PREM14A 1 e5163_prem14a.htm FORM PREM14A

 

 

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

 

Filed by the Registrant

Filed by a Party other than the Registrant

Check the appropriate box:

Preliminary Proxy Statement

Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))

Definitive Proxy Statement

 

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)

 

Payment of Filing Fee (Check the appropriate box):

No fee required.

Fee paid previously with preliminary materials.

Fee computed on table in exhibit required by Item 25(b) per Exchange Act Rules 14a6(i)(1) and 0-11

 

1

 

 

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”), a 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 “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 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. 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”).

 

2

 

 

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 “[*].” 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.

 

3

 

 

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”);

 

4

 

 

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.

 

5

 

 

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

 

6

 

 

TABLE OF CONTENTS

 

​ Page
Market and Industry Data   8 
Trademarks  8
Frequently Used Terms  
Summary Term Sheet  9
Questions and Answers About The Proposals  11
Summary of the Proxy Statement  20
Selected Historical Financial Information  30
Selected Unaudited Pro Forma Condensed Consolidated Combined Financial Information  33
Forward-Looking Statements  33
Risk Factors  34
Special Meeting of Bannix Stockholders  62
Proposal 1: The Business Combination Proposal  67
Material U.S. Federal Income Tax Considerations  78
Unaudited Pro Forma Condensed Consolidated Combined Financial Information  92
Proposal 2: The Charter Amendment Proposal  105
Proposal 3: The Advisory Charter Amendment Proposals  106
Proposal 4: The Stock Issuance Proposal  108
Proposal 5: The Director Election Proposal  109
Proposal 6: The Adjournment Proposal  111
Information About Bannix  111
Bannix Management’s Discussion and Analysis of Financial Condition and Results of Operations  117
Information About Company  127
Company Management’s Discussion and Analysis of Financial Condition and Results of Operations  134
Beneficial Ownership  135
Certain Relationships and Related Party Transactions  137
Description of New Company’s Securities After the Business Combination  139
Securities Act Restrictions on Resale of Common Stock  146
Comparison of Governance and Stockholders’ Rights  147
Trading Symbol, Market Price and Dividend Policy  148
Management of New Company After the Business Combination  148
Appraisal Rights  152
Stockholder Nominations and Proposals  153
Stockholder Communications and Delivery of Documents to Stockholders  154
Legal Matters  154
Experts  154
Where You Can Find More Information  155
Annex A A-1
Annex B B-1
Annex C C-1

 

7

 

 

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.

 

8

 

 

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. Series A Preferred Stock and the Conversion Shares shall be subject to the Seller Lockup Period.

 

9

 

 

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

 

10

 

 

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.

 

11

 

 

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 3.1% in the Combined Company with Tokenize owning approximately 4.5% (taking into consideration conversion of the Series A Preferred Stock into common stock), the Sponsor and related parties will retain an ownership interest of approximately 2.7% of the Combined Company, and the Company Stockholders will own approximately 89.7% 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:

 

  

No Additional

Redemptions(1)(3) %

 

Maximum

Redemptions(2)(3) %

Company Stockholders   89.74%   92.62%
Public Stockholders(2)(3)   7.60%   4.63%
           
Sponsor(8)(9)   2.66%   2.75%
Pro forma Common Stock as of October 23, 2023        
Potential sources of dilution:          
Private Placement Warrants   406,000    406,000 
Public Warrants   6,900,000    6,900,000 

 

(1) Assumes that no additional Public Shares are redeemed.

 

(2) Assumes that 2,939,613 Public Shares are redeemed for aggregate redemption payments of approximately $31,906,028 assuming a $10.85 per share redemption price and based on funds in the Trust Account as of October 3, 2023. This maximum redemption scenario assumes full redemption from Public Stockholders. This scenario is included in this proxy statement for illustrative purposes only.

 

12

 

 

(3) Includes the issuance of 42,500 shares of common stock upon conversion of the Series A Preferred Stock held by Tokenize. If you are to disregard the conversion of the Series A Preferred Stock, the Public Stockholders holding stand-alone without additional redemption will be 3.1% and 0.0% (zero) in case of maximum redemption.

