10q10k10q10k.net

What changed in Brand Engagement Network Inc.'s 10-K — 2024 vs 2025

vs

Paragraph-level year-over-year comparison of Brand Engagement Network Inc.'s 2024 and 2025 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2025 report.

+322 added−521 removedSource: 10-K (2026-04-16) vs 10-K (2024-12-31)

Top changes in Brand Engagement Network Inc.'s 2025 10-K

322 paragraphs added · 521 removed · 179 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

28 edited+114 added−111 removed1 unchanged
Biggest changeThe principal competitive factors in the markets in which we operate include: ● Accuracy and precision of NLP and natural language understanding; ● Degree of available and seamless multimodality; ● Flexible deployment model and cross-platform support; ● Ease and speed of adoption and use; ● Customization and flexibility to customer needs; ● Individualized personalization and contextualization; ● Data security, privacy, and regulatory compliance; ● Extensibility of product innovation, research, and pipeline; ● Depth of vertical expertise and specialization; ● Scope of channel and distribution partner network; ● Pricing, cost structures, and returns on investment; ● Strength of sales and marketing efforts; ● Financial and other resources and name recognition; ● Existing customer relationships; ● Brand salience, reputation, and level of adoption; and ● Track records of success in complex environments.
Biggest changeCompetitive Factors We believe the principal competitive factors in our market include: ● Accuracy and reliability of natural language processing and understanding ● Ability to support multimodal interactions across voice, text, and visual interfaces ● Flexibility of deployment across cloud, hybrid, and on-premises environments ● Speed and ease of implementation and integration ● Degree of customization and adaptability to customer workflows ● Ability to deliver personalized, context-aware interactions ● Data security, privacy, and regulatory compliance ● Strength of product development and innovation pipeline ● Depth of industry-specific expertise ● Scope and effectiveness of partner and distribution networks ● Pricing structure and return on investment for customers ● Strength of sales, marketing, and brand positioning ● Existing customer relationships and adoption levels ● Proven performance in complex, real-world environments Additional Development and Academic Collaborations We continue to invest in research and development initiatives to enhance our platform capabilities and expand into additional industry verticals.
Apart from the foregoing, we are not presently a party to any other legal proceedings that, if determined adversely to us, would individually or taken together have a material adverse effect on our business, operating results, cash flows or financial condition. Defending such proceedings is costly and can impose a significant burden on management and employees.
Apart from the foregoing, we are not presently a party to any other legal proceedings that we believe, if determined adversely to us, would individually or taken together have a material adverse effect on our business, operating results, cash flows or financial condition. Defending such proceedings is costly and can impose a significant burden on management and employees.
Legal Proceedings On January 16, 2025, the Company filed a lawsuit (the “AFG Lawsuit”) against AFG and its Chief Executive Officer, Ralph Wright Brewer III, in the Northern District of Texas, Dallas Division alleging fraudulent misrepresentation, breach of contract, and the concealment of a ransomware attack on its own network shortly before the Reseller Agreement was executed.
Legal Proceedings AFG Litigation On January 16, 2025, the Company filed a lawsuit against AFG and its Chief Executive Officer, Ralph Wright Brewer III, in the Northern District of Texas, Dallas Division alleging fraudulent misrepresentation, breach of contract, and the concealment of a ransomware attack on its own network shortly before the Reseller Agreement was executed.
We 12 Table of Contents also generally apply a policy requiring our employees and independent contractors to sign agreements assigning to us any inventions, trade secrets, works of authorship, developments, processes and other intellectual property generated by them on our behalf and under which they agree to protect our confidential information.
We also generally apply a policy requiring our employees and independent contractors to sign agreements assigning to us any inventions, trade secrets, works of authorship, developments, processes and other intellectual property generated by them on our behalf and under which they agree to protect our confidential information.
The SEC maintains an Internet site ( www.sec.gov ) that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC.
The SEC maintains an Internet website at www.sec.gov that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC.
Intellectual Property We rely on a combination of patents, patent applications, registered and unregistered trademarks, copyrights, trade secrets, license agreements, confidentiality procedures, non-disclosure agreements with third parties and other contractual measures, to protect our intellectual property rights. As of March 27, 2025, we had 21 issued patents, including 10 U.S. issued patents and 11 issued abroad.
Intellectual Property We rely on a combination of patents, patent applications, registered and unregistered trademarks, copyrights, trade secrets, license agreements, confidentiality procedures, non-disclosure agreements with third parties and other contractual measures, to protect our intellectual property rights. 15 As of March 24, 2026, we have 23 issued patents, including 12 U.S. issued patents and 11 issued abroad.
From time to time, we may become involved in legal proceedings or be subject to claims arising in the ordinary course of our business.
These matters are still under investigation. From time to time, we may become involved in legal proceedings or be subject to claims arising in the ordinary course of our business.
The pending U.S. patent applications, if issued, would expire between 2041 and 2044. We continually review our development efforts to assess the existence and patentability of new intellectual property. We control access to and use of our proprietary technology and other confidential information through the use of internal and external controls, including contractual protections with employees, contractors, customers and partners.
We continually review our development efforts to assess the existence and patentability of new intellectual property. We control access to and use of our proprietary technology and other confidential information through the use of internal and external controls, including contractual protections with employees, contractors, customers and partners.
Given that the litigation remains in its early stages, the Company is currently unable to estimate the potential range of recoverable damages or the potential loss or range of loss, if any, resulting from a favorable or unfavorable outcome.
Given that the litigation is not yet at issue, the Company is currently unable to estimate the potential range of recoverable damages or the potential loss or range of loss, if any, resulting from a favorable or unfavorable outcome.
Information contained on or accessible through our website is not incorporated by reference into this Annual Report on Form 10-K and should not be considered a part of this Annual Report on Form 10-K. 13 Table of Contents Available Information The Company electronically files reports with the Securities and Exchange Commission (the “SEC”).
The information contained on, or that can be accessed through, our website is not incorporated by reference into this Annual Report on Form 10-K and should not be considered part of this Annual Report on Form 10-K. Available Information We file reports with the Securities and Exchange Commission (the “SEC”).
We aim to ensure our AI solutions operate effectively across cloud, on-premises, and hybrid environments, supporting seamless integration with our customer's systems, which includes advancing our technology to deploy our 4 Table of Contents multimodal AI Agents within native apps, kiosks, and software development kit integrations.
We aim to ensure our AI solutions operate effectively across cloud, on-premises, and hybrid environments, supporting seamless integration with our customers’ systems, including deployment of our multimodal AI Agents within native applications, kiosks, and software development kit integrations.
There are a number of risks associated with our patent rights and other intellectual property rights, including whether such rights are valid, enforceable or sufficient to protect our business, products or services.
There are a number of risks associated with our patent rights and other intellectual property rights, including whether such rights are valid, enforceable or sufficient to protect our business, products or services. See the section titled “Risk Factors-Risks Related to Intellectual Property, Information Technology, Data Privacy and Security” for a more comprehensive description of risks related to our intellectual property.
Our U.S. issued patents expire between September 9, 2028, and April 18, 2031. We also have 25 pending patent applications, including 24 U.S. nonprovisional patent applications, 9 U.S. provisional patent applications (2 of which are in the process of being revived as a matter of unintentional abandonment), one Patent Cooperation Treaty patent application, and three patent applications in other jurisdictions.
Our U.S. issued patents expire between September 9, 2028, and April 1, 2044. We also have 24 pending patent applications, including 24 U.S. nonprovisional patent applications, 9 U.S. provisional patent applications, one Patent Cooperation Treaty patent application, and three patent applications in other jurisdictions. The pending U.S. patent applications, if issued, would expire between 2041 and 2044.
As a pre-revenue business, revenue generated in 2023 and 2024 was minimal, and we generated minimal revenues in 2022, which were attributable to beta testing of a mobile advertising platform under an exploratory business model that was discontinued. In November 2023, we obtained our first customer in the healthcare industry through our entry-level community cloud AI Agent offering.
Initial revenues in 2022 were generated from beta testing a mobile advertising platform under an exploratory business model, which was subsequently discontinued. In November 2023, we acquired our first healthcare customer through our entry-level community cloud AI Agent offering. In 2024, we expanded our customer base with AI Agent pilots across additional healthcare organizations.
In particular, HIPAA, as amended by the Health Information Technology for Economic and Clinical Health Act, and its respective implementing regulations, establishes privacy and security standards that limit the use and disclosure of protected health information ("PHI"), and require the implementation of administrative, physical, and technical safeguards to ensure the confidentiality, integrity and availability of individually identifiable health information in electronic form.
In particular, the Health Insurance Portability and Accountability Act (“HIPAA”), as amended by the Health Information Technology for Economic and Clinical Health Act (“HITECH”), establishes privacy and security standards that limit the use and disclosure of protected health information (“PHI”) and requires the implementation of administrative, physical, and technical safeguards.
We believe our AI Agents will be deployable across multiple differing industry verticals, regardless of whether a business leverages public or private cloud services, localized or hybrid environments. Whether in the automotive, healthcare or other industries or other developing markets, our AI Agents have been designed to deploy and integrate with our customers' businesses regardless of industry or internal infrastructure.
We believe our AI Agents are deployable across multiple industry verticals, regardless of whether a business leverages public or private cloud services, localized or hybrid environments. Our solutions are designed to integrate with customers’ existing systems and workflows across industries, enabling flexibility without requiring significant infrastructure changes.
The growing adoption of generative AI is being driven by the pursuit of cost reduction, value enhancement, differentiated customer engagements and operational efficiency benefits that we believe are not available to organizations through legacy solutions. There are a number of trends that are impacting the rate of adoption and facilitating changes to the ways organizations manage their technology infrastructure.
Our conversational AI solutions allow us to target a total addressable market estimated to grow from approximately $10 billion to $47 billion¹ by 2030. The growing adoption of generative AI is being driven by the pursuit of cost reduction, value enhancement, differentiated customer engagements, and operational efficiency benefits that we believe are not available to organizations through legacy solutions.
Copies of the Company’s Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K and amendments to those reports filed or furnished to the SEC are also available free of charge through the Company’s investor relations website ( http://www.sanaramedtech.com/investor-relations/ ), as soon as reasonably practicable after electronically filing with or otherwise furnishing such information to the SEC, and are available in print to any shareholder who requests it.
Our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and any amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934 are available free of charge on our investor relations website at https://investors.brandengagementnetwork.com as soon as reasonably practicable after we electronically file such material with, or furnish it to, the SEC.
Our AI Agents are built on 16+ advanced AI modules spanning perception, understanding, and response, with advanced capabilities in natural language processing ("NLP"), multisensory awareness, sentiment and environmental analysis, and real-time individuation and personalization.
Our AI is built on a foundation of 16+ advanced modules spanning perception, understanding, and response, with capabilities including natural language processing (“NLP”), multisensory awareness, sentiment and environmental analysis, and real-time personalization. Our solutions facilitate natural, context-aware interactions across modalities, enabling deployment in live, operational environments where accuracy, accountability, and trust are important.
Current Target Verticals Below are summaries of key end-markets that we believe illustrate both immediate and long-term potential for our product offerings: Healthcare We believe our platform can offer a solution for human-error and burnout across healthcare offerings by taking on a customer-facing role that removes the burden of certain administrative tasks from physicians and other healthcare professionals.
Current Target Verticals Below are summaries of key end-markets that we believe illustrate both immediate and long-term potential for our product offerings: Healthcare We believe our platform can support healthcare organizations by reducing administrative burden, improving patient engagement, and enhancing care coordination across fragmented systems.
We believe that by focusing on the intersection of personalization, customization, and configuration, we can push the boundaries of AI, delivering a versatile and multi-capable agentic solution that enhances value for both businesses and their customers.
We believe that by focusing on the intersection of personalization, customization, and configuration, we can deliver versatile AI solutions that enhance value for both businesses and their customers. 4 Commercial Development As a pre-revenue company, revenue in 2022 through 2024 was minimal.
These key trends include: Agentic AI. We believe the landscape of GenAI has evolved, shifting from knowledge-based tools like AI chatbots and co-pilots to GenAI-enabled agents capable of executing complex, multi-step workflows. These "agentic systems" can complete tasks autonomously and interact dynamically with their environments.
Agentic AI. We believe the landscape of generative AI has evolved from knowledge-based tools such as chatbots and co-pilots to AI-enabled agents capable of executing complex, multi-step workflows. Industry research indicates increasing enterprise focus on deploying agent-based AI systems capable of execution-oriented tasks.² Growing Acceptance of AI.
The AI Industry We operate within the generative AI industry, a rapidly advancing segment within the broader AI market, positioned at the intersection of machine learning, deep learning, and natural language processing.
These developments contributed to the continued refinement of our platform, including multilingual deployment capabilities, integration with third-party systems, support for regulated and institution-approved environments, and the ability to operate across both digital and physical interfaces. 9 The AI Industry We operate within the generative AI industry, a rapidly advancing segment within the broader artificial intelligence market, positioned at the intersection of machine learning, deep learning, and natural language processing.
While regulatory regimes governing artificial intelligence broadly remain undeveloped, there are a number of existing regulations in some of our target verticals with which we may need to comply. For example, there are numerous U.S. federal and state laws and regulations related to the privacy and security of personally identifiable information ("PII"), including health information.
We are subject to a variety of U.S. federal and state laws governing the privacy and security of personally identifiable information (“PII”), including health information.
We aim to connect to clients' real time data systems for access to customer specific files, accounts and records to provide meaningful personalized information to our clients' customers from an approved data set, while maintaining compliance with applicable privacy and data protection laws and regulations.
Our AI Agents can connect to clients’ real-time data systems to access approved information, enabling personalized responses while maintaining compliance with applicable privacy and data protection regulations. We also offer tools that support clients’ customers in managing their personal data and interactions. Our solutions emulate natural, human-like conversations to create meaningful interactions and improved user experiences.
