) Each
Foreign Benefit Plan that is required to be registered or intended to be tax exempt has been registered (and, where applicable,
accepted for registration) and is Tax exempt and has been maintained in good standing, to the extent applicable, with each Governmental
Entity and nothing has been done which would cause it to cease to be registered and/or tax exempt. No Foreign Benefit Plan is a
“defined benefit plan” (as defined in ERISA, whether or not subject to ERISA), or a defined contribution plan for which
any particular investment return is guaranteed by the sponsor or participating employer, or has any material unfunded or underfunded
Liabilities. All material contributions required to have been made by or on behalf of the Group Companies with respect to plans
or arrangements maintained or sponsored by a Governmental Entity (including severance, termination indemnities or other similar
benefits maintained for employees outside of the U.S.) have been timely made or fully accrued.
(j) Each Group Company
has complied with its automatic enrolment obligations as required by the UK Pensions Act 2008 and associated legislation. No notices,
fines, or other sanctions have been issued by any Governmental Entity and no instances of non-compliance with the automatic enrolment
obligations have been notified to any Governmental Entity in respect of any Group Company.
Section 3.12 Environmental
Matters. Except as is not and would not reasonably be expected to be, individually or in the aggregate, material to the
Group Companies (taken as a whole):
(a) None
of the Group Companies has received any written notice from any Governmental Entity or any other Person regarding any actual, alleged,
or potential violation of, or Liability under, any Environmental Laws, that remains outstanding.
(b) There
is (and since the date of incorporation of each applicable Group Company there has been) no Proceeding pending or, to the Company’s
knowledge, threatened in writing against any Group Company in respect to any Environmental Laws.
(c) At
any site owned or leased by a Group Company, there has in the past three (3) years been no manufacture, release, treatment, storage,
disposal, arrangement for disposal, transport or handling of, contamination by, or exposure of any Person to, any Hazardous Substances.
(d) The Group Companies
have made available to Bannix copies of all environmental assessments, audits and reports and all other material environmental,
health and safety documents that are in any Group Company’s possession or control relating to the current or former operations,
properties or facilities of the Group Companies.
Section 3.13 Intellectual
Property.
(a) Section
3.13(a) of the Company Disclosure Schedules sets forth a true and complete list of (i) all currently issued or pending Company
Registered Intellectual Property and (ii) material unregistered Intellectual Property Rights owned by any Group Company as of the
date of this Agreement. Section 3.13(a) of the Company Disclosure Schedules lists, for each item of Company Registered Intellectual
Property as of the date of this Agreement, (A) the owner(s) of such item, (B) the jurisdictions in which such item has been issued
or registered or filed, (C) the issuance, registration or application date, as applicable, for such item and (D) the issuance,
registration or application number, as applicable, for such item.
(b) As
of the date of this Agreement, all necessary fees and filings with respect to any material Company Registered Intellectual Property
have been timely submitted to the relevant intellectual property office or Governmental Entity and Internet domain name registrars
to maintain such material Company Registered Intellectual Property in full force and effect. As of the date of this Agreement,
no issuance or registration obtained and no application filed by the Group Companies for any material Intellectual Property Rights
has been cancelled, abandoned, allowed to lapse or not renewed. As of the date of this Agreement, there are no material Proceedings
pending, including litigations, interference, re-examination, inter parties review, reissue, opposition, nullity, or cancellation
proceedings pending that relate to any of the Company Registered Intellectual Property and, to the Company’s knowledge, no
such material Proceedings are threatened by any Governmental Entity or any other Person.
(c) A
Group Company exclusively owns all right, title and interest in and to all Company Owned Intellectual Property (which, for the
avoidance of doubt, does not include public licensed opensource software), free and clear of all Liens or obligations to others
(other than Permitted Liens). For all Patents owned by the Group Companies, each inventor on the Patent has assigned their rights
to a Group Company. No Group Company has (i) transferred ownership of, or granted any exclusive license with respect to, any material
Company Owned Intellectual Property to any other Person or (ii) granted any customer the right to use any material Company Product
or service on anything other than a non-exclusive basis. The applicable Group Company has valid rights under all Contracts for
Company Licensed Intellectual Property to use, sell, license and otherwise exploit, as the case may be, all Company Licensed Intellectual
Property licensed pursuant to such Contracts as the same is currently used, sold, licensed and otherwise exploited by such Group
Company, except as is not and would not reasonably be expected to be, individually or in the aggregate, material to the Group Companies,
taken as a whole. The Company Owned Intellectual Property and the Company Licensed Intellectual Property, to the Company’s
knowledge, constitute all of the Intellectual Property Rights used or held for use by the Group Companies in the operation of their
respective businesses, to the Company’s knowledge, and all Intellectual Property Rights necessary and sufficient to enable
the Group Companies to conduct their respective businesses as currently conducted in all material respects. The Company Owned Intellectual
Property and the Company Licensed Intellectual Property to the Company’s knowledge, is valid, subsisting and enforceable,
and, to the Company’s knowledge, all of the Group Companies’ rights in and to the Company Registered Intellectual Property,
the Company Owned Intellectual Property and the Company Licensed Intellectual Property, are valid and enforceable and not subject
to any outstanding order, judgment, decree or agreement adversely affecting the Group Companies’ use thereof or rights thereto
(in each case, subject to applicable bankruptcy, insolvency, reorganization, moratorium or other Laws affecting generally the enforcement
of creditors’ rights and subject to general principles of equity).
(d) Each
Group Company’s employees, consultants, advisors and independent contractors who independently or jointly contributed to
or otherwise participated in the authorship, invention, creation, improvement, modification or development of any Intellectual
Property Rights for on behalf of any Group Company (each such person, a “Creator”) have agreed to maintain and
protect the trade secrets and confidential information of all Group Companies. Each Group Company’s employees, consultants,
advisors and independent contractors who independently or jointly contributed to or otherwise participated in the authorship, invention,
creation, improvement, modification or development of any Intellectual Property Rights of such Group Company have assigned or have
agreed to a present assignment to such Group Company all Intellectual Property Rights authored, invented, created, improved, modified
or developed by such person in the course of such Creator’s employment or other engagement with such Group Company.
(e) Each
Group Company has taken all reasonable steps to safeguard and maintain the secrecy of any trade secrets, know-how and other confidential
information owned by any Group Company. Without limiting the foregoing, each Group Company has not disclosed any trade secrets,
know-how or confidential information to any other Person unless such disclosure was under an appropriate written non-disclosure
agreement containing appropriate limitations on use, reproduction and disclosure. To the Company’s knowledge, there has been
no violation or unauthorized access to or disclosure of any trade secrets, know-how or confidential information in the possession
of by any Group Company, or of any written obligations with respect to such.
(f) To
the Company’s knowledge, neither the conduct of the business of the Group Companies nor any of the Company Products nor the
design, development, use, offer for sale, sale or other exploitation of any Company Product infringes, constitutes or results from
an unauthorized use or misappropriation of or otherwise violates any Intellectual Property Rights of any other Person, except as
is not and would not reasonably be expected to be, individually or in the aggregate, material to the Group Companies, taken as
a whole.
(g) Since
its date of incorporation, there is no material Proceeding pending nor has any Group Company received any written communications
or, to the Company’s knowledge, any other communications (i) alleging that a Group Company has infringed, misappropriated
or otherwise violated any Intellectual Property Rights of any other Person, (ii) challenging the validity, enforceability, use
or exclusive ownership of any Company Owned Intellectual Property or (iii) inviting any Group Company to take a license under any
Patent or consider the applicability of any Patents to any products or services of the Group Companies or to the conduct of the
business of the Group Companies.
(h) To
the Company’s knowledge, no Person is infringing, misappropriating, misusing, diluting or violating any Company Owned Intellectual
Property in any material respect. Since its date of incorporation, no Group Company has made any written claim against any Person
alleging any infringement, misappropriation or other violation of any Company Owned Intellectual Property in any material respect.
(i) To
the Company’s knowledge, each Group Company has obtained, possesses and is in compliance with valid licenses to use all of
the Software present on the computers and other Software-enabled electronic devices that it owns or leases or that is otherwise
used by such Group Company and/or its employees in connection with the Group Company business, except as is not and would not reasonably
be expected to be, individually or in the aggregate, material to the Group Companies, taken as whole. No Group Company has disclosed
or delivered to any escrow agent or any other Person, other than employees or Software development contractors who are subject
to confidentiality obligations, any of the source code that is Company Owned Intellectual Property, and no other Person has any
right to, contingent or otherwise, including obtaining access to or using, any such source code. To the Company’s knowledge,
no event has occurred, and no circumstance or condition exists, that (with or without notice or lapse of time or both) will, or
could reasonably be expected to, result in the delivery, license or disclosure of any source code that is owned by a Group Company
or otherwise constitutes Company Owned Intellectual Property to any Person who is not, as of the date the event occurs or circumstance
or condition comes into existence, a current employee or Software development contractor of a Group Company subject to confidentiality
obligations with respect thereto.
(j) No
Software that is licensed under a Public Software license has been used, licensed or distributed by or on behalf of any of the
Group Companies in a manner that, as a consequence of such use, license or distribution, (i) requires any Company Owned Intellectual
Property to be licensed, sold, disclosed, distributed, publicly hosted or otherwise made publicly available, including in source
code form and/or for the purpose of making derivative works, for any reason, (ii) grants, or requires any Group Company to grant,
the right to decompile, disassemble, reverse engineer or otherwise derive the source code of any Company Owned Intellectual Property,
(iii) limits in any manner the ability to charge license fees or otherwise seek compensation in connection with marketing, licensing
or distribution of any Company Owned Intellectual Property or (iv) otherwise imposes any material limitation, restriction or condition
on the right or ability of any Group Company to use, hold for use, license, host, distribute or otherwise dispose of any Company
Owned Intellectual Property, other than compliance with notice, attribution or other formal requirements. The Group Companies are
and have been in material compliance with all applicable licenses for all Public Software that is used in, incorporated into, combined
with, linked with, distributed with, provided to any Person as a service in connection with, provided via a network as a service
or application in connection with, or made available with, any Company Product.
Section 3.14 Labor
Matters.
(a) None
of the Group Companies has (A) any material Liability for any arrears of wages or other compensation for services (including salaries,
wage premiums, commissions, fees or bonuses), any arrears of holiday pay, sick pay or pension contributions, or any penalties,
fines, interest, or other sums for failure to pay or delinquency in paying such compensation, or (B) any material Liability for
any payment to any trust or other fund governed by or maintained by or on behalf of any Governmental Entity with respect to unemployment
compensation benefits, social security, social insurances or other benefits or obligations for any employees of any Group Company
(other than routine payments to be made in the normal course of business and consistent with past practice); and (ii) the Group
Companies have withheld all amounts required by applicable Law or by agreement to be withheld from wages, salaries and other payments
to employees or independent contractors or other service providers, and, in applicable jurisdictions, to workers or non-employee
interns, of each Group Company, except as has not and would not reasonably be expected to result in, individually or in the aggregate,
material Liability to the Group Companies, taken as a whole.
(b) Except
as set forth in Schedule 3.14(b) of the Company Disclosure Schedules, no Group Company is a party to or bound by any CBA and no
employees of any Company Group are represented by any labor union, labor organization, works council, employee delegate, representative
or other employee collective group with respect to their employment. There is no duty on the part of any Group Company to bargain
with any labor union, labor organization, works council, employee delegate, representative or other employee collective group,
including in connection with the execution and delivery of this Agreement, the Ancillary Documents or the consummation of the transactions
contemplated hereby or thereby. Since January 1, 2018, there has been no actual or, to the Company’s knowledge, threatened
unfair labor practice charges, material labor grievances, material labor arbitrations, strikes, lockouts, work stoppages, slowdowns
or other material labor disputes against or affecting any Group Company or any of its employees, workers or contractors. To the
Company’s knowledge, since January 1, 2018, there have been no labor organizing (including any requests for recognition of
any labor or trade union) or decertification activities with respect to any employees, workers or contractors of any Group Company.
(c) The
Group Companies have not incurred any material employment-related liability with respect to or arising out of COVID-19 or any Law,
Order, scheme, directive, guideline or recommendation by any Governmental Entity in connection with or in response to COVID-19
and no material changes to the Company’s workforce as a result of COVID-19 are currently contemplated, planned or announced.
(d) To
the Company’s knowledge, each Group Company has promptly, thoroughly and impartially investigated all sexual harassment,
or other discrimination, retaliation or policy violation allegations, of which the relevant Group Company was notified, against
any employee with the title of “General Manager” or above, and the Group Companies do not reasonably expect any material
Liability with respect to any such allegations. No questions have been submitted to any Group Company by any employee or worker
in relation to potential claims under equal pay or discrimination legislation that remain unanswered in full or in part.
(e) To
the Company’s knowledge, all current employees and other individual service providers of each Group Company are legally authorized
to work in the jurisdiction(s) where they perform services for the Group Company.
(f) Section 3.14(f) of
the Company Disclosure Schedule sets forth the anonymised particulars of each employee, worker and contractor of each Group Company
and the principal terms of their contract, including: (i) the Group Company that employs or engages them, (ii) their current remuneration
(including any benefits, Employee Benefit Plans in which they participate, the rate of contributions paid by any Group Company
in respect of any Employee Benefit Plans in which they participate, and privileges provided or which any Group Company is bound
to provide to them or their dependents, whether now or in the future), (iii) the commencement date of each contract and, if an
employee, the date on which continuous service began, (iv) the length of notice necessary to terminate each contract or, if a fixed
term, the expiry date of the fixed term and details of any previous renewals, (v) the type of contract (whether full or part-time
or other), (vi) their age, (vii) any country in which the employee, worker or contractor works or performs services and/or is paid
and (viii) the law governing the contract, if the employee, worker or contractor works or is paid outside England and Wales.
(g) Except as set forth
on Section 3.14(g) of the Company Disclosure Schedules, in the period of ten years preceding the date of this Agreement,
no Group Company (nor, to the Company’s knowledge, any predecessor or owner of any part of their respective businesses) has
been a party to a relevant transfer for the purposes of TUPE affecting any employee, worker or any other persons engaged by any
Group Company in connection with its business and no event has occurred that may involve such persons in the future being a party
to such a transfer. No such persons have had their terms or employment varied for any reason as a result of or connected with such
a transfer.
(h) No Group Company
is party to any power of attorney which is currently enforce. No person is entitled or authorised in any capacity to bind or commit
any Group Company to any obligation outside the ordinary course of its business.
Section 3.15 Insurance.
Section 3.15 of the Company Disclosure Schedules sets forth a list of all material policies of fire, liability, workers’
compensation, property, casualty and other forms of insurance owned or held by any Group Company as of the date of this Agreement.
All such policies are in full force and effect, all premiums due and payable thereon as of the date of this Agreement have been
paid in full as of the date of this Agreement, and true and complete copies of all such policies have been made available to Bannix.
As of the date of this Agreement, no claim by any Group Company is pending under any such policies as to which coverage has been
denied or disputed, or rights reserved to do so, by the underwriters thereof, except as is not and would not reasonably be expected
to be, individually or in the aggregate, material to the Group Companies, taken as a whole.
Section 3.16 Tax
Matters.
(a) Each
Group Company has prepared and timely filed all Tax Returns and any other information and documentation required to have been filed
by it, all such Tax Returns, information and documentation are and remain true and complete in all material respects and prepared
in compliance in all material respects with all applicable Laws and Orders, and each Group Company has paid all Taxes for Tax periods
ending on or prior to the Closing Date required to have been paid by it regardless of whether such Taxes (i) were shown as due
on a Tax Return or (ii) are not yet due and payable, but for which such Tax will become due and payable immediately after the Closing
Date for the Tax year in which Closing occurs, except as disclosed at Section 3.16 of the Company Disclosure Schedules.
(b) Each
Group Company has timely withheld and paid to the appropriate Tax Authority all amounts required to have been withheld and paid
in connection with amounts paid or owing to any employee, worker, individual independent contractor, other service provider, equity
interest holder or other third-party, except as disclosed at Section 3.16(b) of the Company Disclosure Schedules.
(c) No
Group Company is currently, or has since its incorporation been, the subject of a Tax audit or examination or has been informed
in writing of the commencement or anticipated commencement of any Tax audit or examination that has not been resolved or completed,
nor to the Company’s knowledge, is any such audit or expectation likely to take place.
(d) No
deficiencies for Taxes against any of the Group Companies have been claimed, proposed or assessed in writing by any Tax Authority
that remain unpaid except for deficiencies which are being contested in good faith and with respect to which adequate reserves
have been established.
(e) No
Group Company has consented to extend or waive the time in which any Tax may be assessed or collected by any Tax Authority, other
than any such extensions or waivers that are no longer in effect or that were extensions of time to file Tax Returns obtained in
the ordinary course of business. No Group Company is the beneficiary of any currently effective extension of time within which
to file any Tax Return.
(f) No
“closing agreement” as described in Section 7121 of the Code (or any corresponding or similar provision of state, local
or non-U.S. income Tax Law), private letter rulings, technical advice memoranda or similar agreements or rulings have been entered
into or issued by any Tax Authority with respect to a Group Company which agreement or ruling would be effective after the Closing
Date.
(g) There
are no Liens for Taxes on any assets of the Group Companies other than Liens for Taxes not yet due and payable.
(h) During
the two (2)-year period ending on the date of this Agreement, no Group Company was a distributing corporation or a controlled corporation
in a transaction purported or intended to be governed in whole or in part by Section 355 of the Code (or so much of Section 356
as relates to Section 355).
(i) No
Group Company (i) has been a member of an affiliated group filing a consolidated federal income Tax Return or any affiliated, combined,
consolidated, aggregate, unitary or other group under applicable Law (other than a group the common parent of which was a Group
Company or any of its current Affiliates) or (ii) has any Liability for the Taxes of any Person (other than a Group Company or
any of its current Affiliates) under Section 1.1502-6 of the Treasury Regulations (or any similar provision of state, local or
non-United States Law), as a transferee or successor or by Contract.
(j) No written claims
have been made by any Tax Authority in a jurisdiction where a Group Company does not file Tax Returns that such Group Company is
or may be subject to taxation by that jurisdiction, which claims have not been resolved or withdrawn.
(k) No
Group Company is a party to any Tax allocation, Tax sharing or Tax indemnity or similar agreements and no Group Company is a party
to any joint venture, partnership or other arrangement that is treated as a partnership for U.S. federal income Tax purposes.
(l) No
Group Company has a permanent establishment (within the meaning of the Tax legislation of the United Kingdom, the United States
of America or any applicable Tax treaty) or otherwise has an office or fixed place of business in a country other than the country
in which it is organized.
(m) No
Group Company organized or formed under the Laws of a jurisdiction outside of the United States (i) is a “surrogate foreign
corporation” or “expatriated entity” within the meaning of Section 7874 of the Code (or any corresponding or
similar provision of state, local or non-U.S. Tax Law) or is treated as a U.S. corporation for U.S. federal Tax purposes by reason
of the application of Sections 269B or 7874(b) of the Code (or any corresponding or similar provision of state, local or non-U.S.
Tax Law) or (ii) was created or organized in the United States such that such entity would be taxable in the United States as a
domestic entity pursuant to the dual charter provision of Treasury Regulation Section 301.7701-5(a) (or any corresponding or similar
provision of state, local or non-U.S. Tax Law).
(n) No
Group Company will be required to include any item of income in, or exclude any item of deduction from, taxable income for any
taxable period (or portion thereof) ending after the Closing Date as a result of any (i) change in method of accounting for a taxable
period ending on or prior to the Closing Date; (ii) installment sale made prior to the Closing Date; (iii) prepaid amount received
on or prior to the Closing Date or other deferred revenue; (iv) use of an improper method of accounting for a taxable period on
or prior to the Closing Date; or (v) other deferral of liability for Taxes of a Group Company from any taxable period (or portion
thereof) ending on or before the Closing Date to any taxable period beginning after the Closing Date (or portion thereof). No Group
Company has made an election pursuant to Section 965(h) of the Code.
(o) The
Company is not a passive foreign investment company as defined under Section 1297 of the Code immediately prior to the Closing
Date applying such tests assuming the taxable year of the Company ends at the end of the day immediately prior to the Closing Date.
(p) The
Company has been engaged in an active trade or business outside the United States for the entire 36-month period immediately before
the Closing Date and has no intention to substantially dispose of or discontinue such trade or business (all within the meaning
of Treasury Regulation Section 1.367(a)-3(c)(3)(i)).
(q) Each
Group Company is tax resident only in its jurisdiction of formation.
(r) No
Group Company has (i) made any election to defer payroll Taxes or received or requested any employee retention tax credit, in each
case, under the CARES Act (or any corresponding or similar provision of state, local or non-U.S. income Tax law), or (ii) deferred
any “Applicable Taxes” as defined in and pursuant to IRS Notice 2020-65, 2020-38 IRB 567.
(s) No
Group Company is or has been a party to any “listed transaction” as defined in Section 6707A of the Code and Treasury
Regulations Section 1.6011-4 (or any corresponding or similar provision of U.S. state or local Tax Law). No Group Company has ever
been a party to, or has been otherwise involved in, any transaction, scheme or arrangement the main purpose of which, or one of
the main purposes of which was the avoidance or deferral of a liability to Tax or the reduction of a liability to Tax.
(t) No
Group Company has taken or agreed to take any action or is aware of any fact or circumstance that could reasonably be expected
to prevent or impede the transactions contemplated by this Agreement from qualifying for the Intended Tax Treatment.
(u) No
employee or director or former employee or director of any Group Company or any person associated with any of them holds any shares
or securities or interest in any shares or securities in a Group Company in respect of which the Group Company could be liable
after Closing to pay United Kingdom national insurance contributions or account for income tax or national insurance under the
United Kingdom’s Pay As You Earn system in respect of, or in consequence of any Event occurring before, on or after Closing
in relation to any such shares, securities, options or interests.
(v) Section 3.16
of the Company Disclosure Schedules sets forth full details of all securities options (within the meaning in section 420(8) of
the United Kingdom Income Tax (Earnings and Pensions) Act 2003) acquired by any person where the right or opportunity to acquire
any such securities option was made available by reason of employment with any Group Company of that person or of any other person.
(w) Each
of the Group Companies is registered for the purposes of value added tax as such tax applies in the United Kingdom (“VAT”),
has complied with all statutory provisions, rules, regulations, orders and directions in respect of VAT, and all supplies made
by each Group Company are taxable supplies and each Group Company is entitled to full credit for all input tax.
(x) All
transactions entered into by a Group Company have been made on fully arm’s length terms and there are no circumstances in
which any rules relating to transfer pricing could apply causing any Tax Authority to make an adjustment to the terms on which
such transaction is treated as being made for Tax purposes.
(y) Section
3.16 of the Company Disclosure Schedules sets forth full details of any loans or advances made or agreed to be made by a Group
Company within sections 455, 459 or 460 of the United Kingdom Corporation Tax Act 2010 and no Group Company has released or written
off or agreed to release or write off the whole or any part of any such loans or advances.
(z) All
interest, discounts and premiums payable by a Group Company in respect of its loan relationships within the meaning of section
302 of the United Kingdom Corporation Tax Act 2009 are eligible to be brought into account by that Group Company as a debit for
the purposes of part 5 of that Act, at the time and to the extent that such debits are recognized in the statutory accounts of
the Group Company.
(aa) Each
Group Company has sufficient records to determine the tax consequence which would arise on any disposal or realization of any asset
owned at Closing.
(bb) The
Financial Statements make full provision or reserve within generally accepted accounting principles for any period ending on or
before the date to which they were drawn up for all Tax assessed or liable to be assessed on each Group Company, or for which the
Group Company is accountable at that date, whether or not the Group Company has (or may have) the right of reimbursement against
any other person. Proper provision has been made and shown in the Financial Statements for deferred tax in accordance with GAAP.
(cc) All transactions in
respect of which any clearance or consent was required from any Tax Authority have been entered into by the relevant Group Company
after such consent or clearance was properly obtained. Any application for such clearance or consent has been made on the basis
of full and accurate disclosure of all the relevant material facts and considerations, and all such transactions have been carried
into effect only in accordance with the terms of the relevant clearance or consent.
(dd) There have been
no payments or loans made to, any assets made available or transferred to, or any assets earmarked, however informally, for the
benefit of, any employee or former employee (or any associate of such employee or former employee) of any Group Company by an employee
benefit trust or another third party, falling within the provisions of Schedule 7A to the United Kingdom’s Income Tax (Earnings
and Pensions) Act 2003.
(ee) Neither the execution
of this Agreement nor Closing has given or will give rise to a Liability for Tax.
(ff) Each Group Company
has (to the extent required by law) preserved and retained in its possession complete and accurate records relating to its Tax
affairs (including Pay As You Earn and national insurance records and VAT records) and each Group Company has sufficient records
relating to past events to calculate the profit, gain, loss, balancing charge or balancing allowance (all for Tax purposes) which
would arise on any disposal or on the realization of any assets owned at Closing.
(gg) Each Group Company
has complied with applicable requirements of Law for all Tax holidays and similar Tax benefits that have current applicability
to the Group Companies, and no such Tax holiday or similar Tax benefits will terminate or be subject to recapture or carryback
by reason of the transactions contemplated hereby. The amount of Tax chargeable on any Group Company during any accounting period
ending on or within the seven years prior to Completion has not depended on any concessions, agreements or other formal or informal
arrangements with any Tax Authority.
(hh) Since their respective
dates of incorporation, each Group Company has been classified for U.S. federal and applicable state and local income Tax purposes
as set forth at Section 3.16(v) of the Company Disclosure Schedules and there have been no actions taken or elections made to the
contrary.
Section 3.17 Brokers.
Except for fees (including a good faith estimate of the amounts due and payable assuming the Closing occurs) set forth on Section
3.17 of the Company Disclosure Schedules (which fees shall be the sole responsibility of the Company, except as otherwise provided
in Section 3.17 of the Company Disclosure Schedules), no broker, finder, investment banker or other Person is entitled to
any brokerage fee, finders’ fee or other commission in connection with the transactions contemplated by this Agreement based
upon arrangements made by or on behalf of the Company or any of its Affiliates for which any of the Group Companies has any obligation.
Section 3.18 Real
and Personal Property.
(a) Section
3.18(a) of the Company Disclosure Schedules sets forth a true and complete list (including street addresses) of all real property
owned by any of the Group Companies (the “Owned Real Property” and, together with the Leased Real Property,
the “Real Property”). Except as set forth in Section 3.18(a) of the Company Disclosure Schedule, (i)
the Group Companies have good and marketable title to the Owned Real Property, free and clear of all Liens (except for Permitted
Liens), (ii) no Owned Real Property is subject to any outstanding options or rights of first refusal to purchase any Owned Real
Property, or any portion of any Owned Real Property or interest therein, (iii) no Owned Real Property is subject to any lease,
sublease, concession, license, occupancy agreement, outstanding option or right of first refusal to lease, or other contracts or
arrangement granting to any Person (other than the Group Companies) the right to occupy any Owned Real Property, or any portion
of any Owned Real Property, and (iv) there are no Persons other than the Group Companies in possession of any Owned Real Property.
There are currently in effect such insurance policies for the Owned Real Property as are customarily maintained with respect to
similar properties utilized for comparable purposes.
(b) Section
3.18(b) of the Company Disclosure Schedules sets forth a true and complete list (including street addresses) of all real property
leased by any of the Group Companies (the “Leased Real Property”) and all Real Property Leases pursuant to which
any Group Company is a tenant or landlord as of the date of this Agreement. The Group Companies have valid leasehold interests
to the Leased Real Property, free and clear of all Liens (except for Permitted Liens or any Liens created pursuant to Indebtedness
incurred in the ordinary course of business consistent with past practice). True and complete copies of all such Real Property
Leases (including all material amendments, extensions, renewals and guaranties with respect thereto) have been made available to
Bannix. Each Real Property Lease is in full force and effect and is a valid, legal and binding obligation of the applicable Group
Company party thereto, enforceable in accordance with its terms against such Group Company and, to the Company’s knowledge,
each other party thereto (subject to applicable bankruptcy, insolvency, reorganization, moratorium or other Laws affecting generally
the enforcement of creditors’ rights and subject to general principles of equity). There is no official written notice of
an event of default by any Group Company or, to the Company’s knowledge, any counterparty under any Real Property Lease,
and, to the Company’s knowledge, no event has occurred which (with or without notice or lapse of time or both) would constitute
a material breach or default under any Real Property Lease or would permit termination of, or a material modification or acceleration
thereof, by any counterparty to any Real Property Lease. The Group Companies’ have not received written notice of any material
disputes with respect to any Real Property Lease.
(c) The
Company is not in breach or default of any restrictive covenant affecting the Real Property, and there has not occurred any event
that with the lapse of time or the giving of notice, or both, would constitute such a default under any such restrictive covenant,
in each case except as would not reasonably be expected, individually or in the aggregate, to be material to the Group Companies
(taken as a whole). To the Company’s knowledge, there are no pending or threatened condemnation, expropriation or eminent
domain proceedings with respect to any Real Property.
(d) Except
as would not reasonably be expected to, individually or in the aggregate, be material to the Group Companies (taken as a whole),
(i) the use by the Group Companies of the land, buildings, structures and improvements on the Real Property are in conformity with
all applicable Laws, including, without limitation, all applicable zoning or planning Laws, and with all registered deeds, restrictions
of record or other agreements of record affecting such Real Property, (ii) there exists no conflict or dispute with any Governmental
Authority, regulatory authority or other person relating to any Real Property or the activities thereon or the occupancy or use
thereof of which the Company has received written notice, and (iii) all requisite certificates of occupancy and other permits or
approvals required with respect to the land, buildings, structures and improvements on any of the Owned Real Property and the occupancy
and use thereof have been obtained and are currently in effect.
(e) To
the knowledge of the Company, no damage or destruction has occurred with respect to any of the Real Property that would be material
to the Group Companies (taken as a whole), whether or not covered by an enforceable insurance policy and no Group Company has received
notice that the buildings and other structures on the Real Property are not in good and substantial repair.
(f) Each
Group Company has good, marketable and indefeasible title to, or a valid leasehold interest in or license or right to use, all
of the material assets and properties of the Group Companies reflected in the Financial Statements or thereafter acquired by the
Group Companies, except for assets disposed of in the ordinary course of business.
Section 3.19 Transactions
with Affiliates. Section 3.19 of the Company Disclosure Schedules sets forth all Contracts between (a) any Group
Company, on the one hand, and (b) any officer, director, employee, partner, member, manager, direct or indirect equityholder or
Affiliate of any Group Company (other than, for the avoidance of doubt, any other Group Company) or any Related Person of the foregoing
Persons, on the other hand (each Person identified in this clause (b), a “Company Related Party”), other than
(i) Contracts with respect to a Company Related Party’s employment with (including benefit plans and other ordinary course
compensation from) any of the Group Companies entered into in the ordinary course of business and (ii) Contracts entered into after
the date of this Agreement that are either permitted pursuant to Section 5.1(b) or entered into in accordance with Section
5.1(b). No Company Related Party (A) owns any interest in any material asset or property used in any Group Company’s
business, (B) possesses, directly or indirectly, any material financial interest in, or is a director or executive officer of,
any Person which is a supplier, vendor, partner, customer, lessor or other material business relation of any Group Company, (C)
is a supplier, vendor, partner, customer, lessor, or other material business relation of any Group Company or (D) owes any material
amount to, or is owed any material amount by, any Group Company (other than accrued compensation, employee benefits, employee or
director expense reimbursement, in each case, in the ordinary course of business or pursuant to any transaction entered into after
the date of this Agreement that is either permitted pursuant to Section 5.1(b) or entered into in accordance with Section
5.1(b)). All Contracts, arrangements, understandings, interests and other matters that are required to be disclosed pursuant
to this Section 3.19 (including, for the avoidance of doubt, pursuant to the second sentence of this Section 3.19)
are referred to herein as “Company Related Party Transactions”.
Section 3.20 Data
Privacy and Security.
(a) There
is (and since the date of incorporation of each Group Company there has been) no material Proceeding pending or, to the Company’s
knowledge, threatened against or involving any Group Company initiated by any Person (including (i) the United States Federal Trade
Commission, any state attorney general or similar state official, (ii) any other Governmental Entity, foreign or domestic or (iii)
any regulatory or self-regulatory entity) alleging that any Processing of Personal Data by or on behalf of a Group Company is or
was in violation of any Privacy and Security Requirements.