 

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, including the minimum cash condition, 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 (See “Risk Factors — Risks Related to Bannix, the Business Combination and Redemptions” for additional information related to the minimum cash condition), 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.

 

13

 

 

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.

 

14

 

 

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.

 

15

 

 

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.”

 

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.

 

16

 

 

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. These holders 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.

 

17

 

 

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.

 

18

 

 

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.

  

 

19

 

 

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 statement in 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.

 

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.”

 

20

 

 

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.

 

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.

 

21

 

 

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.”

 

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.”

 

22

 

 

No Additional Redemptions 

 

Sources of Funds

(in millions)

 

Uses

(in millions)

Cash held in Trust Account(1)  $31,906,027  

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  $31,906,027   Total Uses  $850,000,000 

 

(1) As of October, 3, 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.

 

Maximum Redemptions

 

Sources of Funds

(in millions)

  (in Uses millions)
Cash held in Trust Account(1) 0  $  

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 0  $   Total Uses 850,000,000  $ 

 

(1) As of June, 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.

 

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.

 

23

 

 

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 7.6% in the Combined Company which assumes the conversion of the Series A Preferred Stock held by Tokenize, the Sponsor and related parties will retain an ownership

 

interest of approximately 2.7% of the Combined Company, and the Company Stockholders will own approximately 89.7% 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:

 

  

No Additional

Redemptions(1)(3)%

 

Maximum

Redemptions(2) 3)%

Company Stockholders   89.74    92.62 
Public Stockholders*)   7.60    4.63 
Sponsor   2.66    2.75 
Pro forma Common Stock as of December 31, 2022          
Potential sources of dilution:          
Private Placement Warrants   406,000    406,000 
Public Warrants   6,900,000    6,900,000 
Company Options   0    0 
Company Restricted Stock Units   406,000    406,000 
Contingent Consideration Shares   0    0 
Contingent Founder Shares   0    0 

 

(1) Assumes that no additional Public Shares are redeemed. This scenario would require that Company waive the Available Closing Cash condition, which may not be granted.

 

(2) Assumes that 2,939,613 Public Shares are redeemed for aggregate redemption payments of approximately $31,906,028 assuming a $10.85 per share redemption price and based on funds in the Trust Account as of October 3, 2023. This maximum redemption scenario assumes full redemption from Public Stockholders. Therefore, this scenario is included in this proxy statement for illustrative purposes only, as the parties have entered into Committed Financing Agreements and expect to enter into additional Interim Financing Agreements and other financings as needed to meet the Closing Cash condition prior to Closing.

 

(3) Including the issuance of 42,500 Series A Preferred to Tokenize per PPA, being converted into common. If you are to disregard the conversion of the Series A Preferred Stock, the Public Stockholders holding stand-alone without additional redemption will be 3.1% and 0.0% (zero) in case of maximum redemption.

 

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

 

Adjournment Proposal

 

24

 

  

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 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.

  

25

 

 

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.

 

26

 

 

  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.

 

27

 

 

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:

 

28

 

 

 ●   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.

 

29

 

 

  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.

 

30

 

 

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 six months ended June 30, 2023 and the selected historical condensed consolidated balance sheet data as of June 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 three months ended June 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 six months ended June 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.

 

31

 

 

   For the Six Months Ended June 30, 2023  For the Six Months Ended June 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  $(803,653)  $(442,192)  $(1,000,944)  $(395,702)
Net (loss) income  $(50,696)  $(236,066)  $47,107   $(277,203)
Basic and diluted weighted average shares outstanding   6,929,613    9,424,000    9,424,000    4,785,051 
Basic and diluted net (loss) income per share  $(0.01)  $(0.03)  $0.00   $(0.06)

 

   June 30, 2023  December 31, 2022  December 31, 2021
Balance Sheet Data:               
Investments held in the Trust Account  $31,310,191   $71,421,125   $69,691,502 
Total assets  $31,463,212   $71,466,678   $70,292,562 
Total liabilities  $3,271,107   $1,735,906   $657,727 
Common stock subject to possible redemption  $30,838,531   $70,973,384   $58,071,313 
Total shareholders’ (deficit) equity  $(2,646,426)  $(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 June 30, 2023 and the selected historical consolidated balance sheets data as of June 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 June 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