Illustrative Offering Tiers We plan to offer our products in three tiers, varying based on the level of integration, number of customers services, concurrency of customer engagement and customization of the solutions we provided, as well as the needs of our end users. 10 Table of Contents Community Cloud .
We believe our AI solutions can support both customer-facing interactions and internal operational workflows across sales and service environments. 12 Illustrative Offering Tiers We plan to offer our products across three primary deployment tiers, differentiated by level of integration, customization, scalability, and data control, based on the needs of our enterprise customers. Community Cloud.
Our platforms are designed to quickly train and deploy the AI Agents into customer defined environments on multiple device types and engagement modes on the Web (desktop, mobile and app), the phone (voice and text) and installed to meet consumers in the physical world through kiosks.
Our AI Agents support multiple engagement modes, including web (desktop, mobile, and in-app), phone (voice and text), and physical installations via kiosks, enabling clients to meet their users across whichever channels are most relevant to their operations.
Other federal and state laws may also apply to us, including additional regulations regarding IT security, PII, deceptive trade practices in New York and California, among others. Additionally, we may be subject to the General Data Protection Regulation of the European Union and European Economic Area.
Internationally, we may be subject to additional data protection and privacy laws, including Mexico’s Federal Law on Protection of Personal Data Held by Private Parties (“LFPDPPP”), South Africa’s Protection of Personal Information Act (“POPIA”), and the General Data Protection Regulation (“GDPR”) in the European Union and European Economic Area.
Removed
Item 1. Business Overview We are a generative AI ("GenAI") company specializing in conversational AI solutions. Through our secure, human-like AI agents ("AI Agents"), available in different modalities, we seek to transform consumer engagement and elevate customer experience, productivity, and business performance.
Added
Item 1. Business Overview We are an artificial intelligence company focused on the engagement layer of AI, where human interaction connects directly to enterprise systems, workflows, and real-world outcomes. Through our secure, enterprise-grade conversational AI solutions, we enable organizations to connect human intent to data, systems, workflows, and execution across their operations.
Removed
Our conversational AI solutions are tailored to meet the unique needs of our business customers - from AI Agent customization in look, sound, and feel, to conversation design, business system integration, and cross-platform execution. We were originally formed in 2018 with the intention of disrupting the traditional mailing system through a uniquely secure, personalized electronic communication network.
Added
Our technology is powered by our proprietary Engagement Language Model (ELM™), which is designed to operate within secure, closed-loop environments using organization-approved data and embedded governance and compliance controls.
Removed
Although we still seek the same core goal of giving consumers more control over their data, we have refocused our product development on secure and personalized communications between customers and businesses with the new vision of enabling more meaningful interactions and engaging experiences.
Added
We provide configurable systems tailored to the needs of our business customers, including customization in look, sound, and interaction design, as well as business system integration and cross-platform deployment. Our technology is designed to meet the requirements of regulated and complex industries, supporting engagement, improving efficiency, and enabling measurable outcomes.
Removed
In 2023, we consummated our acquisition of DM Lab Co., LTD (“DM Lab”), through which we acquired our first AI Agent prototype. Today we are piloting a scalable and configurable platform that creates, deploys and manages human-like AI Agents, where each assistant is tailored for a specific intended purpose and trained on approved data provided by our customers.
Added
We were originally formed in 2018 with the intention of disrupting traditional communication systems through a secure, personalized digital network. While we continue to prioritize user control over data, our strategy has evolved to enable more dynamic, intelligent interactions between individuals and organizations.
Removed
Our initial focus has been on our healthcare and automotive applications for our AI Agents. We continue to pursue these verticals, developing and implementing our conversational AI solutions to help bridge resource gaps, enhance efficiencies, and enrich decision-making.
Added
In 2023, we consummated our acquisition of DM Lab Co., LTD., through which we acquired our initial conversational AI technology and foundational capabilities. Since then, we have enhanced these capabilities into scalable technology designed for enterprise deployment.
Removed
Recognizing the broader potential of AI-powered engagement, we have expanded our development focus into advertising and media, introducing conversational AI to transform brand messaging into interactive, dynamic experiences that deepen consumer engagement. By continuously refining our technology and expanding its applications, we aim to redefine human-AI interaction across industries.
Added
In 2025, we advanced the general availability of our platform, designed to support deployment of our AI solutions across enterprise environments and real-world operational settings. Our architecture is built on a modular foundation spanning perception, understanding, and response, enabling adaptable and context-aware interaction systems.
Removed
In 2024, we broadened our customer base by launching AI Agent pilots with five additional healthcare companies. Alongside these pilots, we formed commercial partnerships with two healthcare technology companies and an audiovisual media branding company to expand awareness, sales opportunity, and technological capabilities internationally.
Added
We focus on providing configurable solutions that meet specific enterprise use cases, including customization, workflow integration, and cross-channel deployment. Our ongoing development efforts are focused on expanding platform scalability, strengthening enterprise integrations, and supporting real-world operational environments. Our initial commercialization efforts have focused on healthcare applications, with continued expansion into additional verticals, including hospitality, insurance, and advertising and media.
Removed
We offer a customizable human-like AI Agent that can enhance customer engagement while delivering a secure, consistent and effective message for vertically-focused end markets.
Added
We are deploying our solutions to address resource constraints, improve operational efficiency, and support more informed decision-making across these environments. We continue to expand across these verticals while refining our capabilities to meet the demands of complex, real-world operational settings.
Removed
Additionally, we will seek to offer tools to help our clients' customers manage their personal data and conversations. Our AI Agents seek to emulate a discussion between the customers of our clients and our AI Agents as a way of enhancing the user experience by creating a more meaningful interaction.
Added
Recognizing the broader applicability of intelligent engagement technologies, we are expanding the range of enterprise use cases supported by our platform while enhancing performance, scalability, and integration across industry-specific environments.
Removed
By "meeting the consumers where they are" and allowing interactions to occur on their preferred devices, our applications can be more easily and broadly adopted by the market. Furthermore, we aim to integrate with our customers' business backend systems, such as customer relationship management, enterprise resource planning, and Internet of Things (“IoT”) systems within our full-stack.
Added
These pilot initiatives primarily focused on evaluating our AI Agents in real-world healthcare settings, including patient engagement, education, and operational support use cases. During the same period, we established commercial partnerships with two healthcare technology companies and an audiovisual media branding firm to extend global awareness, sales opportunities, and technological capabilities.
Removed
In addition, by providing customers a human-like interface and a secure environment through multi-model communication, we believe we are able to deliver scaled solutions for industries impacted by labor and cost burdens and whom have a desire to increase engagement with their customers. AI Agents .
Added
In 2025, we continued to expand geographically and across new verticals. In Mexico, we strengthened our presence through strategic partnerships involving SKYE LATAM and related entities. In the United States, we deepened engagement with healthcare organizations while expanding into the insurance sector, including through a strategic partnership with Swiss Life Global Solutions.
Removed
We have assembled our technology components to create an integrated AI Agent that enables us to provide a seamless consumer-facing experience for our clients complete with our proprietary configurable safety and security features.
Added
We maintained momentum in South Africa through ongoing collaborations with local technology partners, including Valio Technologies and hospitality-related partners. Additionally, we entered the hospitality vertical, deploying AI solutions designed to enhance operational efficiency, customer engagement, and data sovereignty across properties and services. These activities reflect the progression from initial pilot initiatives toward broader deployment opportunities across multiple industry verticals.
Removed
Our customizable AI Agents are integrated into our clients' environment and train on their internal data to provide a broad array of customer service and education solutions for our clients' interactions with their current and potential customers.
Added
We provide configurable, enterprise-grade AI designed to connect human intent to enterprise systems, workflows, and execution, while delivering secure, consistent, and compliant interactions across industry-specific environments. Our solutions are designed not only to engage in conversation, but to execute tasks and trigger actions within enterprise systems.
Removed
Our AI Agents are designed to work with several existing large language models (“LLMs”), including Anthropic LLM and Llama 2 LLM to configure and personalize our AI Agents' responses to consumer inquiries to create client-specific solutions.
Added
Our technology enables rapid training and deployment across customer-defined environments and multiple engagement modes, including web (desktop, mobile, and applications), phone (voice and text), and physical locations via kiosks.
Removed
We believe in the benefits of small footprint LLMs that work in tandem with other data retrieval and data processing techniques that seek to ensure a safe environment as well as minimize the required computations needed to achieve a human-like experience.
Added
By supporting interactions on preferred devices and integrating with clients’ backend systems—such as customer relationship management (CRM), enterprise resource planning (ERP), and IoT platforms—our solutions can be widely adopted while delivering operational efficiencies, particularly in industries seeking to address labor and cost constraints.
Removed
Our AI Agents can change their dialogue, conversation design, personality and appearances based on the specific needs of our customers and the consumer environments in which they operate.
Added
The platform integrates multiple components into a seamless, configurable AI Agent, trained on a client’s internal data to provide tailored customer service, education, and engagement solutions. Our AI Agents operate with existing LLMs, including models from providers such as Anthropic and Meta (Llama), while leveraging small footprint models and additional data retrieval techniques to optimize computational efficiency and safety.
Removed
Our AI Agents can be offered to our clients' customers through mobile apps, desktops or laptops, as well as through in-store life-size kiosks and SDK integrations and are designed to be deployed in a fully ringfenced environment. Differentiation Through Configurable Safety and Security .
Added
The system dynamically adjusts dialogue, personality, and appearance to suit client-specific environments and user needs. Deployment is flexible across mobile apps, desktops, kiosks, and SDK integrations within secure, ringfenced environments. These AI Agents are powered by our proprietary Engagement Language Model (ELM™), which orchestrates multi-modal perception, understanding, and response to deliver adaptable, secure, and enterprise-ready interactions.
Removed
We believe the primary differentiation of our AI Agents is the ability to reduce bias and minimize "hallucinations," filtering for inappropriate inputs and responses and managing customer identity resolution.
Added
Automotive Commercial Development We believe that the automotive industry represents a significant opportunity for the adoption of conversational and agentic AI due to increasing cost pressures, evolving consumer expectations for digitally enabled engagement, and the need to continuously improve efficiency across dealership and service operations.
Removed
We implement retrieval-augmented generation, a process of optimizing the output of a LLM, so it references an authoritative knowledge base outside of its training data sources before generating a response, and focus on embedding techniques for retrieval. We utilize pre-trained foundation models, which we do not train ourselves, and augment such models with our carefully curated knowledge bases.
Added
Consumer behavior continues to shift toward online and mobile-first interactions, and we believe these dynamics create a favorable environment for AI-driven automation and decision-support tools that can enhance customer experiences and streamline internal workflows.
Removed
Our belief in our ability to reduce bias and minimize hallucinations is based on: ● High-Quality Knowledge Base: We maintain a carefully vetted and regularly updated knowledge base to provide accurate, current information.
Added
Our initial automotive commercial development strategy in 2023 was focused on building and deploying a conversational and agentic AI solution that could support the administration of vehicle service contracts and warranty claims, reduce fraud, improve cash flow and reduce overall dealer costs.
Removed
The information is generally provided to us by our clients who utilize their own experts in their corresponding fields. ● Sophisticated Retrieval Mechanisms: Our retrieval system is designed to find the most relevant and reliable information for each query. ● Careful Curation of Retrieved Information: We prompt the foundation model to base its responses primarily on the retrieved information, reducing the likelihood of generating unfounded statements. 5 Table of Contents ● Uncertainty Communication: We implement prompting strategies that encourage the model to express uncertainty when retrieved information is insufficient or ambiguous.
Added
This initial strategy incorporated the vision of having conversational AI agents replace the traditional owner’s manual for a specific year, make and model and allow vehicle operators to engage in natural conversations with an AI agent.
Removed
Our prompting strategies are triggered whenever our systems detect that the safety threshold is too low. Additionally, we expect to implement data anonymization techniques to safeguard against proprietary data leakage to third-party LLMs. Our platform has been designed with a "middle layer" that performs these configurable safety functions without inducing delay in the overall experience.
Added
The Company created its first demonstration of this in July 2023. 5 In August 2023, the Company entered into an exclusive global automotive reseller agreement with AFG Companies, Inc.
Removed
If desired, the responses will only come from a select dataset that has been ingested while still providing a natural conversation to the user with appropriate natural language responses.
Added
The strategy was to advance our vision and leverage the nearly 1,000 franchise dealerships within the AFG Companies, an extended warranty company that administers vehicle service contracts and other related Finance & Insurance products to dealerships, agencies, and manufacturers.
Removed
In addition, all conversations or sessions can be transcribed and further analyzed to audit the system and the dialogues for continuous monitoring of the configurable safety and security protocols of our platforms. Customization, Configuration, and Optimization . Our AI Agents can enable substantial variations in customer experiences.
Added
The shift in our initial vision was at the direction of the exclusive reseller, AFG, in October 2023, and the new go-to-market strategy was to implement AI agents within the dealership for sales, service and dealer principal interaction.
Removed
ASR, TTS, and NLP can be tweaked for tone, cadence, personality, emotions and other auditory features. The voices used in our AI Agents can be matched with broad variations of agent appearance design with customized ethnicity, skin tone, facial features, and other physical attributes.
Added
The Company and AFG introduced the new go-to-market strategy to attendees of the 2023 NADA (National Automotive Dealers Association) Show, hosted at the MGM Grand to select invitation-only participants.
Removed
AI Agents can be dressed in broad variations of outfits appropriate for the application, such as a nurse's scrubs, auto repair uniform, formal business attire, casual-friendly attire, and other profession-appropriate attire.
Added
Our current automotive product suite includes multiple AI implementations designed to support both consumer-facing engagement and internal dealership operations, including: (i) Web AI Agent, which enhances online dealership experiences by understanding customer intent, answering questions, and supporting lead capture; (ii) In-Vehicle Experience, designed to connect with vehicle data, mobile applications, and contextual information to provide personalized engagement opportunities; (iii) Sales AI Agent, which supports in-dealership customer interactions through interactive kiosk-based experiences; (iv) Service AI Agent, which assists customers with appointment scheduling, maintenance inquiries, and service program education; and (v) Technician AI Agent, which provides real-time guidance and information to technicians while supporting adherence to OEM requirements.

