Brand Engagement Network Inc.(BNAI) - 2024 Q3 - Quarterly Report

Equity Issuance and Financing - The company raised $5.925 million through a private placement by issuing 1.185 million shares of common stock at$5.00 per share[146] - The company entered into a Standby Equity Purchase Agreement with Yorkville, allowing it to sell up to $50 million of common stock over a 36-month period[152] - The company issued 120,000 shares of common stock and 240,000 warrants to The Williams Family Trust for$0.3 million[158] - The company issued 1,980,000 shares of Common Stock and 3,960,000 warrants for aggregate gross proceeds of approximately $5.0 million in a private placement on May 28, 2024[160] - As of November 13, 2024, the company issued 1,594,500 shares of Common Stock for aggregate gross proceeds of$3,986,250, resulting in the issuance of 797,250 May One-Year Warrants and 797,250 May Five-Year Warrants[160] - The company entered into a Standby Equity Purchase Agreement (SEPA) with Yorkville, allowing the sale of up to $50.0 million of Common Stock, with shares issued at 96$5.00 per share for an aggregate purchase price of $5.9 million[195] - As of November 13, 2024, a total of 220,000 shares of Common Stock have been issued to the August Purchasers for gross proceeds of$0.55 million, with delays in funding from certain investors amounting to $1.25 million[198] - On August 26, 2024, the company issued an aggregate of 960,000 warrants with an exercise price of$5.00 per share and a five-year expiration period[199] - On July 1, 2024, the company entered into the July SPA, issuing 120,000 shares of Common Stock and 240,000 July Warrants for an aggregate purchase price of $0.3 million[201] - On May 28, 2024, the company entered into the May SPA, issuing 1,980,000 shares of Common Stock and 3,960,000 May Warrants for aggregate gross proceeds of approximately$5.0 million[203] - As of November 13, 2024, a total of 1,594,500 shares of Common Stock have been issued to the May Purchasers for aggregate gross proceeds of $3,986,250, with delays in funding from certain investors amounting to$963,750[206] - Cash provided by financing activities for the nine months ended September 30, 2024, was approximately $10.3 million, primarily from the sale of Common Stock and exercise of options and warrants[219] Debt and Convertible Instruments - The company issued a$1.7 million promissory note to Yorkville, maturing on March 11, 2025, with a potential interest rate increase to 18% upon default[153] - The company converted $0.4 million of outstanding fees into 151,261 shares of common stock at$2.38 per share through a Fee Conversion Agreement[154] - The company converted $0.4 million of debt into 93,333 shares of common stock at$4.50 per share through a Debt Conversion Agreement[159] - The company issued a $1.9 million convertible promissory note on April 12, 2024, with an 8$0.9 million, with interest rates ranging from 4.667% to 6.69%[212] Acquisitions and Investments - The company acquired Cataneo GmbH for a total purchase price of $19.5 million, consisting of$9 million in cash and 4.2 million shares of common stock at $2.50 per share[141] - The company agreed to pay a cash purchase price of$9.0 million at the closing of the Cataneo Acquisition, with potential additional cash payments for equity consideration[214] - Cash used in investing activities for the nine months ended September 30, 2024, was approximately $0.2 million, primarily for capitalized internal-use software costs[218] Financial Performance and Expenses - The company reported$0.1 million in revenue for the three months ended September 30, 2024, compared to no revenue for the same period in 2023[174] - General and administrative expenses increased by $1.9 million to$4.2 million for the three months ended September 30, 2024, primarily due to professional fees and employee-related costs[175] - Depreciation and amortization expenses increased by $0.8 million to$1.0 million for the three months ended September 30, 2024, due to amortization of developed technology[176] - Research and development expenses increased by $0.1 million to$0.2 million for the three months ended September 30, 2024, due to increased headcount from the acquisition of DM Lab[177] - The company reported a net loss of $5.8 million for the three months ended September 30, 2024, compared to a net loss of$2.6 million for the same period in 2023[173] - General and administrative expenses increased by $8.3 million to$16.0 million for the nine months ended September 30, 2024, primarily due to professional fees and employee-related costs[181] - The company reported a net loss of $15.8 million for the nine months ended September 30, 2024, compared to a net loss of$8.3 million for the same period in 2023[182] - Gain on debt extinguishment for the nine months ended September 30, 2024 was approximately $1.9 million, related to settlement of accounts payable and accrued expenses through the issuance of 93,333 and 151,261 shares of Common Stock and negotiated cash settlement[187] - Change in fair value of warrant liabilities for the nine months ended September 30, 2024 was approximately$0.8 million, associated with non-cash charge for changes in the fair value of warrant liabilities[188] - Cash used in operating activities for the nine months ended September 30, 2024, was approximately $11.7 million, primarily due to a net loss of$15.8 million[216] Liquidity and Capital Resources - As of September 30, 2024, the company's principal source of liquidity was cash of approximately $0.1 million, with an accumulated deficit of approximately$29.1 million[189] - The company does not expect to rely on cash proceeds from Warrant exercises for funding operations, as it plans to seek additional funds through debt or equity issuance[210] - The company has no off-balance sheet financing arrangements as of September 30, 2024[224] Research and Development - The company entered into a research and development sponsorship agreement with Korea University for up to 528.0 million Korean won (approximately $0.4 million) from January 2024 through December 2024[213] - The company paid$211.2 million Korean won (approximately $0.2 million) under the Korea University agreement as of September 30, 2024, with$316.8 million Korean won (approximately $0.2 million) remaining[213] Executive Compensation and Separation - The company's former Co-CEO, Michael Zacharski, received$0.3 million in separation and bonus payments upon his resignation[155] Regulatory and Legal Status - The company is classified as an "emerging growth company" under the JOBS Act, allowing delayed adoption of new accounting standards[225]