 

   June 30, 2023
Assets     
Cash  $ 
Total current assets    
      
Total assets  $ 
      
Liability and Stockholder’s Equity     
Current liabilities:     
Accrued expenses and other current liabilities  $ 
Total liabilities    
      
Stockholder’s Equity:     
Common stock, $1.2617 par value; 100 shares authorized, issued and outstanding   126 
Translation adjustment    
Additional paid-in capital    
Accumulated deficit   (126)
Total stockholder’s equity    
      
Total Liabilities and Stockholder’s Equity  $ 

 

32

 

 

EVIE AUTONOMOUS GROUP LTD
STATEMENTS OF OPERATIONS

 

   For the Period from May 8, 2023 (Inception) to June 30, 2023
Operating costs  $126 
Net loss  $(126)
      
Weighted average shares outstanding, basic and diluted   100 
Basic and diluted net income per common share  $(1.26)

 

SELECTED UNAUDITED PRO FORMA CONDENSED CONSOLIDATED COMBINED FINANCIAL INFORMATION

 

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.

 

33

 

 

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.

 

Evie was incorporated in May 2023 as a clean vehicle for receiving intellectual property owned by Aim Technologies Ltd, Cavonix Ltd response to the acquisition of Westfield Autonomous Groups assets by Mr. Steven Lake. 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 existing 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.

 

34

 

 

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.

 

35

 

 

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.

 

36

 

 

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.

 

37

 

 

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.

 

38

 

 

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.

 

39

 

 

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 unauthorised 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.

 

40

 

 

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.

 

41

 

  

There are significant risks associated with any acquisition program, including, but not limited to, the following:

 

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.

 

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.

 

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;

 

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.

 

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.

 

If the business does not operate as we expect, we may incur an impairment charge based on the value of the assets acquired.

 

EVIE may have difficulty maintaining the necessary quality control over the acquired business and its products and services.

 

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.

 

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.

 

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.

 

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.

 

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.

 

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.

 

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.

 

42

 

 

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.

 

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.

 

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, commencing with Cavonix LTD formation in 2019, 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.

 

43

 

 

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:

 

  a limited availability of market quotations for the New Company common stock;

 

  a reduced level of trading activity in the secondary trading market for the New Company common stock;

 

  a limited amount of news and analyst coverage for New Company;

 

  a decreased ability to issue additional securities or obtain additional financing in the future; and

 

  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:

 

New Company’s ability to advance its current or potential future product candidates;

 

regulatory or legal developments in the United States and other countries, especially changes in laws or regulations applicable to New Company’s future products;

 

the success of competitive products or technologies;

 

introductions and announcements of new product candidates by New Company or its competitors, and the timing of these introductions or announcements;

 

44

 

 

actions taken by regulatory authorities with respect to New Company future product, manufacturing process or sales and marketing terms;

 

actual or anticipated variations in New Company’s financial results or those of companies that are perceived to be similar to New Company;

 

the success of New Company’s efforts to acquire or in-license additional technologies, products or product candidates;

 

developments concerning any future collaborations, including, but not limited to, those with any sources of manufacturing supply and future collaborators;

 

market conditions in the Company’s business;

 

market conditions and sentiment involving companies that have recently completed a business combination with a special purpose acquisition company (“SPAC”);

 

announcements by New Company or its competitors of significant acquisitions, strategic alliances, joint ventures or capital commitments;

 

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;

 

New Company’s ability or inability to raise additional capital and the terms on which it is raised;

 

the recruitment or departure of key personnel;

 

changes in the structure of healthcare payment systems;

 

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;

 

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;

 

the concentrated ownership of New Company common stock;

 

changes in accounting principles;

 

terrorist acts, acts of war or periods of widespread civil unrest;

 

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.

 

45

 

 

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.

 

46

 

 

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.

 

47

 

 

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

 

48

 

 

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,

 

49

 

 

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 certain Committed Financing Agreements and one or more additional Interim 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. In addition, New Company and Bannix entered into and expect to enter into additional Interim Financing Agreements, as described in the Business Combination Agreement, 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 during the Interim Period. To the extent this occurs, it could impose significant dilution on the stockholders of New Company.