(b) Since
January 1, 2018, (i) there has been no Security Incidents with respect to any Company IT Systems, Personal Data, or Company Products
or otherwise related to the business of any Group Company (including, to the Company’s knowledge, prior to each Group Company’s
ownership of its business), (ii) to the Company’s knowledge there has been no unauthorized access to, or use, disclosure,
or Processing of Personal Data or any trade secrets, know-how or confidential information of or in the possession or control of
any Group Company or any of its contractors with regard to any Personal Data obtained from or on behalf of a Group Company, and
(iii) none of the Group Companies has notified or been required to notify any Person of any (A) loss, theft or damage of, or (B)
other unauthorized or unlawful access to, or use, disclosure or other Processing of, Personal Data, except, in each case, as is
not and would not reasonably be excepted to be, individually or in the aggregate, material to the Group Companies, taken as a whole.
(c) Each
Group Company owns or has license to use the Company IT Systems as necessary to operate the business of each Group Company as currently
conducted. The Group Companies have taken reasonable precautions to protect the confidentiality, integrity and security of the
Company IT Systems and all information stored or contained therein or transmitted thereby from any loss, theft, or unauthorized
disclosure, use, access, interruption or modification by any Person. All Company IT Systems are (i) free from any Malicious Code,
material defect, bug or programming, design or documentation error and (ii) in sufficiently good working condition to effectively
perform all material information technology operations necessary for the operation of the business of the Group Companies (except
for ordinary wear and tear). Since January 1, 2018, there have not been any material failures, breakdowns or continued substandard
performance of any Company IT Systems that have caused a material failure or disruption of the Company IT Systems, including, to
the Company’s knowledge, prior to each Group Company’s ownership of its business. The Group Companies have implemented,
maintained and tested adequate and commercially reasonable disaster recovery procedures and facilities for their respective businesses.
(d) The
Group Companies (i) engage and have engaged in, directly or indirectly, Data Processing only with respect to such Data as they
are authorized to so engage (or to cause such Processing, as applicable) by Law and Contract, except as is not and would not reasonably
be expected to be, individually or in the aggregate, material to the Group Companies, taken as a whole, and (ii) have implemented
reasonable safeguards designed to prevent unauthorized use or disclosure of such Data. The Group Companies have, with respect to
all such Data that is subjected to any Processing directly or indirectly in connection with the business of the Group Companies,
all rights necessary to conduct the operation of their respective businesses as then-currently conducted, in all material respects.
Section 3.21 Compliance
with International Trade & Anti-Corruption Laws.
(a) None
of the Group Companies, nor, to the Company’s knowledge, any of their respective officers, directors or employees, any of
their other Representatives, or any other Persons acting for or on behalf of any of the foregoing, is or has been, since its applicable
date of incorporation, (i) a Person named on any Sanctions and Export Control Laws-related list of designated Persons maintained
by a Governmental Entity; (ii) located, organized or resident in a country or territory which is itself the subject of or target
of any Sanctions and Export Control Laws; (iii) an entity owned, directly or indirectly, by one or more Persons described in clause
(i) or (ii); or (iv) otherwise engaging in dealings with or for the benefit of any Person described in clauses (i) through (iii)
or any country or territory which is or has, since January 1, 2018, been the subject of or target of any Sanctions and Export Control
Laws (at the time of this Agreement, Russia, Belarus, the Crimea region of Ukraine, Cuba, Iran, North Korea, Venezuela, Sudan and
Syria).
(b) None
of the Group Companies, nor any of their respective officers, directors or employees, nor, to the Company’s knowledge, any
of their Representatives, or any other Persons acting for or on behalf of any of the foregoing has, to the Company’s knowledge,
since its applicable date of incorporation, directly or indirectly, (i) made, offered, authorized, facilitated, solicited, promised,
paid or received any unlawful contribution, gift, entertainment, bribes, kickbacks, financial or other advantage, or anything else
of value, regardless of form or amount, to or from any Person, (ii) made or paid any contributions, directly or indirectly, to
a domestic or foreign political party or candidate that violate Anti-Corruption Laws, (iii) otherwise made, offered, received,
authorized, promised or paid any improper payment prohibited under any Anti-Corruption Laws or (iv) been the subject of any Proceeding
or disclosure, or except as otherwise disclosed on Section 3.21(b) of the Company Disclosure Schedule, any internal report
or investigation, in each case, regarding any violation or alleged violation under Sanctions and Export Control Laws or Anti-Corruption
Laws, and no such Proceeding is pending or, to the Company’s knowledge, has been threatened.
Section 3.22 Transferor
Representations.
(a) If the Transferor
is not a natural person, the Transferor (i) is duly organized, validly existing and in good standing under the laws of the
state of its formation and (ii) has all necessary power and corporate authority to carry on its business, and to own or use
the properties and assets that it purports to own or use.
(b) Each Transferor
has all requisite power and authority, and has taken all action necessary, to execute and deliver this Agreement and each other
Ancillary Document to which it is a party and to perform its obligations hereunder and thereunder. This Agreement and each other
Ancillary Document to which each Transferor is a party has been duly authorized, executed and delivered by the relevant Transferor,
and this Agreement constitutes, and each other Ancillary Document to which the relevant Transferor is or will be a party when so
executed and delivered will constitute, the legal, valid and binding obligations of the relevant Transferor, enforceable against
the relevant Transferor in accordance with their terms.
(c) Each Transferor
is the record and beneficial owner of, and has good and valid title to, the Company Ordinary Shares set forth next to that Transferor’s
name on Schedule A, free and clear of all Liens, and such Company Ordinary Shares comprise the entire issued share capital
of the Company. No Transferor is a party to any option, warrant, right, contract, call, put or other agreement or commitment providing
for the disposition or acquisition of any of Company Ordinary Shares (other than this Agreement). No Transferor has any other debt
or ownership interest in any Group Company. Other than this Agreement, the Company Ordinary Shares are not subject to any voting
trust agreement or other Contract restricting or otherwise relating to the voting, dividend rights or other disposition of the
Company Ordinary Shares.
(d) The execution
and delivery by each Transferor of this Agreement and each other Ancillary Document, and the performance by it of any actions contemplated
hereunder or thereunder, does not and will not, directly or indirectly (with or without notice or lapse of time or both): (i) conflict
with or violate any provision of the Governing Documents of the Transferor (if Transferor is not a natural person); (ii) require
notice, consent or approval under, conflict with, violate, result in a breach of, result in the acceleration of obligations, loss
of a benefit or increase in Liabilities or fees under, create in any Person the right to terminate, cancel or modify, or cause
a default under or give rise to any rights or penalties under (A) any provision of Law relating to any Transferor, (B) any
provision of any Governmental Order to which any Transferor or any of its properties are subject, (C) any provision of any
Contract to which any Transferor or its properties are bound, or (D) any other restriction of any kind or character to which
any Transferor or its properties are subject; or (iii) require a registration, filing, application, notice, consent, approval,
order, qualification or waiver with, to or from any Governmental Authority.
(e) There are no
Actions pending or, to any Transferor’s knowledge, threatened against or by any Transferor or any of his Affiliates or Related
Persons that may challenge or seek to prevent, enjoin or otherwise delay the transaction contemplated by this Agreement or any
Ancillary Document.
(ee) No Transferor
has (i) had a bankruptcy petition presented against them, or been declared bankrupt, (ii) been served with a statutory demand,
or is unable to pay their debts within the meaning of the United Kingdom’s Insolvency Act 1986, (iii) entered into, or has
proposed to enter into, any composition or arrangement with, or for, their creditors (including an individual voluntary arrangement)
or (iv) been subject of any other event analogous to the foregoing in any jurisdiction.
(f) Investment
Representations
(i) The Bannix Common
Stock that each Transferor will acquire pursuant hereto will be acquired for investment only and not with a view of any distribution
thereof that would violate the Securities Act or any applicable state securities laws.
(ii) No Transferor will
distribute any of the Bannix Common Stock in violation of the Securities Act or any applicable state securities laws.
(iii) Each Transferor
understands that it may not be possible for any Transferor to liquidate its investment readily and it may be necessary to hold
the investment for an indefinite period.
(iv) Each Transferor
is financially able to hold the Bannix Common Stock for long-term investment, (ii) each Transferor recognizes that there are
substantial risks involved in the acquisition of the Bannix Common Stock, including risk of loss of the entire amount of such investment,
and (iii) each Transferor can bear the economic risk of the acquisition of the Bannix Common Stock and the loss of the entire
amount of the investment.
(v) Each Transferor
confirms that it (i) is familiar with Bannix and its Affiliates (collectively, the “Bannix Companies”),
(ii) has been given the opportunity to ask questions of the officers and directors of the Bannix Companies and to obtain (and
has received to each Transferor’s satisfaction) such information about the business and financial condition of the Bannix
Companies as any Transferor has reasonably requested and (iii) has such knowledge and experience in financial and business
matters that each Transferor is capable of evaluating the merits and risks of acquiring the Bannix Common Stock.
(vi) In formulating
a decision to acquire the Bannix Common Stock, each Transferor (i) has relied solely upon an independent investigation of
Bannix and upon consultations with that Transferor’s legal and financial advisors with respect to this Agreement and the
Ancillary Documents and (ii) has not relied on any oral or written representations or warranties of Bannix, except the representations
and warranties expressly set forth in Article 4 and in the Ancillary Documents to which it is or will be a party.
(vii) Each Transferor
is an accredited investor within the meaning of Regulation D under the Securities Act.
(viii) No Transferor
is subject to any “bad actor” disqualifying event described in Rule 506(d)(1)(i)-(viii) of the Securities Act (each
event so described, a “Disqualification Event”).
Section 3.23 Information
Supplied. None of the information supplied or to be supplied by or on behalf of the Group Companies expressly for inclusion
or incorporation by reference prior to the Closing in the Proxy Statement will, when the Proxy Statement is declared effective
or when the Proxy Statement is mailed to the Bannix Stockholders or at the time of the Bannix Stockholders Meeting, and in the
case of any amendment thereto, at the time of such amendment, contain any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances
under which they are made, not misleading.
Section 3.24 Investigation;
No Other Representations.
(a) The
Company, on its own behalf and on behalf of its Representatives, acknowledges, represents, warrants and agrees that (i) it has
conducted its own independent review and analysis of, and, based thereon, has formed an independent judgment concerning, the business,
assets, condition, operations and prospects of, Bannix and (ii) it has been furnished with or given access to such documents and
information about Bannix and its business and operations as it and its Representatives have deemed necessary to enable it to make
an informed decision with respect to the execution, delivery and performance of this Agreement, the Ancillary Documents and the
transactions contemplated hereby and thereby.
(b) In entering into
this Agreement and the Ancillary Documents to which it is or will be a party, the Company has relied solely on its own investigation
and analysis and the representations and warranties expressly set forth in Article 4 and in the Ancillary Documents to which
it is or will be a party and no other representations or warranties of Bannix or any other Person, either express or implied, and
the Company, on its own behalf and on behalf of its Representatives, acknowledges, represents, warrants and agrees that, except
for the representations and warranties expressly set forth in Article 4 and in the Ancillary Documents to which it is or
will be a party, none of Bannix or any other Person makes or has made any representation or warranty, either express or implied,
in connection with or related to this Agreement, the Ancillary Documents or the transactions contemplated hereby or thereby.
Section 3.25 EXCLUSIVITY
OF REPRESENTATIONS AND WARRANTIES. NOTWITHSTANDING THE DELIVERY OR DISCLOSURE TO
Bannix OR ANY OF ITS REPRESENTATIVES OF ANY DOCUMENTATION OR OTHER INFORMATION (INCLUDING ANY FINANCIAL PROJECTIONS OR OTHER SUPPLEMENTAL
DATA), EXCEPT AS OTHERWISE EXPRESSLY SET FORTH IN THIS Article 3 OR THE ANCILLARY DOCUMENTS, NEITHER The Company NOR ANY
OTHER PERSON MAKES, and the company EXPRESSLY DISCLAIMS, ANY REPRESENTATIONS OR
WARRANTIES OF ANY KIND OR NATURE, EXPRESS OR IMPLIED, IN CONNECTION WITH THIS AGREEMENT, THE ANCILLARY DOCUMENTS OR ANY OF the
TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY, INCLUDING AS TO THE MATERIALS RELATING TO THE BUSINESS AND AFFAIRS OR HOLDINGS OF
THE GROUP COMPANIES THAT HAVE BEEN MADE AVAILABLE TO Bannix OR ANY OF ITS REPRESENTATIVES OR IN ANY PRESENTATION OF THE BUSINESS
AND AFFAIRS OF THE GROUP COMPANIES BY THE MANAGEMENT OR ON BEHALF OF THE COMPANY OR OTHERS IN CONNECTION WITH THE TRANSACTIONS
CONTEMPLATED HEREBY OR BY THE ANCILLARY DOCUMENTS, AND NO STATEMENT CONTAINED IN ANY OF SUCH MATERIALS OR MADE IN ANY SUCH PRESENTATION
SHALL BE DEEMED A REPRESENTATION OR WARRANTY HEREUNDER OR OTHERWISE OR DEEMED TO BE RELIED UPON BY Bannix IN EXECUTING, DELIVERING
or PERFORMING THIS AGREEMENT, THE ANCILLARY DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY. Except for the representations
and warranties expressly set forth in article 3 OR the ancillary DOCUMENTS, IT IS UNDERSTOOD THAT ANY COST ESTIMATES, PROJECTIONS
OR OTHER PREDICTIONS, ANY DATA, ANY FINANCIAL INFORMATION OR ANY MEMORANDA OR OFFERING MATERIALS OR PRESENTATIONS, INCLUDING ANY
OFFERING MEMORANDUM OR SIMILAR MATERIALS MADE AVAILABLE BY OR ON BEHALF OF ANY GROUP COMPANY ARE NOT AND SHALL NOT BE DEEMED TO
BE OR TO INCLUDE REPRESENTATIONS OR WARRANTIES OF THE COMPANY OR ANY OTHER PERSON, AND ARE NOT AND SHALL NOT BE DEEMED TO BE RELIED
UPON BY Bannix IN EXECUTING, DELIVERING or PERFORMING THIS AGREEMENT, THE ANCILLARY DOCUMENTS or THE TRANSACTIONS CONTEMPLATED
HEREBY OR THEREBY.
Article
4
REPRESENTATIONS AND WARRANTIES OF BANNIX
Subject to Section 8.8,
(a) except as set forth on the Bannix Disclosure Schedules, or (b) except as set forth in any Bannix SEC Reports (excluding any
disclosures in any “risk factors” section that do not constitute statements of fact, disclosures in any forward-looking
statements disclaimers and other disclosures that are generally cautionary, predictive or forward-looking in nature), Bannix hereby
represents and warrants to the Company and the Transferors, in each case, as of the date hereof, as follows:
Section 4.1 Organization
and Qualification. Bannix is a corporation duly incorporated, validly existing and in good standing under the Laws of its
jurisdiction of incorporation.
Section 4.2 Authority.
Bannix has the requisite corporate power and authority to execute and deliver this Agreement and each Ancillary Document to which
it is or will be a party, to perform its obligations hereunder and thereunder, and to consummate the transactions contemplated
hereby and thereby. Subject to the receipt of the Bannix Stockholder Approval, the execution and delivery of this Agreement, the
Ancillary Documents to which Bannix is or will be a party and the consummation of the transactions contemplated hereby and thereby
have been (or, in the case of any Ancillary Document entered into after the date of this Agreement, will be upon execution thereof)
duly authorized by all necessary corporate, limited liability company or other similar action on the part of Bannix. This Agreement
has been and each Ancillary Document to which Bannix is or will be a party will be, upon execution thereof, duly and validly executed
and delivered by Bannix and constitutes or will constitute, upon execution thereof, as applicable, a valid, legal and binding agreement
of Bannix (assuming this Agreement has been and the Ancillary Documents to which Bannix is or will be a party are or will be, upon
execution thereof, as applicable, duly authorized, executed and delivered by the other Persons party hereto or thereto), enforceable
against Bannix in accordance with their terms (subject to applicable bankruptcy, insolvency, reorganization, moratorium or other
Laws affecting generally the enforcement of creditors’ rights and subject to general principles of equity).
Section 4.3 Consents
and Requisite Governmental Approvals; No Violations.
(a) No consent, approval
or authorization of, or designation, declaration or filing with, any Governmental Entity is required on the part of Bannix with
respect to Bannix’s execution, delivery or performance of its obligations under this Agreement or the Ancillary Documents
to which it is or will be party or the consummation of the transactions contemplated hereby or thereby, except for (i) the filing
with the SEC of (A) the Proxy Statement and (B) such reports under Section 13(a) or 15(d) of the Exchange Act as may be required
in connection with this Agreement, the Ancillary Documents or the transactions contemplated hereby or thereby, (ii) the Bannix
Stockholder Approval, (iii) applicable requirements, if any, under Nasdaq in connection with the transactions contemplated by this
Agreement and the other Ancillary Documents or (v) any other consents, approvals, authorizations, designations, declarations, waivers
or filings, the absence of which would not have a Bannix Material Adverse Effect.
(b) None of the execution
or delivery by Bannix of this Agreement or any Ancillary Document to which it is or will be a party, the performance by Bannix
of its obligations hereunder or thereunder or the consummation by Bannix of the transactions contemplated hereby or thereby will,
directly or indirectly (with or without due notice or lapse of time or both) (i) result in a violation or breach of any provision
of the Governing Documents of Bannix, (ii) result in a violation or breach of, or constitute a default or give rise to any right
of termination, Consent, cancellation, amendment, modification, suspension, revocation or acceleration under, any of the terms,
conditions or provisions of any Contract to which Bannix is a party, (iii) violate, or constitute a breach under, any Order or
applicable Law to which Bannix or any of its properties or assets are subject or bound or (iv) result in the creation of any Lien
upon any of the assets or properties (other than any Permitted Liens) of Bannix, except in the case of any of clauses (ii)
through (iv) above, for any violations, breaches, defaults or other occurrences which, individually or in the aggregate,
would not or would not reasonably be expected to have a Bannix Material Adverse Effect.
Section 4.4 Brokers.
Except for fees (including a good faith estimate of the amounts due and payable assuming the Closing occurs) set forth on Section
4.4 of the Bannix Disclosure Schedules (which fees shall be the sole responsibility of Bannix, except as otherwise provided
in Section 8.6), no broker, finder, investment banker or other Person is entitled to any brokerage fee, finders’ fee
or other commission in connection with the transactions contemplated by this Agreement based upon arrangements made by or on behalf
of Bannix for which Bannix has any obligation.
Section 4.5 Information
Supplied. None of the information supplied or to be supplied by or on behalf of Bannix expressly for inclusion or incorporation
by reference prior to the Closing in the Proxy Statement will, when the Proxy Statement is declared effective or when the Proxy
Statement is mailed to the Bannix Stockholders or at the time of the Bannix Stockholders Meeting, and in the case of any amendment
thereto, at the time of such amendment, contain any untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they are made,
not misleading.
Section 4.6 Capitalization
of Bannix.
(a) Section 4.6(a)
of the Bannix Disclosure Schedules sets forth a true and complete statement of the number and class or series (as applicable) of
the issued and outstanding Bannix Shares. All outstanding Equity Securities of Bannix (except to the extent such concepts are not
applicable under the applicable Law of Bannix’s jurisdiction of incorporation or other applicable Law) have been duly authorized
and validly issued and all of the issued and outstanding Bannix Shares are fully paid and non-assessable. Such Equity Securities
(i) were not issued in violation of the Governing Documents of Bannix (ii) are not subject to any preemptive rights, call option,
right of first refusal, subscription rights, transfer restrictions or similar rights of any Person (other than transfer restrictions
under applicable Securities Laws or under the Governing Documents of Bannix) and were not issued in violation of any preemptive
rights, call option, right of first refusal, subscription rights, transfer restrictions or similar rights of any Person. Except
for the Bannix Shares set forth on Section 4.6(a) of the Bannix Disclosure Schedules (assuming that no Bannix Stockholder
Redemptions are effected) and the Bannix Warrants, immediately prior to Closing, there shall be no other Equity Securities of Bannix
issued and outstanding.
(b) Except (i) for the Bannix
Warrants or (ii) as expressly contemplated by this Agreement, the Ancillary Documents or the transactions contemplated hereby or
thereby or as otherwise either permitted pursuant to Section 5.11 or issued, granted or entered into, as applicable, in
accordance with Section 5.11, there are no outstanding (A) equity appreciation, phantom equity or profit participation rights
or (B) options, restricted stock, phantom stock, warrants, purchase rights, subscription rights, conversion rights, exchange rights,
calls, puts, rights of first refusal or first offer or other Contracts that could require Bannix to issue, sell or otherwise cause
to become outstanding or to acquire, repurchase or redeem any Equity Securities or securities convertible into or exchangeable
for Equity Securities of Bannix.
Section 4.7 SEC Filings.
Bannix has timely filed or furnished all statements, forms, reports and documents required to be filed or furnished by it prior
to the date of this Agreement with the SEC pursuant to Federal Securities Laws since its initial public offering (collectively,
and together with any exhibits and schedules thereto and other information incorporated therein, and as they have been supplemented,
modified or amended since the time of filing, the “Bannix SEC Reports”), and, as of the Closing, will have filed
or furnished all other statements, forms, reports and other documents required to be filed or furnished by it subsequent to the
date of this Agreement with the SEC pursuant to Federal Securities Laws through the Closing (collectively, and together with any
exhibits and schedules thereto and other information incorporated therein, and as they have been supplemented, modified or amended
since the time of filing, but excluding the Proxy Statement, the “Additional Bannix SEC Reports”). Each of the
Bannix SEC Reports, as of their respective dates of filing, and as of the date of any amendment or filing that superseded the initial
filing, complied and each of the Additional Bannix SEC Reports, as of their respective dates of filing, and as of the date of any
amendment or filing that superseded the initial filing, will comply, in all material respects with the applicable requirements
of the Federal Securities Laws (including, as applicable, the Sarbanes-Oxley Act and any rules and regulations promulgated thereunder)
applicable to the Bannix SEC Reports or the Additional Bannix SEC Reports (for purposes of the Additional Bannix SEC Reports, assuming
that the representation and warranty set forth in Section 3.23 is true and correct in all respects with respect to all information
supplied by or on behalf of Group Companies expressly for inclusion or incorporation by reference therein). As of their respective
dates of filing, the Bannix SEC Reports did not contain any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were
made or will be made, as applicable, not misleading. As of the date of this Agreement, there are no outstanding or unresolved comments
in comment letters received from the SEC with respect to the Bannix SEC Reports.
Section 4.8 Trust
Account. As of the date of this Agreement, Bannix has an amount in cash in the Trust Account equal to at least $31,744,838.
The funds held in the Trust Account are (a) invested in United States “government securities” within the meaning of
Section 2(a)(16) of the Investment Company Act, having a maturity of 180 days or less or in money market funds meeting certain
conditions under Rule 2a-7 promulgated under the Investment Company Act which invest only in direct U.S. government treasury obligations
and (b) held in trust pursuant to that certain Investment Management Trust Agreement, dated September 10, 2021, as amended on March
10, 2023 (the “Trust Agreement”), between Bannix and Continental Stock Transfer & Trust Company, as trustee
(the “Trustee”). There are no separate agreements, side letters or other agreements or understandings (whether
written or unwritten, express or implied) that would cause the description of the Trust Agreement in the Bannix SEC Reports to
be inaccurate in any material respect or,
to Bannix’s knowledge, that would entitle any Person to any portion of the funds
in the Trust Account (other than (i) in respect of deferred underwriting commissions or Taxes, (ii) the Bannix Stockholders who
shall have elected to redeem their Bannix Common Stock pursuant to the Governing Documents of Bannix or (iii) if Bannix fails to
complete a business combination within the allotted time period set forth in the Governing Documents of Bannix and liquidates the
Trust Account, subject to the terms of the Trust Agreement, Bannix (in limited amounts to permit Bannix to pay the expenses of
the Trust Account’s liquidation, dissolution and winding up of Bannix) and then the Bannix Stockholders). Prior to the Closing,
none of the funds held in the Trust Account are permitted to be released, except in the circumstances described in the Governing
Documents of Bannix and the Trust Agreement. As of the date of this Agreement, Bannix has performed all material obligations required
to be performed by it, and is not in material default, under the Trust Agreement, and, to Bannix’s knowledge, no event has
occurred which (with due notice or lapse of time or both) would constitute a material default under the Trust Agreement. As of
the date of this Agreement, there are no Proceedings pending with respect to the Trust Account. Since May 1, 2023, Bannix has not
released any money from the Trust Account (other than interest income earned on the funds held in the Trust Account as permitted
by the Trust Agreement). Upon the consummation of the transactions contemplated hereby (including the distribution of assets from
the Trust Account (A) in respect of deferred underwriting commissions or Taxes or (B) to the Bannix Stockholders who have elected
to redeem their Bannix Common Stock pursuant to the Governing Documents of Bannix, each in accordance with the terms of and as
set forth in the Trust Agreement), Bannix shall have no further obligation under either the Trust Agreement or the Governing Documents
of Bannix to liquidate or distribute any assets held in the Trust Account, and the Trust Agreement shall terminate in accordance
with its terms.
Section 4.9 Transactions
with Affiliates. Section 4.9 of the Bannix Disclosure Schedules sets forth all Contracts between (a) Bannix, on
the one hand, and (b) any officer, director, employee, partner, member, manager, direct or indirect equityholder or Affiliate of
Bannix or the Bannix Sponsor, on the other hand (each Person identified in this clause (b), an “Bannix Related
Party”), other than (i) Contracts with respect to a Bannix Related Party’s employment with, or the provision of
services to, Bannix entered into in the ordinary course of business (including benefit plans, indemnification arrangements and
other ordinary course compensation) and (ii) Contracts entered into after the date of this Agreement that are either permitted
pursuant to Section 5.11 or entered into in accordance with Section 5.11. No Bannix Related Party (A) owns any interest
in any material asset or property used in the business of Bannix, (B) possesses, directly or indirectly, any material financial
interest in, or is a director or executive officer of, any Person which is a material client, supplier, vendor, partner, customer,
lessor or other material business relation of Bannix or (C) owes any material amount to, or is owed any material amount by, Bannix
(other than accrued compensation, employee benefits, employee or director expense reimbursement, in each case, in the ordinary
course of business or pursuant to a transaction entered into after the date of this Agreement that is either permitted pursuant
to Section 5.11 or entered into in accordance with Section 5.11). All Contracts, arrangements, understandings, interests
and other matters that are required to be disclosed pursuant to this Section 4.9 (including, for the avoidance of doubt,
pursuant to the second sentence of this Section 4.9) are referred to herein as “Bannix Related Party Transactions”.
Section 4.10 Litigation.
As of the date of this Agreement, there is (and, since its incorporation, there has been) no Proceeding pending or, to Bannix’s
knowledge, threatened against or involving Bannix that, if adversely decided or resolved, would be material to Bannix, taken as
a whole. As of the date of this Agreement, neither Bannix nor its properties or assets is subject to any material Order. As of
the date of this Agreement, there are no material Proceedings by Bannix pending against any other Person.
Section 4.11 Compliance
with Applicable Law. Bannix is (and, since its incorporation, has been) in compliance with all applicable Laws, except
as would not have a Bannix Material Adverse Effect.
Section 4.12 Internal
Controls; Listing; Financial Statements.
(a) Except as is not required
in reliance on exemptions from various reporting requirements by virtue of Bannix’s status as an “emerging growth company”
within the meaning of the Securities Act, as modified by the JOBS Act, or “smaller reporting company” within the meaning
of the Exchange Act and except as otherwise set forth or disclosed in the Bannix SEC Reports,, since its initial public offering,
(i) Bannix has established and maintained a system of internal controls over financial reporting (as defined in Rule 13a-15 and
Rule 15d-15 under the Exchange Act) sufficient to provide reasonable assurance regarding the reliability of Bannix’s financial
reporting and the preparation of Bannix’s financial statements for external purposes in accordance with GAAP and (ii) Bannix
has established and maintained disclosure controls and procedures (as defined in Rule 13a-15 and Rule 15d-15 under the Exchange
Act) designed to ensure that material information relating to Bannix is made known to Bannix’s principal executive officer
and principal financial officer by others within Bannix.
(b) Bannix has not taken
any action prohibited by Section 402 of the Sarbanes-Oxley Act.
(c) Since its initial public
offering, Bannix has complied in all material respects with all applicable listing and corporate governance rules and regulations
of Nasdaq. The classes of securities representing issued and outstanding Bannix Common Stock are registered pursuant to Section
12(b) of the Exchange Act and are listed for trading on Nasdaq. As of the date of this Agreement, there is no material Proceeding
pending or, to Bannix’s knowledge, threatened against Bannix by Nasdaq or the SEC with respect to any intention by such entity
to deregister Bannix Common Stock or prohibit or terminate the listing of Bannix Common Stock on Nasdaq. Bannix has not taken any
action that is designed to terminate the registration of Bannix Common Stock under the Exchange Act.
(d) The Bannix SEC Reports
contain true and complete copies of the applicable Bannix Financial Statements. The Bannix Financial Statements (i) fairly present
in all material respects the financial position of Bannix as at the respective dates thereof, and the results of its operations,
stockholders’ equity and cash flows for the respective periods then ended (subject, in the case of any unaudited interim
financial statements, to normal year-end audit adjustments (none of which is expected to be material) and the absence of notes
thereto), (ii) were prepared in conformity with GAAP applied on a consistent basis during the periods indicated (except, in the
case of any audited financial statements, as may be indicated in the notes thereto and subject, in the case of any unaudited financial
statements, to normal year-end audit adjustments (none of which is expected to be material) and the absence of notes thereto, (iii)
in the case of the audited Bannix Financial Statements, were audited in accordance with the standards of the PCAOB and (iv) comply
in all material respects with the applicable accounting requirements and with the rules and regulations of the SEC, the Exchange
Act and the Securities Act in effect as of the respective dates thereof (including Regulation S-X or Regulation S-K, as applicable).
(e) Bannix has established
and maintains systems of internal accounting controls that are designed to provide, in all material respects, reasonable assurance
that (i) all transactions are executed in accordance with management’s authorization and (ii) all transactions are recorded
as necessary to permit preparation of proper and accurate financial statements in accordance with GAAP and to maintain accountability
for Bannix’s and its Subsidiaries’ assets. Bannix maintains and, for all periods covered by the Bannix Financial Statements,
has maintained books and records of Bannix in the ordinary course of business that are accurate and complete and reflect the revenues,
expenses, assets and liabilities of Bannix in all material respects.
(f) Except as otherwise
set forth or disclosed in the Bannix SEC Reports, since its incorporation, Bannix has not received any written complaint, allegation,
assertion or claim that there is (i) a “significant deficiency” in the internal controls over financial reporting of
Bannix, (ii) a “material weakness” in the internal controls over financial reporting of Bannix or (iii) fraud, whether
or not material, that involves management or other employees of Bannix who have a significant role in the internal controls over
financial reporting of Bannix.
(g) Bannix has limited its
activities in all material respects to those activities (a) contemplated by the Prospectus, or (b) otherwise necessary, desirable
or advisable to consummate the transactions contemplated by this Agreement or the Ancillary Documents.
Section 4.13 No Undisclosed
Liabilities. Except for the Liabilities (a) set forth in Section 4.13 of the Bannix Disclosure Schedules, (b) incurred
in connection with the negotiation, preparation or execution of this Agreement or any Ancillary Document, the performance of its
covenants or agreements in this Agreement or any Ancillary Document or the consummation of the transactions contemplated hereby
or thereby (including, for the avoidance of doubt, the Bannix Expenses and any Liabilities arising out of, or related to, any Proceeding
related to this Agreement, the Ancillary Documents or the transactions contemplated hereby or thereby, including any stockholder
demand or other stockholder Proceedings (including derivative claims) arising out of, or related to, any of the foregoing), (c)
set forth or disclosed in the Bannix Financial Statements, (d) that have arisen since the date of the most recent balance sheet
included in the Bannix SEC Reports in the ordinary course of business, (e) that are either permitted pursuant to Section 5.11
or incurred in accordance with Section 5.11, or (f) that are not, and would not reasonably be expected to be, individually
or in the aggregate, material to Bannix, taken as a whole, the Bannix do not have any Liabilities.
Section 4.14 Tax Matters
(a) Bannix has prepared
and filed all material Tax Returns required to have been filed by it, all such Tax Returns are true and complete in all material
respects and prepared in compliance in all material respects with all applicable Laws and Orders, and Bannix has paid all material
Taxes required to have been paid or deposited by it regardless of whether shown on a Tax Return.