… 173 more changes not shown on this page.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

114 edited+11 added−55 removed277 unchanged
Biggest changeA decline in revenue from, or the loss of, any significant customer, could have a material adverse effect on our financial condition and operating results. 16 Table of Contents We have a limited number of customers in our initial pilot programs, and we expect to depend upon a small number of customers in the immediate future for a substantial portion of future revenues.
Biggest changeWe have a limited number of customers in our initial pilot programs, and we expect to depend upon a small number of customers in the immediate future for a substantial portion of future revenues. Accordingly, 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.
An acquisition, investment or business relationship may result in unforeseen risks, operating difficulties and expenditures, including the following: ● an acquisition may negatively affect our financial results because it may require us to incur charges or assume substantial debt or other liabilities, may cause adverse tax consequences or unfavorable accounting treatment, may expose us to claims and disputes by third parties, including intellectual property claims and disputes, or may not generate sufficient financial return to offset additional costs and expenses related to the acquisition; ● costs and potential difficulties associated with the requirement to test and assimilate the internal control processes of the acquired business; ● we may encounter difficulties or unforeseen expenditures assimilating or integrating the businesses, technologies, infrastructure, products, personnel or operations of the acquired companies, particularly if the key personnel of the acquired company choose not to work for us or if we are unable to retain key personnel, if their technology is not easily adapted to work with ours, or if we have difficulty retaining the customers of any acquired business due to changes in ownership, management, or otherwise; ● we may not realize the expected benefits of the acquisition; ● an acquisition may disrupt our ongoing business, divert resources, increase our expenses, and distract our management; ● an acquisition may result in a delay or reduction of customer subscriptions for our offerings for both us and the company acquired due to customer uncertainty about continuity and effectiveness of service from either company; ● the potential impact on relationships with existing customers, vendors, and channel providers as business partners as a result of acquiring another company or business that competes with or otherwise is incompatible with those existing relationships; ● the potential that our due diligence of the acquired company or business does not identify significant problems or liabilities, or that we underestimate the costs and effects of identified liabilities; ● exposure to litigation or other claims in connection with, or inheritance of claims or litigation risk as a result of, an acquisition, including but not limited to claims from former employees, customers, or other third parties, which may differ from or be more significant than the risks our business faces; ● potential goodwill impairment charges related to acquisitions; ● we may encounter difficulties in, or may be unable to, successfully sell any acquired offerings; ● an acquisition may involve the entry into geographic or business markets in which we have little or no prior experience or where competitors have stronger market positions; 26 Table of Contents ● an acquisition may require us to comply with additional laws and regulations, or to engage in substantial remediation efforts to cause the acquired company to comply with applicable laws or regulations, or result in liabilities resulting from the acquired company's failure to comply with applicable laws or regulations; ● our use of cash to pay for an acquisition would limit other potential uses for our cash; ● if we incur debt to fund such acquisition, such debt may subject us to material restrictions on our ability to conduct our business as well as financial maintenance covenants; and ● to the extent that we issue a significant amount of equity securities in connection with future acquisitions, existing stockholders may be diluted and earnings per share may decrease.
An acquisition, investment or business relationship may result in unforeseen risks, operating difficulties and expenditures, including the following: ● an acquisition may negatively affect our financial results because it may require us to incur charges or assume substantial debt or other liabilities, may cause adverse tax consequences or unfavorable accounting treatment, may expose us to claims and disputes by third parties, including intellectual property claims and disputes, or may not generate sufficient financial return to offset additional costs and expenses related to the acquisition; ● costs and potential difficulties associated with the requirement to test and assimilate the internal control processes of the acquired business; ● we may encounter difficulties or unforeseen expenditures assimilating or integrating the businesses, technologies, infrastructure, products, personnel or operations of the acquired companies, particularly if the key personnel of the acquired company choose not to work for us or if we are unable to retain key personnel, if their technology is not easily adapted to work with ours, or if we have difficulty retaining the customers of any acquired business due to changes in ownership, management, or otherwise; ● we may not realize the expected benefits of the acquisition; ● an acquisition may disrupt our ongoing business, divert resources, increase our expenses, and distract our management; ● an acquisition may result in a delay or reduction of customer subscriptions for our offerings for both us and the company acquired due to customer uncertainty about continuity and effectiveness of service from either company; ● the potential impact on relationships with existing customers, vendors, and channel providers as business partners as a result of acquiring another company or business that competes with or otherwise is incompatible with those existing relationships; 30 ● the potential that our due diligence of the acquired company or business does not identify significant problems or liabilities, or that we underestimate the costs and effects of identified liabilities; ● exposure to litigation or other claims in connection with, or inheritance of claims or litigation risk as a result of, an acquisition, including but not limited to claims from former employees, customers, or other third parties, which may differ from or be more significant than the risks our business faces; ● potential goodwill impairment charges related to acquisitions; ● we may encounter difficulties in, or may be unable to, successfully sell any acquired offerings; ● an acquisition may involve the entry into geographic or business markets in which we have little or no prior experience or where competitors have stronger market positions; ● an acquisition may require us to comply with additional laws and regulations, or to engage in substantial remediation efforts to cause the acquired company to comply with applicable laws or regulations, or result in liabilities resulting from the acquired company’s failure to comply with applicable laws or regulations; ● our use of cash to pay for an acquisition would limit other potential uses for our cash; ● if we incur debt to fund such acquisition, such debt may subject us to material restrictions on our ability to conduct our business as well as financial maintenance covenants; and ● to the extent that we issue a significant amount of equity securities in connection with future acquisitions, existing stockholders may be diluted and earnings per share may decrease.
Any future deterioration of the South Korean economy or the global economy could adversely affect our business, financial condition, and results of operations. Risks Related to Intellectual Property, Information Technology, Data Privacy and Security We will rely in part upon third-party providers of cloud-based infrastructure to host our products.
Any future deterioration of the South Korean economy or the global economy could adversely affect our business, financial condition, and results of operations. 33 Risks Related to Intellectual Property, Information Technology, Data Privacy and Security We will rely in part upon third-party providers of cloud-based infrastructure to host our products.
Further, investors' perceptions that our internal controls are inadequate or that we are unable to produce accurate consolidated financial statements may have a material adverse effect on our stock price. Our sales cycles may be long and unpredictable, particularly with respect to large subscriptions, and our sales efforts require considerable time and expense .
Further, investors’ perceptions that our internal controls are inadequate or that we are unable to produce accurate consolidated financial statements may have a material adverse effect on our stock price. 23 Our sales cycles may be long and unpredictable, particularly with respect to large subscriptions, and our sales efforts require considerable time and expense.
These proceedings could also result in negative publicity, which could harm customer and public perception of our business, regardless of whether the allegations are valid or whether we are ultimately found liable. AI is a nascent and rapidly changing technology. The slowing or stopping of the development or acceptance of AI technologies may adversely affect our business.
These proceedings could also result in negative publicity, which could harm customer and public perception of our business, regardless of whether the allegations are valid or whether we are ultimately found liable. 32 AI is a nascent and rapidly changing technology. The slowing or stopping of the development or acceptance of AI technologies may adversely affect our business.
Our current and potential competitors may also establish cooperative relationships among themselves or with third parties that may further enhance their resources. Some of our competitors have made or could make acquisitions of businesses that allow them to offer more competitive and comprehensive solutions.
Our current and potential competitors may also establish cooperative relationships among themselves or with third parties that may further enhance their resources. 26 Some of our competitors have made or could make acquisitions of businesses that allow them to offer more competitive and comprehensive solutions.
These developments may further complicate compliance efforts and increase legal risk and compliance costs for us and the third parties upon whom we rely. Outside the United States, an increasing number of laws, regulations, and industry standards govern data privacy and security.
These developments may further complicate compliance efforts and increase legal risk and compliance costs for us and the third parties upon whom we rely. 41 Outside the United States, an increasing number of laws, regulations, and industry standards govern data privacy and security.
One or a few customers may represent a substantial portion of our total revenues in any one year or over a period of several years. Our ability to maintain close relationships with major customers will be essential to the growth and profitability of our business.
One or a few customers may represent a substantial portion of our total revenues in any one year or over a period of several years. 27 Our ability to maintain close relationships with major customers will be essential to the growth and profitability of our business.
A security incident or other interruption could disrupt our ability (and that of third parties upon whom we rely) to provide our platform and services. We may expend significant resources or modify our business activities to try to protect against security incidents.
A security incident or other interruption could disrupt our ability (and that of third parties upon whom we rely) to provide our platform and services. 39 We may expend significant resources or modify our business activities to try to protect against security incidents.
If the Company calls the Public Warrants for redemption after the redemption criteria described elsewhere in Annual Report on Form 10-K have been satisfied, we have the option to require any holder that wishes to exercise their Public Warrants to do so on a "cashless basis." If the Company's management chooses to require holders to exercise their Public Warrants on a cashless basis, the number of our Common Stock received by a holder upon exercise will be fewer than it would have been had such holder exercised the Public Warrant for cash.
If the Company calls the Public Warrants for redemption after the redemption criteria described elsewhere in Annual Report on Form 10-K have been satisfied, we have the option to require any holder that wishes to exercise their Public Warrants to do so on a “cashless basis.” If the Company’s management chooses to require holders to exercise their Public Warrants on a cashless basis, the number of our Common Stock received by a holder upon exercise will be fewer than it would have been had such holder exercised the Public Warrant for cash.
We 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.
We 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.
These provisions include the following: ● a classified board of directors so that not all members of the board of directors are elected at one time; ● the right of the board of directors to establish the number of directors and fill any vacancies and newly created directorship; ● director removal solely for cause; ● super-majority voting to amend certain provisions of our Charter and any provision of our Bylaws; ● "blank check" preferred stock that our board of directors could use to implement a shareholder rights plan; ● the right of our board of directors to issue our authorized but unissued Common Stock and Preferred Stock without stockholder approval; ● no ability of our stockholders to call special meetings of stockholders; ● no right of our stockholders to act by written consent, which requires all stockholder actions to be taken at a meeting of our stockholders; ● limitations on the liability of, and the provision of indemnification to, our director and officers; ● the right of the board of directors to make, alter, or repeal our Bylaws; and ● advance notice requirements for nominations for election to our board of directors or for proposing matters that can be acted upon by stockholders at annual stockholder meetings.
