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Brand Engagement Network Inc.(BNAI) - 2023 Q3 - Quarterly Report
BNAIBrand Engagement Network Inc.(BNAI)2023-11-14 21:16

Financial Performance - For the three months ended September 30, 2023, the company reported a net loss of 1,589,913,consistingofoperatingandformationcostsof1,589,913, consisting of operating and formation costs of 1,624,228 and a change in fair value of warrant liabilities of 539,266,offsetbyinterestearnedof539,266, offset by interest earned of 573,581 [117]. - For the nine months ended September 30, 2023, the company had a net income of 231,821,whichincludedinterestearnedof231,821, which included interest earned of 3,868,445, offset by operating and formation costs of 2,485,751andachangeinfairvalueofwarrantliabilitiesof2,485,751 and a change in fair value of warrant liabilities of 1,150,873 [119]. - The company had cash used in operating activities of 726,761fortheninemonthsendedSeptember30,2023,comparedto726,761 for the nine months ended September 30, 2023, compared to 512,027 for the same period in 2022 [124][125]. Cash and Liquidity - As of September 30, 2023, the company had cash held in the Trust Account amounting to 49,179,344,whichisintendedtobeusedforcompletingabusinesscombination[126].−Thecompanyhasdeterminedthatitdoesnothavesufficientliquiditytomeetanticipatedobligationsforatleasttwelvemonthsafterthefinancialstatementsareissued,raisingsubstantialdoubtaboutitsabilitytocontinueasagoingconcern[132].−Thecompanyhasnolong−termdebtoroff−balancesheetarrangementsasofSeptember30,2023[133].ShareholderActivity−Thecompany’sshareholdersredeemedapproximately26,298,498ClassAordinarysharesforcashataredemptionpriceofapproximately49,179,344, which is intended to be used for completing a business combination [126]. - The company has determined that it does not have sufficient liquidity to meet anticipated obligations for at least twelve months after the financial statements are issued, raising substantial doubt about its ability to continue as a going concern [132]. - The company has no long-term debt or off-balance sheet arrangements as of September 30, 2023 [133]. Shareholder Activity - The company’s shareholders redeemed approximately 26,298,498 Class A ordinary shares for cash at a redemption price of approximately 10.21 per share, totaling an aggregate redemption amount of approximately 269,585,000[114].−Thecompanyhasidentifiedaclericalerrorresultinginanoverpaymentofapproximately269,585,000 [114]. - The company has identified a clerical error resulting in an overpayment of approximately 887,555 to redeeming shareholders, of which 870,731hasbeencollectedasofSeptember30,2023[127].BusinessCombinationPlans−ThecompanyplanstoextendthedatetoconsummateabusinesscombinationfromDecember4,2023,toMay4,2024,pendingshareholderapproval[114].AccountingStandards−TheFASB′sASU2020−06,effectiveJanuary1,2024,willsimplifyaccountingforcertainfinancialinstruments,impactingthecompany′sfinancialpositionandresultsofoperations[139].−ThecompanyhasnotadoptedASU2020−06asofSeptember30,2023,andiscurrentlyassessingitspotentialimpact[139].−Managementbelievesthatnootherrecentlyissuedaccountingstandardswillmateriallyaffecttheunauditedcondensedconsolidatedfinancialstatements[140].EquityAccounting−Thecompanyaccountsforordinarysharessubjecttopossibleredemptionastemporaryequity,presentedatredemptionvalueoutsideofshareholders′deficit[137].−Net(loss)incomeperordinaryshareiscalculatedusingthetwo−classmethod,excludingaccretionassociatedwithredeemableshares[138].IPOCosts−Thecompanyincurred870,731 has been collected as of September 30, 2023 [127]. Business Combination Plans - The company plans to extend the date to consummate a business combination from December 4, 2023, to May 4, 2024, pending shareholder approval [114]. Accounting Standards - The FASB's ASU 2020-06, effective January 1, 2024, will simplify accounting for certain financial instruments, impacting the company's financial position and results of operations [139]. - The company has not adopted ASU 2020-06 as of September 30, 2023, and is currently assessing its potential impact [139]. - Management believes that no other recently issued accounting standards will materially affect the unaudited condensed consolidated financial statements [140]. Equity Accounting - The company accounts for ordinary shares subject to possible redemption as temporary equity, presented at redemption value outside of shareholders' deficit [137]. - Net (loss) income per ordinary share is calculated using the two-class method, excluding accretion associated with redeemable shares [138]. IPO Costs - The company incurred 17,501,346 in Initial Public Offering related costs, including 6,189,014ofunderwritingfeesand6,189,014 of underwriting fees and 10,830,775 of deferred underwriting fees [123].