(b) Bannix has timely withheld
and paid to the appropriate Tax Authority all material amounts required to have been withheld and paid in connection with amounts
paid or owing to any employee, worker, individual independent contractor, other service providers, equity interest holder or other
third-party.
(c) Bannix is not currently
the subject of a Tax audit or examination and has not been informed in writing of the commencement or anticipated commencement
of any Tax audit or examination that has not been resolved or completed, in each case with respect to material Taxes.
(d) No deficiencies for
Taxes against Bannix has been claimed, proposed or assessed in writing by any Tax Authority that remain unpaid except for deficiencies
which are being contested in good faith and with respect to which adequate reserves have been established.
(e) Bannix has not consented
to extend or waive the time in which any material Tax may be assessed or collected by any Tax Authority, other than any such extensions
or waivers that are no longer in effect or that were extensions of time to file Tax Returns obtained in the ordinary course of
business, in each case with respect to material Taxes.
(f) No “closing agreement”
as described in Section 7121 of the Code (or any corresponding or similar provision of state, local or non-U.S. income Tax Law),
private letter rulings, technical advice memoranda or similar agreements or rulings have been entered into or issued by any Tax
Authority with respect to Bannix which agreement or ruling would be effective after the Closing Date.
(g) Bannix is not and has
not been a party to any “listed transaction” as defined in Section 6707A of the Code and Treasury Regulations Section
1.6011-4 (or any corresponding or similar provision of state, local or non-U.S. income Tax Law).
(h) There are no Liens for
material Taxes on any assets of Bannix other than Permitted Liens.
(i) During the two (2)-year
period ending on the date of this Agreement, Bannix was not a distributing corporation or a controlled corporation in a transaction
purported or intended to be governed in whole or in part by Section 355 of the Code (or so much of Section 356 as relates to Section
355).
(j) To the knowledge of
Bannix, Bannix has not had a permanent establishment (within the meaning of an applicable Tax treaty) or otherwise has an office
or fixed place of business in a country other than the country in which it is organized.
(k) Bannix will not be required
to include any item of income in, or exclude any item of deduction from, taxable income for any taxable period (or portion thereof)
ending after the Closing Date as a result of any (i) change in method of accounting for a taxable period ending on or prior to
the Closing Date; (ii) installment sale made prior to the Closing Date; (iii) prepaid amount received on or prior to the Closing
Date or other deferred revenue; (iv) use of an improper method of accounting for a taxable period on or prior to the Closing Date,
or (v) any other deferral of liability for Taxes of Bannix from any taxable period (or portion thereof) ending on or before the
Closing Date to any taxable period beginning after the Closing Date (or portion thereof). No Group Company has made an election
pursuant to Section 965(h) of the Code.
(l) Bannix is tax resident
only in its jurisdiction of incorporation.
(m) Bannix (i) has not been
a member of an affiliated group filing a consolidated federal income Tax Return or any affiliated, combined, consolidated, aggregate,
unitary or other group under federal, state, local or non-United States Law and (ii) has no material Liability for the Taxes of
any Person under Section 1.1502-6 of the Treasury Regulations (or any similar provision of state, local or non-United States Law),
as a transferee or successor or by Contract (other than any Contract entered into in the ordinary course of business and the principal
purpose of which does not relate to Taxes).
(n) To the Knowledge of
Bannix, in the past three (3) years, no written claims have been made by any Tax Authority in a jurisdiction where Bannix does
not file Tax Returns that Bannix is or may be subject to taxation by that jurisdiction, which claims have not been resolved or
withdrawn.
(o) Bannix is not a party
to any Tax allocation, Tax sharing or Tax indemnity or similar agreements (other than one that is included in a Contract entered
into in the ordinary course of business that is not primarily related to Taxes) and Bannix is not a party to any joint venture,
partnership or other arrangement that is treated as a partnership for U.S. federal income Tax purposes.
(p) Bannix has not taken
or agreed to take any action or is aware of any fact or circumstance that could reasonably be expected to prevent or impede the
transactions contemplated by this Agreement from qualifying for the Intended Tax Treatment.
Section 4.15 Investigation;
No Other Representations.
(a) Bannix, on its own behalf
and on behalf of its Representatives, acknowledges, represents, warrants and agrees that (i) it has conducted its own independent
review and analysis of, and, based thereon, has formed an independent judgment concerning, the business, assets, condition, operations
and prospects, of the Group Companies and (ii) it has been furnished with or given access to such documents and information about
the Group Companies and their respective businesses and operations as it and its Representatives have deemed necessary to enable
it to make an informed decision with respect to the execution, delivery and performance of this Agreement, the Ancillary Documents
and the transactions contemplated hereby and thereby.
(b) In entering into this
Agreement and the Ancillary Documents to which it is or will be a party, Bannix has relied solely on its own investigation and
analysis and the representations and warranties expressly set forth in Article 3 and in the Ancillary Documents to which
it is or will be a party and no other representations or warranties of the Company or any other Person, either express or implied,
and Bannix, on its own behalf and on behalf of its Representatives, acknowledges, represents, warrants and agrees that, except
for the representations and warranties expressly set forth in Article 3 and in the Ancillary Documents to which it is or
will be a party, neither the Company nor any other Person makes or has made any representation or warranty, either express or implied,
in connection with or related to this Agreement, the Ancillary Documents or the transactions contemplated hereby or thereby.
Section 4.16 Absence
of Certain Changes or Events. Since incorporation, except as otherwise expressly contemplated by this Agreement, there
has not been any Bannix Material Adverse Effect.
Section 4.17 Employees.
Other than any officers of Bannix as described in the Bannix SEC Reports, Bannix has never employed any employees or retained any
individual independent contractors. Bannix has not and does not maintain, sponsor, contribute to or have any direct liability under
any employee benefit plan (as defined in Section 3(3) of ERISA), nonqualified deferred compensation plan subject to Section 409A
of the Code, bonus, stock option, stock purchase, restricted stock, incentive, deferred compensation, retiree medical or life insurance,
supplemental retirement, severance, change in control, fringe benefit, sick pay and vacation plans or arrangements or other employee
benefit plans, programs or arrangements. Except as set forth in Section 4.17 of the Bannix Disclosure Schedules, neither
the execution and delivery of this Agreement nor the other Ancillary Documents nor the consummation of the transactions contemplated
by this Agreement will (i) result in any payment becoming due to any director, officer or employee of Bannix, (ii) result in the
acceleration of the time of payment or vesting of any such benefits, or (iii) give rise to any “excess parachute payment”
within the meaning of Section 280G of the Code. There is no contract, agreement, plan or arrangement to which Bannix is a party
which requires payment by any party of a Tax gross-up or Tax reimbursement payment to any person.
Section 4.18 EXCLUSIVITY
OF REPRESENTATIONS AND WARRANTIES. NOTWITHSTANDING THE DELIVERY OR DISCLOSURE TO
THE TRANSFERORS, the COMPANY OR ANY OF ITS REPRESENTATIVES OF ANY DOCUMENTATION OR OTHER INFORMATION (INCLUDING ANY FINANCIAL PROJECTIONS
OR OTHER SUPPLEMENTAL DATA), EXCEPT AS OTHERWISE EXPRESSLY SET FORTH IN THIS Article 4 OR THE ANCILLARY DOCUMENTS, NONE
OF Bannix OR ANY OTHER PERSON MAKES, and Bannix EXPRESSLY DISCLAIMS, ANY REPRESENTATIONS
OR WARRANTIES OF ANY KIND OR NATURE, EXPRESS OR IMPLIED, IN CONNECTION WITH THIS AGREEMENT, THE ANCILLARY DOCUMENTS OR ANY OF the
TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY, INCLUDING AS TO THE MATERIALS RELATING TO THE BUSINESS AND AFFAIRS OR HOLDINGS OF
BANNIX THAT HAVE BEEN MADE AVAILABLE TO THE COMPANY OR ANY OF ITS REPRESENTATIVES OR IN ANY PRESENTATION OF THE BUSINESS AND AFFAIRS
OF BANNIX BY OR ON BEHALF OF THE MANAGEMENT OF BANNIX OR OTHERS IN CONNECTION WITH THE TRANSACTIONS CONTEMPLATED HEREBY OR BY THE
ANCILLARY DOCUMENTS, AND NO STATEMENT CONTAINED IN ANY OF SUCH MATERIALS OR MADE IN ANY SUCH PRESENTATION SHALL BE DEEMED A REPRESENTATION
OR WARRANTY HEREUNDER OR OTHERWISE OR DEEMED TO BE RELIED UPON BY THE COMPANY OR ANY OF ITS REPRESENTATIVES IN EXECUTING, DELIVERING
OR PERFORMING THIS AGREEMENT, THE ANCILLARY DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED HEREBY or THEREBY. Except for the representations
and warranties expressly set forth in Article 4 or the ancillary DOCUMENTS, IT IS UNDERSTOOD THAT ANY COST ESTIMATES, PROJECTIONS
OR OTHER PREDICTIONS, ANY DATA, ANY FINANCIAL INFORMATION OR ANY MEMORANDA OR OFFERING MATERIALS OR PRESENTATIONS, INCLUDING ANY
OFFERING MEMORANDUM OR SIMILAR MATERIALS MADE AVAILABLE BY OR ON BEHALF OF BANNIX ARE NOT AND SHALL NOT BE DEEMED TO BE OR TO INCLUDE
REPRESENTATIONS OR WARRANTIES OF BANNIX, AND ARE NOT AND SHALL NOT BE DEEMED TO BE RELIED UPON BY THE TRANSFERORS, THE COMPANY
OR ANY OF their respective REPRESENTATIVES IN EXECUTING, DELIVERING or PERFORMING THIS AGREEMENT, THE ANCILLARY DOCUMENTS or THE
TRANSACTIONS CONTEMPLATED Hereby or thereby.
Article
5
COVENANTS
Section 5.1 Conduct
of Business of the Company.
(a) From and after the date
of this Agreement until the earlier of the Closing or the termination of this Agreement in accordance with its terms, the Company
shall, and the Company shall cause its Subsidiaries to, except as expressly contemplated by this Agreement or any Ancillary Document,
as required by applicable Law (including as may be requested or compelled by any Governmental Entity), as set forth on Section
5.1(a) of the Company Disclosure Schedules, or as consented to in writing by Bannix (such consent not to be unreasonably withheld,
conditioned or delayed), (i) operate the business of the Group Companies in the ordinary course in all material respects and (ii)
use reasonable best efforts to maintain and preserve intact in all material respects the business organization, assets, properties
and business relations of the Group Companies (taken as a whole).
(b) Without limiting the
generality of the foregoing, from and after the date of this Agreement until the earlier of the Closing or the termination of this
Agreement in accordance with its terms, the Company and the Transferors (to the extent within their control as holders of the Company
Ordinary Shares) shall, and the Company shall cause its Subsidiaries to, except as expressly contemplated, or otherwise to pursue
the transactions contemplated, by this Agreement or any Ancillary Document, as required by applicable Law, as set forth on Section
5.1(b) of the Company Disclosure Schedules or as consented to in writing by Bannix (such consent, other than in the case of
Section 5.1(b)(i) , Section 5.1(b)(v), Section 5.1(b)(vii) (but only to the extent relating to any Material
Contract of the type described in Section 3.7(a)(v), Section 3.7(a)(ix), or Section 3.7(a)(xi)(C)), Section
5.1(b)(xii), Section 5.1(b)(xiv), or Section 5.1(b)(xv) (to the extent related to any of the foregoing), not
to be unreasonably withheld, conditioned or delayed), not do any of the following:
(i) declare, set aside,
make or pay a dividend on, or make any other distribution or payment in respect of, any Equity Securities of any Group Company,
repurchase or redeem any outstanding Equity Securities of any Group Company or otherwise carry out any other return of capital,
other than dividends or distributions, declared, set aside or paid by any of the Company’s Subsidiaries to the Company or
any Subsidiary that is, directly or indirectly, wholly owned by the Company;
(ii) (A) merge, consolidate,
combine or amalgamate any Group Company with any Person or (B) purchase or otherwise acquire (whether by merging or consolidating
with, purchasing any Equity Security in or a substantial portion of the assets of, or by any other manner) any corporation, partnership,
association or other business entity or organization or division thereof;
(iii) replace or adopt
any amendments, supplements, restatements or modifications to any Group Company’s Governing Documents, pass any resolution
of the members of any Group Company, or otherwise alter or change the share capital of any Group Company or the rights attaching
to any shares;
(iv) (A) sell, assign,
abandon, lease, license or otherwise dispose of any material assets or properties of the Group Companies, other than in the ordinary
course of business consistent with past practice, or (B) create, subject or incur any Lien on any material assets or properties
of the Group Companies (other than Permitted Liens or Liens on the Company’s Real Property interests securing Indebtedness
incurred the ordinary course of business consistent with past practice);
(v) transfer, allot, issue,
create, sell, grant or otherwise directly or indirectly dispose of, or subject to a Lien, (A) any Equity Securities of any Group
Company or (B) any options, warrants, rights of conversion or other rights, agreements, arrangements or commitments obligating
any Group Company to issue, deliver or sell any Equity Securities of any Group Company;
(vi) incur, create or assume
any Indebtedness, other than in the ordinary course of business consistent with past practice;
(vii) (A) amend, modify
or terminate any Material Contract, or enter into any Contract that would constitute a Material Contract, of the type described
in Section 3.7(a)(iv), Section 3.7(a)(v), Section 3.7(a)(ix), Section 3.7(a)(x) or Section 3.7(a)(xi)(C)
(such types of Material Contracts, collectively, the “Designated Material Contracts”) in each case in a manner
that is adverse to the Group Companies, taken as a whole, except in the ordinary course of business consistent with past practice
(and excluding, for the avoidance of doubt, any expiration or automatic extension or renewal of any Designated Material Contract
pursuant to its terms or entering into additional work or purchase orders pursuant to, and in accordance with the terms of, any
Designated Material Contract), or (B) waive any material benefit or right under any Designated Material Contract;
(viii) make any loans,
advances or capital contributions to, or guarantees for the benefit of, or any investments in, any Person, other than (A) intercompany
loans and parent guarantees made by any Group Companies in the ordinary course of business consistent with past practice or capital
contributions between the Company and any of its wholly owned Subsidiaries, in each case, that exceed one hundred thousand dollars
($100,000) in the aggregate at any time outstanding and (B) the reimbursement of expenses of employees and consultants in the ordinary
course of business consistent with past practice;
(ix) except as required
under the terms of any Employee Benefit Plan of any Group Company that is set forth on the Section 3.11(a) of the Company
Disclosure Schedules or except in the ordinary course of business consistent with past practice, (A) amend, modify, adopt, enter
into or terminate any material Employee Benefit Plan of any Group Company or any material benefit or compensation plan, policy,
program or Contract that would be an Employee Benefit Plan if in effect as of the date of this Agreement, (B) increase or decrease
the compensation or benefits payable to any current or former director, manager, officer, employee, worker, individual independent
contractor or other service provider of any Group Company, (C) take any action to accelerate any payment, right to payment, or
benefit, or the funding of any payment, right to payment or benefit, payable or to become payable to any current or former director,
manager, officer, employee, worker, non-employee intern, individual independent contractor or other service provider of any Group
Company in an amount that exceeds fifty thousand dollars ($50,000) per annum, in respect of any single individual, (D) waive or
release any non-competition, non-solicitation, no-hire, non-disclosure or other restrictive covenant obligation of any current
or former director, or employee of any Group Company, or (E) hire, engage or terminate (other than for cause) any single individual
whose annual base salary (or, in the case of an independent contractor, annual base compensation) is in excess of two hundred fifty
thousand dollars ($250,000);
(x) make, change or revoke
any election concerning Taxes, enter into any Tax closing agreement, settle any Tax claim or assessment, change or otherwise modify
any method of accounting as such relates to Taxes, amend any income or other Tax Return, surrender any right to claim a refund
of income or other Taxes, or consent to any extension or waiver of the limitation period applicable to or relating to any Tax claim
or assessment, other than any such extension or waiver that is obtained in the ordinary course of business;
(xi) enter into any settlement,
conciliation or similar Contract relating to the settlement of a dispute the performance of which would involve the payment by
the Group Companies in excess of fifty thousand dollars ($50,000), in the aggregate, or that imposes, or by its terms will impose
at any point in the future, any material, non-monetary obligations on any Group Company (including Bannix or any of their respective
Affiliates after the Closing);
(xii) authorize, recommend,
propose or announce an intention to adopt, or otherwise effect, a plan of complete or partial liquidation, dissolution, restructuring,
recapitalization, reorganization or similar transaction involving any Group Company or permit any Group Company to enter administration;
(xiii) change (other than
reasonable and usual amendments in the ordinary course of business) any Group Company’s methods of accounting in any material
respect, other than changes that are made in accordance with PCAOB standards;
(xiv) enter into any Contract
with any broker, finder, investment banker or other Person under which such Person is or will be entitled to any brokerage fee,
finders’ fee or other commission in connection with the transactions contemplated by this Agreement or any Ancillary Document;
(xv) make any Change of
Control Payment that is not set forth on Section 3.2(f) of the Company Disclosure Schedules in an amount exceeding one hundred
thousand dollars ($100,000);
(xvi) (A) enter into, terminate,
or materially alter or amend any CBA or recognize any labor union, labor organization, works council, or similar employee-representative
body as the bargaining representative for any employees of the Group Company or (B) implement or announce any employee layoffs,
plant closings, reductions in force, furloughs or other similar actions that could, in each case, implicate WARN or require collective
consultation (whether by applicable Law or any CBA); or
(xvii) enter into any Contract
to take, or cause to be taken, any of the actions set forth in this Section 5.1.
Notwithstanding anything
in this Section 5.1 or this Agreement to the contrary, nothing set forth in this Agreement shall give Bannix, directly or
indirectly, the right to control or direct the operations of the Group Companies prior to the Closing.
Section 5.2 Efforts
to Consummate.
(a) Subject to the terms
and conditions herein provided, each of the Parties shall use reasonable best efforts to take, or cause to be taken, all actions
and to do, or cause to be done, all things reasonably necessary or advisable to consummate and make effective as promptly as reasonably
practicable the transactions contemplated by this Agreement (including the satisfaction, but not waiver, of the closing conditions
set forth in Article 6 and, in the case of any Ancillary Document to which such Party will be a party after the date of
this Agreement, to execute and deliver such Ancillary Document when required pursuant to this Agreement). Without limiting the
generality of the foregoing, each of the Parties shall use reasonable best efforts to obtain, file with or deliver to, as applicable,
any Consents of any Governmental Entities or other Persons necessary, proper or advisable to consummate the transactions contemplated
by this Agreement or the Ancillary Documents. The Company shall bear the costs incurred in connection with obtaining such Consents;
provided, however, that, subject to Section 8.6, each Party shall bear its out-of-pocket costs and expenses
in connection with the preparation of any such Consents. Bannix shall promptly inform the Company of any communication between
Bannix, on the one hand, and any Governmental Entity, on the other hand, and the Company shall promptly inform Bannix of any communication
between the Company, on the one hand, and any Governmental Entity, on the other hand, in either case, regarding any of the transactions
contemplated by this Agreement or any Ancillary Document. Without limiting the generality of the foregoing, no Party shall enter
into any agreement with any Governmental Entity not to consummate the transactions contemplated hereby or by the Ancillary Documents,
except with the prior written consent of Bannix and the Company. Nothing in this Section 5.2 obligates any Party or any
of its Affiliates to agree to (a) sell, license or otherwise dispose of, or hold separate and agree to sell, license or otherwise
dispose of, any entities, assets or facilities of any Group Company or any entity, facility or asset of such Party or any of its
Affiliates, (b) terminate, amend or assign existing relationships and contractual rights or obligations, (c) amend, assign or terminate
existing licenses or other agreements, or (d) enter into new licenses or other agreements. No Party shall agree to any of the foregoing
measures with respect to any other Party or any of its Affiliates, except with Bannix’s and the Company’s prior written
consent.
(b) From and after the date
of this Agreement until the earlier of the Closing or termination of this Agreement in accordance with its terms, Bannix, on the
one hand, and the Company, on the other hand, shall give counsel for the Company (in the case of Bannix) or Bannix (in the case
of the Company), a reasonable opportunity to review in advance, and consider in good faith the views of the other in connection
with, any proposed written communication to any Governmental Entity relating to the transactions contemplated by this Agreement
or the Ancillary Documents. Each of the Parties agrees not to participate in any substantive meeting or discussion, either in person
or by telephone with any Governmental Entity in connection with the transactions contemplated by this Agreement unless it consults
with, in the case of Bannix, the Company, or, in the case of the Company, Bannix in advance and, to the extent not prohibited by
such Governmental Entity, gives, in the case of Bannix, the Company, or, in the case of the Company, Bannix, the opportunity to
attend and participate in such meeting or discussion.
(c) Notwithstanding anything
to the contrary in the Agreement, in the event that this Section 5.2 conflicts with any other covenant or agreement in this
Article 5 that is intended to specifically address any subject matter, then such other covenant or agreement shall govern
and control solely to the extent of such conflict.
Section 5.3 Confidentiality
and Access to Information.
(a) The Parties shall procure
that, on the date of this Agreement, Bannix, the Company, EVIE Autonomous Ltd and Cavonix Ltd shall enter into the confidential
agreement in a form to be determined by the Parties (the “Supplemental Confidentiality Agreement”). The Parties
hereby acknowledge and agree that the information being provided in connection with this Agreement and the consummation of the
transactions contemplated hereby is subject to the terms of the Confidentiality Agreement and Supplemental Confidentiality Agreement.
Notwithstanding the foregoing or anything to the contrary in this Agreement, in the event that this Section 5.3(a), the Confidentiality
Agreement or the Supplemental Confidentiality Agreement conflicts with any other covenant or agreement contained in this Agreement
or any Ancillary Document that contemplates the disclosure, use or provision of information or otherwise, then such other covenant
or agreement contained in this Agreement or such Ancillary Document, as applicable, shall govern and control to the extent of such
conflict and the Parties shall take such steps to procure that they and their respective Affiliates give full force and effect
to the foregoing.
(b) From
and after the date of this Agreement until the earlier of the Closing Date or the termination of this Agreement in accordance with
its terms, upon reasonable advance written notice, the Company shall provide, or cause to be provided, to Bannix and its Representatives
during normal business hours reasonable access to the directors, officers, books and records and properties of the Group Companies
(in a manner so as to not interfere in any material respect with the normal business operations of the Group Companies). Notwithstanding
the foregoing, none of the Group Companies shall be required to provide to Bannix or any of its Representatives any information
(i) if and to the extent doing so would (A) violate any Law to which any Group Company is subject, (B) result in the disclosure
of any trade secrets of third parties in breach of any Contract with such third party,
(C) violate any legally-binding obligation
of any Group Company with respect to confidentiality, non-disclosure or privacy or (D) jeopardize protections afforded to any Group
Company under the attorney-client privilege or the attorney work product doctrine (provided that, in case of each of clauses
(A) through (D), the Company shall, and shall cause the other Group Companies to, use reasonable best efforts to (x)
provide such access as can be provided (or otherwise convey such information regarding the applicable matter as can be conveyed)
without violating such privilege, doctrine, Contract, obligation or Law and (y) provide such information in a manner without violating
such privilege, doctrine, Contract, obligation or Law), or (ii) if any Group Company, on the one hand, and Bannix or any of its
Representatives, on the other hand, are adverse parties in a litigation and such information is reasonably pertinent thereto; provided
that the Company shall, in the case of clause (i) or (ii), provide prompt written notice of the withholding of access
or information on any such basis unless such written notice is prohibited by applicable Law.
(c) From
and after the date of this Agreement until the earlier of the Closing Date or the termination of this Agreement in accordance with
its terms, upon reasonable advance written notice, Bannix shall provide, or cause to be provided, to the Company and its Representatives
during normal business hours reasonable access to the directors, officers, books and records of Bannix (in a manner so as to not
interfere in any material respect with the normal business operations of the Bannix). Notwithstanding the foregoing, Bannix shall
not be required to provide, or cause to be provided to, the Company or any of its Representatives any information (i) if and to
the extent doing so would (A) violate any Law to which Bannix is subject, (B) result in the disclosure of any trade secrets of
third parties in breach of any Contract with such third party, (C) violate any legally-binding obligation of Bannix with respect
to confidentiality, non-disclosure or privacy or (D) jeopardize protections afforded to Bannix under the attorney-client privilege
or the attorney work product doctrine (provided that, in case of each of clauses (A) through (D), Bannix shall
use reasonable best efforts to (x) provide such access as can be provided (or otherwise convey such information regarding the applicable
matter as can be conveyed) without violating such privilege, doctrine, Contract, obligation or Law and (y) provide such information
in a manner without violating such privilege, doctrine, Contract, obligation or Law), or (ii) if Bannix or the Bannix Sponsor,
on the one hand, and any Group Company, or any of their respective Representatives, on the other hand, are adverse parties in a
litigation and such information is reasonably pertinent thereto; provided that Bannix shall, in the case of clause (i)
or (ii), provide prompt written notice of the withholding of access or information on any such basis unless such written
notice is prohibited by applicable Law.
(d) The
Parties hereby acknowledge and agree that the Confidentiality Agreement and Supplemental Confidentiality Agreement shall be automatically
terminated effective as of the Closing, and each of the Parties shall take such steps to procure that they and their respective
Affiliates give full force and effect to the foregoing.
Section 5.4 Public
Announcements.
(a) Subject
to Section 5.4(b), Section 5.7 and Section 5.8, none of the Parties shall, and the Parties shall procure that
none of their respective Representatives shall, issue any press releases or make any public announcements with respect to this
Agreement or the transactions contemplated hereby without the prior written consent of, prior to the Closing, the Company and Bannix
or, after the Closing, the Company and the Bannix Sponsor; provided, however, that each Party, the Bannix Sponsor
and their respective Representatives may issue or make, as applicable, any such press release, public announcement or other communication
(i) if such press release,
public announcement or other communication is required by applicable Law, in which case (A) prior to
the Closing, the disclosing Party or its applicable Representatives shall, unless and to the extent prohibited by such applicable
Law, (x) if the disclosing Person is Bannix or a Representative of a Bannix, reasonably consult with the Company in connection
therewith and provide the Company with an opportunity to review and comment on such press release, public announcement or communication
and shall consider any such comments in good faith, or (y) if the disclosing Party is the Company, a Transferor or a Representative
of the Company, reasonably consult with Bannix in connection therewith and provide Bannix with an opportunity to review and comment
on such press release, public announcement or communication and shall consider any such comments in good faith, or (B) after the
Closing, the disclosing Party or its applicable Representatives shall, unless and to the extent prohibited by such applicable Law,
(x) if the disclosing Person is the Bannix Sponsor or a Representative of the Bannix Sponsor, reasonably consult with the Company
in connection therewith and provide the Company with an opportunity to review and comment on such press release, public announcement
or communication and consider any such comments in good faith, (y) if the disclosing Person is a Transferor, the Company or a Representative
of the Company, reasonably consult with Bannix and the Bannix Sponsor in connection therewith and provide Bannix and the Bannix
Sponsor with an opportunity to review and comment on such press release, public announcement or communication and consider any
such comments in good faith, and (z) if the disclosing Person is Bannix or a Representative of Bannix, reasonably consult with
the Company in connection therewith and provide the Company with an opportunity to review and comment on such press release, public
announcement or communication and consider any such comments in good faith, (ii) to the extent such press release, public announcements
or other communications contain only information previously disclosed in a press release, public announcement or other communication
previously made in accordance with this Section 5.4 and (iii) to Governmental Entities in connection with any Consents required
to be made under this Agreement, the Ancillary Documents or in connection with the transactions contemplated hereby or thereby.
Notwithstanding anything to the contrary in this Section 5.4 or otherwise in this Agreement, the Parties agree that Bannix
and its Representatives may provide general information about the subject matter of this Agreement and the transactions contemplated
hereby to any direct or indirect former, current or prospective investor or in connection with normal fund raising or related marketing
or informational or reporting activities.
(b) The
initial press release concerning this Agreement and the transactions contemplated hereby shall be a joint press release in the
form agreed by the Company and Bannix prior to the execution of this Agreement and such initial press release (the “Signing
Press Release”) shall be released as promptly as reasonably practicable after the execution of this Agreement on the
day thereof. Promptly after the execution of this Agreement, Bannix shall file a current report on Form 8-K (the “Signing
Filing”) with the Signing Press Release and a description of this Agreement as required by, and in compliance with, the
Securities Laws, which the Company shall have the opportunity to review and comment upon prior to filing and Bannix shall consider
such comments in good faith. The Company, on the one hand, and Bannix, on the other hand, shall mutually agree upon (such agreement
not to be unreasonably withheld, conditioned or delayed by either the Company or Bannix, as applicable) a press release announcing
the consummation of the transactions contemplated by this Agreement (the “Closing Press Release”) prior to the
Closing, and, on the Closing Date (or such other date as may be mutually agreed to in writing by Bannix and the Company prior to
the Closing), the Parties shall cause the Closing Press Release to be released. Promptly after the Closing (but in any event within
four (4) Business Days after the Closing), Bannix shall file a current report on Form 8-K (the “Closing Filing”)
with the Closing Press Release and a description of the Closing as required by Securities Laws, which Closing Filing shall be mutually
agreed upon by the Company and Bannix prior to the Closing (such agreement not to be unreasonably withheld, conditioned or delayed
by either the Company or Bannix, as applicable). In connection with the preparation of each of the Signing Press Release, the Signing
Filing, the Closing Press Release and the Closing Filing, each Party shall, upon written request by any other Party, furnish such
other Party with all information concerning itself, its directors, officers and equityholders, and such other matters as may be
reasonably necessary for such press release or filing.
Section 5.5 Tax
Matters.
(a) Tax
Treatment.
(i) The
Parties intend that the transactions contemplated hereby shall be treated in accordance with the Intended Tax Treatment, and each
Party shall, and shall cause its respective Affiliates to, file all Tax Returns consistent with, and take no position inconsistent
with (whether in audits, Tax Returns or otherwise) such treatment except to the extent required to do so pursuant to a “determination”
that is final within the meaning of Section 1313(a) of the Code (or any similar provision of applicable state, local or non-U.S.
Tax Law) or a change in applicable Law after the date hereof.
(ii) Bannix
and the Company hereby adopt this Agreement as a “plan of reorganization” within the meaning of Treasury Regulations
Sections 1.368-2(g) and 1.368-3(a). The Parties shall not take any action, or knowingly fail to take any action, which action or
failure to act would reasonably be expected to prevent or impede, the Intended Tax Treatment. Notwithstanding the foregoing or
anything else to the contrary contained in this Agreement, the Parties acknowledge and agree that no Party is making any representation
or warranty as to the qualification of the transactions contemplated hereby as a reorganization under Section 368 of the Code or
as to the effect, if any, that any transaction consummated on, after or prior to the Effective Time has or may have on any such
reorganization status. Each of the Parties acknowledge and agree that each such Party (x) has had the opportunity to obtain independent
legal and tax advice with respect to the transactions contemplated by this Agreement, and (y) is responsible for paying its own
Taxes, including any adverse Tax consequences that may result if the transactions contemplated hereby is determined not to qualify
as a reorganization under Section 368 of the Code.
(b) Tax
Matters Cooperation. Each of the Parties shall (and shall cause their respective Affiliates to) reasonably cooperate, as and
to the extent reasonably requested by another Party, in connection with the filing of relevant Tax Returns, and any audit or tax
proceeding. Such cooperation shall include the retention and (upon the other Party’s request) the provision (with the right
to make copies), in each case without undue burden or expense, of records and information reasonably relevant to any Tax proceeding
or audit, making employees reasonably available on a mutually convenient basis to provide additional information and explanation
of any material provided hereunder.
