Brand Engagement Network (BNAIW) risk factors, FY2024 10-K

Other

1. 01Future resales of our Common Stock may cause the market price of our Common Stock to drop significantly, even if the Company’s business is doing well
2. 02We have a history of losses and may not be able to achieve profitability on a consistent basis or at all
3. 03We may need additional capital, and we cannot be certain that additional financing will be available on favorable terms, or at all
4. 04Our revenue growth depends in part on the success of our strategic relationships with third parties, including channel partners, and if we are unable to establish and maintain successful relationships with them, our business, operating results, and financial condition could be adversely affected
5. 05If we are not able to grow, maintain and enhance our brand and reputation, our relationships with our customers, partners, investors and employees may be harmed, and our business and results of operations may be adversely affected
6. 06The benefits of our products to customers and projected return on investment have not been substantiated through long-term trials or use
7. 07Our ability to complete the Acquisition is dependent on our ability to obtain financing on favorable terms, or at all
8. 08Nasdaq may delist our securities from trading on its exchange, which could limit investors’ ability to make transactions in our securities and subject us to additional trading restrictions
9. 09The Company may redeem unexpired Public Warrants prior to their exercise at a time that is disadvantageous to the holder, thereby making the Public Warrants worthless

Risks Related to our Business and Industry

1. 10We have a limited operating history, which makes it difficult to evaluate our prospects and future results of operations
2. 11We expect to be dependent on a limited number of customers and end markets. A decline in revenue from, or the loss of, any significant customer, could have a material adverse effect on our financial condition and operating results
3. 12The total addressable market opportunity for our current and future products may be much smaller than we estimate
4. 13We have filed a lawsuit against one of our commercial partners, and lawsuits and other litigation matters are expensive and time consuming, and, if resolved adversely, could harm our business, financial condition, or results of operations
5. 142 The Company, has not yet invested the necessary resources into the accounting and reporting functions in order to properly account for and prepare its US GAAP compliant financial statements on a timely basis
6. 156 The Company has failed to properly classify the acquired developed technology from DM Lab Co., LTD ("DM Lab") as an in-process research and development asset
7. 163 The Company has incorrectly included certain 2023 liabilities in accounts payable at December 31, 2022
8. 17However, we cannot assure you that these measures will significantly improve or remediate the material weaknesses and significant deficiencies described above. As of March 27, 2025, the material weaknesses and significant deficiencies have not been remediated
9. 18market price of our stock could decline, and we could be subject to sanctions or investigations by the SEC or other regulatory authorities
10. 19Our ability to sell our software and services to customers is dependent on the quality of our offerings, and our failure to maintain the quality of our offerings could have a material adverse effect on our sales and results of operations
11. 20Downturns or upturns in our sales may not be immediately reflected in our financial position and results of operations
12. 21We face intense and growing competition for our products and services, and we may lack sufficient financial or other resources to maintain or improve our competitive positions
13. 22We may not be able to effectively develop and expand our sales, marketing and customer support capabilities
14. 23We may not be able to successfully manage our growth, and if we are not able to grow efficiently, our business, financial condition and results of operations could be harmed
15. 24If we are unable to achieve and sustain a level of liquidity sufficient to support our operations and fulfill our obligations, our business, operating results and financial position could be adversely affected
16. 25Changes in our subscription or pricing models could adversely affect our operating results
17. 26We may offer discounts on our pricing models to drive awareness of our products and encourage usage and adoption. If these marketing strategies fail to lead to customers entering into long-term contracts with company-favorable pricing terms, our ability to grow our revenue will be adversely affected
18. 27The loss of one or more key members of our management team or personnel, or our failure to attract, integrate and retain additional personnel in the future, could harm our business and negatively affect our ability to successfully grow our business
19. 28Our ability to complete the Acquisition is dependent on our ability to meet the conditions to close, including the ability to obtain financing on favorable terms, or at all and our ability to pay down payments in accordance with the Purchase Agreement
20. 29We may acquire or invest in companies and technologies, which may divert our management's attention, and result in additional dilution to our stockholders. We may be unable to integrate acquired businesses and technologies successfully or achieve the expected benefits of such acquisitions or investments
21. 30The occurrence of any of these risks could have a material adverse effect on our business, results of operations, and financial condition. Moreover, we cannot assure you that we would not be exposed to unknown liabilities
22. 31Our operations could be affected by the rapidly evolving, complex laws, rules and regulations to which our business will become subject, and political and other actions may adversely impact our business
23. 32We may become involved in legal, regulatory, and administrative inquiries and proceedings, and unfavorable outcomes in litigation or other matters could negatively impact our business, financial conditions, and results of operations
24. 33AI is a nascent and rapidly changing technology. The slowing or stopping of the development or acceptance of AI technologies may adversely affect our business
25. 34Social and ethical issues relating to the use of new and evolving technologies, such as AI, in our offerings may result in reputational harm and liability
26. 35Deterioration of the economic conditions in South Korea could adversely affect our current business, financial conditions and results of operation