These provisions include the following: ● a classified board of directors so that not all members of the board of directors are elected at one time; ● the right of the board of directors to establish the number of directors and fill any vacancies and newly created directorship; ● director removal solely for cause; ● super-majority voting to amend certain provisions of our Charter and any provision of our Bylaws; ● “blank check” preferred stock that our board of directors could use to implement a shareholder rights plan; ● the right of our board of directors to issue our authorized but unissued Common Stock and Preferred Stock without stockholder approval; ● no ability of our stockholders to call special meetings of stockholders; ● no right of our stockholders to act by written consent, which requires all stockholder actions to be taken at a meeting of our stockholders; ● limitations on the liability of, and the provision of indemnification to, our director and officers; ● the right of the board of directors to make, alter, or repeal our Bylaws; and ● advance notice requirements for nominations for election to our board of directors or for proposing matters that can be acted upon by stockholders at annual stockholder meetings.
Any or all of the above issues, or the perception that any of them have occurred, could result in adverse consequences including, but not limited to, business interruptions and diversions of funds, decreased ability to attract new customers, existing customers deciding to terminate or not renew their agreements, reduced ability to obtain and maintain required or desirable cybersecurity certifications, reputational damage, government enforcement actions (for example, 34 Table of Contents investigations, fines, penalties, audits, and inspections), and private litigation (including class claims), any of which could materially adversely affect our results of operations, financial condition, and future prospects.
Any or all of the above issues, or the perception that any of them have occurred, could result in adverse consequences including, but not limited to, business interruptions and diversions of funds, decreased ability to attract new customers, existing customers deciding to terminate or not renew their agreements, reduced ability to obtain and maintain required or desirable cybersecurity certifications, reputational damage, government enforcement actions (for example, investigations, fines, penalties, audits, and inspections), and private litigation (including class claims), any of which could materially adversely affect our results of operations, financial condition, and future prospects.
These rules and regulations require that we adopt additional controls and procedures and disclosure, corporate governance and other practices thereby significantly increasing our legal, financial and other compliance costs. These new obligations will also make other aspects of our business more difficult, time-consuming or costly and increase demand on our personnel, systems and other resources.
These rules and regulations require that we adopt additional controls and procedures and disclosure, corporate governance and other practices thereby significantly increasing our legal, financial and other compliance costs. These obligations also make other aspects of our business more difficult, time-consuming or costly and increase demand on our personnel, systems and other resources.
For additional information on risks that privacy and data protection obligations could pose to our business, see the Risk Factor titled " We are or may become subject to stringent and evolving U.S. and foreign laws, regulations, and rules, contractual obligations, industry standards, policies and other obligations related to data privacy and security.
For additional information on risks that privacy and data protection obligations could pose to our business, see the Risk Factor titled “We are or may become subject to stringent and evolving U.S. and foreign laws, regulations, and rules, contractual obligations, industry standards, policies and other obligations related to data privacy and security.
In the "land" phase of our business model, we may deploy prototype capabilities to potential customers at minimal cost initially to them for evaluation purposes, and there is no guarantee that we will be able to convert these engagements into long-term sales arrangements.
In the “land” phase of our business model, we may deploy prototype capabilities to potential customers at minimal cost initially to them for evaluation purposes, and there is no guarantee that we will be able to convert these engagements into long-term sales arrangements.
For example, the California Consumer Privacy Act of 2018, as amended by the California Privacy Rights Act of 2020 (collectively, "CCPA"), applies to personal data of consumers, business representatives, and employees who are California residents, and requires businesses to provide specific disclosures in privacy notices and honor requests of such individuals to exercise certain privacy rights.
For example, the California Consumer Privacy Act of 2018, as amended by the California Privacy Rights Act of 2020 (collectively, “CCPA”), applies to personal data of consumers, business representatives, and employees who are California residents, and requires businesses to provide specific disclosures in privacy notices and honor requests of such individuals to exercise certain privacy rights.
We are also subject to the risks generally associated with new product introductions and applications, including lack of market acceptance, delays in product development and failure of products to operate properly. These risks could have a material adverse effect on our business, results of operations and financial condition.
We are also subject to the risks generally associated with new product introductions and applications, including lack of market acceptance, delays in product development and failure of products to operate properly. These risks could have a material adverse effect on our business, results of operations development and failure of products to operate properly.
See the Risk Factor titled "If our information technology systems or those of third parties upon which we rely, or our data, are or were compromised, we could experience adverse consequences resulting from such compromise, including but not limited to regulatory investigations or actions; litigation; fines and penalties; disruptions of our business, reputational harm; loss of revenue or profits; loss of customers or sales; and other adverse consequences" for additional information concerning security risks.
See the Risk Factor titled “If our information technology systems or those of third parties upon which we rely, or our data, are or were compromised, we could experience adverse consequences resulting from such compromise, including but not limited to regulatory investigations or actions; litigation; fines and penalties; disruptions of our business, reputational harm; loss of revenue or profits; loss of customers or sales; and other adverse consequences” for additional information concerning security risks.
Our Certificate of Incorporation (our "Charter") and Bylaws contain provisions that could depress the trading price of our Common Stock by acting to discourage, delay, or prevent a change of control or changes in our management that our stockholders may deem advantageous.
Our Certificate of Incorporation (our “Charter”) and Bylaws contain provisions that could depress the trading price of our Common Stock by acting to discourage, delay, or prevent a change of control or changes in our management that our stockholders may deem advantageous.
In addition, we have the ability to redeem the outstanding Public Warrants at any time after they become exercisable and prior to their expiration, at a price of $0.10 per Warrant if, among other things, the Reference Value equals or exceeds $10.00 per share (as adjusted for adjustments to the number of shares issuable upon exercise or the exercise price of a Public Warrant).
We have the ability to redeem the outstanding Public Warrants at any time after they become exercisable and prior to their expiration, at a price of $0.10 per Public Warrant, if, among other things, the Reference Value equals or exceeds $180.00 per share (as adjusted for adjustments to the number of shares issuable upon exercise or the exercise price of a Public Warrant.
Future investors in our Company may not experience a similar rate of return. ● We have a limited operating history, which makes it difficult to evaluate our prospects and future results of operations. ● We have a history of losses and may not be able to achieve profitability on a consistent basis or at all. 14 Table of Contents ● We expect to be dependent on a limited number of customers and end markets.
Future investors in our Company may not experience a similar rate of return. ● We have a limited operating history, which makes it difficult to evaluate our prospects and future results of operations. ● We have a history of losses and may not be able to achieve profitability on a consistent basis or at all. ● We expect to be dependent on a limited number of customers and end markets.
The risk of patent litigation has been amplified by the increase in the number of a type of patent holder, which we refer to as a non-practicing entity, whose sole or principal business is to assert such 30 Table of Contents claims and against whom our own intellectual property portfolio may provide little deterrent value.
The risk of patent litigation has been amplified by the increase in the number of a type of patent holder, which we refer to as a non-practicing entity, whose sole or principal business is to assert such claims and against whom our own intellectual property portfolio may provide little deterrent value.
For example, the federal Health Insurance Portability and Accountability Act of 1996 ("HIPAA"), as amended by the Health Information Technology for Economic and Clinical Health Act, imposes specific requirements relating to the privacy, security, and transmission of individually identifiable protected health information.
For example, the federal Health Insurance Portability and Accountability Act of 1996 (“HIPAA”), as amended by the Health Information Technology for Economic and Clinical Health Act, imposes specific requirements relating to the privacy, security, and transmission of individually identifiable protected health information.
Furthermore, as a result of disclosure of information in this Annual Report on Form 10-K and in our Exchange Act and other filings required of a public company, our business and financial condition will become more visible, which we believe may give some of our competitors who may not be similarly required to disclose this type of information a competitive advantage.
Furthermore, as a result of disclosure of information in this Annual Report on Form 10-K and in our Exchange Act and other filings required of a public company, our business and financial condition is more visible, which we believe may give some of our competitors who may not be similarly required to disclose this type of information a competitive advantage.
For example, to maintain and improve the effectiveness of our disclosure controls and procedures and internal control over financial reporting, we will need to commit significant resources, hire additional staff and provide additional management oversight.
For example, to maintain and improve the effectiveness of our disclosure controls and procedures and internal control over financial reporting, we need to commit significant resources, maintain additional staff and provide additional management oversight.
Further, any 23 Table of Contents failure in optimizing our spending on third-party cloud services as we scale could negatively impact our gross margins. Even if we are successful in our expansion efforts, they will be expensive and complex, and require the dedication of significant management time and attention.
Further, any failure in optimizing our spending on third-party cloud services as we scale could negatively impact our gross margins. Even if we are successful in our expansion efforts, they will be expensive and complex, and require the dedication of significant management time and attention.
Concerns regarding third-party use of AI for purposes contrary to local governmental interests, including concerns relating to the misuse of AI applications, models, and solutions, could result in unilateral or multilateral restrictions on products that can be used for training, refining, and 27 Table of Contents deploying large language models.
Concerns regarding third-party use of AI for purposes contrary to local governmental interests, including concerns relating to the misuse of AI applications, models, and solutions, could result in unilateral or multilateral restrictions on products that can be used for training, refining, and deploying large language models.
In order to protect our proprietary technologies and processes, we rely in part on trade secret laws and confidentiality agreements with our employees, consultants, and third parties. These agreements may not effectively prevent unauthorized disclosure of confidential 31 Table of Contents information and may not provide an adequate remedy in the event of unauthorized disclosure of confidential information.