(c) Transferors’
indemnification for Taxes. With effect from Closing the Transferors shall indemnify Bannix on a joint and several basis in
respect of (i) any Liability for Tax for which any Group Company is liable as a result of any Event occurring on or before Closing,
or any income, profits or gains earned, accrued or received (or deemed to be earned, accrued or received for the purposes of Tax)
on or before Closing, (ii) any liability of any Group Company or Bannix to account for income tax under the United Kingdom’s
Pay As You Earn system or national insurance contributions (primary or secondary) which arises in consequence of or in connection
with the payment of any part of the Purchase Price pursuant to this Agreement and (iii) any Liability for Tax arising as a result
of, in respect of or in connection with the Pre-Reorganisation, (iv) any withholding Tax pursuant to Section 2.5 of this Agreement,
and (v) any liability of any Group Company as a result of any transferee, successor or similar liability for Tax, including by
Contract. The Transferors shall have no liability under the preceding provisions of this Section 5.5(c) to the extent that any
such Liability for Tax (x) is the subject of a specific reserve or specific provision (other than a provision for deferred Tax)
in the Financial Statements, or (y) arises or is increased only as a result of any change in Tax law or any increase in rates of
Tax (other than any penalty, charge, surcharge, fine or interest) announced and coming into force after Closing, or as a result
of any change in the accounting policies of any Group Company after Closing, save where such change is made in order to comply
with generally accepted accounting principles, the published practice of any Tax Authority, or any law or rule of any regulatory
authority or body or (z) it arises as a result of a transaction in the ordinary course of business of any Group Company between
the date of the Financial Statements and Closing.
(d) Transfer
Taxes. Notwithstanding anything to the contrary contained herein, Bannix and the Company each shall pay fifty percent (50%)
of all transfer, documentary, sales, use, stamp, registration or other similar Taxes (which, for the avoidance of doubt, shall
not include any Tax imposed on or determined with reference to income, profits, gross receipts, or direct or indirect capital gains)
incurred in connection with the transactions contemplated hereby (“Transfer Taxes”). The Company shall, at its
own expense, file (or cause to be filed) all necessary Tax Returns with respect to all such Transfer Taxes and shall timely pay
(or cause to be timely paid) to the applicable Governmental Entity such Transfer Taxes. The Parties agree to reasonably cooperate
to (i) sign and deliver such resale and other certificates or forms as may be necessary or appropriate to establish an exemption
from (or otherwise reduce) any such Transfer Taxes and (ii) prepare and file (or cause to be prepared and filed) all Tax Returns
in respect of any such Transfer Taxes.
Section 5.6 Exclusive
Dealing.
(a) From
the date of this Agreement until the earlier of the Closing or the termination of this Agreement in accordance with its terms,
the Transferors and the Company shall not, and shall cause the other Group Companies and its and their respective Representatives
not to, directly or indirectly: (i) solicit, initiate, encourage (including by means of furnishing or disclosing information),
knowingly facilitate, discuss or negotiate, directly or indirectly, any inquiry, proposal or offer (written or oral) with respect
to a Company Acquisition Proposal; (ii) furnish or disclose any non-public information to any Person in connection with, or that
could reasonably be expected to lead to, a Company Acquisition Proposal; (iii) enter into any Contract or other arrangement or
understanding regarding a Company Acquisition Proposal; (iv) prepare or make any filings in connection with a public offering of
any Equity Securities or other securities of any Group Company (or any Affiliate or successor of any Group Company); or (v) otherwise
cooperate in any way with, or assist or participate in, or knowingly facilitate or encourage any effort or attempt by any Person
(other than Bannix) to do or seek to do any of the foregoing. The Company agrees to (A) notify Bannix promptly upon receipt of
any Company Acquisition Proposal by any Group Company, and to describe the material terms and conditions of any such Company Acquisition
Proposal in reasonable detail (including the identity of the Persons making such Company Acquisition Proposal) and (B) keep Bannix
reasonably informed on a current basis of any modifications to such offer or information.
(b) From
the date of this Agreement until the earlier of the Closing or the termination of this Agreement in accordance with its terms,
Bannix shall not, and each of them shall cause their Representatives not to, directly or indirectly: (i) solicit, initiate, encourage
(including by means of furnishing or disclosing information), knowingly facilitate, discuss or negotiate, directly or indirectly,
any inquiry, proposal or offer (written or oral) with respect to a Bannix Acquisition Proposal; (ii) furnish or disclose any non-public
information to any Person in connection with, or that could reasonably be expected to lead to, a Bannix Acquisition Proposal; (iii)
enter into any Contract or other arrangement or understanding regarding a Bannix Acquisition Proposal; or (iv) otherwise cooperate
in any way with, or assist or participate in, or knowingly facilitate or encourage any effort or attempt by any Person (other than
any Group Company) to do or seek to do any of the foregoing. Bannix agrees to (A) notify the Company promptly upon receipt of any
Bannix Acquisition Proposal by Bannix, and to describe the material terms and conditions of any such Bannix Acquisition Proposal
in reasonable detail (including the identity of any person or entity making such Bannix Acquisition Proposal) and (B) keep the
Company reasonably informed on a current basis of any modifications to such offer or information.
(c) For
the avoidance of doubt, it is understood and agreed that the covenants and agreements contained in this Section 5.6 shall
not prohibit the Company, Bannix or any of their respective Representatives from taking any actions in the ordinary course that
are not otherwise in violation of this Section 5.6 (such as answering phone calls) or informing any Person inquiring about
a possible Company Acquisition Proposal or Bannix Acquisition Proposal, as applicable, of the existence of the covenants and agreements
contained in this Section 5.6.
Section 5.7 Preparation
of Proxy Statement. As promptly as reasonably practicable following the date hereof, Bannix and the Company shall jointly
prepare and mutually agree upon (such agreement not to be unreasonably withheld, conditioned or delayed by either of Bannix or
the Company, as applicable), and the Company shall file with the SEC, the Proxy Statement (it being understood that the Proxy Statement
shall include a proxy statement/prospectus of Bannix which will be included therein and which will be used for the Bannix Stockholders
Meeting to adopt and approve the Bannix Stockholder Approval Matters and other matters or proposals reasonably related to the Bannix
Stockholder Approval Matters, all in accordance with and as required by Bannix’s Governing Documents, applicable Law, and
any applicable rules and regulations of the SEC and Nasdaq). Each of the Company and Bannix shall use its reasonable best efforts
to (a) cause the Proxy Statement to comply in all material respects with the applicable rules and regulations promulgated by the
SEC (including, with respect to the Group Companies, the provision of financial statements of, and any other information with respect
to, the Group Companies for all periods, and in the form, required to be included in the Proxy Statement under Securities Laws
(after giving effect to any waivers received) or in response to any comments from the SEC); (b) promptly notify the others of,
reasonably cooperate with each other with respect to and respond promptly to any comments of the SEC or its staff; (c) have the
Proxy Statement declared effective under the Securities Act as promptly as reasonably practicable after it is filed with the SEC;
and (d) keep the Proxy Statement in effect through the Closing in order to permit the consummation of the transactions contemplated
by this Agreement. Bannix, on the one hand, and the Company, on the other hand, shall promptly furnish, or cause to be furnished,
to the other all information concerning such Party and its Representatives that may be required or reasonably requested in connection
with any action contemplated by this Section 5.7 or for inclusion in any other statement, filing, notice or application
made by or on behalf of Bannix to the SEC or Nasdaq in connection with the transactions contemplated by this Agreement or the Ancillary
Documents. If any Party becomes aware of any information that should be disclosed in an amendment or supplement to the Proxy Statement,
then (i) such Party shall promptly inform, in the case of Bannix, the Company, or, in the case of the Company, Bannix, thereof;
(ii) such Party shall prepare and mutually agree upon with, in the case of Bannix, the Company, or, in the case of the Company,
Bannix (in either case, such agreement not to be unreasonably withheld, conditioned or delayed), an amendment or supplement to
the Proxy Statement; (iii) Bannix shall file such mutually agreed upon amendment or supplement with the SEC; and (iv) the Parties
shall reasonably cooperate, if appropriate, in mailing such amendment or supplement to the Bannix Stockholders. Bannix shall as
promptly as reasonably practicable advise the Company of the time of effectiveness of the Proxy Statement, the issuance of any
stop order relating thereto or the suspension of the qualification of the Bannix Common Stock for offering or sale in any jurisdiction,
and the Company and Bannix shall each use its reasonable best efforts to have any such stop order or suspension lifted, reversed
or otherwise terminated. Each of the Parties shall use reasonable best efforts to ensure that none of the information related to
him, her or it or any of his, her or its Representatives, supplied by or on his, her or its behalf for inclusion or incorporation
by reference in the Proxy Statement will, at the time the Proxy Statement is initially filed with the SEC, at each time at which
it is amended, or at the time it becomes effective under the Securities Act contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances
under which they are made, not misleading.
Section 5.8 Bannix
Stockholder Approval. As promptly as reasonably practicable following the time at which the Proxy Statement is declared
effective under the Securities Act, Bannix shall (a) duly give notice of and (b) use reasonable best efforts to duly convene and
hold a meeting of its stockholders (the “Bannix Stockholders Meeting”) in accordance with the Governing Documents
of Bannix, for the purposes of obtaining the Required Bannix Stockholder Approval and, if applicable, any approvals related thereto
and providing its applicable stockholders with the opportunity to elect to effect a Bannix Stockholder Redemption. Except as otherwise
required by applicable Law, (i) Bannix shall, through the Bannix Board, recommend to its Stockholders, (A) the adoption and approval
of this Agreement, the Ancillary Documents and the transactions contemplated hereby and thereby, (B) the adoption and approval
of each other proposal reasonably agreed to by Bannix and the Company as necessary or appropriate in connection with the consummation
of the transactions contemplated by this Agreement or the Ancillary Documents; and (C) the adoption and approval of a proposal
for the postponement or adjournment of the Bannix Stockholders Meeting, if necessary, to permit further solicitation of proxies
because there are not sufficient votes to approve and adopt any of the foregoing (such proposals in (A) through (C), collectively,
the “Bannix Transaction Proposals”), and (ii) Bannix shall include such recommendation contemplated by clause
(i) in the Proxy Statement. Notwithstanding the foregoing or anything to the contrary herein, Bannix may postpone or adjourn the
Bannix Stockholders Meeting (1) to solicit additional proxies for the purpose of obtaining the Bannix Stockholder Approval, (2)
for the absence of a quorum, (3) to allow reasonable additional time for the filing or mailing of any supplemental or amended disclosures
that Bannix has determined, based on the advice of outside legal counsel, is reasonably likely to be required under applicable
Law and for such supplemental or amended disclosure to be disseminated and reviewed by the Bannix Stockholders prior to the Bannix
Stockholders Meeting or (4) if the holders of Bannix Common Stock have elected to redeem a number of Bannix Common Stock as of
such time that would reasonably be expected to result in the condition set forth Section 6.3(d) not being satisfied; provided
that, without the consent of the Company, in no event shall Bannix adjourn the Bannix Stockholders Meeting for more than fifteen
(15) Business Days later than the most recently adjourned meeting or to a date that is beyond the Termination Date.
Section 5.9 Transaction
Support Agreements; Company Approvals.
(a) As
promptly as reasonably practicable (and in any event within thirty (30) days) following the date of this Agreement (the “Transaction
Support Agreement Deadline”), the Company shall deliver, or cause to be delivered, to Bannix the Transaction Support
Agreements duly executed by each Transferor.
(b) As
promptly as reasonably practicable (and in any event within ten (10) Business Days) following the date of this Agreement, the Company
shall provide a written resolution of its shareholders approving or ratifying (in accordance with and to the extent required by
the Company’s Governing Documents and applicable Law): (i) the adoption and approval of this Agreement, each Ancillary Documents
to which the Company is or will be a party and the transactions contemplated hereby and thereby; (ii) the adoption and approval
of each other proposal that either the SEC or Nasdaq (or the respective staff members thereof) indicates is necessary in its comments
to the Proxy Statement or in correspondence related thereto; and (iii) the adoption and approval of each other proposal reasonably
agreed to by Bannix and the Company as necessary or appropriate in connection with the consummation of the transactions contemplated
by this Agreement or the Ancillary Documents (collectively, the “Company Shareholder Resolutions”). The Company,
through the Company Board, shall recommend to the Company Shareholders that they vote in favor of passing each resolution contained
in the Company Shareholder Resolutions (the “Company Board Recommendation”). The Company shall provide a duly
executed copy of the Company Shareholder Resolutions to Bannix after they are signed by the Company Shareholders.
Section 5.11 Conduct
of Business of Bannix.
(a) From
and after the date of this Agreement until the earlier of the Closing or the termination of this Agreement in accordance with its
terms, Bannix shall procure that the business of Bannix shall be conducted in the ordinary course of business and in a manner consistent
with past practice and Bannix shall not, except as expressly contemplated by this Agreement or any Ancillary Document, as required
by applicable Law, as set forth on Section 5.11 of the Bannix Disclosure Schedules or as consented to in writing by the
Company (such consent not to be unreasonably withheld, conditioned or delayed), do any of the following:
(b) adopt
any amendments, supplements, restatements or modifications to the Trust Agreement (or any other agreement related to the Trust
Account) or the Governing Documents of Bannix;
(c) declare,
set aside, make or pay a dividend on, or make any other distribution or payment in respect of, its Equity Securities, or repurchase,
redeem or otherwise acquire, or offer to repurchase, redeem or otherwise acquire, any outstanding of its Equity Securities;
(d) split,
combine or reclassify any of its capital stock or other Equity Securities or issue any other security in respect of, in lieu of
or in substitution for shares of its capital stock;
(e) incur,
create or assume any Indebtedness, except for Indebtedness for borrowed money in an amount not to exceed $25,000 in the aggregate;
(f) make
any loans or advances to, or capital contributions in, or guarantee any Liability of, any other Person, other than to, or in, Bannix
or any of its Subsidiaries;
(g) issue
any Equity Securities or grant any additional options, warrants or stock appreciation rights with respect to its Equity Securities,
other than the issuance of Bannix Common Stock in connection with the exercise of any Bannix Warrant outstanding on the date hereof,
or knowingly grant any material security interest in any of its assets;
(h) (i)
amend, modify or renew any Bannix Related Party Transaction, other than (A) the entry into any Contract with a Bannix Related Party
with respect to the incurrence of Indebtedness permitted by Section 5.11(e) or (b) for the avoidance of doubt, any expiration
or automatic extension or renewal of any Contract pursuant to its terms, or (ii) enter into any Contract that would constitute
a Bannix Related Party Transaction;
(i) engage
in any activities or business, or incur any material Liabilities, other than any activities, businesses or Liabilities that are
either permitted under this Section 5.11 (including, for the avoidance of doubt, any activities, businesses or Liabilities
contemplated by, incurred in connection with or that are otherwise incidental or attendant to this Agreement or any Ancillary Document,
the performance of any covenants or agreements hereunder or thereunder or the consummation of the transactions contemplated hereby
or thereby) or in accordance with this Section 5.11;
(j) authorize,
recommend, propose or announce an intention to adopt a plan of complete or partial liquidation or dissolution;
(k) make
any change in any method of financial accounting or financial accounting principles, policies, procedures or practices, except
as required by a concurrent amendment in GAAP or applicable Law made subsequent to the date hereof, as agreed to by its independent
accountants;
(l) enter
into any Contract with any broker, finder, investment banker or other Person under which such Person is or will be entitled to
any brokerage fee, finders’ fee or other commission in connection with the transactions contemplated by this Agreement;
(m) make,
change or revoke any material election concerning Taxes, enter into any material Tax closing agreement, settle any material Tax
claim or assessment, or consent to any extension or waiver of the limitation period applicable to or relating to any material Tax
claim or assessment, other than any such extension or waiver that is obtained in the ordinary course of business; or
(n) enter
into any Contract to take, or cause to be taken, any of the actions set forth in this Section 5.11.
Notwithstanding anything
in this Section 5.11 or this Agreement to the contrary, (i) nothing set forth in this Agreement shall give the Company,
directly or indirectly, the right to control or direct the operations of Bannix and (ii) nothing set forth in this Agreement shall
prohibit, or otherwise restrict the ability of, Bannix from using the funds held by Bannix outside the Trust Account to pay any
Bannix Expenses or other Liabilities of Bannix or from otherwise distributing or paying over any funds held by Bannix outside the
Trust Account to the Bannix Sponsor or any of its Affiliates, in each case, prior to the Closing.
Section 5.12 Nasdaq
Listing.
(a) The
Company shall use its reasonable best efforts to assist Bannix in satisfying all applicable initial and continuing listing requirements
of Nasdaq. The Company shall, and shall cause its Representatives to, reasonably cooperate with Bannix and its Representatives
in connection with the foregoing.
(b) From
the date hereof through the Closing, Bannix shall use its reasonable best efforts to ensure Bannix remains listed as a public company
on, and for the Bannix Common Stock and Bannix Warrants (but, in the case of the Bannix Warrants, only to the extent issued as
of the date hereof) to be listed on, Nasdaq.
Section 5.13 Trust
Account. Upon satisfaction or, to the extent permitted by applicable Law, waiver of the conditions set forth in Article
6 and provision of notice thereof to the Trustee, (a) at the Closing, Bannix shall (i) cause the documents, certificates and
notices required to be delivered to the Trustee pursuant to the Trust Agreement to be so delivered, and (ii) make all appropriate
arrangements to cause the Trustee to (A) pay as and when due all amounts, if any, payable to the Public Stockholders of Bannix
pursuant to the Bannix Stockholder Redemption, (B) pay the amounts due to the underwriters of Bannix’s initial public offering
for their deferred underwriting commissions as set forth in the Trust Agreement and (C) immediately thereafter, pay all remaining
amounts then available in the Trust Account to Bannix in accordance with the Trust Agreement, and (b) thereafter, the Trust Account
shall terminate, except as otherwise provided therein.
Section 5.14 Indemnification
of Directors and Officers; Tail Insurance.
(a) Each
Party agrees that (i) all rights to indemnification or exculpation now existing in favor of the directors and officers of Bannix
and the Company, as provided in the applicable Governing Documents of Bannix and the Company, respectively, or otherwise in effect
as of immediately prior to the Effective Time, in either case, solely with respect to any matters occurring on or prior to the
Effective Time, shall survive the transactions contemplated by this Agreement and shall continue in full force and effect from
and after the Effective Time for a period of six (6) years and (ii) the Company will perform and discharge, or cause to be performed
and discharged by Bannix, all obligations to provide such indemnity and exculpation during such six (6)-year period. To the maximum
extent permitted by applicable Law, during such six (6)-year period, the Company shall advance, or caused to be advanced, expenses
in connection with such indemnification as provided in the applicable Governing Documents of Bannix or the Company, as the case
may be, other applicable agreements as in effect immediately prior to the Effective Time. The indemnification and liability limitation
or exculpation provisions of the Governing Documents of Bannix and the Company shall not, during such six (6)-year period, be amended,
repealed or otherwise modified following the Effective Time in any manner that would materially and adversely affect the rights
thereunder of individuals who, as of immediately prior to the Effective Time, or at any time prior to such time, were directors
or officers of Bannix or the Company (the “D&O Indemnified Persons”) entitled to be so indemnified, have
their liability limited or be exculpated with respect to any matters occurring on or prior to the Effective Time and relating to
the fact that such D&O Indemnified Person was a director or officer of Bannix or the Company on or prior to the Effective Time,
unless such amendment, repeal or other modification is required by applicable Law.
(b) The
Company or Bannix shall not have any obligation under this Section 5.14 to any D&O Indemnified Person when and if a
court of competent jurisdiction shall ultimately determine (and such determination shall have become final and non-appealable)
that the indemnification of such D&O Indemnified Person in the manner contemplated hereby is prohibited by applicable Law.
(c) For
a period of six (6) years following the Effective Time, the Company shall purchase or maintain, or cause to be purchased or maintained,
as the case may be, without any lapses in coverage, directors’ and officers’ liability insurance for the benefit of
those Persons who are covered by any comparable insurance policies of Bannix or the Company, as the case may be, in effect as of
the date of this Agreement with respect to matters occurring on or prior to the Effective Time. Such insurance policies shall provide
coverage on terms (with respect to coverage and amount) that are substantially the same as (and no less favorable in the aggregate
to the Persons covered thereby than) the coverage provided under such corresponding directors’ and officers’ liability
insurance policies in effect as of the date of this Agreement; provided that neither the Company nor Bannix shall be obligated
to pay annual premiums in excess of three hundred percent (300%) of the most recent annual premium paid by Bannix or the Company
prior to the date of this Agreement and, in such event, the Company shall purchase, or cause to be purchased, the maximum coverage
available for three hundred percent (300%) of the most recent annual premium paid by Bannix or the Company prior to the date of
this Agreement.
(d) If
the Company or any of its successors or assigns (i) shall merge or consolidate with or merge into any other corporation or entity
and shall not be the surviving or continuing corporation or entity of such consolidation or merger or (ii) shall transfer all or
substantially all of their respective properties and assets as an entity in one or a series of related transactions to any Person,
then in each such case, proper provisions shall be made so that the successors or assigns of the Company shall assume all of the
obligations set forth in this Section 5.14.
(e) The
D&O Indemnified Persons entitled to the indemnification, liability limitation, exculpation or insurance coverage set forth
in this Section 5.14 are intended to be third-party beneficiaries of this Section 5.14. This Section 5.14
shall survive the consummation of the transactions contemplated by this Agreement and shall be binding on all successors and assigns
of the Company.
Section 5.15 Required
Financials.
(a) The
Company shall deliver to Bannix, as promptly as reasonably practicable following the date of the relevant financial statement or
other applicable period, the Closing Company Financial Statements.
(b) Each
Party shall use its reasonable best efforts (i) to assist, upon advance written notice, during normal business hours and in a manner
such as to not unreasonably interfere with the normal operation of such Party, the other Parties in causing to be prepared in a
timely manner any other financial information or statements (including customary pro forma financial statements) that are required
to be included in the Proxy Statement and any other filings to be made by such Parties with the SEC in connection with the transactions
contemplated by this Agreement or any Ancillary Document and (ii) to obtain the consents of its auditors with respect thereto as
may be required by applicable Law or requested by the SEC.
Section 5.16 FIRPTA
Certificates. At or prior to the Closing, the Company shall deliver, or cause to be delivered, to Bannix and Bannix shall
deliver, or cause to be delivered, to the Company, a certificate, duly executed by the Company or Bannix, as applicable, complying
with Treasury Regulations Section 1.1445-2(c)(3), together with evidence that the Company or Bannix, as applicable, has provided
notice to the Internal Revenue Service in accordance with the provisions of Treasury Regulations Section 1.897-2(h)(2), in each
case, in a form and substance reasonably acceptable to the Company or Bannix, as applicable.
Section 5.17 Company
Related Party Transactions. The Company shall take, or cause to be taken, all actions necessary or advisable to terminate
at or prior to the Closing all Company Related Party Transactions (other than those set forth on Section 5.17 of the Company
Disclosure Schedules) without any further obligations or Liabilities of the Company or any of its Affiliates (including the other
Group Companies).
Section 5.18 Transferors
Restrictive Covenants:
(a) During the period
commencing on the Closing Date and continuing for all times for two (2) years) thereafter (the “Restriction Period”),
each Transferor shall not, and shall cause its Affiliates (each Transferor and its Affiliates, a “Transferor Restricted
Party”) not to, without the consent of Bannix (which consent may be withheld, delayed or conditioned in Bannix’s sole
discretion), directly or indirectly, on its or their behalf or on behalf of any other Person engage or participate in any business
that is directly competitive to the competitive business anywhere throughout the world (whether in its or their own capacity or
as owner, stockholder, member, lender, partner, manager, co-venturer, director, officer, employee, agent or consultant), except
that the Seller Restricted Parties may collectively, directly or indirectly, own less than five percent (5%) of the outstanding
securities of any class of any publicly traded securities of any Person so long as no such Transferor Restricted Party is involved,
directly or indirectly, in the management of such Person. For the avoidance of doubt and notwithstanding anything to the contrary
herein, nothing in this Section 5.18 shall apply to or restrict any actions or provision of any services by any
Transferor or any of its Affiliates expressly contemplated by this Agreement or any Ancillary Document (including the ownership
of Bannix’s equity), and no such actions or services shall be deemed to be “competitive” for purposes of this Section
5.18..
(b)
During the Restriction Period, each Transferors shall not (and shall cause its Affiliates not to), without the consent of Bannix
(which consent may be withheld, delayed or conditioned in Bannix’s sole discretion), directly or indirectly, on their behalf
or on behalf of any other Person, solicit the business of any vendor of Bannix or any of their Subsidiaries or induce or attempt
to induce any vendor of Bannix or any of their Subsidiaries to withdraw, decrease or cancel its business with Bannix or any of
its Subsidiaries.
(c)
During the Restriction Period, each Transferor shall not (and shall cause its Affiliates not to), without the consent of Bannix
(which consent may be withheld, delayed or conditioned in Bannix’s sole discretion), directly or indirectly, on its own behalf
or on behalf of any other Person, solicit, induce or recruit any employee or consultant of Bannix or any of its Subsidiaries to
leave such employment or retention or to accept employment with or render services to or with any other Person, other than general
solicitation not specifically targeting employees or consultants of Bannix or any of its Subsidiaries.
(d) Bannix and each
Transferor acknowledge that (i) Bannix and each Transferor, Company and its Subsidiaries engage in a competitive business, and
(ii) each Transferor has had access to confidential information that is valuable and material to the business. Accordingly, as
a condition to Bannix’s willingness to enter into this Agreement and each of the Ancillary Documents, Bannix has required
that the covenants and agreements contained in this Section 5.18 be included in this Agreement, and each Transferor
has agreed to such covenants and agreements. Bannix each and Transferor acknowledges and agrees that it is fair, reasonable and
necessary, for the protection of the value of the Business and the operations and goodwill of the Business, that Bannix and each
Transferor make the agreements and covenants contained in this Agreement.
(e)
In the event of any breach by any of the Seller Parties or their Affiliates of any of the restrictive covenants contained in this Section
5.18, the running of the period of the applicable restriction shall be automatically tolled and suspended for the duration
of such breach, and shall automatically recommence when such breach is remedied in order that Bannix shall receive the full benefit
of the Seller Parties’ compliance with each of the covenants contained in this Section 5.18.
Section 5.19 Privacy
Program. From and after the date hereof, the Company shall use its reasonable best efforts to cause the Company to have
adopted and implemented, on behalf of itself and each of the Group Companies, with effect from the Closing, a program of compliance
with Privacy and Security Requirements and all applicable privacy Laws, intended to ensure that the Company and Group Companies
are in material compliance with Privacy and Security Requirements and all applicable privacy Laws.
Section 5.20 Anti-Bribery
and Anti-Corruption. From and after the date hereof, the Company shall use its reasonable best efforts to comply with all
applicable anti-bribery / anti-corruption laws (including but not limited to the Anti-Corruption Laws) (“ABAC Laws”).
From and after the date hereof, the Company shall also use its reasonable best efforts to cause the Company to adopt and implement,
on behalf of itself and each of the Group Companies, with effect from the Closing, a program of compliance intended to ensure that
the Company and Group Companies are in material compliance with all applicable ABAC Laws.
Section 5.21 Binding
Letter of Intent and Funding Obligation.
(a) On June 12, 2023
the Company shall loan, or procure that EVIE Autonomous Ltd loans, to Bannix the sum of £150,000 and, in connection therewith,
Bannix shall deliver to the Company or EVIE Autonomous Ltd (as the case may be) a duly executed promissory note instrument in respect
of such loan.
(c) On July 30, 2023,
the Company shall loan, or procure that EVIE Autonomous Ltd loans, to Bannix the sum of £150,000 and, in connection therewith,
Bannix shall deliver to the Company or EVIE Autonomous Ltd (as the case may be) a duly executed promissory note instrument.
(d) If requested in writing
by Bannix, the Company shall loan, or procure that EVIE Autonomous Ltd loans, to Bannix such additional sums as Bannix may reasonably
require to perform its obligations under this Agreement and any Ancillary Documents to which it is a party and consummate the transactions
set out herein and therein, and in connection therewith, Bannix shall deliver to the Company or EVIE Autonomous Ltd (as the case
may be) a duly executed promissory note instrument.
Section 5.22 Further
Assurances. The Parties hereto shall further cooperate with each other and use their respective commercially reasonable
efforts to take or cause to be taken all actions, and do or cause to be done all things, necessary, proper or advisable on their
part under this Agreement and applicable Laws to consummate the transactions contemplated by this Agreement as soon as reasonably
practicable, including preparing and filing as soon as practicable all documentation to effect all necessary notices, reports and
other filings.
Article
6
CONDITIONS TO CONSUMMATION OF THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT
Section 6.1 Conditions
to the Obligations of the Parties. The obligations of the Parties to consummate the transactions contemplated by this Agreement
are subject to the satisfaction or, if permitted by applicable Law, waiver by the Party for whose benefit such condition exists
of the following conditions:
(a) each
Consent set forth on Section 6.1(a) of the Bannix Disclosure Schedules relating to the transactions contemplated by this
Agreement shall have been obtained (or deemed, by applicable Law, to have been obtained), as applicable;
(b) no
Order or Law issued by any court of competent jurisdiction or other Governmental Entity or other legal restraint or prohibition
preventing the consummation of the transactions contemplated by this Agreement shall be in effect;
(c) the
Proxy Statement shall have become effective in accordance with the provisions of the Securities Act, no stop order shall have been
issued by the SEC and shall remain in effect with respect to the Proxy Statement, and no proceeding seeking such a stop order shall
have been threatened or initiated by the SEC and remain pending;
(d) each
of the Company Shareholder Resolutions shall have been passed by Company Shareholders holding at least the requisite number of
issued and outstanding Equity Securities of the Company;
(e) the
Bannix Stockholder Approval shall have been obtained;
(f) the
Bannix’s initial listing application with Nasdaq in connection with the transactions contemplated by this Agreement shall
have been conditionally approved and, immediately following Closing, Bannix shall satisfy any applicable initial and continuing
listing requirements of Nasdaq, and Bannix shall not have received any notice of non-compliance therewith that has not been cured
prior to, or would not be cured at or immediately following the Closing; and
(g) after
giving effect to the transactions contemplated hereby (including the Bannix Stockholder Redemption), Bannix or the Company shall
have at least $5,000,001 of net tangible assets (as determined in accordance with Rule 3a51-1(g)(1) of the Exchange Act) immediately
after the Closing.
Section 6.2 Other
Conditions to the Obligations of Bannix. The obligations of Bannix to consummate the transactions contemplated by this
Agreement are subject to the satisfaction or, if permitted by applicable Law, waiver by Bannix of the following further conditions:
(a) (i)
the Company Fundamental Representations (other than the representations and warranties set forth in Section 3.2(a) and Section
3.8(a)) shall be true and correct (without giving effect to any limitation as to “materiality” or “Company
Material Adverse Effect” or any similar limitation set forth herein) in all material respects as of the date of this Agreement
and as of the Closing Date, as though made on and as of the Closing Date (except to the extent that any such representation and
warranty is made as of an earlier date, in which case such representation and warranty shall be true and correct in all material
respects as of such earlier date), (ii) the representations and warranties set forth in Section 3.2(a) shall be true and
correct in all respects (except for de minimis inaccuracies) as of the date of this Agreement and as of the Closing Date,
as though made on and as of the Closing Date (except to the extent that any such representation and warranty is made as of an earlier
date,
in which case such representation and warranty shall be true and correct in all respects (except for de minimis inaccuracies)
as of such earlier date), (iii) the representations and warranties set forth in Section 3.8(a) shall be true and correct
in all respects as of the date of this Agreement and the Closing Date, as though made on and as of the Closing Date (except to
the extent that any such representation and warranty is made as of an earlier date, in which case such representation and warranty
shall be true and correct in all respects as of such earlier date) and (iv) the representations and warranties of the Company set
forth in Article 3 (other than the Company Fundamental Representations) shall be true and correct (without giving effect
to any limitation as to “materiality” or “Company Material Adverse Effect” or any similar limitation set
forth herein) in all respects as of the date of this Agreement and as of the Closing Date, as though made on and as of the Closing
Date (except to the extent that any such representation and warranty is made as of an earlier date, in which case such representation
and warranty shall be true and correct in all respects as of such earlier date), except where the failure of such representations
and warranties to be true and correct, taken as a whole, does not cause a Company Material Adverse Effect;
(b) the
Company shall have performed and complied in all material respects with the covenants and agreements required to be performed or
complied with by the Company under this Agreement at or prior to the Closing;
(c) since
the date of this Agreement, no Company Material Adverse Effect has occurred;
(d) at
or prior to the Closing, the Company shall have delivered, or caused to be delivered, to Bannix a certificate duly executed by
an authorized officer of the Company, dated as of the Closing Date, to the effect that the conditions specified in Section 6.2(a),
Section 6.2(b) and Section 6.2(c) are satisfied, in a form and substance reasonably satisfactory to Bannix (the “Company
Closing Certificate”).