 

While during the Interim Period, Company and Bannix are expected to enter into additional Interim Financing Agreements, with the exception of the Interim Financing Agreements described in this proxy statement, 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.

 

50

 

 

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 have 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.

 

51

 

 

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 August 11, 2023 (as approved by the stockholders at the extension meeting held on February 10, 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

 

52

 

 


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.

 

53

 

 

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.

 

54

 

 

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;

 

55

 

 

  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.

 

56

 

 

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.

 

57

 

 

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.

 

58

 

 

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. 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:

 

59

 

 

  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.

 

60

 

  

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.

 

61

 

 

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.”

 

The following table shows all possible sources and the extent of dilution, pursuant to the exercise Private Placement Warrants,, assuming minimum redemptions and maximum redemptions scenarios:

 

  

No Additional

Redemptions(1)

%

Maximum

Redemptions(2)

%
Company Stockholder   89.74    92.62  
Public Stockholders*   7.60    4.63  
Sponsor   2.66    2.75  
Pro forma fully diluted Common Stock as of June 30, 2023           

 

* Including the issuance of 42,500 Series A Preferred to Tokenize per PPA, being converted into common. If you are to disregard the conversion of the Series A Preferred Stock, the Public Stockholders holding stand-alone without additional redemption will be 3.1% and 0.0% (zero) in case of maximum redemption.

 

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.

 

62

 

 

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.

 

63

 

  

  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.

 

64

 

 

  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:

 

65

 

 

  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)

 

Maximum

Redemptions(3)

IPO underwriting fees(1)  $2,070,000   $225,000 
IPO proceeds net of redemptions  $31,906,028   $0 
Underwriting fees as a percentage of IPO proceeds net of
redemptions
   6.49%     

  

(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.

 

66

 

 

(3) Assumes that 2,939,613 Public Shares are redeemed for aggregate redemption payments of approximately $31,906,028 assuming a $10.85 per share redemption price and based on funds in the Trust Account as of October 3, 2023. This maximum redemption scenario assumes full redemption from Public Stockholders. Such a scenario would require that Company waive the $40 million minimum cash condition. Bannix cannot guarantee that Company will grant such a waiver.

 

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 COMBINATION 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:

 

67

 

 

  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 “[*].”

 

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 and the related Interim Financing Arrangements 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.

 

68

 

 

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 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.

 

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.

 

69

 

 

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 (on top of two other none 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, 2023 Bannix entered into a contingent none exclusive consulting agreement with ClearThink Capital (“ClearThink”) LLC that was amended and finalize on August 24, 2023, where ClearThink will act as non-exclusive transactional and strategic capital markets advisor to the Company with respect to the Company’s contemplated initial business combination for a fee as followings: simultaneously with the initial closing of the Transaction, cash in the amount of $1,200,000 and (ii) $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 and raised to 9.99%

 

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

 

70

 

 

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.

 

71

 

  

  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 fo 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:

 

72

 

 

  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.

 

  The Rights of Steve Lake and Other Indirect Evie Shareholders Pursuant to the Investor Rights Agreement. The risks relating to the rights granted to Steve Lake and other indirect Evie shareholders pursuant to the Investor Rights Agreement, including Steve Lake’s right to nominate a majority of directors on the Bannix Board.

 

  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.

 

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.

  

73

 

 

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.

 

74

 

 

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)  $31,906,027  

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  $31,906,027   Total Uses  $850,000,000 

  

(1) As of October, 3, 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.

 

Maximum Redemptions

 

Sources of Funds

(in millions)

 

Uses

(in millions)

Cash held in Trust Account(1) 0  $  

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  $0   Total Uses  $850,000,000 

 

(1) As of June, 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.

 

75

 

 

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:

 

76

 

 

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.

 

77

 

 

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;

 

78

 

 

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

 

79

 

 

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.

 

80

 

 

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 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.

 

81

 

 

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.

 

82

 

 

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.

 

83

 

 

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.

 

84

 

 

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

 

85

 

 

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:

 

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

 

86

 

 

 

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.

 

87

 

  

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:

 

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.

 

88

 

 

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.

 

89

 

 

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