In order to protect our proprietary technologies and processes, we rely in part on trade secret laws and confidentiality agreements with our employees, consultants, and third parties. These agreements may not effectively prevent unauthorized disclosure of confidential information and may not provide an adequate remedy in the event of unauthorized disclosure of confidential information.
In the ordinary course of business, we collect, receive, store, process, generate, use, transfer, disclose, make accessible, protect, secure, dispose of, transmit, and share (collectively, "process") personal data and other sensitive information, including proprietary and confidential business data, trade secrets, intellectual property, sensitive third-party data and health data (collectively, "sensitive data").
In the ordinary course of business, we collect, receive, store, process, generate, use, transfer, disclose, make accessible, protect, secure, dispose of, transmit, and share (collectively, “process”) personal data and other sensitive information, including proprietary and confidential business data, trade secrets, intellectual property, sensitive third-party data and health data (collectively, “sensitive data”).
Our actual results may not always be in line with or exceed any guidance we have provided, especially in times of unfavorable or uncertain economic and market conditions, such as the current global economic uncertainty experienced as a result of the COVID-19 pandemic and the current inflationary environment in the United States.
Our actual results may not always be in line with or exceed any guidance we have provided, especially in times of unfavorable or uncertain economic and market conditions, such as the current global economic uncertainty experienced as a result of the current inflationary environment in the United States.
Our results of operations depend on sales to enterprise customers, which make product purchasing decisions based in part or entirely on factors, or perceived factors, not directly related to the features of the software, including, among others, such customer's projections of business growth, uncertainty about economic conditions (including as a result of public health crises such as the COVID-19 pandemic and international affairs such as the conflict between Russia and Ukraine and in the Middle East), capital budgets, anticipated cost savings from the implementation of our software, potential preference for such customer's internally developed software solutions, perceptions about our business and software, more favorable terms offered by potential competitors, and previous technology investments.
Our results of operations depend on sales to enterprise customers, which make product purchasing decisions based in part or entirely on factors, or perceived factors, not directly related to the features of the software, including, among others, such customer’s projections of business growth, uncertainty about economic conditions (including as a result of international affairs such as the conflict between Russia and Ukraine and in the Middle East), capital budgets, anticipated cost savings from the implementation of our software, potential preference for such customer’s internally developed software solutions, perceptions about our business and software, more favorable terms offered by potential competitors, and previous technology investments.
We are required to comply with the SEC's rules implementing Sections 302 and 404 of Sarbanes-Oxley, which will require management to certify financial and other information in our quarterly and annual reports and provide an annual management report on the effectiveness of controls over financial reporting.
We are required to comply with the SEC’s rules implementing Sections 302 and 404 of Sarbanes-Oxley, which requires management to certify financial and other information in our quarterly and annual reports and provide an annual management report on the effectiveness of controls over financial reporting.
These claims, lawsuits and proceedings could involve labor and employment, discrimination and harassment, commercial disputes, intellectual property rights (including patent, trademark, copyright, trade secret and other proprietary rights), class actions, general contract, tort, defamation, data privacy rights, antitrust, common-law fraud, government regulation or compliance, alleged federal and state securities and "blue sky" law violations or other investor claims and other matters.
These claims, lawsuits and proceedings could involve labor and employment, discrimination and harassment, commercial disputes, intellectual property rights (including patent, trademark, copyright, trade secret and other proprietary rights), class actions, general contract, tort, defamation, data privacy rights, antitrust, common-law fraud, government regulation or compliance, alleged federal and state securities and “blue sky” law violations or other investor claims and other matters.
Prior to BEN’s merger with Prior BEN and DHC Acquisition Corp. (the "Business Combination"), BEN was a private company with limited accounting personnel to adequately execute our accounting processes and other supervisory resources with which to address our internal control over financial reporting and, as a result, we may experience difficulty in meeting these reporting requirements in a timely manner.
Prior to BEN’s merger with Prior BEN and DHC Acquisition Corp. (the “Business Combination”), BEN was a private company with limited accounting personnel to adequately execute our accounting processes and other supervisory resources with which to address our internal control over financial reporting and, as a result, we may experience difficulty in meeting these reporting requirements in a timely manner.
In the ordinary course of our business, we and the third parties upon which we rely, collect, receive, store, process, generate, use, transfer, disclose, make accessible, protect, secure, dispose of, transmit, and share (collectively, "process") proprietary, confidential, and sensitive data, including personal data (such as health-related data), intellectual property and trade secrets (collectively, "sensitive information").
In the ordinary course of our business, we and the third parties upon which we rely, collect, receive, store, process, generate, use, transfer, disclose, make accessible, protect, secure, dispose of, transmit, and share (collectively, “process”) proprietary, confidential, and sensitive data, including personal data (such as health-related data), intellectual property and trade secrets (collectively, “sensitive information”).
In recent years, adverse conditions and volatility in the worldwide financial markets, fluctuations in oil and commodity prices, and the COVID-19 pandemic, have contributed to the uncertainty of global economic prospects in general and have adversely affected, and may continue to adversely affect, the South Korean economy.
In recent years, adverse conditions and volatility in the worldwide financial markets and fluctuations in oil and commodity prices have contributed to the uncertainty of global economic prospects in general and have adversely affected, and may continue to adversely affect, the South Korean economy.
Social 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. 28 Table of Contents Social and ethical issues relating to the use of AI may result in reputational harm and liability, and may cause us to incur additional research and development costs to resolve such issues.
Social 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. Social and ethical issues relating to the use of AI may result in reputational harm and liability, and may cause us to incur additional research and development costs to resolve such issues.
If this were to occur, we could face significant material adverse consequences, including: ● a limited availability of market quotations for our securities; ● reduced liquidity for our securities; ● a determination that our Common Stock is a "penny stock" which will require brokers trading in our Common Stock to adhere to more stringent rules and possibly result in a reduced level of trading activity in the secondary trading market for the Company's securities; ● a limited amount of news and analyst coverage; and ● a decreased ability to issue additional securities or obtain additional financing in the future.
If this were to occur, we could face significant material adverse consequences, including: ● a limited availability of market quotations for our securities; ● reduced liquidity for our securities; ● a determination that our Common Stock is a “penny stock” which will require brokers trading in our Common Stock to adhere to more stringent rules and possibly result in a reduced level of trading activity in the secondary trading market for the Company’s securities; ● a limited amount of news and analyst coverage; and ● a decreased ability to issue additional securities or obtain additional financing in the future. 47 Item 1B.
We believe that our future success will also depend in part on our continued ability to identify, hire, train and motivate qualified personnel. High demand exists for senior management and 24 Table of Contents other key personnel (including technical, engineering, product, finance and sales personnel) in the AI industry.
We believe that our future success will also depend in part on our continued ability to identify, hire, train and motivate qualified personnel. High demand exists for senior management and other key personnel (including technical, engineering, product, finance and sales personnel) in the AI industry.
The ability to provide this public guidance, and the ability to accurately forecast our results of operations, could be impacted by the global macroeconomic events, such as the COVID-19 pandemic and the current conflict in Ukraine and in the Middle East.
The ability to provide this public guidance, and the ability to accurately forecast our results of operations, could be impacted by the global macroeconomic events, such as the current conflict in Ukraine and in the Middle East.
In particular, the European Economic Area ("EEA") and the United Kingdom ("UK") have significantly restricted the transfer of personal data to the United States and other countries whose privacy laws it generally believes are inadequate. Other jurisdictions may adopt similarly stringent interpretations of their data localization and cross-border data transfer laws.
In particular, the European Economic Area (“EEA”) and the United Kingdom (“UK”) have significantly restricted the transfer of personal data to the United States and other countries whose privacy laws it generally believes are inadequate. Other jurisdictions may adopt similarly stringent interpretations of their data localization and cross-border data transfer laws.
Although there are currently various mechanisms that may be used to transfer personal data from the EEA and UK to the 35 Table of Contents United States in compliance with law, such as the EEA's standard contractual clauses, the UK's International Data Transfer Agreement / Addendum, and the EU-U.S.
Although there are currently various mechanisms that may be used to transfer personal data from the EEA and UK to the United States in compliance with law, such as the EEA’s standard contractual clauses, the UK’s International Data Transfer Agreement / Addendum, and the EU-U.S.
This may happen if the inputs that the model relied on were inaccurate, incomplete or flawed (including if a bad actor "poisons" the model with bad inputs or logic), or if the logic of the model is flawed (a so-called "hallucination"). We or our customers may also use AI/ML outputs to make certain decisions.
This may happen if the inputs that the model relied on were inaccurate, incomplete or flawed (including if a bad actor “poisons” the model with bad inputs or logic), or if the logic of the model is flawed (a so-called “hallucination”). We or our customers may also use AI/ML outputs to make certain decisions.
As an emerging growth company, our independent registered public accounting firm will not be required to formally attest to the effectiveness of our internal control over financial reporting pursuant to Section 404(a) until the later of (i) the year following our first annual report 37 Table of Contents required to be filed with the SEC or (ii) we are no longer an emerging growth company.
As an emerging growth company, our independent registered public accounting firm is not be required to formally attest to the effectiveness of our internal control over financial reporting pursuant to Section 404(a) until the later of (i) the year following our first annual report required to be filed with the SEC or (ii) we are no longer an emerging growth company.
Other factors that may cause fluctuations in our quarterly results of operations and financial position include, without limitation, those listed below: ● the success of our sales and marketing efforts; ● our ability to increase our margins; 17 Table of Contents ● the timing of expenses and revenue recognition; ● the timing and amount of payments received from our customers; ● termination of one or more large contracts by customers or channel providers; ● the time- and cost-intensive nature of our sales efforts and the length and variability of sales cycles; ● the amount and timing of operating expenses related to the maintenance and expansion of our business and operations; ● the timing and effectiveness of new sales and marketing initiatives; ● changes in our pricing policies or those of our competitors; ● the timing and success of new products, features, and functionality introduced by us or our competitors; ● cyberattacks and other actual or perceived data or security breaches; ● our ability to hire and retain employees, in particular, those responsible for the development, operations and maintenance, and selling or marketing of our software; and our ability to develop and retain talented sales personnel who are able to achieve desired productivity levels in a reasonable period of time and provide sales leadership in areas in which we are expanding our sales and marketing efforts; ● changes in the competitive dynamics of our industry; ● the cost of and potential outcomes of future claims or litigation, which could have a material adverse effect on our business; ● indemnification payments to our customers or other third parties; ● ability to scale our business with increasing demands; ● the timing of expenses related to any future acquisitions; and ● general economic, regulatory, and market conditions, including the impact of public health crises such as the COVID-19 pandemic and international affairs such as the conflict between Russia and Ukraine and in the Middle East which may cause financial market volatility.