Section 6.3 Other
Conditions to the Obligations of the Company. The obligations of the Company and Transferors to consummate the transactions
contemplated by this Agreement are subject to the satisfaction or, if permitted by applicable Law, waiver by the Company (on behalf
of itself and/or Transferors) of the following further conditions:
(a) (i)
the Bannix Fundamental Representations shall be true and correct (without giving effect to any limitation as to “materiality”
or “Bannix Material Adverse Effect” or any similar limitation set forth herein) in all material respects as of the
date of this Agreement and as of the Closing Date, as though made on and as of the Closing Date (except to the extent that any
such representation and warranty is made as of an earlier date, in which case such representation and warranty shall be true and
correct in all material respects as of such earlier date), and (ii) the representations and warranties of Bannix (other than the
Bannix Fundamental Representations) contained in Article 4 of this Agreement shall be true and correct (without giving effect
to any limitation as to “materiality” or “material adverse effect” or any similar limitation set forth
herein) in all respects as of the date of this Agreement and as of the Closing Date, as though made on and as of the Closing Date
(except to the extent that any such representation and warranty is made as of an earlier date, in which case such representation
and warranty shall be true and correct in all respects as of such earlier date), except where the failure of such representations
and warranties to be true and correct, taken as a whole, does not cause a Bannix Material Adverse Effect;
(b) Bannix
shall have performed and complied in all material respects with the covenants and agreements required to be performed or complied
with by them under this Agreement at or prior to the Closing;
(c) since
the date of this Agreement, no Bannix Material Adverse Effect has occurred;
(d) at
or prior to closing, all officers and directors of Bannix shall have executed written resignations effective as of Closing;
(e) at
or prior to the Closing, Bannix shall have delivered, or caused to be delivered a certificate duly executed by an authorized officer
of Bannix, dated as of the Closing Date, to the effect that the conditions specified in Section 6.3(a) and Section 6.3(b)
are satisfied, in a form and substance reasonably satisfactory to the Company (the “Bannix Closing Certificate”).
(f) at or prior to closing,
the Transferors receiving confirmation from HM Revenue & Customs that in respect of the transactions contemplated by this Agreement
(i) no counteraction notice under section 698 Income Tax Act 2007 will be given; and (ii) the provisions of section 137 of the
Taxation of Chargeable Gains Act 1992 do not apply with the result that the provisions of section 135 of that Act would not be
prevented from applying.
Section 6.4 Frustration
of Closing Conditions. None of the Company or Transferors may rely on the failure of any condition set forth in this Article
6 to be satisfied if such failure was proximately caused by the Company’s or Transferor’s failure to use reasonable
best efforts to cause the Closing to occur, as required by Section 5.2, or a breach of this Agreement. Bannix may not rely
on the failure of any condition set forth in this Article 6 to be satisfied if such failure was proximately caused by Bannix’s
failure to use reasonable best efforts to cause the Closing to occur, as required by Section 5.2, or a breach of this Agreement.
Article
7
TERMINATION
Section 7.1 Termination.
This Agreement may be terminated and the transactions contemplated by this Agreement may be abandoned at any time prior to the
Closing:
(a) by mutual written consent
of Bannix and the Company;
(b) by Bannix, if any of
the representations or warranties set forth in Article 3 shall not be true and correct or if any of the Company or Transferors
has failed to perform any covenant or agreement on the part of the Company or Transferor set forth in this Agreement (including
an obligation to consummate the Closing), in each case, such that the condition to Closing set forth in either Section 6.2(a)
or Section 6.2(b) could not be satisfied and the breach or breaches causing such representations or warranties not to be
true and correct, or the failures to perform any covenant or agreement, as applicable, is (or are) not cured or cannot be cured
within the earlier of (i) thirty (30) days after written notice thereof is delivered to the Company by Bannix, and (ii) the Termination
Date; provided, however, that Bannix is not then in breach of this Agreement so as to prevent the condition to Closing
set forth in either Section 6.3(a) or Section 6.3(b) from being satisfied;
(c) by the Company, if any
of the representations or warranties set forth in Article 4 shall not be true and correct or if Bannix has failed to perform
any covenant or agreement on the part of Bannix set forth in this Agreement (including an obligation to consummate the Closing),
in each case, such that the condition to Closing set forth in either Section 6.3(a) or Section 6.3(b) could not be
satisfied and the breach or breaches causing such representations or warranties not to be true and correct, or the failures to
perform any covenant or agreement, as applicable, is (or are) not cured or cannot be cured within the earlier of (i) thirty (30)
days after written notice thereof is delivered to Bannix by the Company and (ii) the Termination Date; provided, however,
that the Company is not then in breach of this Agreement so as to prevent the condition to Closing set forth in Section 6.2(a)
or Section 6.2(b) from being satisfied;
(d) by either Bannix or
the Company, if the transactions contemplated by this Agreement shall not have been consummated on or prior to December 31, 2023
(the “Termination Date”); provided, that (i) the right to terminate this Agreement pursuant to this Section
7.1(d) shall not be available to Bannix if Bannix’s breach of any of its covenants or obligations under this Agreement
shall have proximately caused the failure to consummate the transactions contemplated by this Agreement on or before the Termination
Date, and (ii) the right to terminate this Agreement pursuant to this Section 7.1(d) shall not be available to the Company
if any of the Company’s or Transferor’s breach of its covenants or obligations under this Agreement shall have proximately
caused the failure to consummate the transactions contemplated by this Agreement on or before the Termination Date; provided, further,
the Parties may mutually agree in writing to extend the Termination Date in the event all material closing conditions have been
satisfied and regulatory approval is pending.
(e) by either Bannix or
the Company, if any Governmental Entity shall have issued an Order or taken any other action permanently enjoining, restraining
or otherwise prohibiting the transactions contemplated by this Agreement and such Order or other action shall have become final
and non-appealable;
(f) by either Bannix or
the Company if the Bannix Stockholders Meeting has been held (including any adjournment or postponement thereof), has concluded,
the Bannix Stockholders have duly voted and the Bannix Stockholder Approval was not obtained; or
(g) by Bannix, if (i) the
Company does not deliver, or cause to be delivered to Bannix, a Transaction Support Agreement duly executed by each Transferor
in accordance with Section 5.9(a) on or prior to the Transaction Support Agreement Deadline or (ii) each of the Company
Shareholder Resolutions have not been duly passed on or prior to the time at which the Proxy Statement is declared effective under
the Securities Act.
Section 7.2 Effect
of Termination. In the event of the termination of this Agreement pursuant to Section 7.1, this entire Agreement
shall forthwith become void (and there shall be no Liability or obligation on the part of the Parties and their respective Representatives)
with the exception of this Section 7.2, Article 8 and Article 1 (to the extent related to the foregoing),
each of which shall survive such termination and remain valid and binding obligations of the Parties. For the avoidance of doubt,
the Confidentiality Agreement and Supplemental Confidentiality Agreement shall survive such termination and remain valid and binding
obligations of the parties thereto in accordance with their respective terms. Notwithstanding the foregoing or anything to the
contrary herein, the termination of this Agreement pursuant to Section 7.1 shall not affect any Liability on the part of
any Party for a willful and material breach of any covenant or agreement set forth in this Agreement prior to such termination
or actual fraud.
Article
8
MISCELLANEOUS
Section 8.1 Non-Survival.
The representations, warranties, agreements and covenants in this Agreement shall terminate at the Effective Time, except for those
covenants and agreements that, by their terms, contemplate performance after the Effective Time. Notwithstanding the foregoing:
(a) Sections 5.5(c)
(Transferors’ indemnification of Taxes) and Section 5.18 (Transferors Restrictive Covenants), and Article 8 and Article
1 (to the extent related to the foregoing), shall survive and continue in full force and effect after the termination of this
Agreement pursuant to Section 8.1;
(b) Bannix shall be
entitled to bring a claim and all of its rights are preserved in respect of any breach by the Company or any of the Transferors
(as the case may be) of the Company Fundamental Representations, Section 2.1 (Acquisition of the Shares), Section 3.23 (Information
Supplied) or Section 5.7 (Preparation of Proxy Statement) on or prior to the termination of this Agreement pursuant to this Section
8.1; and
(c) this Section 8.1
shall not affect any Liability on the part of any Party for actual fraud.
Section 8.2 Entire
Agreement; Assignment. This Agreement (together with the Ancillary Documents) constitutes the entire agreement among the
Parties with respect to the subject matter hereof and supersedes all other prior agreements and understandings, both written and
oral, among the Parties with respect to the subject matter hereof. This Agreement may not be assigned by any Party (whether by
operation of law or otherwise) without the prior written consent of (a) Bannix and the Company prior to Closing and (b) Bannix,
the Bannix Sponsor and the Company after the Closing. Any attempted assignment of this Agreement not in accordance with the terms
of this Section 8.2 shall be void.
Section 8.3 Amendment.
This Agreement may be amended or modified only by a written agreement executed and delivered by (a) Bannix and the Company prior
to the Closing and (b) Bannix, the Bannix Sponsor, Transferors and the Company after the Closing. This Agreement may not be modified
or amended except as provided in the immediately preceding sentence and any purported amendment by any Party or Parties effected
in a manner which does not comply with this Section 8.3 shall be void, ab initio.
Section 8.4 Notices.
All notices, requests, claims, demands and other communications hereunder shall be in writing and shall be given (and shall be
deemed to have been duly given) by delivery in person, by e-mail (having obtained electronic delivery confirmation thereof (i.e.,
an electronic record of the sender that the e-mail was sent to the intended recipient thereof without an “error” or
similar message that such e-mail was not received by such intended recipient)), or by registered or certified mail (postage prepaid,
return receipt requested) (upon receipt thereof) to the other Parties as follows:
(a) If to Bannix, to:
| |
8265 West Sunset Blvd., Suite #107 |
|
| |
West Hollywood, CA 90046 |
|
| |
(323) 682-8949 |
|
| |
Attn: |
CEO |
|
| |
Email: |
doug.davis@bannixacquisition.com |
|
| |
|
|
| |
with a copy (which shall not constitute notice) to: |
Fleming PLLC |
| |
|
30 Wall Street, 8th Floor |
| |
|
New York, New York 10005 |
(b) If to the Company, to:
| |
Unit 8 Riverside |
|
| |
Campbell Road |
|
| |
Stoke-On-Trent |
|
| |
Staffordshire ST4 4RJ |
|
| |
T: +44 01782 640650 |
|
| |
Attn: |
CEO |
|
| |
Email: |
sl@evieautonomous.com |
|
| |
|
|
| |
with a copy (which shall not constitute notice)
to: |
Beswicks Legal |
| |
|
West Court, Campbell Road |
| |
|
Stoke-on-Trent ST4 4FB |
or to such other address as the Party to whom
notice is given may have previously furnished to the others in writing in the manner set forth above.
Section 8.5 Governing
Law. This Agreement shall be governed by and construed in accordance with the laws of the State of Delaware, without giving
effect to any choice of law or conflict of law provision or rule (whether of the State of Delaware or any other jurisdiction) that
would cause the application of the law of any jurisdiction other than the State of Delaware.
Section 8.6 Fees and
Expenses. Except as otherwise set forth in this Agreement, all fees and expenses incurred in connection with this Agreement,
the Ancillary Documents and the transactions contemplated hereby and thereby, including the fees and disbursements of counsel,
financial advisors and accountants, shall be paid by the Party incurring such fees or expenses; provided, that, for the
avoidance of doubt, if this Agreement is terminated in accordance with its terms, the Company shall pay, or cause to be paid, all
Unpaid Company Expenses and Bannix shall pay, or cause to be paid, all Unpaid Bannix Expenses.
Section 8.7 Construction;
Interpretation. The term “this Agreement” means this Business Combination Agreement together with the Schedules
and Exhibits hereto, as the same may from time to time be amended, modified, supplemented or restated in accordance with the terms
hereof. The headings set forth in this Agreement are inserted for convenience only and shall not affect in any way the meaning
or interpretation of this Agreement. No Party, nor its respective counsel, shall be deemed the drafter of this Agreement for purposes
of construing the provisions hereof, and all provisions of this Agreement shall be construed according to their fair meaning and
not strictly for or against any Party. Unless otherwise indicated to the contrary herein by the context or use thereof: (a) the
words, “herein,” “hereto,” “hereof” and words of similar import refer to this Agreement as
a whole, including the Schedules and Exhibits, and not to any particular section, subsection, paragraph, subparagraph or clause
set forth in this Agreement; (b) masculine gender shall also include the feminine and neutral genders, and vice versa; (c) words
importing the singular shall also include the plural, and vice versa; (d) the words “include,” “includes”
or “including” shall be deemed to be followed by the words “without limitation”; (e) references to “$”
or “dollar” or “US$” shall be references to United States dollars, and references to “£”
or “GBP” shall be references to the lawful currency of the United Kingdom; (f) the word “or” is disjunctive
but not necessarily exclusive; (g) the words “writing”, “written” and comparable terms refer to printing,
typing and other means of reproducing words (including electronic media) in a visible form; (h) the word “day” means
calendar day unless Business Day is expressly specified; (i) the word “extent” in the phrase “to the extent”
means the degree to which a subject or other thing extends, and such phrase shall not mean simply “if”; (j) all references
to Articles, Sections, Exhibits or Schedules are to Articles, Sections, Exhibits and Schedules of this Agreement; (k) the words
“provided” or “made available” or words of similar import (regardless of whether capitalized or not) shall
mean, when used with reference to documents or other materials required to be provided or made available to Bannix, any documents
or other materials posted to the electronic data room located at ___________ under the project name “ “ as of 5:00
p.m., Eastern Time, at least one (1) Business Day prior to the date of this Agreement, an index of which is at Section 8.7 of the
Company Disclosure Schedules; (l) all references to any Law will be to such Law as amended, supplemented or otherwise modified
or re-enacted from time to time; and (m) all references to any Contract are to that Contract as amended or modified from time to
time in accordance with the terms thereof (subject to any restrictions on amendments or modifications set forth in this Agreement).
If any action under this Agreement is required to be done or taken on a day that is not a Business Day, then such action shall
be required to be done or taken not on such day but on the first succeeding Business Day thereafter.
Section 8.8 Exhibits
and Schedules. All Exhibits and Schedules, or documents expressly incorporated into this Agreement, are hereby incorporated
into this Agreement and are hereby made a part hereof as if set out in full in this Agreement. The Schedules shall be arranged
in sections and subsections corresponding to the numbered and lettered Sections and subsections set forth in this Agreement. Any
item disclosed in the Company Disclosure Schedules or in the Bannix Disclosure Schedules corresponding to any Section or subsection
of Article 3 (in the case of the Company Disclosure Schedules) or Article 4 (in the case of the Bannix Disclosure
Schedules) shall be deemed to have been disclosed with respect to every other section and subsection of Article 3 (in the
case of the Company Disclosure Schedules) or Article 4 (in the case of the Bannix Disclosure Schedules), as applicable,
where the relevance of such disclosure to such other Section or subsection is reasonably apparent on the face of the disclosure.
The information and disclosures set forth in the Schedules that correspond to the section or subsections of Article 3 or
Article 4 may not be limited to matters required to be disclosed in the Schedules, and any such additional information or
disclosure is for informational purposes only and does not necessarily include other matters of a similar nature.
Section 8.9 Parties
in Interest. This Agreement shall be binding upon and inure solely to the benefit of each Party and its successors and
permitted assigns and, except as provided in Section 5.14, the last sentence of this Section 8.9 and Section 8.13,
nothing in this Agreement, express or implied, is intended to or shall confer upon any other Person any rights, benefits or remedies
of any nature whatsoever under or by reason of this Agreement. The Bannix Sponsor shall be an express third-party beneficiary of
Section 5.4, Section 5.15(d), Section 5.16, Section 8.2, Section 8.3, this Section 8.9
and Section 8.14.
Section 8.10 Severability.
Whenever possible, each provision of this Agreement will be interpreted in such a manner as to be effective and valid under applicable
Law, but if any term or other provision of this Agreement is held to be invalid, illegal or unenforceable under applicable Law,
all other provisions of this Agreement shall remain in full force and effect so long as the economic or legal substance of the
transactions contemplated hereby is not affected in any manner materially adverse to any Party. Upon such determination that any
term or other provision of this Agreement is invalid, illegal or unenforceable under applicable Law, the Parties shall negotiate
in good faith to modify this Agreement so as to effect the original intent of the Parties as closely as possible in an acceptable
manner in order that the transactions contemplated hereby are consummated as originally contemplated to the greatest extent possible.
Section 8.11 Counterparts;
Electronic Signatures. This Agreement and each Ancillary Document (including any of the closing deliverables contemplated
hereby) may be executed in one or more counterparts, each of which shall be deemed to be an original, but all of which shall constitute
one and the same agreement. Delivery of an executed counterpart of a signature page to this Agreement or any Ancillary Document
(including any of the closing deliverables contemplated hereby) by e-mail, or scanned pages shall be effective as delivery of a
manually executed counterpart to this Agreement or any such Ancillary Document.
Section 8.12 Knowledge
of Company; Knowledge of Bannix. For all purposes of this Agreement, the phrase “to the Company’s knowledge”
and “known by the Company” and any derivations thereof shall mean as of the applicable date, the actual knowledge of
the individuals set forth on Section 8.12(a) of the Company Disclosure Schedules, assuming reasonable due inquiry and investigation
of his or her direct reports. For all purposes of this Agreement, the phrase “to Bannix’s knowledge” and “to
the knowledge of Bannix” and any derivations thereof shall mean as of the applicable date, the actual knowledge of the individuals
set forth on Section 8.12(b) of the Bannix Disclosure Schedules, assuming reasonable due inquiry and investigation of his
or her direct reports. For the avoidance of doubt, none of the individuals set forth on Section 8.12(a) of the Company Disclosure
Schedules or Section 8.12(b) of the Bannix Disclosure Schedules shall have any personal Liability or obligations regarding
such knowledge.
Section 8.13 No Recourse.
This Agreement may only be enforced against, and any action for breach of this Agreement may only be made against, the Parties,
and without limiting the generality of the foregoing, none of the Representatives of Bannix or the Company (other than the Transferors)
shall have any Liability arising out of or relating to this Agreement or the transactions contemplated hereby, including with respect
to any claim (whether in tort, contract or otherwise) for breach of this Agreement or in respect of any written or oral representations
made or alleged to be made in connection herewith, except as expressly provided herein.
Section 8.14 Extension;
Waiver. The Company may (a) extend the time for the performance of any of the obligations or other acts of Bannix set forth
herein, (b) waive any inaccuracies in the representations and warranties of Bannix set forth herein or (c) waive compliance by
Bannix with any of the agreements or conditions set forth herein. Bannix (prior to the Closing Date) and the Bannix Sponsor (after
the Closing Date), may (i) extend the time for the performance of any of the obligations or other acts of the Company set forth
herein, (ii) waive any inaccuracies in the representations and warranties of the Company set forth herein or (iii) waive compliance
by the Company with any of the agreements or conditions set forth herein. Any agreement on the part of any such Party to any such
extension or waiver shall be valid only if set forth in a written instrument signed on behalf of such Party. Any waiver of any
term or condition shall not be construed as a waiver of any subsequent breach or a subsequent waiver of the same term or condition,
or a waiver of any other term or condition of this Agreement. The failure of any Party to assert any of its rights hereunder shall
not constitute a waiver of such rights.
Section 8.15 Waiver
of Jury Trial. THE PARTIES EACH HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY RIGHT TO TRIAL BY JURY OF ANY
PROCEEDING, CLAIM, DEMAND, ACTION, OR CAUSE OF ACTION (I) ARISING UNDER THIS AGREEMENT OR UNDER ANY ANCILLARY DOCUMENT OR (II)
IN ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES IN RESPECT OF THIS AGREEMENT OR ANY ANCILLARY
DOCUMENT OR ANY OF THE TRANSACTIONS RELATED HERETO OR THERETO OR ANY FINANCING IN CONNECTION WITH THE TRANSACTIONS CONTEMPLATED
HEREBY OR ANY OF THE TRANSACTIONS CONTEMPLATED THEREBY, IN EACH CASE, WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER IN
CONTRACT, TORT, EQUITY, OR OTHERWISE. THE PARTIES EACH HEREBY AGREES AND CONSENTS THAT ANY SUCH PROCEEDING, CLAIM, DEMAND, ACTION
OR CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY AND THAT THE PARTIES MAY FILE AN ORIGINAL COUNTERPART OF A COPY
OF THIS AGREEMENT WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE PARTIES HERETO TO THE WAIVER OF THEIR RIGHT TO TRIAL
BY JURY. EACH PARTY CERTIFIES AND ACKNOWLEDGES THAT (A) NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED,
EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER, (B)
EACH SUCH PARTY UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF THIS WAIVER, (C) EACH SUCH PARTY MAKES THIS WAIVER VOLUNTARILY
AND (D) EACH SUCH PARTY HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS
IN THIS Section 8.15.
Section 8.16 Submission
to Jurisdiction. Each of the Parties irrevocably and unconditionally submits to the exclusive jurisdiction of the Chancery
Court of the State of Delaware (or, if the Chancery Court of the State of Delaware declines to accept jurisdiction, any state or
federal court within State of New York, New York County), for the purposes of any Proceeding, claim, demand, action or cause of
action (a) arising under this Agreement or under any Ancillary Document or (b) in any way connected with or related or incidental
to the dealings of the Parties in respect of this Agreement or any Ancillary Document or any of the transactions contemplated hereby
or any of the transactions contemplated thereby, and irrevocably and unconditionally waives any objection to the laying of venue
of any such Proceeding in any such court, and further irrevocably and unconditionally waives and agrees not to plead or claim in
any such court that any such Proceeding has been brought in an inconvenient forum. Each Party hereby irrevocably and unconditionally
waives, and agrees not to assert, by way of motion or as a defense, counterclaim or otherwise, in any Proceeding claim, demand,
action or cause of action against such Party (i) arising under this Agreement or under any Ancillary Document or (ii) in any way
connected with or related or incidental to the dealings of the Parties in respect of this Agreement or any Ancillary Document or
any of the transactions contemplated hereby or any of the transactions contemplated thereby, (A) any claim that such Party is not
personally subject to the jurisdiction of the courts as described in this Section 8.16 for any reason, (B) that such Party
or such Party’s property is exempt or immune from the jurisdiction of any such court or from any legal process commenced
in such courts (whether through service of notice, attachment prior to judgment, attachment in aid of execution of judgment, execution
of judgment or otherwise) and (C) that (x) the Proceeding, claim, demand, action or cause of action in any such court is brought
against such Party in an inconvenient forum, (y) the venue of such Proceeding, claim, demand, action or cause of action against
such Party is improper or (z) this Agreement, or the subject matter hereof, may not be enforced against such Party in or by such
courts. Each Party agrees that service of any process, summons, notice or document by registered mail to such party’s respective
address set forth in Section 8.4 shall be effective service of process for any such Proceeding, claim, demand, action or
cause of action.
Section 8.17 Remedies.
Except as otherwise expressly provided herein, any and all remedies provided herein will be deemed cumulative with and not exclusive
of any other remedy conferred hereby, or by law or equity upon such Party, and the exercise by a Party of any one remedy will not
preclude the exercise of any other remedy. The Parties agree that irreparable damage for which monetary damages, even if available,
would not be an adequate remedy, would occur in the event that the Parties do not perform their respective obligations under the
provisions of this Agreement (including failing to take such actions as are required of them hereunder to consummate the transactions
contemplated by this Agreement) in accordance with their specific terms or otherwise breach such provisions. It is accordingly
agreed that the Parties shall be entitled to seek an injunction or injunctions, specific performance and other equitable relief
to prevent breaches of this Agreement and to enforce specifically the terms and provisions of this Agreement, in each case, without
posting a bond or undertaking and without proof of damages and this being in addition to any other remedy to which they are entitled
at law or in equity. Each of the Parties agrees that it will not oppose the granting of an injunction, specific performance and
other equitable relief when expressly available pursuant to the terms of this Agreement on the basis that the other parties have
an adequate remedy at law or an award of specific performance is not an appropriate remedy for any reason at law or equity.
Section 8.18 Trust
Account Waiver. Reference is made to the final prospectus of Bannix, filed with the SEC (File No. 333-253324) on September
13, 2021 (the “Prospectus”). Each of the Transferors and the Company acknowledges and agrees and understands
that Bannix has established a trust account (the “Trust Account”) containing the proceeds of its initial public
offering (the “IPO”) and from certain private placements occurring simultaneously with the IPO (including interest
accrued from time to time thereon) for the benefit of Bannix’s public stockholders (including overallotment shares acquired
by Bannix’s underwriters, the “Public Stockholders”), and Bannix may disburse monies from the Trust Account
only in the express circumstances described in the Prospectus. For and in consideration of Bannix entering into this Agreement,
and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the Transferors and
Company agrees on behalf of itself and its Representatives that, notwithstanding the foregoing or anything to the contrary in this
Agreement, none of the Transferors, the Company nor any of their respective Representatives does now or shall at any time hereafter
have any right, title, interest or claim of any kind in or to any monies in the Trust Account or distributions therefrom, or make
any claim against the Trust Account (including any distributions therefrom), regardless of whether such claim arises as a result
of, in connection with or relating in any way to, this Agreement or any proposed or actual business relationship between Bannix
or any of its Representatives, on the one hand, and, the Transferors, the Company or any of their respective Representatives, on
the other hand, or any other matter, and regardless of whether such claim arises based on contract, tort, equity or any other theory
of legal liability (any and all such claims are collectively referred to hereafter as the “Trust Account Released Claims”).
The Transferors and the Company, on their own behalf and on behalf of their respective Representatives, hereby irrevocably waives
any Trust Account Released Claims that it or any of its Representatives may have against the Trust Account (including any distributions
therefrom) now or in the future as a result of, or arising out of, any negotiations, or Contracts with Bannix or its Representatives
and will not seek recourse against the Trust Account (including any distributions therefrom) for any reason whatsoever (including
for an alleged breach of any agreement with Bannix or its Affiliates).
* * * * *
IN WITNESS WHEREOF,
each of the Parties has caused this Business Combination Agreement to be duly executed on its behalf as of the day and year first
above written.
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“BANNIX”
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BANNIX ACQUISITION CORP. |
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By: /s/ Douglas Davis |
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Name: Douglas Davis |
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Title: CEO |
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“COMPANY” |
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EVIE AUTONOMOUS GROUP |
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By: /s/ Steven Lake |
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Name: Steven Lake |
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Title: CEO |
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“TRANSFERORS” |
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By: /s/ Steven Lake |
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Name: Steven Lake |
[Signature Page to Business Combination Agreement]
Annex B
SECOND
AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION OF
BANNIX ACQUISITION CORP.
Bannix
Acquisition Corp., a corporation organized and existing under the laws of the State of Delaware (the “Corporation”),
hereby certifies as follows:
ONE:
The original certificate of incorporation of the Corporation was filed with the Secretary of State of the State of Delaware
on February 4, 2021, under the name “Bannix Acquisition Corp.” (the “Original Certificate”). The
Original Certificate was amended and restated by the amended and restated certificate of incorporation of the Corporation filed
with the office of the Secretary of State of the State of Delaware on September 9, 2021 and as amended by the certificate of amendment
to the certificate of incorporation filed with the Secretary of the State of Delaware on March 9, 2023 (the “Amended and
Restated Certificate”).
TWO:
This second amended and restated certificate of incorporation of the Corporation (the “Second Amended and Restated
Certificate”), which both restates and further amends the provisions of the Amended and Restated Certificate, has been
duly adopted by the Board of Directors (the “Board of Directors”) and the stockholders of the Corporation in
accordance with Sections 228, 242 and 245 of the General Corporation Law of the State of Delaware (the “DGCL”).
THREE:
Effective as of [•], 2023, the text of the Amended and Restated Certificate of the Corporation is hereby amended and restated
in its entirety as follows:
ARTICLE I
NAME
The name of the corporation is [___________]
(the ‘Corporation’).
ARTICLE II
PURPOSE
The purpose of the Corporation is to engage in
any lawful act or activity for which corporations may be organized under the DGCL.
ARTICLE III
REGISTERED AGENT
The address of the Corporation’s registered
office in the State of Delaware is 3411 Silverside Road, Tatnall Building, #104, in the City of Wilmington, in the County of New
Castle, Delaware 19810. The name of its Registered Agent at such address is Corporate Creations Network Inc.
ARTICLE IV
CAPITALIZATION
Section 4.1 Authorized Capital
Stock. The total number of shares of all classes of capital stock, each with a par value of $0.01 per share, which the
Corporation is authorized to issue is 410,000,000 shares, consisting of (a) 400,000,000 shares of common stock (the ‘Common
Stock’), and (b) 10,000,000 shares of preferred stock (the ‘Preferred Stock’).
Section 4.2 Preferred Stock.
The Board of Directors of the Corporation (the ‘Board’) is hereby expressly authorized, subject to any
limitations prescribed by law, to provide out of the unissued shares of the Preferred Stock for one or more series of Preferred
Stock and to establish from time to time the number of shares to be included in each such series and to fix the voting rights,
if any, designations, powers, preferences and relative, participating, optional, special and other rights, if any, of each such
series and any qualifications, limitations and restrictions thereof, as shall be stated in the resolution or resolutions adopted
by the Board providing for the issuance of such series and included in a certificate of designation (a ‘Preferred Stock
Designation’) filed pursuant to the DGCL, and the Board is hereby expressly vested with the authority to the full
extent provided by law, now or hereafter, to adopt any such resolution or resolutions.
Section 4.3 Common Stock.
(a) Voting.
(i) Except as otherwise required by law or this
Second Amended and Restated Certificate (including any Preferred Stock Designation), the holders of the Common Stock shall exclusively
possess all voting power with respect to the Corporation.
(ii) Except as otherwise required by law or this
Amended and Restated Certificate (including any Preferred Stock Designation), the holders of shares of Common Stock shall be entitled
to one vote for each such share on each matter properly submitted to the stockholders on which the holders of the Common Stock
are entitled to vote. The holders of shares of Common Stock shall not have cumulative voting rights.
(iii) Except as otherwise required by law or
this Second Amended and Restated Certificate (including any Preferred Stock Designation), at any annual or special meeting of the
stockholders of the Corporation, holders of the Common Stock shall have the exclusive right to vote for the election of directors
and on all other matters properly submitted to a vote of the stockholders.
(iv) No holder of Common Stock shall be entitled,
as such, as a matter of right, to subscribe for or purchase any part of any new or additional issue of stock of any class or series
whatsoever or of securities convertible into stock of any class whatsoever, whether now or hereafter authorized and whether issued
for cash or other consideration, or by way of dividend.
(b) Dividends. Subject to
applicable law, the rights, if any, of the holders of any outstanding series of the Preferred Stock and the provisions of Article
IX hereof, the holders of shares of Common Stock shall be entitled to receive such dividends and other distributions (payable
in cash, property or capital stock of the Corporation) when, as and if declared thereon by the Board from time to time out of any
assets or funds of the Corporation legally available therefor and shall share equally on a per share basis in such dividends and
distributions.
(c) Liquidation, Dissolution or Winding
Up of the Corporation. Subject to applicable law, the rights, if any, of the holders of any outstanding series
of the Preferred Stock and the provisions of Article IX hereof, in the event of any voluntary or involuntary liquidation,
dissolution or winding up of the Corporation, after payment or provision for payment of the debts and other liabilities of the
Corporation, the holders of shares of Common Stock shall be entitled to receive all the remaining assets of the Corporation available
for distribution to its stockholders, ratably in proportion to the number of shares of Common Stock held by them.
Section 4.4 Rights, Warrants
and Options. The Corporation has the authority to create and issue rights, warrants and options entitling the holders thereof
to acquire from the Corporation any shares of its capital stock of any class or classes, with such rights, warrants and options
to be evidenced by or in instrument(s) approved by the Board. The Board is empowered to set the exercise price, duration,
times for exercise and other terms and conditions of such rights, warrants or options; provided, however, that the consideration
to be received for any shares of capital stock issuable upon exercise thereof may not be less than the par value thereof.
Section 4.5 Vote to Increase or Decrease
Authorized Shares. The number of authorized shares of Preferred Stock or Common Stock may be increased or decreased (but
not below the number of shares thereof then outstanding) by the affirmative vote of the holders of a majority of the voting power
of all of the outstanding shares of stock of the Corporation entitled to vote thereon, voting together as a single class, without
a separate class vote of the holders of the Preferred Stock, or any series thereof, irrespective of the provisions of Section 242(b)(2)
of the DGCL, unless a vote of any such holders is required pursuant to the terms of any Preferred Stock.
ARTICLE V
BOARD OF DIRECTORS
Section 5.1 Board Powers.