Risks Related to Intellectual Property, Information Technology, Data Privacy and Security

1. 36We will rely in part upon third-party providers of cloud-based infrastructure to host our products. Any disruption in the operations of these third-party providers, limitations on capacity or interference with our use could adversely affect our business, financial condition and results of operations
2. 37A real or perceived defect, security vulnerability, error, or performance failure in our software could cause us to lose revenue, damage our reputation, and expose us to liability
3. 38We could incur substantial costs as a result of any claim of infringement, misappropriation or violation of another party's intellectual property rights
4. 39Unauthorized use of our proprietary technology and intellectual property could adversely affect our business and results of operations
5. 40Our failure to protect our intellectual property rights and proprietary information could diminish our brand and other intangible assets
6. 41Issues in the use of AI or machine learning in our software may result in reputational harm or liability
7. 42We may be unable to respond quickly enough to changes in technology and technological risks and to develop our intellectual property into commercially viable products
8. 43and we cannot guarantee that third parties' infrastructure in our supply chain or our third-party partners' supply chains have not been compromised
9. 44Applicable data privacy and security obligations may require us to provide notice of data security incidents involving certain types of data, including personal data. Such disclosures are costly, and the disclosure or the failure to comply with such requirements could lead to adverse consequences
10. 45Similar laws are being considered in several other states, as well as at the federal and local levels, and we expect more states to pass similar laws in the future. These developments may further complicate compliance efforts and increase legal risk and compliance costs for us and the third parties upon whom we rely

Risks Related to Ownership of Our Common Stock and Public Warrants

1. 46We do not intend to pay dividends for the foreseeable future
2. 47We will incur increased costs as a result of operating as a public company, and our management is required to devote substantial time to compliance with our public company responsibilities and corporate governance practices
3. 48Nasdaq may delist our securities from trading on its exchange, which could limit investors' ability to make transactions in our securities and subject us to additional trading restrictions
4. 49Failure to establish and maintain effective internal controls in accordance with Section 404 of Sarbanes-Oxley could have a material adverse effect on our business and stock price
5. 50required to be filed with the SEC or (ii) we are no longer an emerging growth company. At such time, our independent registered public accounting firm may issue a report that is adverse in the event it is not satisfied with the level at which our controls are documented, designed or operating
6. 51Delaware law and provisions in our Certificate of Incorporation and Bylaws could make a merger, tender offer, or proxy contest difficult, thereby depressing the trading price of our Common Stock
7. 52The provision in our Charter requiring exclusive venue in the Court of Chancery in the State of Delaware and the federal district courts of the United States for certain types of lawsuits may have the effect of discouraging lawsuits against directors and officers
8. 53Future sales of shares by existing shareholders could cause our stock price to decline
9. 54The Company may redeem unexpired Public Warrants prior to their exercise at a time that is disadvantageous to the holder, thereby making the Public Warrants worthless
10. 55We have the ability to require holders of the Public Warrants to exercise such warrants on a cashless basis, which will cause holders to receive fewer shares of Common Stock upon their exercise of the Public Warrants than they would have received had they been able to exercise their Public Warrants for cash
11. 56The exclusive forum clause set forth in the warrant agreement governing the Public Warrants may have the effect of limiting an investor's rights to bring legal action against us and could limit the investor's ability to obtain a favorable judicial forum for disputes with us
12. 57Our business and operations could be negatively affected if we become subject to any securities litigation or shareholder activism, which could cause us to incur significant expense, hinder execution of business and growth strategy and impact our stock price
13. 58If our operating and financial performance in any given period does not meet the guidance provided to the public or the expectations of investment analysts, the market price of our Common Stock and Public Warrants may decline
14. 59Our management does not have prior experience in operating a public company
15. 60A substantial number of the Company's Common Stock are restricted securities and as a result, there may be limited liquidity for our Common Stock
16. 61Our Common Stock may be delisted from the Nasdaq Capital Market which could negatively impact the price of our Common Stock, liquidity and our ability to access the capital markets
17. 62consecutive business days, the Staff will provide written notification to the Company that it has regained compliance with the Bid Price Requirement (unless the Staff exercises its discretion to extend the 10-day period)
18. 63The issuances of additional shares of Common Stock under the SEPA may result in dilution of holders of Common Stock and have a negative impact on the market price of the Common Stock