Acquisition and Financing - The Company entered into a Share Purchase and Transfer Agreement to acquire Cataneo GmbH for an aggregate purchase price of $19.5 million, consisting of $9.0 million in cash and 4,200,000 shares of Common Stock valued at $2.50 per share[133]. - The transaction is expected to close in the first half of 2025, subject to various conditions including the making of a Cash Election and obtaining third-party approvals[135]. - The Company plans to finance the acquisition through third-party financing, which may include debt or equity[136]. - The cash purchase price for the acquisition of Cataneo is $9.0 million, with potential additional cash payments for equity consideration[194]. Financial Performance - For the three months ended March 31, 2025, the company reported revenues of $10,000, a decrease of $39,790 compared to $49,790 for the same period in 2024[163]. - General and administrative expenses for the three months ended March 31, 2025 were approximately $3.2 million, a decrease of approximately $3.3 million compared to the prior period, primarily due to transaction costs incurred in connection with the Business Combination[165]. - Research and development expenses for the three months ended March 31, 2025 were approximately $11,000, a decrease of approximately $0.2 million compared to the same period in 2024[167]. - The company had an accumulated deficit of approximately $50.6 million as of March 31, 2025, and expects losses and negative cash flows to continue for the foreseeable future[169]. - The net loss for Q1 2025 was approximately $3.6 million, compared to a net loss of approximately $6.9 million in Q1 2024[196][197]. Cash Flow and Liquidity - As of March 31, 2025, the company's principal source of liquidity was cash of approximately $0.2 million, indicating a need for additional capital to fund operations[169]. - Cash used in operating activities for Q1 2025 was approximately $2.6 million, a decrease from $4.5 million in Q1 2024[196][197]. - Cash provided by financing activities in Q1 2025 was approximately $2.8 million, down from $6.3 million in Q1 2024[199][200]. - The company reported a net cash increase of approximately $87,000 in Q1 2025, compared to $1.6 million in Q1 2024[195]. Debt and Defaults - The Company issued a non-convertible unsecured promissory note for approximately $1.7 million, which matured on March 11, 2025, and is currently in default with an outstanding balance of $416,667[141]. - The Company issued a convertible promissory note for $1.9 million, with an outstanding balance of $760,000 as of March 31, 2025, and is also in default on this note[142]. - The company is in default on the Cohen Convertible Note with an unpaid balance of $0.8 million as of March 31, 2025[171]. - The Company experienced a default on the Yorkville Promissory Note with an outstanding balance of $0.4 million as of March 31, 2025[180]. Intellectual Property and Development - The Company has significant intellectual property in the form of a patent portfolio targeting industries such as automotive, healthcare, and financial services[132]. - The Company is focused on developing AI assistants that enhance customer experiences and operational efficiency in the automotive and healthcare markets[131]. - The Company entered into a research and development sponsorship agreement with Korea University for a total consideration of approximately $0.4 million[192]. Share Issuance and Warrants - During the quarter ending March 31, 2025, Purchasers exercised 787,132 Committed Warrants for aggregate gross proceeds of $1.5 million[145]. - The Company issued 330,000 shares of Common Stock for gross proceeds of $750,000 during the quarter ending March 31, 2025[173]. - During the quarter ending March 31, 2025, the Company issued 1,500,000 shares of Common Stock to Yorkville under the SEPA[179]. - As of March 31, 2025, the Company has 1,901,281 May One-Year Warrants and 1,251,587 May Five-Year Warrants outstanding[173]. Operating Costs and Future Outlook - The company expects to incur significant operating costs that will impact future profitability, including research and development expenses and capital expenditures for expansion[152]. - The change in fair value of warrant liabilities for the three months ended March 31, 2025 was approximately $0.6 million, reflecting a non-cash charge for changes in the fair value of the warrant liabilities[168]. - There were no material changes to critical accounting policies from the previous year[202]. - The company has no off-balance sheet financing arrangements as of March 31, 2025[204]. - The company is classified as an "emerging growth company" under the JOBS Act, allowing it to delay adopting new accounting standards[205].
Brand Engagement Network Inc.(BNAI) - 2025 Q1 - Quarterly Report