A delay in the timing of receipt of any revenues owed to us or a default in payments on large contracts may negatively impact our liquidity for the period and in the future. 21 Other factors that may cause fluctuations in our quarterly results of operations and financial position include, without limitation, those listed below: ● the success of our sales and marketing efforts; ● our ability to increase our margins; ● the timing of expenses and revenue recognition; ● the timing and amount of payments received from our customers; ● termination of one or more large contracts by customers or channel providers; ● the time- and cost-intensive nature of our sales efforts and the length and variability of sales cycles; ● the amount and timing of operating expenses related to the maintenance and expansion of our business and operations; ● the timing and effectiveness of new sales and marketing initiatives; ● changes in our pricing policies or those of our competitors; ● the timing and success of new products, features, and functionality introduced by us or our competitors; ● cyberattacks and other actual or perceived data or security breaches; ● our ability to hire and retain employees, in particular, those responsible for the development, operations and maintenance, and selling or marketing of our software; and our ability to develop and retain talented sales personnel who are able to achieve desired productivity levels in a reasonable period of time and provide sales leadership in areas in which we are expanding our sales and marketing efforts; ● changes in the competitive dynamics of our industry; ● the cost of and potential outcomes of future claims or litigation, which could have a material adverse effect on our business; ● indemnification payments to our customers or other third parties; ● ability to scale our business with increasing demands; ● the timing of expenses related to any future acquisitions; and ● general economic, regulatory, and market conditions, including international affairs such as the conflict between Russia and Ukraine and in the Middle East which may cause financial market volatility.
These factors may also be exacerbated if, consistent with our growth strategy, our customer base continues to grow to encompass larger enterprises, 20 Table of Contents which may also require more sophisticated and costly sales efforts. These factors may also be exacerbated by unfavorable conditions in the economy.
These factors may also be exacerbated if, consistent with our growth strategy, our customer base continues to grow to encompass larger enterprises, which may also require more sophisticated and costly sales efforts. These factors may also be exacerbated by unfavorable conditions in the economy.
Our 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.
Our business and operations could be negatively affected if we become subject to any securities litigation, shareholder activism or “short squeeze” trading activity, which could cause us to incur significant expense, hinder execution of business and growth strategy and impact our stock price.
The 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. 38 Table of Contents Our Charter provides that, unless otherwise consented to by us in writing, the Court of Chancery of the State of Delaware (or, if and only if the Court of Chancery lacks subject matter jurisdiction, any state court located within the State of Delaware or, if and only if all such state courts lack subject matter jurisdiction, the federal district court for the District of Delaware) and any appellate court therefrom shall be the sole and exclusive forum for the following claims or causes of action under Delaware statutory or common law: (i) any derivative claim or cause of action brought on behalf of the Company; (ii) any claim or cause of action for breach of a fiduciary duty owed by any current or former director, officer or other employee or shareholder of the Company, to the Company or the Company's shareholders; (iii) any claim or cause of action against the Company or any current or former director, officer or other employee of the Company, arising out of or pursuant to any provision of the DGCL, the Charter or the Bylaws of the Company (as each may be amended from time to time); (iv) any claim or cause of action seeking to interpret, apply, enforce or determine the validity of the Charter or the Bylaws of the Company (as each may be amended from time to time, including any right, obligation, or remedy thereunder); (v) any claim or cause of action as to which the DGCL confers jurisdiction on the Court of Chancery of the State of Delaware; and (vi) any claim or cause of action against this corporation or any current or former director, officer or other employee of the Company, governed by the internal-affairs doctrine or otherwise relate to the Company's internal affairs, in all cases to the fullest extent permitted by applicable law and subject to the court having personal jurisdiction over the indispensable parties named as defendants.
Our Charter provides that, unless otherwise consented to by us in writing, the Court of Chancery of the State of Delaware (or, if and only if the Court of Chancery lacks subject matter jurisdiction, any state court located within the State of Delaware or, if and only if all such state courts lack subject matter jurisdiction, the federal district court for the District of Delaware) and any appellate court therefrom shall be the sole and exclusive forum for the following claims or causes of action under Delaware statutory or common law: (i) any derivative claim or cause of action brought on behalf of the Company; (ii) any claim or cause of action for breach of a fiduciary duty owed by any current or former director, officer or other employee or shareholder of the Company, to the Company or the Company’s shareholders; (iii) any claim or cause of action against the Company or any current or former director, officer or other employee of the Company, arising out of or pursuant to any provision of the DGCL, the Charter or the Bylaws of the Company (as each may be amended from time to time); (iv) any claim or cause of action seeking to interpret, apply, enforce or determine the validity of the Charter or the Bylaws of the Company (as each may be amended from time to time, including any right, obligation, or remedy thereunder); (v) any claim or cause of action as to which the DGCL confers jurisdiction on the Court of Chancery of the State of Delaware; and (vi) any claim or cause of action against this corporation or any current or former director, officer or other employee of the Company, governed by the internal-affairs doctrine or otherwise relate to the Company’s internal affairs, in all cases to the fullest extent permitted by applicable law and subject to the court having personal jurisdiction over the indispensable parties named as defendants.
We have a history of losses and may not be able to achieve profitability on a consistent basis or at all . We have incurred losses in each year since our incorporation. We incurred a net loss of approximately $33.7 million and $11.7 million in the years ended December 31, 2024 and 2023, respectively.
We have a history of losses and may not be able to achieve profitability on a consistent basis or at all. We have incurred losses in each year since our incorporation. We incurred a net loss of approximately $8.3 million and $33.7 million in the years ended December 31, 2025 and 2024, respectively.
Our sales cycles may be long, and it may be difficult to predict exactly when, or if, we will make a sale with a potential customer or how quickly we can move them from the "land" phase into the "expand" phase.
Our sales cycles may be long, and it may be difficult to predict exactly when, or if, we will make a sale with a potential customer or how quickly we can move them from the “land” phase into the “expand” phase.
If and when the Public Warrants become redeemable by us, we may exercise our redemption right even if 39 Table of Contents we are unable to register or qualify the underlying securities for sale under all applicable state securities laws.
If and when the Public Warrants become redeemable by us, we may exercise our redemption right even if we are unable to register or qualify the underlying securities for sale under all applicable state securities laws.
In addition, acquired businesses 25 Table of Contents may have ongoing or potential liabilities, legal claims (including tort and/or personal injury claims) or adverse operating issues that we fail to discover through due diligence prior to the acquisition.
In addition, acquired businesses may have ongoing or potential liabilities, legal claims (including tort and/or personal injury claims) or adverse operating issues that we fail to discover through due diligence prior to the acquisition.
Any interruption in our service, whether as a result of an internal or third-party issue, could damage our brand and reputation, cause our customers to terminate or not renew their contracts with us or decrease use of our software and services, require us to indemnify our customers against certain losses, result in our issuing credit or paying penalties or fines, subject us to other losses or liabilities, cause our software to be perceived as unreliable or unsecure, and prevent us from gaining new or additional business from current or future customers, any of which could harm our business, financial condition, and results of operations.
In addition, any negative publicity arising from these disruptions could harm our reputation and brand and adversely affect our business. 34 Any interruption in our service, whether as a result of an internal or third-party issue, could damage our brand and reputation, cause our customers to terminate or not renew their contracts with us or decrease use of our software and services, require us to indemnify our customers against certain losses, result in our issuing credit or paying penalties or fines, subject us to other losses or liabilities, cause our software to be perceived as unreliable or unsecure, and prevent us from gaining new or additional business from current or future customers, any of which could harm our business, financial condition, and results of operations.
As a result, we had an accumulated deficit of approximately $47.0 million as of December 31, 2024. We anticipate that our operating expenses will increase substantially in the foreseeable future as we continue to enhance our offerings, broaden our customer base, expand our sales and marketing activities, expand our operations, hire additional employees, and continue to develop our technology.
As a result, we had an accumulated deficit of approximately $55.3 million as of December 31, 2025. We anticipate that our operating expenses will increase substantially in the foreseeable future as we continue to enhance our offerings, broaden our customer base, expand our sales and marketing activities, expand our operations, hire additional employees, and continue to develop our technology.
For example, the European Union's General Data Protection Regulation ("EU GDPR"), the United Kingdom's GDPR ("UK GDPR"), Brazil's General Data Protection Law (Lei Geral de Proteção de Dados Pessoais, or LGPD) (Law No. 13,709/2018), and China's Personal Information Protection Law impose strict requirements for processing personal data.
For example, the European Union’s General Data Protection Regulation (“EU GDPR”), the United Kingdom’s GDPR (“UK GDPR”), Brazil’s General Data Protection Law (Lei Geral de Proteção de Dados Pessoais, or LGPD) (Law No. 13,709/2018), and China’s Personal Information Protection Law impose strict requirements for processing personal data.
We have the ability to redeem the outstanding Public Warrants at any time after they become exercisable and prior to their expiration, at a price of $0.01 per Public Warrant, if, among other things, the Reference Value equals or exceeds $18.00 per share (as adjusted for adjustments to the number of shares issuable upon exercise or the exercise price of a Public Warrant.
In addition, we have the ability to redeem the outstanding Public Warrants at any time after they become exercisable and prior to their expiration, at a price of $1.00 per Warrant if, among other things, the Reference Value equals or exceeds $100.00 per share (as adjusted for adjustments to the number of shares issuable upon exercise or the exercise price of a Public Warrant).
Our ability to anticipate changes in technology and regulatory standards and to successfully develop and introduce new and enhanced 32 Table of Contents products on a timely basis will be a significant factor in our ability to be competitive.
Our ability to anticipate changes in technology and regulatory standards and to successfully develop and introduce new and enhanced products on a timely basis will be a significant factor in our ability to be competitive.
In addition, supply-chain attacks have increased in frequency and severity, 33 Table of Contents and we cannot guarantee that third parties' infrastructure in our supply chain or our third-party partners' supply chains have not been compromised.
In addition, supply-chain attacks have increased in frequency and severity, and we cannot guarantee that third parties’ infrastructure in our supply chain or our third-party partners’ supply chains have not been compromised.
As a result, we are subject to political, economic, legal and regulatory risks specific to South Korea, and our performance and successful fulfilment of our operational strategies are dependent in part on the overall South Korean economy.
