Brand Engagement Network Inc.(BNAI) - 2024 Q2 - Quarterly Report

Financial Performance - The net loss for the three months ended June 30, 2024, was approximately $3.0 million, a slight improvement compared to a net loss of$3.1 million in the same period in 2023[143]. - Revenue for the six months ended June 30, 2024, was $0.05 million, compared to no revenue in the same period of 2023[149]. - Net loss for the six months ended June 30, 2024, was approximately$9.9 million, compared to a net loss of $5.7 million in the same period of 2023, representing an increase in loss of$4.2 million[151]. - The company expects to continue incurring losses and negative cash flows due to increased general and administrative expenses and ongoing product research and development[156]. Operating Expenses - Total operating expenses for the three months ended June 30, 2024, were $6.3 million, an increase of$3.2 million from $3.1 million in the same period in 2023[143]. - General and administrative expenses were approximately$5.3 million, an increase of approximately $2.5 million compared to the same period in 2023[144]. - General and administrative expenses increased to approximately$11.8 million for the six months ended June 30, 2024, up by approximately $6.4 million from$5.4 million in 2023[150]. - Total operating expenses for the six months ended June 30, 2024, were approximately $13.2 million, an increase of$7.5 million compared to $5.7 million in 2023[151]. - Significant operating costs are expected to continue, impacting future profitability, including research and development expenses and general administrative expenses[133]. Research and Development - Research and development expenses for the three months ended June 30, 2024, were approximately$0.4 million, an increase of approximately $0.3 million compared to the same period in 2023[146]. Cash Flow and Financing - Cash used in operating activities for the six months ended June 30, 2024, was approximately$8.6 million, compared to $1.3 million for the same period in 2023, primarily due to a net loss of approximately$9.9 million in 2024 versus $5.7 million in 2023[173][174]. - Cash provided by financing activities during the six months ended June 30, 2024, was approximately$8.5 million, significantly higher than $2.1 million in 2023, mainly from proceeds received from the sale of Common Stock[176][177]. - The company entered into a private placement in May 2024, raising approximately$5.0 million through the issuance of 1,980,000 shares of Common Stock[160]. - The company had cash of approximately $1.4 million and an accumulated deficit of approximately$23.2 million as of June 30, 2024[156]. Debt and Liabilities - Gain on debt extinguishment for the three months ended June 30, 2024, was approximately $1.8 million, related to the settlement of accounts payable through the issuance of shares of Common Stock[147]. - Gain on debt extinguishment for the six months ended June 30, 2024, was approximately$1.8 million, with no such gain reported in 2023[154]. - Change in fair value of warrant liabilities for the three months ended June 30, 2024, was approximately $1.5 million, reflecting a non-cash charge for changes in the fair value of the warrant liability[148]. - Change in fair value of warrant liabilities for the six months ended June 30, 2024, was approximately$1.4 million, with no such expenses incurred in 2023[155]. - The company has outstanding loans totaling approximately $0.9 million, with interest rates ranging from 4.667$1.0 million, driven by a $3.6 million increase in accounts payable[173]. - The company reported a net decrease in cash and cash equivalents of approximately$253,588 for the six months ended June 30, 2024, compared to an increase of $286,073 in 2023[172]. - Cash used in investing activities was approximately$0.1 million for the six months ended June 30, 2024, down from approximately $0.6 million in 2023, primarily related to capitalized internal-use software costs[175]. Company Status and Future Outlook - The company has not generated any significant revenue to date, as it remains in the development stage[134]. - The company anticipates substantial additional capital will be required to develop products and fund operations for the foreseeable future[133]. - The company is focused on expanding its operations and driving brand awareness, particularly following the acquisition of DM Lab Co., LTD in May 2023[144]. - There were no material changes to critical accounting policies and estimates from the previous reporting period[179]. - The company has no off-balance sheet financing arrangements as of June 30, 2024[181]. - The company is classified as an "emerging growth company" under the JOBS Act, allowing it to delay adopting new accounting standards[182]. - The financial statements may not be comparable to those of companies that comply with new accounting pronouncements as of public company effective dates due to the extended transition period[183].