The business and affairs of the Corporation shall be managed by, or under the direction of, the Board. In addition to the powers
and authority expressly conferred upon the Board by statute, this Amended and Restated Certificate or the Bylaws of the Corporation
(‘Bylaws’), the Board is hereby empowered to exercise all such powers and do all such acts and things
as may be exercised or done by the Corporation, subject, nevertheless, to the provisions of the DGCL, this Amended and Restated
Certificate and any Bylaws adopted by the stockholders; provided, however, that no Bylaws hereafter adopted by the stockholders
shall invalidate any prior act of the Board that would have been valid if such Bylaws had not been adopted.
Section 5.2 Number, Election and Term.
(a) The number of directors of the Corporation,
other than those who may be elected by the holders of one or more series of the Preferred Stock voting separately by class or series,
shall be fixed from time to time exclusively by the Board pursuant to a resolution adopted by a majority of the Board.
(b) Subject to the rights of the holders of one
or more series of Preferred Stock, voting separately by class or series, to elect directors pursuant to the terms of one or more
series of Preferred Stock, the election of directors shall be determined by a plurality of the votes cast by the stockholders present
in person or represented by proxy at the meeting and entitled to vote thereon.
(c) Subject to Section 5.5 hereof,
the directors shall be elected or appointed for a term of office continuing until the next annual meeting of stockholders of the
Corporation. Each director shall hold office until such director’s successor is elected and qualified, or until such director’s
earlier death, resignation, disqualification or removal from office. Any director may resign at any time upon notice to the Corporation
given in writing by any electronic transmission permitted in the Bylaws or in accordance with applicable law.
(d) Unless and except to the extent that the
Bylaws shall so require, the election of directors need not be by written ballot.
Section 5.3 Newly Created Directorships
and Vacancies. Subject to Section 5.5 hereof, newly created directorships resulting from an
increase in the number of directors and any vacancies on the Board resulting from death, resignation, retirement, disqualification,
removal or other cause may be filled solely and exclusively by a majority vote of the remaining directors then in office, even
if less than a quorum or by a sole remaining director (and not by stockholders), and any director so chosen shall hold office for
the remainder of the full term of the class of directors to which the new directorship was added or in which the vacancy occurred
and until his or her successor has been elected and qualified, subject, however, to such director’s earlier death, resignation,
retirement, disqualification or removal.
Section 5.4 Removal. Subject
to Section 5.5 hereof, any or all of the directors may be removed from office at any time, but only for cause
and only by the affirmative vote of holders of 66 2/3% of the voting power of all then outstanding shares of capital stock of the
Corporation entitled to vote generally in the election of directors, voting together as a single class.
Section 5.5 Preferred Stock -
Directors. Notwithstanding any other provision of this Article V, and except as otherwise required by
law, whenever the holders of one or more series of the Preferred Stock shall have the right, voting separately by class or series,
to elect one or more directors, the term of office, the filling of vacancies, the removal from office and other features of such
directorships shall be governed by the terms of such series of the Preferred Stock as set forth in this Amended and Restated Certificate
(including any Preferred Stock Designation) and such directors shall not be included in any of the classes created pursuant to
this Article V unless expressly provided by such terms.
Section 5.6 Quorum. A
quorum for the transaction of business by the directors shall be set forth in the Bylaws.
ARTICLE VI
BYLAWS
In furtherance and not in limitation of the powers
conferred upon it by law, the Board shall have the power and is expressly authorized to adopt, amend, alter or repeal the Bylaws.
The affirmative vote of a majority of the Board shall be required to adopt, amend, alter or repeal the Bylaws. The Bylaws also
may be adopted, amended, altered or repealed by the stockholders; provided, however, that in addition to any vote of the holders
of any class or series of capital stock of the Corporation required by law or by this Second Amended and Restated Certificate (including
any Preferred Stock Designation), the affirmative vote of the holders of at least a majority of the voting power of all then outstanding
shares of capital stock of the Corporation entitled to vote generally in the election of directors, voting together as a single
class, shall be required for the stockholders to adopt, amend, alter or repeal the Bylaws; and provided further, however, that
no Bylaws hereafter adopted by the stockholders shall invalidate any prior act of the Board that would have been valid if such
Bylaws had not been adopted.
ARTICLE VII
MEETINGS OF STOCKHOLDERS; ACTION BY WRITTEN
CONSENT; STOCKHOLDER ACTION
Section 7.1 Meetings. Subject
to the rights, if any, of the holders of any outstanding series of the Preferred Stock, and to the requirements of applicable law,
special meetings of stockholders of the Corporation may be called only by the Chairman of the Board, Chief Executive Officer of
the Corporation, or the Board pursuant to a resolution adopted by a majority of the Board, and the ability of the stockholders
to call a special meeting is hereby specifically denied. Except as provided in the foregoing sentence, special meetings of stockholders
may not be called by another person or persons.
Section 7.2 Advance Notice. Advance
notice of stockholder nominations for the election of directors and of business to be brought by stockholders before any meeting
of the stockholders of the Corporation shall be given in the manner provided in the Bylaws.
Section 7.3 Action by Written
Consent. Except as may be otherwise provided for or fixed pursuant to this Second Amended and Restated Certificate
(including any Preferred Stock Designation) relating to the rights of the holders of any outstanding series of Preferred Stock,
any action required or permitted to be taken by the stockholders of the Corporation must be effected by a duly called annual or
special meeting of such stockholders and may not be effected by written consent of the stockholders.
Section 7.4 Stockholder Action.
Special meetings of stockholders may be called only by (a) the Board of Directors pursuant to a resolution adopted by a majority
of the directors then in office; (b) the Chairman of the Board of Directors; (c) the Chief Executive Officer of the Corporation;
or (d) the President of the Corporation.
ARTICLE VIII
LIMITED LIABILITY; INDEMNIFICATION
Section 8.1 Limitation of Director
Liability. A director of the Corporation shall not be personally liable to the Corporation or its stockholders for
monetary damages for breach of fiduciary duty as a director, except to the extent such exemption from liability or limitation thereof
is not permitted under the DGCL as the same exists or may hereafter be amended unless a director violated his or her duty of loyalty
to the Corporation or its stockholders, acted in bad faith, knowingly or intentionally violated the law, authorized unlawful payments
of dividends, unlawful stock purchases or unlawful redemptions, or derived improper personal benefit from his or her actions as
a director. Any amendment, modification or repeal of the foregoing sentence shall not adversely affect any right or protection
of a director of the Corporation hereunder in respect of any act or omission occurring prior to the time of such amendment, modification
or repeal.
Section 8.2 Indemnification and
Advancement of Expenses.
(a) To the fullest extent permitted by applicable
law, as the same exists or may hereafter be amended, the Corporation shall indemnify and hold harmless each person who is or was
made a party or is threatened to be made a party to or is otherwise involved in any threatened, pending or completed action, suit
or proceeding,
whether civil, criminal, administrative or investigative (a ‘proceeding’) by reason of
the fact that he or she is or was a director or officer of the Corporation or, while a director or officer of the Corporation,
is or was serving at the request of the Corporation as a director, officer, employee or agent of another corporation or of a partnership,
joint venture, trust, other enterprise or nonprofit entity, including service with respect to an employee benefit plan (an ‘indemnitee’),
whether the basis of such proceeding is alleged action in an official capacity as a director, officer, employee or agent, or in
any other capacity while serving as a director, officer, employee or agent, against all liability and loss suffered and expenses
(including, without limitation, attorneys’ fees, judgments, fines, ERISA excise taxes and penalties and amounts paid in settlement)
reasonably incurred by such indemnitee in connection with such proceeding. The Corporation shall to the fullest extent not prohibited
by applicable law pay the expenses (including attorneys’ fees) incurred by an indemnitee in defending or otherwise participating
in any proceeding in advance of its final disposition; provided, however, that, to the extent required by applicable law, such
payment of expenses in advance of the final disposition of the proceeding shall be made only upon receipt of an undertaking, by
or on behalf of the indemnitee, to repay all amounts so advanced if it shall ultimately be determined that the indemnitee is not
entitled to be indemnified under this Section 8.2 or otherwise. The rights to indemnification and advancement
of expenses conferred by this Section 8.2 shall be contract rights and such rights shall continue as to an
indemnitee who has ceased to be a director, officer, employee or agent and shall inure to the benefit of his or her heirs, executors
and administrators. Notwithstanding the foregoing provisions of this Section 8.2(a), except for proceedings to
enforce rights to indemnification and advancement of expenses, the Corporation shall indemnify and advance expenses to an indemnitee
in connection with a proceeding (or part thereof) initiated by such indemnitee only if such proceeding (or part thereof) was authorized
by the Board.
(b) The rights to indemnification and advancement
of expenses conferred on any indemnitee by this Section 8.2 shall not be exclusive of any other rights that
any indemnitee may have or hereafter acquire under law, this Amended and Restated Certificate, the Bylaws, an agreement, vote of
stockholders or disinterested directors, or otherwise.
(c) Any repeal or amendment of this Section 8.2 by
the stockholders of the Corporation or by changes in law, or the adoption of any other provision of this Amended and Restated Certificate
inconsistent with this Section 8.2, shall, unless otherwise required by law, be prospective only (except to the
extent such amendment or change in law permits the Corporation to provide broader indemnification rights on a retroactive basis
than permitted prior thereto), and shall not in any way diminish or adversely affect any right or protection existing at the time
of such repeal or amendment or adoption of such inconsistent provision in respect of any proceeding (regardless of when such proceeding
is first threatened, commenced or completed) arising out of, or related to, any act or omission occurring prior to such repeal
or amendment or adoption of such inconsistent provision.
(d) This Section 8.2 shall
not limit the right of the Corporation, to the extent and in the manner authorized or permitted by law, to indemnify and to advance
expenses to persons other than indemnitees.
ARTICLE IX
CORPORATE OPPORTUNITY
To the extent allowed by law, the doctrine of
corporate opportunity, or any other analogous doctrine, shall not apply with respect to the Corporation or any of its officers
or directors, or any of their respective affiliates, in circumstances where the application of any such doctrine would conflict
with any fiduciary duties or contractual obligations they may have as of the date of this Amended and Restated Certificate or in
the future, and the Corporation renounces any expectancy that any of the directors or officers of the Corporation will offer
any such corporate opportunity of which he or she may become aware to the Corporation, except, the doctrine of corporate opportunity
shall apply with respect to any of the directors or officers of the Corporation with respect to a corporate opportunity that was
offered to such person solely in his or her capacity as a director or officer of the Corporation and (i) such opportunity
is one the Corporation is legally and contractually permitted to undertake and would otherwise be reasonable for the Corporation
to pursue and (ii) the director or officer is permitted to refer that opportunity to the Corporation without violating any
legal obligation.
ARTICLE X
AMENDMENT OF SECOND AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
The Corporation reserves the right at any time
and from time to time to amend, alter, change or repeal any provision contained in this Second Amended and Restated Certificate
(including any Preferred Stock Designation), and other provisions authorized by the laws of the State of Delaware at the time in
force that may be added or inserted, in the manner now or hereafter prescribed by this Amended and Restated Certificate and the
DGCL; and, except as set forth in Article VIII, all rights, preferences and privileges of whatever nature herein conferred
upon stockholders, directors or any other persons by and pursuant to this Second Amended and Restated Certificate in its present
form or as hereafter amended are granted subject to the right reserved in this Article X.
ARTICLE XI
EXCLUSIVE FORUM FOR CERTAIN LAWSUITS
Section 11.1 Forum. Unless
the Corporation consents in writing to the selection of an alternative forum, to the fullest extent permitted by the applicable
law, the Court of Chancery of the State of Delaware (the ‘Court of Chancery’) shall be the sole and exclusive
forum for any stockholder (including a beneficial owner) to bring (i) any derivative action or proceeding brought on behalf
of the Corporation, (ii) any action asserting a claim of breach of a fiduciary duty owed by any director, officer or other
employee of the Corporation to the Corporation or the Corporation’s stockholders, (iii) any action asserting a claim
against the Corporation, its directors, officers or employees arising pursuant to any provision of the DGCL or this Amended and
Restated Certificate or the Bylaws, or (iv) any action asserting a claim against the Corporation, its directors, officers
or employees governed by the internal affairs doctrine and, if brought outside of Delaware, the stockholder bringing the suit will
be deemed to have consented to service of process on such stockholder’s counsel, except for, as to each of (i) through
(iv) above, any claim (A) as to which the Court of Chancery determines that there is an indispensable party not subject
to the jurisdiction of the Court of Chancery (and the indispensable party does not consent to the personal jurisdiction of the
Court of Chancery within ten days following such determination), (B) which is vested in the exclusive jurisdiction of a court or
forum other than the Court of Chancery, or (C) for which the Court of Chancery does not have subject matter jurisdiction.
Notwithstanding the foregoing, (i) the provisions of this Section 11.1 will not apply to suits brought
to enforce a duty or liability created by the Securities Act, the Exchange Act or any other claim for which the federal courts
have exclusive jurisdiction, and (ii) unless the Corporation consents in writing to the selection of an alternative forum,
the Court of Chancery and the federal district courts of the United States of America shall, to the fullest extent permitted by
law, have concurrent jurisdiction for the resolution of any complaint asserting a cause of action arising under the Securities
Act of 1933, as amended, or the rules and regulations promulgated thereunder. Any person or entity purchasing or otherwise acquiring
any interest in any security of the Corporation shall be deemed to have notice of and consented to the provisions of this Section 11.1.
Section 11.2 Consent to Jurisdiction. If
any action the subject matter of which is within the scope of Section 11.1 immediately above is filed in a court other than
a court located within the State of Delaware (a ‘Foreign Action’) in the name of any stockholder, such
stockholder shall be deemed to have consented to (i) the personal jurisdiction of the state and federal courts located within
the State of Delaware in connection with any action brought in any such court to enforce Section 11.1 immediately above (an
‘FSC Enforcement Action’) and (ii) having service of process made upon such stockholder in any such
FSC Enforcement Action by service upon such stockholder’s counsel in the Foreign Action as agent for such stockholder.
Section 11.3 Severability. If
any provision or provisions of this Article XI shall be held to be invalid, illegal or unenforceable as applied
to any person or entity or circumstance for any reason whatsoever, then, to the fullest extent permitted by law, the validity,
legality and enforceability of such provisions in any other circumstance and of the remaining provisions of this Article
XI (including, without limitation, each portion of any sentence of this Article XI containing any such
provision held to be invalid, illegal or unenforceable that is not itself held to be invalid, illegal or unenforceable) and the
application of such provision to other persons or entities and circumstances shall not in any way be affected or impaired thereby.
Any person or entity purchasing or otherwise acquiring any interest in shares of capital stock of the Corporation shall be deemed
to have notice of and consented to the provisions of this Article XI.
ARTICLE
XII
MISCELLANEOUS
If
any provision of this Second Amended and Restated Certificate becomes or is declared on any ground by a court of competent jurisdiction
to be illegal, unenforceable or void, portions of such provision, or such provision in its entirety, to the extent necessary, shall
be severed from this Second Amended and Restated Certificate, and the court shall replace such illegal, void or unenforceable provision
of this Second Amended and Restated Certificate with a valid and enforceable provision that most accurately reflects the Corporation’s
intent, in order to achieve, to the maximum extent possible, the same economic, business and other purposes of the illegal, void
or unenforceable provision. The balance of this Second Amended and Restated Certificate shall be enforceable in accordance with
its terms.
[Signature Page Follows]
IN WITNESS WHEREOF, Bannix Acquisition Corp.
has caused this Second Amended and Restated Certificate to be duly executed and acknowledged in its name and on its behalf by an
authorized officer as of the date first set forth above.
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Bannix Acquisition Corp. |
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By: |
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Name: |
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Title: Chairman and Chief Executive Officer |
[Signature Page to Second Amended and Restated
Certificate of Incorporation]
Annex
C
AMENDED AND RESTATED
BYLAWS OF [_____], INC.
(Effective as of [•],
2023)
ARTICLE
1
CORPORATE
OFFICES
Section
1.1 Registered Office. The registered office of [_____], Inc. (the “Corporation”) shall be fixed
in the Corporation’s certificate of incorporation. References in these bylaws to the certificate of incorporation, as the
same shall be amended and/or restated from time to time (the “Certificate”), shall include the terms of any
certificate of designations of any series of preferred stock.
Section
1.2 Other Offices. The Corporation also may have offices at such other places, both within and without the State of
Delaware, as the Board of Directors of the Corporation (the “Board”) may from time to time determine or the business of
the Corporation may require.
ARTICLE
2
MEETINGS
OF STOCKHOLDERS
Section
2.1 Time and Place of Meetings. Meetings of stockholders shall be held at any time and place, within or without the
State of Delaware, designated by the Board. In the absence of any such designation, stockholders’ meetings shall be held
at the Corporation’s principal executive office.
Section
2.2 Annual Meeting. The annual meeting of stockholders shall be held on such date, at such time and at such place within
or without the State of Delaware as shall be designated from time to time by the Board and stated in the Corporation’s notice
of the meeting. At the annual meeting, directors shall be elected and any other business properly brought before the meeting may
be transacted.
Section
2.3 Special Meeting.
(i) A special meeting of the stockholders, other than those required by statute, may be called at any time only in the manner provided
in the Certificate. The Board may cancel, postpone or reschedule any previously scheduled special meeting at any time, before or
after the notice for such meeting has been sent to the stockholders.
(ii)
The notice of a special meeting shall include the purpose for which the meeting is called. Only such business shall be conducted
at a special meeting of stockholders as shall have been set forth in the notice of such meeting. Nothing contained in this Section
2.3(ii) shall be construed as limiting, fixing or affecting the time when a meeting of stockholders called by action of
the Board may be held.
Section
2.4 Advance Notice Procedures.
(i)
Advance Notice of Stockholder Business. At an annual meeting of the stockholders, only such business shall be conducted
as shall have been properly brought before the meeting. To be properly brought before an annual meeting, business must be brought:
(A) pursuant to the Corporation’s notice of meeting (or any supplement thereto) or proxy materials with respect to such meeting,
(B) by or at the direction of the Board (or any authorized committee thereof), or (C) by a stockholder of the Corporation who (1)
is a stockholder of record at the time of the giving of the notice required by Sections 2.4(i)-(iii) and on the
record date for the determination of stockholders entitled to vote at the annual meeting and (2) has timely complied in proper
written form with the procedures set forth in Sections 2.4(i)-(iii). In addition, for business to be properly
brought before an annual meeting by a stockholder, such business must be a proper matter for stockholder action pursuant to these
bylaws and applicable law. Except for proposals properly made in accordance with Rule 14a-8 under the Securities Exchange Act of
1934, and the rules and regulations thereunder (as so amended and inclusive of such rules and regulations) (the “1934
Act”), and included in the notice of meeting given by or at the direction of the Board, for the avoidance of doubt, clause
(C) above shall be the exclusive means for a stockholder to bring business before an annual meeting of stockholders.
(a)
For business to be properly
brought before an annual meeting by a stockholder pursuant to clause Section 2.4(i)(C) above, a
stockholder’s notice must set forth all information required under this Section 2.4(i) and must be
received by the Secretary of the Corporation at the principal executive offices of the Corporation not later than the
90th day nor earlier than the 120th day before the one-year anniversary of the preceding
year’s annual meeting; provided,
however, that in the event that no annual meeting was held in the previous year or if
the date of the annual meeting is advanced by more than 30 days prior to or delayed by more than 60 days after the one-year
anniversary of the date of the previous year’s annual meeting, then, for notice by the stockholder to be timely, it
must be received by the Secretary of the Corporation not earlier than the close of business on the 120th day
prior to such annual meeting and not later than the close of business on the later of (i) the 90th day prior
to such annual meeting or (ii) the tenth day following the day on which a Public Announcement (as defined below) of the date
of such annual meeting is first made. In no event shall any adjournment or postponement of an annual meeting or the
announcement thereof commence a new time period for the giving of a stockholder’s notice as described in
this Section 2.4(i)(a). “Public Announcement” shall mean disclosure in a press release
reported by the Dow Jones News Service, Associated Press or a comparable national news service or in a document publicly
filed by the Corporation with the Securities and Exchange Commission pursuant to Section 13, 14 or 15(d) of the 1934 Act.
(b)
To be in proper written form, a stockholder’s notice to the Secretary of the Corporation must set forth as to each matter
of business the stockholder intends to bring before the annual meeting: (1) a brief description of the business intended to be
brought before the annual meeting and the reasons for conducting such business at the annual meeting, (2) the name and address,
as they appear on the Corporation’s books, of the stockholder proposing such business and any Stockholder Associated Person
(as defined below), (3) the class or series and number of shares of the Corporation that are held of record or are beneficially
owned, directly or indirectly, by the stockholder or any Stockholder Associated Person and any Derivative Instruments (as defined
below) held or beneficially owned, directly or indirectly, by the stockholder or any Stockholder Associated Person, (4) whether
and the extent to which any hedging or other transaction or series of transactions has been entered into by or on behalf of such
stockholder or any Stockholder Associated Person with respect to any securities of the Corporation, and a description of any other
agreement, arrangement or understanding (including any short position or any borrowing or lending of shares), the effect or intent
of which is to mitigate loss to, or to manage the risk or benefit from share price changes for, or to increase or decrease the
voting power of, such stockholder or any Stockholder Associated Person with respect to any securities of the Corporation, (5) any
proxy, contract, arrangement, understanding or relationship pursuant to which the stockholder or a Stockholder Associated Person
has a right to vote any shares of any security of the Corporation, (6) any rights to dividends on the shares of the Corporation
beneficially owned by the stockholder or a Stockholder Associated Person that are separated or separable from the underlying shares
of the Corporation, (7) any performance-related fees (other than asset-based fees) that the stockholder or a Stockholder Associated
Person is entitled to based on any increase or decrease in the value of shares of the Corporation or Derivative Instruments, if
any, as of the date of such notice, (8) any material interest of the stockholder or a Stockholder Associated Person in such business
and (9) a statement whether such stockholder or any Stockholder Associated Person will deliver a proxy statement and form of proxy
to holders of at least the percentage of the Corporation’s voting shares required under applicable law to carry the proposal
(such information provided and statements made as required by clauses (1) through (9), a “Business Solicitation Statement”).
In addition, to be in proper written form, a stockholder’s notice to the Secretary of the Corporation must be supplemented
not later than ten days following the record date for notice of the meeting to disclose the information contained in clauses (3)
through (7) above as of the record date for notice of the meeting. For purposes of this Section 2.4, a “Stockholder
Associated Person” of any stockholder shall mean (i) any person controlling, directly or indirectly, or acting in concert
with, such stockholder, (ii) any beneficial owner of shares of stock of the Corporation owned of record or beneficially by such
stockholder and on whose behalf the proposal or nomination, as the case may be, is being made, or (iii) any person controlling,
controlled by or under common control with such person referred to in the preceding clauses (i) and (ii). For purposes of this Section
2.4, a “Derivative Instrument” shall mean any option, warrant, convertible security, stock appreciation
right or similar right with an exercise or conversion privilege or a settlement payment or mechanism at a price related to any
class or series of shares of the Corporation or with a value derived in whole or in part from the value of any class or series
of capital stock of the Corporation or otherwise.
(c)
Without exception, no business shall be conducted at any annual meeting except in accordance with the provisions set forth in this Section
2.4(i) and, if applicable, Section 2.4(ii). In addition, business proposed to be brought by a stockholder
may not be brought before the annual meeting if such stockholder or a Stockholder Associated Person, as applicable, takes action
contrary to the representations made in the Business Solicitation Statement applicable to such business or if the Business Solicitation
Statement applicable to such business contains an untrue statement of a material fact or omits to state a material fact necessary
to make the statements therein not misleading. The chairperson of the annual meeting shall, if the facts warrant,
determine and
declare at the annual meeting that business was not properly brought before the annual meeting in accordance with the provisions
prescribed by these bylaws, and, if the chairperson should so determine, he or she shall so declare at the annual meeting that
any such business not properly brought before the annual meeting shall not be conducted.
(ii)
Advance Notice of Director Nominations at Annual Meetings. Notwithstanding anything in these bylaws to the contrary, only
persons who are nominated in accordance with the procedures set forth in this Section 2.4(ii) shall be eligible
for election or re-election as directors at an annual meeting of stockholders. Nominations of persons for election or re-election
to the Board shall be made at an annual meeting of stockholders only (A) by or at the direction of the Board or (B) by a stockholder
of the Corporation who (1) was a stockholder of record at the time of the giving of the notice required by this Section
2.4(ii) and on the record date for the determination of stockholders entitled to vote at the annual meeting and (2) has
complied with the notice procedures set forth in this Section 2.4(ii). In addition to any other applicable requirements,
for a nomination to be made by a stockholder, the stockholder must have given timely notice thereof in proper written form to the
Secretary of the Corporation.
(a)
To comply with clause (B) of Section 2.4(ii) above, a nomination to be made by a stockholder must set forth all
information required under this Section 2.4(ii) and must be received by the Secretary of the Corporation at the
principal executive offices of the Corporation at the time set forth in, and in accordance with Section 2.4(i)(a).
(b)
To be in proper written form, such stockholder’s notice to the Secretary must set forth:
(1)
as to each person (a “nominee”) whom the stockholder proposes to nominate for election or re-election as a director:
(A) the name, age, business address and residence address of the nominee, (B) the principal occupation or employment of the nominee,
(C) the class or series and number of shares of the Corporation that are held of record or are beneficially owned, directly or
indirectly, by the nominee and any Derivative Instruments held or beneficially held of record or are beneficially owned, directly
or indirectly, by the nominee, (D) whether and the extent to which any hedging or other transaction or series of transactions has
been entered into by or on behalf of the nominee with respect to any securities of the Corporation, and a description of any other
agreement, arrangement or understanding (including any short position or any borrowing or lending of shares), the effect or intent
of which is to mitigate loss to, or to manage the risk or benefit of share price changes for, or to increase or decrease the voting
power of the nominee, (E) any proxy, contract, arrangement, understanding or relationship pursuant to which the nominee has a right
to vote any shares of any security of the Corporation, (F) any rights to dividends on the shares of the Corporation beneficially
owned by the nominee that are separated or separable from the underlying shares of the Corporation, (G) any performance-related
fees (other than asset-based fees) that the nominee is entitled to based on any increase or decrease in the value of shares of
the Corporation or Derivative Instruments, if any, as of the date of such notice, (H) a description of all arrangements or understandings
between the stockholder and each nominee and any other person or persons (naming such person or persons) pursuant to which the
nominations are to be made by the stockholder, (I) a written statement executed by the nominee acknowledging that as a director
of the Corporation, the nominee will owe a fiduciary duty under Delaware law with respect to the Corporation and its stockholders
and (J) any other information relating to the nominee that would be required to be disclosed about such nominee if proxies were
being solicited for the election or re-election of the nominee as a director, or that is otherwise required, in each case pursuant
to Regulation 14A under the 1934 Act (including without limitation the nominee’s written consent to being named in the proxy
statement, if any, as a nominee and to serving as a director if elected or re-elected, as the case may be); and
(2)
as to such stockholder giving notice, (A) the information required to be provided pursuant to clauses (2) through (7) of Section
2.4(i)(b) above, and the supplement referenced in the second sentence of Section 2.4(i)(b) above (except
that the references to “business” in such clauses shall instead refer to nominations of directors for purposes of this
paragraph), and (B) a statement whether such stockholder or Stockholder Associated Person will deliver a proxy statement and form
of proxy to holders of a number of the Corporation’s voting shares reasonably believed by such stockholder or Stockholder
Associated Person to be necessary to elect or re-elect such nominee(s) (such information provided and statements made as required
by clauses (A) and (B) above, a “Nominee Solicitation Statement”).
(c)
At the request of the Board, any person nominated by a stockholder for election or re-election as a director must furnish to the
Secretary of the Corporation (1) that information required to be set forth in the stockholder’s notice of nomination of such
person as a director as of a date subsequent to the date on which the notice of such person’s nomination was given, (2) a
written questionnaire with respect to the background and qualification of such person and the background of any other person or
entity on whose behalf the nomination is being made (which questionnaire shall be provided by the Secretary upon written request
of any stockholder of record identified by name within five business days of such written request), (3) such other information
as may reasonably be required by the Corporation to determine the eligibility of such proposed nominee to serve as an independent
director or audit committee financial expert of the Corporation under applicable laws, securities exchange rules or regulations,
or any publicly-disclosed corporate governance guideline or committee charter of the Corporation and (4) such information that
could be material to a reasonable stockholder’s understanding of the independence, or lack thereof, of such nominee. In the
absence of the furnishing of such information if requested, such stockholder’s nomination shall not be considered in proper
form pursuant to this Section 2.4(ii).
(d)
No person shall be eligible for election or re-election as a director of the Corporation at an annual meeting of stockholders unless
nominated in accordance with the provisions set forth in this Section 2.4(ii). In addition, a nominee shall not be
eligible for election or re-election if a stockholder or Stockholder Associated Person, as applicable, takes action contrary to
the representations made in the Nominee Solicitation Statement applicable to such nominee or if the Nominee Solicitation Statement
applicable to such nominee contains an untrue statement of a material fact or omits to state a material fact necessary to make
the statements therein not misleading. The chairperson of the annual meeting shall, if the facts warrant, determine and declare
at the annual meeting that a nomination was not made in accordance with the provisions prescribed by these bylaws, and if the chairperson
should so determine, he or she shall so declare at the annual meeting, and the defective nomination shall be disregarded.
(iii)
Other Requirements and Rights. In addition to the foregoing provisions of this Section 2.4, a stockholder must
also comply with all applicable requirements of state law and of the 1934 Act and the rules and regulations thereunder with respect
to the matters set forth in this Section 2.4. Nothing in this Section 2.4 shall be deemed to affect
any rights of:
(i)
a stockholder to request inclusion of proposals in the Corporation’s proxy statement pursuant to Rule 14a-8 (or any successor
provision) under the 1934 Act; or
(ii)
the Corporation to omit a proposal from the Corporation’s proxy statement pursuant to Rule 14a-8 (or any successor provision)
under the 1934 Act.
Section
2.5 Notice of Stockholders’ Meetings. Whenever stockholders are required or permitted to take any action at a
meeting, a written notice of the meeting shall be given which shall state the place, date and hour of the meeting, the record date
for determining the stockholders entitled to vote at the meeting, if such date is different from the record date for determining
stockholders entitled to notice of the meeting, and, in the case of a special meeting, the purpose or purposes for which the meeting
is called. Except as otherwise provided in the General Corporation Law of the State of the Delaware (the “DGCL”),
the Certificate or these bylaws, the written notice of any meeting of stockholders shall be given not less than 10 nor more than
60 days before the date of the meeting to each stockholder entitled to vote at such meeting as of the record date for determining
the stockholders entitled to notice of the meeting.
Section
2.6 Quorum. The holders of a majority of the aggregate voting power of the capital stock issued and outstanding and
entitled to vote, present in person or represented by proxy, shall constitute a quorum for the transaction of business at all meetings
of the stockholders, except as otherwise required by the DGCL, the Certificate or these bylaws. Where a separate vote by a class
or series or classes or series is required, a majority of the outstanding shares of such class or series or classes or series,
present in person or represented by proxy, shall constitute a quorum (as to such class or series) entitled to take action with
respect to that vote on that matter, except as otherwise provided by law, the Certificate or these bylaws. Abstentions and non-votes
by brokers are counted as present for purposes of determining a quorum.
If
a quorum is not present or represented at any meeting of the stockholders, then either (i) the chairperson of the meeting, or (ii)
the holders of a majority of the shares entitled to vote at the meeting, present in person or represented by proxy, shall have
power to adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum is present
or represented. At such adjourned meeting at which a quorum is present or represented, any business may be transacted that might
have been transacted at the meeting as originally noticed.
Section
2.7 Adjourned Meeting; Notice. When a meeting is adjourned to another time and/or place, unless these bylaws otherwise
require, notice need not be given of the adjourned meeting if the time and place thereof are announced at the meeting at which
the adjournment is taken. At the adjourned meeting, the Corporation may transact any business which might have been transacted
at the original meeting. If the adjournment is for more than 30 days or a new record date for stockholders entitled to vote is
fixed for the adjourned meeting, a notice of the adjourned meeting shall be given to each stockholder of record entitled to vote
at the meeting.