A significant number of our employees and operations are located in South Korea. As a result, we are subject to political, economic, legal and regulatory risks specific to South Korea, and our performance and successful fulfilment of our operational strategies are dependent in part on the overall South Korean economy.
If the protection of our proprietary rights is inadequate to prevent use or appropriation by third parties, the value of our products, brand, and other intangible assets may be diminished, and competitors may be able to more effectively replicate our products. Any of these events would harm our business.
If the protection of our proprietary rights is inadequate to prevent use or appropriation by third parties, the value of our products, brand, and other intangible assets may be diminished, and competitors may be able to more effectively replicate our products.
Acquisitions involve many and diverse risks and uncertainties, including risks associated with conduction due diligence, the inability to satisfy closing conditions, problems integrating the purchased operations, assets, technologies or products, unanticipated costs, liabilities, and economic, political, legal and regulatory challenges due to our inexperience operating in new regions or countries, inability to achieve anticipated synergies, overpaying for acquisitions, invalid sales assumptions underlying potential acquisitions, issues maintaining uniform standards, procedures, controls and policies, diversion of management attention, adverse effects on existing business relationships or acquired company business relationships, risks associated with entering new markets, potential loss of key employees of acquired businesses, increased legal, accounting and compliance costs, and failure to successfully integrate acquired companies, such as Cataneo, or retain key personnel from the acquired company.
Our future success will depend, in part, upon our ability to manage the expanded business following these acquisitions, including challenges related to the management and monitoring of new operations and associated increased costs and complexity associated with such acquisitions. 29 Acquisitions involve many and diverse risks and uncertainties, including risks associated with conduction due diligence, the inability to satisfy closing conditions, problems integrating the purchased operations, assets, technologies or products, unanticipated costs, liabilities, and economic, political, legal and regulatory challenges due to our inexperience operating in new regions or countries, inability to achieve anticipated synergies, overpaying for acquisitions, invalid sales assumptions underlying potential acquisitions, issues maintaining uniform standards, procedures, controls and policies, diversion of management attention, adverse effects on existing business relationships or acquired company business relationships, risks associated with entering new markets, potential loss of key employees of acquired businesses, increased legal, accounting and compliance costs, and failure to successfully integrate acquired companies or retain key personnel from the acquired company.
None of the 6,000,000 warrants (the "Private Placement Warrants") sold at a price of $1.50 per Private Placement Warrant in a private placement to the Sponsor, which were assumed in connection with the closing of the Business Combination, will be redeemable by us so long as they are held by the Sponsor or their permitted transferees.
None of the 600,000 warrants (the “Private Placement Warrants”) sold at a price of $15.00 per Private Placement Warrant in a private placement to the Sponsor, which were assumed in connection with the closing of the Business Combination, will be redeemable by us so long as they are held by the Sponsor or their permitted transferees.
Any intellectual property litigation to which we might become a party, or for which we are required to provide indemnification, may require us to do one or more of the following: ● cease selling or using products that incorporate the intellectual property rights that we allegedly infringe, misappropriate or violate; ● make substantial payments for legal fees, settlement payments or other costs or damages; ● obtain a license, which may not be available on reasonable terms or at all, to sell or use the relevant technology; or ● redesign the allegedly infringing products to avoid infringement, misappropriation or violation, which could be costly, time-consuming or impossible.
If we sue to enforce our rights or are sued by a third party that claims that our products infringe, misappropriate or violate their rights, the litigation could be expensive and could divert our management resources. 35 Any intellectual property litigation to which we might become a party, or for which we are required to provide indemnification, may require us to do one or more of the following: ● cease selling or using products that incorporate the intellectual property rights that we allegedly infringe, misappropriate or violate; ● make substantial payments for legal fees, settlement payments or other costs or damages; ● obtain a license, which may not be available on reasonable terms or at all, to sell or use the relevant technology; or ● redesign the allegedly infringing products to avoid infringement, misappropriation or violation, which could be costly, time-consuming or impossible.
Our systems and the third-party systems upon which we and our customers rely are also vulnerable to damage or interruption from catastrophic occurrences such as earthquakes, floods, fires, power loss, telecommunication failures, 29 Table of Contents cybersecurity threats, terrorist attacks, natural disasters, public health crises such as the COVID-19 pandemic, geopolitical and similar events, or acts of misconduct.
Our systems and the third-party systems upon which we and our customers rely are also vulnerable to damage or interruption from catastrophic occurrences such as earthquakes, floods, fires, power loss, telecommunication failures, cybersecurity threats, terrorist attacks, natural disasters, geopolitical and similar events, or acts of misconduct.
AI/ML is a significant and potentially growing element of our business. The development and use of AI/ML present various privacy and security risks that may impact our business. AI/ML technologies are subject to privacy and data security laws, as well as increasing regulation and scrutiny.
The development and use of AI/ML present various privacy and security risks that may impact our business. AI/ML technologies are subject to privacy and data security laws, as well as increasing regulation and scrutiny.
However, 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.
However, we cannot assure you that these measures will significantly improve or remediate the material weaknesses and significant deficiencies described above. As of April 15, 2026, the material weaknesses and significant deficiencies have not been remediated.
The 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 .
This will have the effect of reducing the potential “upside” of the holder’s investment in the Company. 45 The 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 .
Although we are in the process of implementing internal controls, we are in the early stages of such implementation. We cannot assure you that the measures we have taken to date will be sufficient to remediate any weaknesses in our internal controls that we may identify or prevent the identification of significant deficiencies or material weaknesses in the future.
We cannot assure you that the measures we have taken to date will be sufficient to remediate any weaknesses in our internal controls that we may identify or prevent the identification of significant deficiencies or material weaknesses in the future.
Litigation, regardless of the outcome, can be very expensive and can divert management's efforts. Our failure to protect our intellectual property rights and proprietary information could diminish our brand and other intangible assets . As of March 27, 2025, we had 21 issued patents, including 10 U.S. issued patents and 11 issued abroad.
Litigation, regardless of the outcome, can be very expensive and can divert management’s efforts. Our failure to protect our intellectual property rights and proprietary information could diminish our brand and other intangible assets. As of March 24, 2026, we have 23 issued patents, including 12 U.S. issued patents and 11 issued abroad.
These patents and patent applications seek to protect our proprietary inventions relevant to our business, in addition to other proprietary technologies. We intend to pursue additional intellectual property protection to the extent we believe it would be beneficial and cost-effective.
We continually review our development efforts to assess the existence and patentability of new intellectual property. These patents and patent applications seek to protect our proprietary inventions relevant to our business, in addition to other proprietary technologies. We intend to pursue additional intellectual property protection to the extent we believe it would be beneficial and cost-effective.
If we are unable to provide efficient deployment and support services at scale, our ability to grow our operations may be harmed, and we may need to hire additional services personnel, which could negatively impact our business, financial condition, and results of operations.
If we are unable to provide efficient deployment and support services at scale, our ability to grow our operations may be harmed, and we may need to hire additional services personnel, which could negatively impact our business, financial condition, and results of operations. 25 Downturns or upturns in our sales may not be immediately reflected in our financial position and results of operations.
We cannot assure that (i) subscriptions that may be completed, delayed, cancelled or reduced will be replaced with new business, (ii) the pilot customers will ultimately utilize our products and services, or (iii) the pilot customers will enter into additional contracts with us on acceptable terms or at all.
We cannot assure that (i) subscriptions that may be completed, delayed, cancelled or reduced will be replaced with new business, (ii) the pilot customers will ultimately utilize our products and services, or (iii) the pilot customers will enter into additional contracts with us on acceptable terms or at all. 20 The total addressable market opportunity for our current and future products may be much smaller than we estimate.
In addition, if we choose to acquire or invest in other new businesses, products or technologies, we may be unable to complete these acquisitions or successfully integrate them in a cost-effective and/or non-disruptive manner. 15 Table of Contents ● AI is a nascent and rapidly changing technology.
We may be unable to integrate acquired businesses and technologies successfully or achieve the expected benefits of such acquisitions or investments. 19 ● If we choose to acquire or invest in other new businesses, products or technologies, we may be unable to complete these acquisitions or successfully integrate them in a cost-effective and/or non-disruptive manner. ● AI is a nascent and rapidly changing technology.
If one or more of these analysts cease coverage of us or fail to publish reports on us regularly, we could lose visibility in the financial markets, which in turn could cause our stock price or trading volume to decline. 36 Table of Contents We do not intend to pay dividends for the foreseeable future.
If one or more of these analysts cease coverage of us or fail to publish reports on us regularly, we could lose visibility in the financial markets, which in turn could cause our stock price or trading volume to decline.
As a result, future growth of the Korean economy is subject to many factors beyond our control, including developments in the global economy. The South Korean economy is closely tied to, and is affected by developments in, the global economy.
The economic indicators in South Korea in recent years have shown mixed signs of growth and uncertainty. As a result, future growth of the Korean economy is subject to many factors beyond our control, including developments in the global economy. The South Korean economy is closely tied to, and is affected by developments in, the global economy.
If Nasdaq delists our Common Stock from trading on its exchange and we are not able to list our securities on another national securities exchange, we expect that our securities could be quoted on an over-the-counter market.
There can be no assurance that the Company will continue to be compliant with the Bid Price Requirement. If Nasdaq delists our Common Stock from trading on its exchange and we are not able to list our securities on another national securities exchange, we expect that our securities could be quoted on an over-the-counter market.
If that were to happen, our investors could lose confidence in our reported financial information, the 19 Table of Contents market price of our stock could decline, and we could be subject to sanctions or investigations by the SEC or other regulatory authorities.
If that were to happen, our investors could lose confidence in our reported financial information, the market price of our stock could decline, and we could be subject to sanctions or investigations by the SEC or other regulatory authorities. Although we are in the process of implementing internal controls, we are in the early stages of such implementation.
We may at times fail (or be perceived to have failed) in our efforts to comply with our data privacy and security obligations. Moreover, despite our efforts, our personnel or third parties on whom we rely on may fail to comply with such obligations, which could negatively impact our business operations.
Moreover, despite our efforts, our personnel or third parties on whom we rely on may fail to comply with such obligations, which could negatively impact our business operations.
Accordingly, 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.
We 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.