Section
2.8 Conduct of Business. The chairperson of any meeting of stockholders shall determine the order of business and the
procedure at the meeting, including such regulation of the manner of voting and the conduct of business. The chairperson of any
meeting of stockholders shall be designated by the Board; in the absence of such designation, the Chairman of the Board, if any,
the Chief Executive Officer (in the absence of the chairperson) or the President (in the absence of the Chairman of the Board and
the Chief Executive Officer), or in their absence any other executive officer of the Corporation, shall serve as chairperson of
the stockholder meeting.
Section
2.9 Voting.
(i)
Voting Rights. Except as may be otherwise provided by law, the Certificate or these bylaws, each stockholder shall be entitled
to one vote for each share of capital stock held by such stockholder. Any share of capital stock of the Corporation held by the
Corporation shall have no voting rights.
(ii)
Vote Required. Except as otherwise required by law, the Certificate or these bylaws, in all matters other than the election
of directors, the affirmative vote of a majority of the shares present in person or represented by proxy at the meeting and entitled
to vote on the subject matter shall be the act of the stockholders. Except as otherwise required by law, the Certificate or these
bylaws, the vote required for election of a director by the stockholders at a meeting of stockholders shall, except in a contested
election, be the affirmative vote of a majority of the votes cast in favor or against the election of a nominee at a meeting of
stockholders. In a contested election, the directors shall be elected by a plurality of the votes cast at a meeting of stockholders
by the holders of stock entitled to vote in such election. For purposes of Section 2.9(ii), (i) a “contested
election” means that as of the record date for the meeting at which the election is held, there are more nominees for election
than positions on the Board of Directors and (ii) a “majority of the votes cast” means that the number of votes cast
in favor of the election of a director exceeds the number of votes cast against the election of that director.
(iii)
Abstentions and Broker Non-Votes. In determining the number of votes cast for or against a proposal or nominee, shares abstaining
from voting on a matter will not be treated as a vote cast. A non-vote by a broker will be counted for purposes of determining
a quorum but not for purposes of determining the number of votes cast.
Section
2.10 No Stockholder Action by Written Consent Without a Meeting. Subject to the rights of the holders of any series
of preferred stock, any action required or permitted to be taken by the stockholders of the Corporation must be effected at a duly
called annual or special meeting of stockholders of the Corporation and may not be effected by any consent in writing by such stockholders.
Section
2.11 Record Dates.
(i)
In order that the Corporation may determine the stockholders entitled to notice of or to vote at any meeting of stockholders or
any adjournment thereof, the Board may fix a record date, which record date shall not precede the date upon which the resolution
fixing the record date is adopted by the Board and which record date shall not be more than 60 nor less than 10 days before the
date of such meeting. If no record date is fixed by the Board, the record date for determining stockholders entitled to notice
of and to vote at a meeting of stockholders shall be at the close of business on the day next preceding the day on which notice
is given, or, if notice is waived, at the close of business on the day next preceding the day on which the meeting is held. A determination
of stockholders of record entitled to notice of or to vote at a meeting of stockholders shall apply to any adjournment of the meeting;
provided, however, that the Board may fix a new record date for determination of stockholders entitled to vote at the adjourned
meeting.
(ii)
In order that the Corporation may determine the stockholders entitled to receive payment of any dividend or other distribution
or allotment of any rights or the stockholders entitled to exercise any rights in respect of any change, conversion or exchange
of stock, or for the purpose of any other lawful action, the Board may fix a record date, which record date shall not precede the
date upon which the resolution fixing the record date is adopted, and which record date shall be not more than 60 days prior to
such action. If no record date is fixed, the record date for determining stockholders for any such purpose shall be at the close
of business on the day on which the Board adopts the resolution relating thereto.
Section
2.12 Proxies. Each stockholder entitled to vote at a meeting of stockholders may authorize another person or persons
to act for such stockholder by proxy authorized by an instrument in writing or by a transmission permitted by law filed in accordance
with the procedure established for the meeting, but no such proxy shall be voted or acted upon after three years from its date,
unless the proxy provides for a longer period. The revocability of a proxy that states on its face that it is irrevocable shall
be governed by the provisions of Section 212 of the DGCL. A written proxy may be in the form of a telegram, cablegram, or other
means of electronic transmission permitted by law, which results in a writing from such stockholder or by his attorney and delivered
to the Secretary of the meeting.
Section
2.13 List of Stockholders Entitled to Vote. The officer who has charge of the stock ledger of the Corporation shall
prepare and make, at least 10 days before every meeting of stockholders, a complete list of the stockholders entitled to vote at
the meeting; provided, however, if the record date for determining the stockholders entitled to vote is less than 10 days before
the meeting date, the list shall reflect the stockholders entitled to vote as of the tenth day before the meeting date. The stockholder
list shall be arranged in alphabetical order and show the address of each stockholder and the number of shares registered in the
name of each stockholder. The Corporation shall not be required to include electronic mail addresses or other electronic contact
information on such list. Such list shall be open to the examination of any stockholder for any purpose germane to the meeting
for a period of at least 10 days prior to the meeting (i) at a place within the city where the meeting is to be held, which place
shall be specified in the notice of the meeting or (ii) during ordinary business hours at the Corporation’s principal place
of business.
ARTICLE
3
DIRECTORS
Section
3.1 Board Power. The business and affairs of the Corporation shall be managed by or under the direction of the Board,
except as may be otherwise provided in the DGCL or the Certificate.
Section
3.2 Board Size. The Board shall consist of no less than 3 members and no more than 5 members, each of whom shall be
a natural person. The number of directors shall be determined from time to time solely by resolution of the Board in accordance
with the provisions of the Certificate. No reduction of the authorized number of directors shall have the effect of removing any
director before that director’s term of office expires.
Section
3.3 Election, Qualification and Term of Office of Directors. Except as provided in Section 3.4, each director,
including a director elected to fill a vacancy, shall hold office until the expiration of the term for which elected and until
such director’s successor is elected and qualified, or until such director’s earlier death, resignation, disqualification
or removal from office. Directors need not be stockholders unless so required by the Certificate or these bylaws. The Certificate
or these bylaws may prescribe other qualifications for directors.
Section
3.4 Removal of Directors. Any director may be removed from office by the stockholders of the Corporation only for cause
by the affirmative vote of at least 66 2/3% of the voting power of the outstanding shares of capital stock of the Corporation entitled
to vote generally in the election of directors, voting together as a single class.
Section
3.5 Resignation and Vacancies. Any director may resign at any time upon notice given in writing or by electronic transmission
to the Corporation; provided, however, that if such notice is given by electronic transmission, such electronic transmission must
either set forth or be submitted with information from which it can be determined that the electronic transmission was authorized
by the director. A resignation is effective when the resignation is delivered unless the resignation specifies a later effective
date or an effective date determined upon the happening of an event or events. Acceptance of such resignation shall not be necessary
to make it effective.
Vacancies
and newly created directorships resulting from any increase in the authorized number of directors elected by all of the stockholders
having the right to vote as a single class shall be filled only by a majority of the directors then in office,
although less than
a quorum, or by a sole remaining director. A person so elected by the directors then in office to fill a vacancy or newly created
directorship shall hold office until the next annual meeting of stockholders of the Corporation and until his or her successor
is elected and qualified, or until such director’s earlier death, resignation, disqualification or removal from office.
Section
3.6 Place of Meetings; Meetings by Telephone. The Board may hold meetings, both regular and special, either within or
without the State of Delaware. Members of the Board, or any committee designated by the Board, may participate in a meeting of
the Board, or any committee, by means of conference telephone or other communications equipment by means of which all persons participating
in the meeting can hear each other, and such participation in a meeting shall constitute presence in person at the meeting.
Section
3.7 Regular Meetings. Regular meetings of the Board may be held without notice at such time and at such place as shall
from time to time be determined by the Board.
Section
3.8 Special Meetings; Notice. Special meetings of the Board for any purpose or purposes may be called at any time by
the Chairman of the Board, the Chief Executive Officer, the President or a majority of the authorized number of directors, at such
times and places as he or she or they shall designate. Notice of special meetings of the Board shall be given to each director
at least 48 hours before the date of the meeting in such manner as is determined by the Board.
Section
3.9 Quorum; Voting. At all meetings of the Board, a majority of the total number of directors then in office shall constitute
a quorum for the transaction of business. If a quorum is not present at any meeting of the Board, then the directors present thereat
may adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum is present. A
meeting at which a quorum is initially present may continue to transact business notwithstanding the withdrawal of directors, if
any action taken is approved by at least a majority of the required quorum for that meeting. The vote of a majority of the directors
present at any meeting at which a quorum is present shall be the act of the Board, except as may be otherwise specifically provided
by statute, the Certificate or these bylaws.
Section
3.10 Board Action by Written Consent Without a Meeting. Unless otherwise restricted by the Certificate or these bylaws,
any action required or permitted to be taken at any meeting of the Board, or of any committee thereof, may be taken without a meeting
if all members of the Board or committee, as the case may be, consent thereto in writing or by electronic transmission and the
writing or writings or electronic transmission or transmissions are filed with the minutes of proceedings of the Board or committee.
Section
3.11 Fees and Compensation of Directors. Unless otherwise restricted by the Certificate or these bylaws, the Board shall
have the authority to fix the compensation of directors.
ARTICLE
4
COMMITTEES
Section
4.1 Committees of Directors. The Board may designate one or more committees, each committee to consist of one or more
of the directors of the Corporation. The Board may designate one or more directors as alternate members of any committee, who may
replace any absent or disqualified member at any meeting of the committee. Any such committee, to the extent provided in the resolution
of the Board or in these bylaws, shall have and may exercise all the powers and authority of the Board in the management of the
business and affairs of the Corporation, and may authorize the seal of the Corporation to be affixed to all papers that may require
it; but no such committee shall have the power or authority to (i) approve or adopt, or recommend to the stockholders, any action
or matter (other than the election or removal of directors) expressly required by the DGCL to be submitted to stockholders for
approval, or (ii) adopt, amend or repeal any bylaw of the Corporation.
Section
4.2 Committee Minutes. Each committee shall keep regular minutes of its meetings and report the same to the Board when
required.
Section
4.3 Meetings and Action of Committees.
Meetings
and actions of committees shall be governed by, and held and taken in accordance with, the provisions of:
(a) Section 3.6 (place
of meetings and meetings by telephone);
(b) Section 3.7 (regular
meetings);
(c) Section 3.8 (special
meetings; notice);
(d)
Section 3.9 (quorum; voting);
(e)
Section 3.10 (action without a meeting); and
(f)
Section 7.5 (waiver of notice)
(g)
with such changes in the context of those bylaws as are necessary to substitute the committee and its members for the Board and
its members. However:
(i)
the time of regular meetings of committees may be determined by resolution of the committee; and
(ii)
special meetings of committees may also be called by resolution of the committee.
The
Board may adopt rules for the governance of any committee not inconsistent with the provisions of these bylaws.
Section
4.4 Subcommittees. Unless otherwise provided under applicable law, or in the Certificate, these bylaws or the resolutions
of the Board designating the committee, a committee may create one or more subcommittees, each subcommittee to consist of one or
more members of the committee, and delegate to a subcommittee any or all of the powers and authority of the committee.
ARTICLE
5
OFFICERS
Section
5.1 Officers. The officers of the Corporation shall be a Chairman of the Board, a Chief Executive Officer, a President,
one or more Executive Vice President or Vice Presidents, a Chief Operating Officer, a Chief Financial Officer, a Secretary and
a Treasurer and such other officers and assistant officers as may be deemed necessary or desirable by the Board. Any number of
offices may be held by the same person. In its discretion, the Board may choose not to fill any office for any period as it may
deem advisable; provided, however, that there shall always be (i) a Chairman of the Board, a President or a Vice President and
(ii) a Treasurer, a Secretary, an Assistant Treasurer or an Assistant Secretary.
Section
5.2 Appointment of Officers. The Board shall appoint the officers of the Corporation, except such officers as may be
appointed in accordance with the provisions of Section 5.3, subject to the rights, if any, of an officer under any
contract of employment. A vacancy in any office because of death, resignation, removal, disqualification or any other cause shall
be filled in the manner prescribed in this Article V for the regular election to such office.
Section
5.3 Subordinate Officers. The Board may appoint, or empower the Chief Executive Officer or, in the absence of a Chief
Executive Officer, the President, to appoint, such other officers and agents as the business of the Corporation may require. Each
of such officers and agents shall hold office for such period, have such authority, and perform such duties as are provided in
these bylaws or as the Board may from time to time determine.
Section
5.4 Removal and Resignation of Officers. Any officer may be removed, either with or without cause, by an affirmative
vote of the majority of the Board at any regular or special meeting of the Board or, except in the case of an officer chosen by
the Board, by any officer upon whom such power of removal may be conferred by the Board. Any officer may resign at any time by
giving written or electronic notice to the Corporation; provided, however, that if such notice is given by electronic transmission,
such electronic transmission must either set forth or be submitted with information from which it can be determined that the electronic
transmission was authorized by the officer. Any resignation shall take effect at the date of the receipt of that notice or at any
later time specified in that notice. Unless otherwise specified in the notice of resignation, the acceptance of the resignation
shall not be necessary to make it effective. Any resignation is without prejudice to the rights, if any, of the Corporation under
any contract to which the officer is a party.
Section
5.5 Vacancies in Offices. Any vacancy occurring in any office of the Corporation shall be filled by the Board as provided
in Section 5.2 and Section 5.3.
Section
5.6 Representation of Shares of Other Corporations. The Chairman of the Board, the Chief Executive Officer, the President,
the Chief Financial Officer, any Vice President, the Treasurer, the Secretary or Assistant Secretary of this Corporation, or any
other person authorized by the Board, the Chairman of the Board, the Chief Executive Officer, the President or a Vice President,
is authorized to vote, represent, and exercise on behalf of this Corporation all rights incident to any and all shares of any other
corporation or corporations standing in the name of this Corporation. The authority granted herein may be exercised either by such
person directly or by any other person authorized to do so by proxy or power of attorney duly executed by such person having the
authority.
Section
5.7 Authority and Duties of Officers. All officers of the Corporation shall respectively have such authority and perform
such duties in the management of the business of the Corporation as may be designated from time to time by the Board and, to the
extent not so provided, as generally pertain to their respective offices, subject to the control of the Board.
Section
5.8 The Chairman of the Board. The Chairman of the Board shall have the powers and duties customarily and usually associated
with the office of the Chairman of the Board. The Chairman of the Board shall preside at meetings of the stockholders and of the
Board.
Section
5.9 The Chief Executive Officer. The Chief Executive Officer shall have, subject to the supervision, direction and control
of the Board, ultimate authority for decisions relating to the supervision, direction and management of the affairs and the business
of the Corporation customarily and usually associated with the position of Chief Executive Officer, including, without limitation,
all powers necessary to direct and control the organizational and reporting relationships within the Corporation. If at any time
the office of the Chairman and Vice Chairman of the Board shall not be filled, or in the event of the temporary absence or disability
of the Chairman of the Board and the Vice Chairman of the Board, the Chief Executive Officer shall perform the duties and exercise
the powers of the Chairman of the Board unless otherwise determined by the Board.
Section
5.10 The President. The President shall have, subject to the supervision, direction and control of the Board, the general
powers and duties of supervision, direction and management of the affairs and business of the Corporation customarily and usually
associated with the position of President. The President shall have such powers and perform such duties as may from time to time
be assigned to him or her by the Board, the Chairman of the Board or the Chief Executive Officer. In the event of the absence or
disability of the Chief Executive Officer, the President shall perform the duties and exercise the powers of the Chief Executive
Officer unless otherwise determined by the Board.
Section
5.11 The Chief Operating Officer. The Chief Operating Officer of the Corporation shall have, subject to the supervision,
direction and control of the Board, the Chairman of the Board, the Chief Executive Officer and the President, general and active
management of the business of the Corporation and shall see that all orders and resolutions of the Board are carried into effect.
The Chief Operating Officer shall have such other powers and perform such duties as may from time be assigned to him or her by
the Board, the Chairman of the Board, the Chief Executive Officer or the President.
Section
5.12 The Vice Presidents and Assistant Vice Presidents. Each Vice President and Assistant Vice President shall have
such powers and perform such duties as may from time to time be assigned to him or her by the Board, the Chairman of the Board,
the Chief Executive Officer or the President.
Section 5.13 The
Secretary and Assistant Secretaries.
(i)
The Secretary shall attend meetings of the Board and meetings of the stockholders and record all votes and minutes of all such
proceedings in a book or books kept for such purpose. The Secretary shall have all such further powers and duties as are customarily
and usually associated with the position of Secretary or as may from time to time be assigned to him or her by the Board, the Chairman
of the Board, the Chief Executive Officer or the President.
(ii)
Each Assistant Secretary shall have such powers and perform such duties as may from time to time be assigned to him or her by the
Board, the Chairman of the Board, the Chief Executive Officer, the President or the Secretary. In the event of the absence, inability
or refusal to act of the Secretary, the Assistant Secretary (or if there shall be more than one, the Assistant secretaries in the
order determined by the Board) shall perform the duties and exercise the powers of the Secretary.
Section
5.14 The Chief Financial Officer, the Treasurer and Assistant Treasurers.
(i)
The Chief Financial Officer shall be responsible for maintaining the Corporation’s accounting records and statements, and
shall keep full and accurate accounts of receipts and disbursements in books belonging to the Corporation. The Chief Financial
Officer shall also maintain adequate records of all assets, liabilities and transactions of the Corporation and shall assure that
adequate audits thereof are currently and regularly made. The Chief Financial Officer shall have all such further powers and perform
all such further duties as are customarily and usually associated with the position of Chief Financial Officer, or as may from
time to time be assigned to him or her by the Board, the Chairman, the Chief Executive Officer or the President. Unless a Treasurer
has been appointed separately in accordance with Section 5.2 or Section 5.3, the Chief Financial Officer
shall also perform the duties of Treasurer prescribed in paragraph (ii) below.
(ii)
The Treasurer shall have custody of the Corporation’s funds and securities, shall deposit or cause to be deposited moneys
or other valuable effects in the name and to the credit of the Corporation in such depositories as may be designated by any duly
authorized officer of the Corporation, and shall have such further powers and perform such further duties as may from time to time
be assigned to him or her by the Board, the Chief Executive Officer, or the President.
(iii)
Each Assistant Treasurer shall have such powers and perform such duties as may from time to time be assigned to him or her by the
Board, the Chief Executive Officer, the President, the Chief Financial Officer or the Treasurer.
ARTICLE
6
STOCK
Section
6.1 Stock Certificates; Uncertificated Shares. The shares of the Corporation may be represented by certificated or uncertificated
shares, as determined by the Corporation in accordance with applicable law. Every holder of stock represented by certificates shall
be entitled to have a certificate signed by, or in the name of the Corporation by the Chairman of the Board or Vice Chairman of
the Board, or the President or a Vice-President, and by the Treasurer or an Assistant Treasurer, or the Secretary or an Assistant
Secretary of the Corporation representing the number of shares registered in certificate form. Any or all of the signatures on
the certificate may be a facsimile. In case any officer, transfer agent or registrar who has signed or whose facsimile signature
has been placed upon a certificate has ceased to be such officer, transfer agent or registrar before such certificate is issued,
it may be issued by the Corporation with the same effect as if such person were such officer, transfer agent or registrar at the
date of issue. The Corporation shall not have power to issue a certificate in bearer form.
Section
6.2 Special Designation on Certificates. If the Corporation is authorized to issue more than one class of stock or more
than one series of any class, then the powers, the designations, the preferences, and the relative, participating, optional or
other special rights of each class of stock or series thereof and the qualifications, limitations or restrictions of such preferences
and/or rights shall be set forth in full or summarized on the face or back of the certificate that the Corporation shall issue
to represent such class or series of stock; provided, however, that, except as otherwise provided in Section 202 of the DGCL, in
lieu of the foregoing requirements there may be set forth on the face or back of the certificate that the Corporation shall issue
to represent such class or series of stock, a statement that the Corporation will furnish without charge to each stockholder who
so requests the powers, designations, preferences and relative, participating, optional or other special rights of each class of
stock or series thereof and the qualifications, limitations or restrictions of such preferences and/or rights. Within a reasonable
time after the issuance or transfer of uncertificated stock, the Corporation shall send to the registered owner thereof a written
notice containing the information required to be set forth or stated on certificates pursuant to this Section 6.2 or
Sections 151(f), 156, 202(a) or 218(a) of the DGCL, or with respect to this Section 6.2, a statement that the Corporation
will furnish without charge to each stockholder who so requests the powers, designations, preferences and relative, participating,
optional or other special rights of each class of stock or series thereof and the qualifications, limitations or restrictions of
such preferences and/or rights. Except as otherwise expressly provided by law, the rights and obligations of the holders of uncertificated
stock and the rights and obligations of the holders of certificates representing stock of the same class and series shall be identical.
Section
6.3 Lost, Stolen or Destroyed Certificates. Except as provided in this Section 6.3, no new certificates
for shares shall be issued to replace a previously issued certificate unless the latter is surrendered to the Corporation and cancelled
at the same time. The Corporation may issue a new certificate of stock or uncertificated shares in the place of any certificate
theretofore issued by it, alleged to have been lost, stolen or destroyed, and the Corporation may require the owner of the lost,
stolen or destroyed certificate, or such owner’s legal representative, to give the Corporation a bond sufficient to indemnify
it against any claim that may be made against it on account of the alleged loss, theft or destruction of any such certificate or
the issuance of such new certificate or uncertificated shares.
Section
6.4 Dividends. The Board, subject to any restrictions contained in the Certificate or applicable law, may declare and
pay dividends upon the shares of the Corporation’s capital stock. Dividends may be paid in cash, in property, or in shares
of the corporation’s capital stock, subject to the provisions of the Certificate.
Section
6.5 Transfer of Stock. Transfers of record of shares of stock of the Corporation shall be made only upon its books by
the holders thereof, in person or by an attorney duly authorized, and, if such stock is certificated, upon the surrender of a certificate
or certificates for a like number of shares, properly endorsed or accompanied by proper evidence of succession, assignation or
authority to transfer; provided, however, that such succession, assignment or authority to transfer is not prohibited by the Certificate,
these bylaws, applicable law or contract.
Section
6.6 Stock Transfer Agreements. The Corporation shall have power to enter into and perform any agreement with any number
of stockholders of any one or more classes of stock of the Corporation to restrict the transfer of shares of stock of the Corporation
of any one or more classes owned by such stockholders in any manner not prohibited by the DGCL.
Section
6.7 Registered Stockholders. The Corporation:
(i)
shall be entitled to recognize the exclusive right of a person registered on its books as the owner of shares to receive dividends
and to vote as such owner;
(ii)
shall be entitled to hold liable for calls and assessments the person registered on its books as the owner of shares; and
(iii)
shall not be bound to recognize any equitable or other claim to or interest in such share or shares on the part of another person,
whether or not it shall have express or other notice thereof, except as otherwise provided by the laws of Delaware.
ARTICLE
7
MANNER
OF GIVING NOTICE AND WAIVER
Section
7.1 Notice of Stockholders’ Meetings. Notice of any meeting of stockholders, if mailed, is given when deposited
in the United States mail, postage prepaid, directed to the stockholder at such stockholder’s address as it appears on the
Corporation’s records. An affidavit of the Secretary or an Assistant Secretary of the Corporation or of the transfer agent
or other agent of the Corporation that the notice has been given shall, in the absence of fraud, be prima facie evidence of the
facts stated therein.
Section
7.2 Notice by Electronic Transmission. Without limiting the manner by which notice otherwise may be given effectively
to stockholders pursuant to the DGCL, the Certificate or these bylaws, any notice to stockholders given by the Corporation under
any provision of the DGCL, the Certificate or these bylaws shall be effective if given by a form of electronic transmission consented
to by the stockholder to whom the notice is given. Any such consent shall be revocable by the stockholder by written notice to
the Corporation. Any such consent shall be deemed revoked if:
(i)
the Corporation is unable to deliver by electronic transmission two consecutive notices given by the Corporation in accordance
with such consent; and
(ii)
such inability becomes known to the Secretary or an Assistant Secretary of the Corporation or to the transfer agent, or other person
responsible for the giving of notice.
However, the inadvertent
failure to treat such inability as a revocation shall not invalidate any meeting or other action.
Any
notice given pursuant to the preceding paragraph shall be deemed given:
(iii)
if by facsimile telecommunication, when directed to a number at which the stockholder has consented to receive notice;
(iv)
if by electronic mail, when directed to an electronic mail address at which the stockholder has consented to receive notice;
(v)
if by a posting on an electronic network together with separate notice to the stockholder of such specific posting, upon the later
of (A) such posting and (B) the giving of such separate notice; and
(vi)
if by any other form of electronic transmission, when directed to the stockholder.
An
affidavit of the Secretary or an Assistant Secretary or of the transfer agent or other agent of the Corporation that the notice
has been given by a form of electronic transmission shall, in the absence of fraud, be prima facie evidence of the facts stated
therein.
An
“electronic transmission” means any form of communication, not directly involving the physical transmission
of paper, that creates a record that may be retained, retrieved, and reviewed by a recipient thereof, and that may be directly
reproduced in paper form by such a recipient through an automated process.
Section
7.3 Notice to Stockholders Sharing an Address. Except as otherwise prohibited under the DGCL, without limiting the manner
by which notice otherwise may be given effectively to stockholders, any notice to stockholders given by the Corporation under the
provisions of the DGCL, the Certificate or these bylaws shall be effective if given by a single written notice to stockholders
who share an address if consented to by the stockholders at that address to whom such notice is given. Any such consent shall be
revocable by the stockholder by written notice to the Corporation. Any stockholder who fails to object in writing to the Corporation,
within 60 days of having been given written notice by the Corporation of its intention to send the single notice, shall be deemed
to have consented to receiving such single written notice.
Section
7.4 Notice to Person with Whom Communication Is Unlawful. Whenever notice is required to be given under the DGCL, the
Certificate or these bylaws, to any person with whom communication is unlawful, the giving of such notice to such person shall
not be required and there shall be no duty to apply to any governmental authority or agency for a license or permit to give such
notice to such person. Any action or meeting which shall be taken or held without notice to any such person with whom communication
is unlawful shall have the same force and effect as if such notice had been duly given. In the event that the action taken by the
Corporation is such as to require the filing of a certificate under the DGCL, the certificate shall state, if such is the fact
and if notice is required, that notice was given to all persons entitled to receive notice except such persons with whom communication
is unlawful.
Section
7.5 Waiver of Notice. Whenever notice is required to be given to stockholders, directors or other persons under any
provision of the DGCL, the Certificate or these bylaws, a written waiver, signed by the person entitled to notice, or a waiver
by electronic transmission by the person entitled to notice, whether before or after the time of the event for which notice is
to be given, shall be deemed equivalent to notice. Attendance of a person at a meeting shall constitute a waiver of notice of such
meeting, except when the person attends a meeting for the express purpose of objecting at the beginning of the meeting, to the
transaction of any business because the meeting is not lawfully called or convened. Neither the business to be transacted at, nor
the purpose of, any regular or special meeting of the stockholders or the Board, as the case may be, need be specified in any written
waiver of notice or any waiver by electronic transmission unless so required by the Certificate or these bylaws.
ARTICLE
8
INDEMNIFICATION
Section
8.1 Indemnification of Directors and Officers in Third Party Proceedings. Subject to the other provisions of this Article
VIII, the Corporation shall indemnify and hold harmless, to the fullest extent permitted by the DGCL, as now or hereinafter
in effect, any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action,
suit, arbitration, alternative dispute resolution mechanism, investigation, inquiry, judicial, administrative or legislative hearing,
or any other threatened, pending or completed proceeding, whether civil, criminal, administrative, legislative, investigative or
other nature and including any and all appeals (collectively, each a “Proceeding”) (other than an action by
or in the right of the Corporation to procure a judgement
in its favor) by reason
of the fact that such person is or was a director or officer of the Corporation, or while a director of the Corporation or officer
of the Corporation is or was serving at the request of the Corporation as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise, against all liability and loss suffered and expenses, including, without
limitation, attorneys’ fees, judgments, fines, ERISA excise taxes, damages, claims, penalties and amounts paid in settlement
actually and reasonably incurred by such person in connection with such Proceeding, if such person acted in good faith and in a
manner such person reasonably believed to be in or not opposed to the best interests of the Corporation, and, with respect to any
criminal action or proceeding, had no reasonable cause to believe such person’s conduct was unlawful. The termination of
any Proceeding by judgment, order, settlement, conviction, or upon a plea of nolo contendere or its equivalent, shall not, of itself,
create a presumption that the person did not act in good faith and in a manner which such person reasonably believed to be in or
not opposed to the best interests of the Corporation, and, with respect to any criminal action or proceeding, had reasonable cause
to believe that such person’s conduct was unlawful.
Section
8.2 Indemnification of Directors and Officers in Actions by or in the Right of the Corporation. Subject to the other
provisions of this Article VIII, the Corporation shall indemnity, to the fullest extent permitted by the DGCL, as now
or hereinafter in effect, any person who was or is a party or is threatened to be made a party to any Proceeding by or in the right
of the Corporation to procure a judgement in its favor by reason of the fact that such person is or was a director or officer of
the Corporation, or while a director or officer of the Corporation is or was serving at the request of the Corporation as a director,
officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise against all liability
and loss suffered and expenses, including, without limitation, attorneys’ fees, judgments, fines, ERISA excise taxes, damages,
claims, penalties and amounts paid in settlement actually and reasonably incurred by such person in connection with such Proceeding,
if such person acted in good faith and in a manner such person reasonably believed to be in or not opposed to the best interests
of the Corporation; except that no indemnification shall be made in respect of any claim, issue or matter as to which such person
shall have been adjudged to be liable to the Corporation unless and only to the extent that the Court of Chancery or the court
in which such action or suit was brought shall determine upon application that, despite the adjudication of liability but in view
of all the circumstances of the case, such person is fairly and reasonably entitled to indemnity for such expenses which the Court
of Chancery or such other court shall deem proper.
Section
8.3 Successful Defense. To the extent that a present or former director or officer of the Corporation has been successful
on the merits or otherwise in defense of any Proceeding described in Section 8.1 or Section 8.2, or
in defense of any claim, issue or matter therein, such person shall be indemnified against expenses (including attorneys’
fees) actually and reasonably incurred by such person in connection therewith to the extent not already advanced pursuant to Section
8.5.
Section
8.4 Indemnification of Others. Subject to the other provisions of this Article VIII, the Corporation shall
have power to indemnify its employees and its agents to the extent not prohibited by the DGCL or other applicable law. The Board
shall have the power to delegate the determination of whether employees or agents shall be indemnified to such person or persons
as the Board determines.
Section
8.5 Advanced Payment of Expenses. Expenses (including attorneys’ fees) incurred by an officer or director of the
Corporation in defending any Proceeding shall be paid by the Corporation, and expenses (including attorneys’ fees) incurred
by the Corporation’s employees and agents in defending any Proceeding shall be paid by the Corporation, in advance of the
final disposition of such Proceeding upon receipt of a written request therefor and an undertaking, by or on behalf of the person,
to repay such amounts so advanced if it shall ultimately be determined by final judicial decision of a court of competent jurisdiction
from which there is no further right to appeal that such person is not entitled to be indemnified under this Article VIII or
the DGCL. The right to advancement of expenses shall not apply if a determination is reasonably made that the facts known at the
time such determination is made demonstrate clearly and convincingly that officer, director, employee or agent, as applicable,
acted in bad faith or in a manner that such person did not reasonably believe to be in or not opposed to the best interests of
the Corporation, or, with respect to any criminal proceeding, that such person had reasonable cause to believe his or her conduct
was unlawful. Such determination shall be made: (i) by the Board by a majority vote of directors who are not parties to such proceeding,
whether or not such majority constitutes a quorum; (ii) by a committee of such directors designated by a majority vote of such
directors, whether or not such majority constitutes a quorum; or (iii) if there are no such directors, or if such directors so
direct, by independent legal counsel in a written opinion to the Board, a copy of which shall be delivered to the officer, director,
employee or agent, as applicable.
Section
8.6 Limitation on Indemnification. Subject to the requirements in Section 8.3 and the DGCL, the Corporation
shall not be obligated to indemnify any person pursuant to this Article VIII in connection with any Proceeding
(or any part of any Proceeding):
(i)
for which payment has actually been made to or on behalf of such person under any statute, insurance policy, indemnity provision,
vote or otherwise, except with respect to any excess beyond the amount paid;
(ii)
for an accounting or disgorgement of profits pursuant to Section 16(b) of the 1934 Act, or similar provisions of federal, state
or local statutory law or common law, if such person is held liable therefor (including pursuant to any settlement arrangements);
(iii)
for any reimbursement of the Corporation by such person of any bonus or other incentive-based or equity-based compensation or of
any profits realized by such person from the sale of securities of the Corporation, as required in each case under the 1934 Act
(including any such reimbursements that arise from an accounting restatement of the Corporation pursuant to Section 304 of the
Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”), or the payment to the Corporation of profits arising
from the purchase and sale by such person of securities in violation of Section 306 of the Sarbanes-Oxley Act), if such person
is held liable therefor (including pursuant to any settlement arrangements);
(iv)
initiated by such person (and not by way of defense), unless (a) the Board authorized the Proceeding (or the relevant part of the
Proceeding) prior to its initiation, (b) the Corporation provides the indemnification, in its sole discretion, pursuant to the
powers vested in the Corporation under applicable law, (c) otherwise required to be made under this Section 8.6, or
(d) otherwise required by applicable law; or
(v)
if prohibited by applicable law; provided, however, that if any provision or provisions of this Article VIII shall
be held to be invalid, illegal or unenforceable for any reason whatsoever: (1) the validity, legality and enforceability of the
remaining provisions of this Article VIII (including, without limitation, each portion of any paragraph or clause
containing any such provision held to be invalid, illegal or unenforceable, that is not itself held to be invalid, illegal or unenforceable)
shall not in any way be affected or impaired thereby; and (2) to the fullest extent possible, the provisions of this Article
VIII (including, without limitation, each such portion of any paragraph or clause containing any such provision held to
be invalid, illegal or unenforceable) shall be construed so as to give effect to the intent manifested by the provision held invalid,
illegal or unenforceable.
Section
8.7 Determination; Claim. If a claim for indemnification or advancement of expenses under this Article VIII is
not paid in full within 90 days after receipt by the Corporation of the written request therefor, the claimant shall be entitled
to an adjudication by a court of competent jurisdiction of his or her entitlement to such indemnification or advancement of expenses.
The Corporation shall indemnify such person against any and all expenses that are incurred by such person in connection with any
action for indemnification or advancement of expenses from the Corporation under this Article VIII, to the extent such
person is successful in such action, and to the extent not prohibited by law. In any such suit, the Corporation shall, to the fullest
extent not prohibited by law, have the burden of proving that the claimant is not entitled to the requested indemnification or
advancement of expenses.
Section
8.8 Non-Exclusivity of Rights. The indemnification and advancement of expenses provided by, or granted pursuant to,
this Article VIII shall not be deemed exclusive of any other rights to which those seeking indemnification or
advancement of expenses may be entitled under the Certificate or any statute, bylaw, agreement, vote of stockholders or disinterested
directors or otherwise, both as to action in such person’s official capacity and as to action in another capacity while holding
such office. The Corporation is specifically authorized to enter into individual contracts with any or all of its directors, officers,
employees or agents respecting indemnification and advancement of expenses, to the fullest extent not prohibited by the DGCL or
other applicable law.
Section
8.9 Insurance. The Corporation may purchase and maintain insurance on behalf of any person who is or was a director,
officer, employee or agent of the Corporation, or is or was serving at the request of the Corporation as a director, officer, employee
or agent of another corporation, partnership, joint venture, trust or other enterprise against any liability asserted against such
person and incurred by such person in any such capacity, or arising out of such person’s status as such, whether or not the
Corporation would have the power to indemnify such person against such liability under the provisions of the DGCL.
Section
8.10 Survival. Notwithstanding anything to the contrary, the rights to indemnification and advancement of expenses conferred
by this Article VIII shall be contract rights and shall continue as to a person who has ceased to be a director,
officer, employee or agent and shall inure to the benefit of the heirs, executors and administrators of such a person.
Section
8.11 Effect Of Repeal Or Modification. Any amendment, alteration or repeal of this Article VIII shall
not adversely affect any right or protection hereunder of any person in respect of any act or omission occurring prior to such
amendment, alteration or repeal.
Section
8.12 Certain Definitions. For purposes of this Article VIII, references to the “Corporation”
shall include, in addition to the resulting corporation, any constituent corporation (including any constituent of a constituent)
absorbed in a consolidation or merger which, if its separate existence had continued, would have had power and authority to indemnify
its directors, officers, employees or agents, so that any person who is or was a director, officer, employee or agent of such constituent
corporation, or is or was serving at the request of such constituent corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise, shall stand in the same position under the provisions of this Article
VIII with respect to the resulting or surviving corporation as such person would have with respect to such constituent
corporation if its separate existence had continued. For purposes of this Article VIII, references to “other
enterprises” shall include employee benefit plans; references to “fines” shall include any excise
taxes assessed on a person with respect to an employee benefit plan; and references to “serving at the request of the
Corporation” shall include any service as a director, officer, employee or agent of the Corporation which imposes duties
on, or involves services by, such director, officer, employee or agent with respect to an employee benefit plan, its participants
or beneficiaries; and a person who acted in good faith and in a manner such person reasonably believed to be in the interest of
the participants and beneficiaries of an employee benefit plan shall be deemed to have acted in a manner “not opposed
to the best interests of the Corporation” as referred to in this Article VIII.
ARTICLE
9
GENERAL
MATTERS
Section
9.1 Execution of Corporate Contracts and Instruments. Except as otherwise provided by law, the Certificate or these
bylaws, the Board may authorize any officer or officers, or agent or agents, to enter into any contract or execute any document
or instrument in the name of and on behalf of the Corporation; such authority may be general or confined to specific instances.
Unless so authorized or ratified by the Board or within the agency power of an officer, no officer, agent or employee shall have
any power or authority to bind the Corporation by any contract or engagement or to pledge its credit or to render it liable for
any purpose or for any amount.
Section
9.2 Fiscal Year. The fiscal year of the Corporation shall be fixed by resolution of the Board and may be changed by
the Board.
Section
9.3 Seal. The Corporation may adopt a corporate seal, which shall be adopted and which may be altered by the Board.
The Corporation may use the corporate seal by causing it or a facsimile thereof to be impressed or affixed or in any other manner
reproduced.
Section
9.4 Construction; Definitions. Unless the context requires otherwise, the general provisions, rules of construction,
and definitions in the DGCL shall govern the construction of these bylaws. Without limiting the generality of this provision, the
singular number includes the plural, the plural number includes the singular, and the term “person” includes both an
entity and a natural person.
ARTICLE
10
AMENDMENTS
The
Board is expressly authorized to adopt, alter, amend or repeal these bylaws. The affirmative vote of at least a majority of Board
then in office shall be required in order for the Board to adopt, amend, alter or repeal these bylaws. The bylaws may also be adopted,
amended or repealed by the affirmative vote of at least a majority of the voting power of the outstanding shares of capital stock
of the Corporation entitled to vote upon such adoption, amendment or repeal, voting as a single class.
Annex
D
SECURITIES PURCHASE AGREEMENT
This
SECURITIES PURCHASE AGREEMENT (the “Agreement”), dated as of September 29, 2022 (the “Effective
Date”), by and among Bannix Management LLP, Balaji Venugopal Bhat, Nicholos Hellyer, Subbanarasimhaiah Arun, Vishant Vora
and Suresh Yezhuvath (collectively called the ”Seller” and more fully
described in Schedule 1), and INSTANT FAME LLC, with an address located at 10620 Southern Highland, Suite 11—151,
Las Vegas, NV 89141 (“Buyer”) and Bannix Acquisition Corp., a Delaware corporation (the “Company”).
WHEREAS:
A.
Seller and Buyer are executing and delivering this Agreement in reliance upon the exemption from securities registration
afforded by the rules and regulations as promulgated by the United States Securities and Exchange Commission (the ”SEC”)
under the Securities Act of 1933, as amended (the “1933 Act”); and
B.
Seller is the holder of shares of common stock and Private Placement Units of the Company trading on the Nasdaq
Stock Market under the symbols “BNIX”, “BNIXW” (warrants) and ”BNIXR” (rights) and wishes
to sell 385,000 shares of common stock (the ”Shares”), $.01 par value per share (the ”Common Stock”),
and 90,000 Private Placement Units consisting of 90,000 shares of Common Stock, the right to receive 9,000 shares of Common Stock
upon consummation of the business combination (the ”Right”) and Common Stock Purchase Warrants (the ”Warrant”)
to acquire 90,000 shares of Common Stock at an exercise price of $11.50 (the “Units” and collectively
with the Shares, the Right and the Warrants, the ”Securities”) and a copy of such Warrant is hereby
attached as Exhibit A; and
C.
In consideration of Buyer providing the Seller with $200,000 in funding to be used by the Company as working capital,
which was provided on September 29, 2022 (the ”Financing”), Buyer will purchase from Seller and Seller will sell to
Buyer, the Securities in one closing upon the terms and conditions set forth in this Agreement; and
D.
The Company is in need of additional working capital and Buyer is willing to provide the Company with funds for
all the working capital purposes and to work with the company to consummate an initial business combination; and
E.
Closing. The purchase and sale of the Securities shall take place at one closing (the “Closing”).
The Closing of the transaction contemplated by this Agreement shall take place on the date hereof simultaneously with the execution
and delivery of this Agreement by all parties hereto (such date, the ”Closing Date”). Subject to the terms
and conditions hereof and in reliance on the representations and warranties of the Parties, at the Closing, Buyer shall purchase
the Securities from Seller and Seller shall sell, assign and transfer such Securities to Buyer for no further consideration outside
of providing the Financing.
NOW THEREFORE, Seller and
Buyer severally (and not jointly) hereby agree as follows:
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1. |
Purchase and Sale of the Securities. |
a.
Purchase of the Securities. On the Closing Date, Seller shall sell to Buyer and Buyer agrees to purchase
from Seller the Securities in consideration of the Buyer providing the Financing. Buyer has provided the Financing by wire transfer
on September 29, 2022, which the Company has confirmed receipt of and Seller shall deliver such Securities against delivery
of the Financing.
b.
Closing Date. Buyer has provided the Financing. Upon execution of this Agreement, the Seller will undertake
to deliver the Securities.
c.
Closing Deliveries.
(i)
At the Closing, Seller shall deliver to Buyer an instruction letter and required medallion guaranteed stock powers
from the Seller to the Company’s transfer agent directing the transfer agent to cancel the book entry representing the Securities
and re-issue a new book entry representing the Securities in the name of the Buyer.
(ii)
On September 29, 2022, Buyer has delivered and paid to the Company the Financing by wire transfer to the account
specified by the Company.
(iii)
The sale of the Securities will be exempt from the registration requirements of the 1933 Act pursuant to an exemption
provided by Section 4(a)(1) thereunder.
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2. |
Buyer’s Representations and
Warranties. Buyer represents and warrants to Seller that: |
a.
Investment Purpose. Buyer is purchasing the Securities pursuant to this Agreement for its own account and
not with a present view towards the public sale or distribution thereof, except pursuant to sales registered or exempted from
registration under the Act; provided, however, that by making the representations herein, Buyer does not agree to
hold any of the Securities for any minimum or other specific term and reserves the right to dispose of the Securities at any time
in accordance with or pursuant to a registration statement or an exemption under the 1933 Act; provided, further, the Buyer understands
that Buyer is acquiring the Securities subject to those certain lock up provisions set forth in the letter agreement (the “Letter
Agreement”) which is attached hereto as Exhibit B, and that the Securities will be restricted from transfer as set
forth in such Letter Agreement.
b.
Accredited Buyer Status. Buyer is an “accredited investor” as that term is defined in Rule 501(a)
of Regulation D (an “Accredited Investor”).
c.
Reliance on Exemptions. Buyer understands that the Securities are being offered and sold to it in reliance
upon specific exemptions from the registration requirements of United States federal and state securities laws and that Seller
is relying upon the truth and accuracy of, and Buyer’s compliance with, the representations, warranties, agreements, acknowledgments
and understandings of Buyer set forth herein in order to determine the availability of such exemptions and the eligibility of
Buyer to acquire the Securities.
d.
Information. Buyer acknowledges that the Seller is an affiliate of the Company. Buyer understands that his
investment in the Securities involves a significant degree of risk. Buyer is not aware of any facts that may constitute a breach
of any of Seller’s representations and warranties made herein.
e.
Governmental Review. Buyer understands that no United States federal or state agency or any other government
or governmental agency has passed upon or made any recommendation or endorsement of the Securities.
f.
Authorization; Enforcement. This Agreement has been duly and validly authorized. This Agreement has been
duly executed and delivered on behalf of Buyer, and this Agreement constitutes a valid and binding agreement of Buyer enforceable
in accordance with its terms.
g.
Buyer acknowledges and understands that the Securities are subject to significant restrictions as set forth in the
Letter Agreement in the form attached as Exhibit B hereto. Buyer agrees to be bound by all such limitations.
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3. |
Representations and Warranties of Seller.
Seller represents and warrants to Buyer that: |
a.
Organization and Qualification. The Company and each of its Subsidiaries (as defined below), if any, is a
corporation duly organized, validly existing and in good standing under the laws of the jurisdiction in which it is incorporated,
with full power and authority (corporate and other) to own, lease, use and operate its properties and to carry on its business
as and where now owned, leased, used, operated and conducted. The Company and each of its Subsidiaries is duly qualified as a
foreign corporation to do business and is in good standing in every jurisdiction in which its ownership or use of property or
the nature of the business conducted by it makes such qualification necessary except where the failure to be so qualified or in
good standing would not have a Material Adverse Effect. ”Material Adverse Effect” means any material adverse effect
on the business, operations, assets, financial condition or prospects of the Company or its Subsidiaries, if any, taken as a whole,
or on the transactions contemplated hereby or by the agreements or instruments to be entered into in connection herewith. ”Subsidiaries”
means any corporation or other organization, whether incorporated or unincorporated, in which the Company owns, directly or indirectly,
any equity or other ownership interest.
b.
Authorization; Enforcement. (i) Seller is the sole beneficial owner of the Securities, (ii) the Securities
sold hereunder have been duly authorized by the appropriate corporate action of the Company, (iii) Seller has all requisite power
and authority to enter into and perform this Agreement and to consummate the transactions contemplated hereby and thereby and
to Sell the Securities, in accordance with the terms hereof and thereof, and (iv) this Agreement constitutes, and upon execution
and delivery by Seller of the Securities, each of such instruments will constitute, a legal, valid and binding obligation of Seller
enforceable against Seller in accordance with its terms.
c.
Capitalization. As of the date hereof, the authorized capital stock of the Company consists of 100,000,000
shares of Common Stock, $0.01 par value per share, of which 10,861,500 shares are issued and outstanding (excluding 6,900,000
shares are subject to redemption and 1,437,500 Treasury stocks), 1,000,000 shares of authorized Preferred Stock, $0.01 par value
per share, of which zero (0.00) shares are issued and outstanding and 7,306,000 warrants to acquire common shares at exercise
price of $11.50 per share. All of such outstanding shares of capital stock are, or upon issuance will be, duly authorized, validly
issued, fully paid and non- assessable. No shares of capital stock of the Company are subject to preemptive rights or any other
similar rights of the shareholders of the Company or any liens or encumbrances imposed through the actions or failure to act of
the Company. The Company, upon request of Buyer, will furnish to Buyer true and correct copies of the Company’s Amended
and Restated Certificate of Incorporation as in effect on the date hereof (“Certificate of Incorporation”),
the Company’s By- laws, as in effect on the date hereof (the “By-laws”).
d.
Sale of the Shares. The Securities are free from all taxes, liens, claims and encumbrances with respect to
the sale thereof and shall not be subject to preemptive rights or other similar rights of shareholders of the Company and will
not impose personal liability upon the holder thereof.
e.
Information. Seller is an affiliate of the Company. Seller is not aware of any facts that may constitute
a breach of any of Buyer’s or Seller’s representations and warranties made herein.
f.
No Conflicts. The execution, delivery and performance of this Agreement and the consummation by Seller of
the transactions contemplated hereby will not (i) conflict with or result in a violation of any provision of the Company’s
Amended and Restated Certificate of Incorporation or By-laws (ii) violate or conflict with, or result in a breach of any provision
of, or constitute a default (or an event which with notice or lapse of time or both could become a default) under, or give to
others any rights of termination, amendment, acceleration or cancellation of, any agreement, indenture, patent, patent license
or instrument to which the Company or any of its Subsidiaries is a party, or (iii) result in a violation of any law, rule, regulation,
order, judgment or decree (including federal and state securities laws and regulations and regulations of any self-regulatory
organizations to which Seller or its securities are subject) applicable to Seller or any of its Subsidiaries or by which any property
or asset of Seller or any of its Subsidiaries is bound or affected (except for such conflicts, defaults, terminations, amendments,
accelerations, cancellations and violations as would not, individually or in the aggregate, have a Material Adverse Effect).
g.
The Securities represent approximately 4% of the issued and outstanding shares of common stock of the Company and
22% of the issued and outstanding Private Placement Units of the Company.
h.
Absence of Litigation. There is no action, suit, claim, proceeding, inquiry or investigation before or by
any court, public board, government agency, self-regulatory organization or body pending or, to the knowledge of Seller, threatened
against or affecting the Company or any of its Subsidiaries, or their officers or directors in their capacity as such, that could
have a Material Adverse Effect.
i.
No Materially Adverse Contracts, Etc. Neither the Company nor any of its Subsidiaries is subject to any charter,
corporate or other legal restriction, or any judgment, decree, order, rule or regulation which in the judgment of the Company’s
officers has or is expected in the future to have a Material Adverse Effect. Neither the Company nor any of its Subsidiaries is
a party to any contract or agreement which in the judgment of the Company’s officers has or is expected to have a Material
Adverse Effect.
j.
Tax Status. The Company and each of its Subsidiaries has made or filed all federal, state and foreign income
and all other tax returns, reports and declarations required by any jurisdiction to which it is subject (unless and only to the
extent that the Company and each of its Subsidiaries has set aside on its books provisions reasonably adequate for the payment
of all unpaid and unreported taxes) and has paid all taxes and other governmental assessments and charges that are material in
amount, shown or determined to be due on such returns, reports and declarations, except those being contested in good faith and
has set aside on its books provisions reasonably adequate for the payment of all taxes for periods subsequent to the periods to
which such returns, reports or declarations apply.
k.
Certain Transactions. Except for arm’s length transactions pursuant to which the Company or any of
its Subsidiaries makes payments in the ordinary course of business upon terms no less favorable than the Company or any of its
Subsidiaries could obtain from third parties and other than the employment agreements with management of the Company.
l.
Disclosure. All information relating to or concerning the Company or any of its Subsidiaries set forth in
this Agreement in connection with the transactions contemplated hereby is true and correct in all material respects and Seller
has not omitted to state any material fact necessary in order to make the statements made herein or therein, in light of the circumstances
under which they were made, not misleading.
m.
No Brokers. Seller has taken no action which would give rise to any claim by any person for brokerage commissions,
transaction fees or similar payments relating to this Agreement or the transactions contemplated hereby.
n.
Professional Fees. The Company does not have any outstanding invoice or amounts owed with any professional
advisors including, but not limited to, Loeb & Loeb, other attorneys, auditors and accountants.
a.
Best Efforts. The parties shall use their best efforts to satisfy timely each of the conditions described
in Section 6 and 7 of this Agreement.
b.
Use of Proceeds. The Seller will loan the proceeds from the sale of the Securities to the Company for the
working capital requirement of the Company. This loan will be forfeited by the Seller upon liquidation or business combination.
c.
Additional Funding; Additional Expenses. The Company agrees that Buyer may, in its sole and absolute discretion,
invest additional capital as needed to fund on- going expenses of the Company (“Additional Fundings”). Two (2) business
days prior to the closing of such Additional Funding, the Buyer and the Company will communicate via teleconference with Subash
Menon providing the relevant details of such Additional Funding. Upon the closing of Additional Fundings in excess of $25,000,
Buyer will indemnify Subash Menon for any losses incurred as a result of the Additional Fundings. In any event, the Sellers and
Subash Menon will not be responsible to provide any further funding required by the Company from the Effective Date of this Agreement
and the Sellers will not be required to transfer, assign or sell any additional securities to the Buyer as a condition to closing
such Additional Financing. All expenses in excess of $5,000 to be incurred by the Company must be approved unanimously by the
Board of Directors prior to the Company committing to such expense. Upon unanimous approval by the Board of Directors, the required
funds needed for the payment of such expenses must be available in the Company’s bank account prior to signing a definitive
agreement or engagement letter or any such document, including an email, committing the company to such expenses.
d.
Liquidation. In the event the Company is unable to close a business combination as described in the prospectus
filed by the Company with the SEC on September 10, 2021, then the Seller will take all the necessary steps to enable the Company
to proceed with a return of the proceeds in the trust account to its public stockholders and liquidate the Company. It is explicitly
stated, understood and agreed that the Seller and/or Subash Menon will not bear any expense towards the said liquidation.
e.
Business Combination. The Company will obtain a fairness opinion from an independent investment banking firm
which is a member of the Financial Industry Regulatory Authority, Inc. or an independent accounting firm confirming that an initial
business combination is fair to the Company from a financial point of view. The Company will engage Loeb & Loeb to vet the
business combination documents.
5.
Conditions to Seller’s Obligation to Sell. The obligation of Seller hereunder to sell the Securities to Buyer at
the Closing is subject to the satisfaction, at or before the Closing Date of each of the following conditions thereto, provided
that these conditions are for Seller’s sole benefit and may be waived by Seller at any time in its sole discretion:
(a)
Buyer shall have executed this Agreement and delivered the same
to Seller.
(b)
Buyer shall have delivered the Financing in accordance with Section 1(a) above.
(c)
The representations and warranties of the Buyer shall be true and correct in all material respects as of the date
when made and as of the Closing Date as though made at that time (except for representations and warranties that speak as of a
specific date), and the Buyer shall have performed, satisfied and complied in all material respects with the covenants, agreements
and conditions required by this Agreement to be performed, satisfied or complied with by the Buyer at or prior to the Closing
Date.
(d)
No litigation, statute, rule, regulation, executive order, decree, ruling or injunction shall have been enacted,
entered, promulgated or endorsed by or in any court or governmental authority of competent jurisdiction or any self-regulatory
organization having authority over the matters contemplated hereby which prohibits the consummation of any of the transactions
contemplated by this Agreement.
(e)
Buyer shall have entered into the Letter Agreement in the form attached hereto as Exhibit B.
6.
Conditions to Buyer’s Obligation to Purchase. The obligation of Buyer hereunder to purchase the Securities at the
Closing is subject to the satisfaction, at or before the Closing Date of each of the following conditions, provided that these
conditions are for Buyer’s sole benefit and may be waived by Buyer at any time in his sole discretion:
(a)
Seller shall have executed this Agreement and delivered the same to
Buyer.
(b)
Seller shall have delivered the transfer documents for the transfer of Securities to the Buyer, to Continental Stock
Transfer & Trust Co. within five (5) business days of the Closing Date.
(c)
The representations and warranties of Seller shall be true and correct in all material respects as of the date when
made and as of the Closing Date as though made at such time (except for representations and warranties that speak as of a specific
date) and Seller shall have performed, satisfied and complied in all material respects with the covenants, agreements and conditions
required by this Agreement to be performed, satisfied or complied with by Seller at or prior to the Closing Date.
(d)
On the Closing Date, Balaji Venugopal Bhat, Subbanarasimhaiah Arun and Vishant Vora shall resign as directors of
the Company and Craig Marshak, Jamal Khurshid, Douglas Davis, Eric T. Shuss and Ned L. Siegel shall be appointed to the
Board of Directors of the Company. Craig Marshak and Jamal Khurshid shall be appointed as Co-Chairman to the Board of Directors.
Nicholos Hellyer will resign as the CFO of the Company. Further, Subash Menon will resign as CEO of the Company and Doug Davis
will be appointed as CEO of the Company and will have the signature rights in the Company bank’s accounts.
(e)
No litigation, statute, rule, regulation, executive order, decree, ruling or injunction shall have been enacted,
entered, promulgated or endorsed by or in any court or governmental authority of competent jurisdiction or any self-regulatory
organization having authority over the matters contemplated hereby which prohibits the consummation of any of the transactions
contemplated by this Agreement.
(f)
No event shall have occurred which could reasonably be expected to have a Material Adverse Effect on Seller.
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7. |
Governing Law; Miscellaneous. |
a.
Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State
of Nevada without regard to principles of conflicts of laws. Any action brought by either party against the other concerning the
transactions contemplated by this Agreement shall be brought only in the state courts of Nevada or in the federal courts located
in the state and county of Clarke. The parties to this Agreement hereby irrevocably waive any objection to jurisdiction and venue
of any action instituted hereunder and shall not assert any defense based on lack of jurisdiction or venue or based upon forum
non conveniens. Seller and Buyer waive trial by jury. The prevailing party shall be entitled to recover from the other party
its reasonable attorney’s fees and costs. In the event that any provision of this Agreement or any other agreement delivered
in connection herewith is invalid or unenforceable under any applicable statute or rule of law, then such provision shall be deemed
inoperative to the extent that it may conflict therewith and shall be deemed modified to conform with such statute or rule of
law. Any such provision which may prove invalid or unenforceable under any law shall not affect the validity or enforceability
of any other provision of any agreement. Each party hereby irrevocably waives personal service of process and consents to process
being served in any suit, action or proceeding in connection with this Agreement or any other Transaction Document by mailing
a copy thereof via registered or certified mail or overnight delivery (with evidence of delivery) to such party at the address
in effect for notices to it under this Agreement and agrees that such service shall constitute good and sufficient service of
process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process in any other
manner permitted by law.
b.
Counterparts; Signatures by Facsimile. This Agreement may be executed in one or more counterparts, each of
which shall be deemed an original but all of which shall constitute one and the same agreement and shall become effective when
counterparts have been signed by each party and delivered to the other party. This Agreement, once executed by a party, may be
delivered to the other party hereto by facsimile transmission of a copy of this Agreement bearing the signature of the party so
delivering this Agreement.
c.
Headings. The headings of this Agreement are for convenience of reference only and shall not form part of,
or affect the interpretation of, this Agreement.
d.
Severability. In the event that any provision of this Agreement is invalid or unenforceable under any applicable
statute or rule of law, then such provision shall be deemed inoperative to the extent that it may conflict therewith and shall
be deemed modified to conform with such statute or rule of law. Any provision hereof which may prove invalid or unenforceable
under any law shall not affect the validity or enforceability of any other provision hereof.
e.
Entire Agreement; Amendments. This Agreement and the instruments referenced herein contain the entire understanding
of the parties with respect to the matters covered herein and therein and, except as specifically set forth herein or therein,
neither Seller nor Buyer makes any representation, warranty, covenant or undertaking with respect to such matters. No provision
of this Agreement may be waived or amended other than by an instrument in writing signed by the majority in interest of Buyer.
f.
Notices. All notices, demands, requests, consents, approvals, and other communications required or permitted
hereunder shall be in writing and, unless otherwise specified herein, shall be (i) personally served, (ii) deposited in the mail,
registered or certified, return receipt requested, postage prepaid, (iii) delivered by reputable air courier service with charges
prepaid, or (iv) transmitted by hand delivery, telegram, or facsimile, addressed as set forth below or to such other address as
such party shall have specified most recently by written notice. Any notice or other communication required or permitted to be
given hereunder shall be deemed effective (a) upon hand delivery or delivery by facsimile, with accurate confirmation generated
by the transmitting facsimile machine, at the address or number designated below (if delivered on a business day during normal
business hours where such notice is to be received), or the first business day following such delivery (if delivered other than
on a business day during normal business hours where such notice is to be received) or (b) on the second business day following
the date of mailing by express courier service, fully prepaid, addressed to such address, or upon actual receipt of such mailing,
whichever shall first occur. The addresses for such communications shall be:
If to Seller, to:
subash.menon@bannixacquisition.com
and to subash.menon@pelatro.com and to
sudeesh.yezhuvath@pelatro.com
If to Buyer, to:
INSTANT
FAME LLC
10620 Southern Highland, Suite 11—151
Las Vegas, NV 89141
With a copy to (which
copy shall not constitute notice):
Stephen M. Fleming, Esq.
Fleming PLLC
30 Wall Street, 8th
Floor NY, NY 10005
Email: smf@flemingpllc.com
Each party shall provide notice to the other party
of any change in address.
g.
Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the parties and
their successors and assigns. Neither Seller nor Buyer shall assign this Agreement or any rights or obligations hereunder without
the prior written consent of the other. Notwithstanding the foregoing, subject to Section 2(f), Buyer may assign his rights hereunder
to any person that purchases Securities in a private transaction from Buyer or to any of its ”affiliates,” as that
term is defined under the 1934 Act, with prior written consent of Seller. Such consent shall not be unreasonably withheld.
h.
Third Party Beneficiaries. This Agreement is intended for the benefit of the parties hereto and their respective
permitted successors and assigns, and is not for the benefit of, nor may any provision hereof be enforced by, any other person.
i.
Survival. The representations and warranties of Seller and the agreements and covenants set forth in this
Agreement shall survive the closing hereunder notwithstanding any due diligence investigation conducted by or on behalf of Buyer.
Seller agrees to indemnify and hold harmless each of Buyer and all their officers, directors, employees and agents for loss or
damage arising as a result of or related to any breach or alleged breach by Seller of any of its representations, warranties and
covenants set forth in this Agreement or any of its covenants and obligations under this Agreement, including advancement of expenses
as they are incurred.
j.
Further Assurances. Each party shall do and perform, or cause to be done and performed, all such further
acts and things, and shall execute and deliver all such other agreements, certificates, instruments and documents, as the other
party may reasonably request in order to carry out the intent and accomplish the purposes of this Agreement and the consummation
of the transactions contemplated hereby.
k.
No Strict Construction. The language used in this Agreement will be deemed to be the language chosen by the
parties to express their mutual intent, and no rules of strict construction will be applied against any party.
l.
Remedies. Both parties acknowledge that a breach by the other party of its obligations hereunder will cause
irreparable harm to the aggrieved party by vitiating the intent and purpose of the transaction contemplated hereby. Accordingly,
both parties acknowledge that the remedy at law for a breach of obligations under this Agreement by either party will be inadequate
and agree, in the event of a breach or threatened breach by either party of the provisions of this Agreement, that the aggrieved
party shall be entitled, in addition to all other available remedies at law or in equity, and in addition to the penalties assessable
herein, to an injunction or injunctions restraining, preventing or curing any breach of this Agreement and to enforce specifically
the terms and provisions hereof, without the necessity of showing economic loss and without any bond or other security being required.
m.
Indemnification. The Buyer hereby indemnifies the Seller and all former directors and officers of the Company
for any indemnification obligation or liability that should arise in connection with the Company pursuant to Section 4 of the
Letter Agreement dated September 10, 2021.
IN WITNESS WHEREOF, the undersigned Buyer and
Seller have caused this Agreement to be duly executed as of the date first above written.
| SELLER: |
|
| |
|
| /s/ |
|
| Bannix Management LLP |
|
| /s/ |
|
| |
|
| Balaji Venugopal Bhat |
|
| /s/ |
|
| |
|
| Subbanarasimhaiah Arun |
|
| BUYER: |
|
| |
|
| INSTANT FAME LLC |
|
| |
|
| By: |
/s/
|
|
| Name: Doug Davis |
|
| Title: Manager |
|
| ACKNOLWEDGED AND AGREED: |
|
| |
|
| Bannix Acquisition Corp. |
|
| |
|
| By: |
/s/ |
|
| Name: Subash Menon |
|
| Title: CEO |
|
Schedule 1 – Details
of Seller and Securities
The Seller includes all
the individuals and entities mentioned in the tables given below. Each individual/entity will sell and transfer the quantity of
shares and/or private placement units mentioned against their respective name.
| Item |
Name |
Shares |
| B013COM |
BANNIX
MANAGEMENT LLP |
285,000 |
| B013COM |
BALAJI
VENUGOPAL BHAT |
35,000 |
| B013COM |
NICHOLOS
HELLYER |
5,000 |
| B013COM |
SUBBANARASIMHAIAH
ARUN |
35,000 |
| B013COM |
VISHANT
VORA |
25,000 |
| |
|
|
| Total |
|
385,000 |
| Item |
Name |
Private
Placement Units |
| B013UNIT |
SURESH
YEZHUVATH |
90,000
(1) |
(1)
Each Private Placement Unit consists of one share of common stock, one redeemable warrant to purchase one share of common stock
at a price of $11.50 per whole share and one right. Each right entitles the holder thereof to receive one-tenth (1/10) of one
share of common stock upon the consummation of the Business Combination.
D-13
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