… 100 more changes not shown on this page.

Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

1 edited+0 added−0 removed9 unchanged
Biggest changeWe have processes for assessing, identifying and managing cybersecurity risks, which are built into our information technology function and are designed to help protect our information assets and operations from internal 42 Table of Contents and external cyber threats, protect employee and customer information from unauthorized access or attack, as well as secure our networks and systems.
Biggest changeWe have processes for assessing, identifying and managing cybersecurity risks, which are built into our information technology function and are designed to help protect our information assets and operations from internal and external cyber threats, protect employee and customer information from unauthorized access or attack, as well as secure our networks and systems.

Item 2. Properties

Properties — owned and leased real estate

1 edited+0 added−0 removed1 unchanged
Biggest changeItem 2. Properties We do not own any buildings or other real property. Our principal executive offices are located at 145 E. Snow King Ave, PO Box 1045, Jackson, WY 83001. The Company leases 5800 square feet of office space at Shinwon Plaza, 28-2 Hannam-dong, Yongsan-gu, Seoul.
Biggest changeItem 2. Properties We do not own any buildings or other real property. Our principal executive offices are located at 300 Delaware Ave, Suite 210, Wilmington, Delaware 19801. The Company leases 5800 square feet of office space at Shinwon Plaza, 28-2 Hannam-dong, Yongsan-gu, Seoul.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

1 edited+5 added−0 removed4 unchanged
Biggest changeThe results of any current or future litigation cannot be predicted with certainty, and regardless of the outcome, litigation can have an adverse impact on us because of defense and settlement costs, diversion of management resources and other factors. Item 4. Mine Safety Disclosures Not applicable. 43 Table of Contents Part II
Biggest changeThe results of any current or future litigation cannot be predicted with certainty, and regardless of the outcome, litigation can have an adverse impact on us because of defense and settlement costs, diversion of management resources and other factors. Item 4. Mine Safety Disclosures Not applicable. 48 Part II
Added
On March 26, 2025, the Company filed a First Amended Complaint against AFG in the Southern District of New York alleging breach of contract against AFG with respect to the AFG Subscription Agreement. Specifically, the Company alleges that AFG failed to fund its required March 13, 2025 payment in the amount of $6,500,000.
Added
In the lawsuit, the Company seeks actual damages in the amount of the missed payment, pre- and post-judgment of interest, consequential damages and attorneys’ fees and costs.
Added
It also seeks a declaration from the court that AFG was and is obligated to purchase an aggregate of $6.5 million of additional shares of the Company’s Common Stock on each of the first four anniversaries of the Initial Offering Closing Date and Business Combination Closing (as defined in the AFG Subscription Agreement) pursuant to the AFG Subscription Agreement.
Added
On May 12, 2025, AFG filed an Answer and Counterclaims in which it denies the allegations of the lawsuit and asserts counterclaims for an unspecified amount of damages against the Company.
Added
Given that the litigation is not yet at issue, the Company is currently unable to estimate the potential range of recoverable damages or the potential loss or range of loss, if any, resulting from a favorable or unfavorable outcome.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

4 edited+0 added−0 removed2 unchanged
Biggest changeThe closing price of our Common Stock and Public Warrants as reported by Nasdaq on March 27, 2025, was $0.38 and $0.02, respectively. Record Holders As of March 27, 2025, there were 111 shareholders of record and there were 42,274,461 shares of Common Stock issued and outstanding.
Biggest changeThe closing price of our Common Stock and Public Warrants as reported by Nasdaq on April 13, 2026, was $50.95 and $0.316, respectively. Record Holders As of April 13, 2026, there were 50 shareholders of record and there were 5,857,955 shares of Common Stock issued and outstanding.
We currently expect to retain any future earnings to fund our operations and the expansion of our business. Recent Sales of Unregistered Securities There were no sales of unregistered securities during the year ended December 31, 2024 that were not previously reported on a Quarterly Report on Form 10-Q or a Current Report on Form 8-K.
We currently expect to retain any future earnings to fund our operations and the expansion of our business. Recent Sales of Unregistered Securities There were no sales of unregistered securities during the year ended December 31, 2025 that were not previously reported on a Quarterly Report on Form 10-Q or a Current Report on Form 8-K.
Issuer Purchases of Equity Securities We did not repurchase any of our equity securities during the fourth quarter of the fiscal year ended December 31, 2024. Comparative Stock Performance We are a smaller reporting company as defined in Rule 12b-2 under the Exchange Act.
Issuer Purchases of Equity Securities We did not repurchase any of our equity securities during the fourth quarter of the fiscal year ended December 31, 2025. Comparative Stock Performance We are a smaller reporting company as defined in Rule 12b-2 under the Exchange Act.
As a result, we are not required to provide the information required by Item 201(e) of Regulation S-K. Item 6. [Reserved] 44 Table of Contents
As a result, we are not required to provide the information required by Item 201(e) of Regulation S-K.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

29 edited+13 added−176 removed20 unchanged
Biggest changeResults of Operations Comparison of the year ended December 31, 2024 and 2023 Years Ended December 31, Increase (Decrease) 2024 2023 Revenues $ 99,790 $ 35,210 $ 64,580 Operating expenses: General and administrative 19,242,571 10,841,024 8,401,547 Depreciation and amortization 2,728,411 637,990 2,090,421 Research and development 1,127,779 236,710 891,069 Impairment of deferred customer acquisition costs 13,475,000 — 13,475,000 Total operating expenses 36,573,761 11,715,724 24,858,037 Loss from operations (36,473,971) (11,680,514) (24,793,457) Other income (expenses): Interest expense (202,945) (56,515) (146,430) Interest income 3,328 15,520 (12,192) Gain on debt extinguishment 1,946,310 — 1,946,310 Change in fair value of warrant liabilities 994,687 — 994,687 Other 17,162 (9,757) 26,919 51 Table of Contents Other income (expenses), net 2,758,542 (50,752) 2,809,294 Net loss $ (33,715,429) $ (11,731,266) $ (21,984,163) Revenues During the year ended December 31, 2024 , we earned $0.1 million in revenue through proof of concept and revenue sharing.
Biggest changeOther expenses Other expenses primarily consists of foreign currency gains or losses as a result of exchange rate fluctuations on transactions denominated in Korean won. 51 Results of Operations Comparison of the years Ended December 31, 2025 and 2024 Years Ended December 31, Increase 2025 2024 (Decrease) Revenues $ 275,120 $ 99,790 $ 175,330 Operating expenses: General and administrative 8,872,915 19,242,571 (10,369,656 ) Research and development 162,973 1,127,779 (964,806 ) Impairment of deferred customer acquisition costs - 13,475,000 (13,475,000 ) Depreciation and amortization 3,865,381 2,728,411 1,136,970 Total operating expenses 12,901,269 36,573,761 (23,672,492 ) Loss from operations (12,626,149 ) (36,473,971 ) 23,847,822 Other income (expenses): Interest expense (410,460 ) (202,945 ) (207,515 ) Change in fair value of warrant liabilities 197,292 994,687 (797,395 ) Gain (loss) on debt extinguishment 4,191,074 1,946,310 2,244,764 Other 22,808 20,490 2,318 Other income (expenses), net 4,000,714 2,758,542 1,242,172 Net loss $ (8,625,435 ) $ (33,715,429 ) $ 25,089,994 Revenues During the years ended December 31, 2025 and 2024, revenue was immaterial.
However, the Company's cannot conclude these are probable of being implemented or, if probable of being implemented, being in sufficient enough amounts to satisfy our contractual amounts as they presently exist that are coming due over the next 12 months as of the date of such filing.
However, the Company cannot conclude these are probable of being implemented or, if probable of being implemented, being in sufficient enough amounts to satisfy our contractual amounts as they presently exist that are coming due over the next 12 months as of the date of such filing.
We expect to elect to use this extended transition period to enable us to comply with new or revised accounting standards that have different effective dates for public and private companies until the earlier of the date that we (i) are no longer an emerging growth company or (ii) affirmatively and irrevocably opts out of the extended transition period 60 Table of Contents provided in the JOBS Act.
We expect to elect to use this extended transition period to enable us to comply with new or revised accounting standards that have different effective dates for public and private companies until the earlier of the date that we (i) are no longer an emerging growth company or (ii) affirmatively and irrevocably opts out of the extended transition period provided in the JOBS Act.
The Company believes that it will be able to obtain additional working capital through equity financings, additional debt, or other arrangements to fund future operations, and it intends to raise capital through equity or debt investments in the Company by third parties, including through the SEPA and the Promissory Note or other public offerings or private placements.
The Company believes that it will be able to obtain additional working capital through equity financings, additional debt, or other arrangements to fund future operations, and it intends to raise capital through equity or debt investments in the Company by third parties, including through public offerings or private placements.
We believe the likelihood that warrantholders will exercise their respective Warrants, and therefore the amount of cash proceeds that we would receive, is dependent upon the trading price of our Common Stock.
We believe the likelihood that warrant holders will exercise their respective warrants, and therefore the amount of cash proceeds that we would receive, is dependent upon the trading price of our Common Stock.
Cash Exercise of Warrants There is no assurance that the holders of the Warrants will elect to exercise for cash any or all of such Warrants, especially when the trading price of our Common Stock is less than the exercise price per share of such Warrants.
Cash Exercise of Warrants There is no assurance that the holders of our warrants described under this section will elect to exercise for cash any or all of such warrants, especially when the trading price of our Common Stock is less than the exercise price per share of such warrants.
The preparation of the Company’s consolidated financial statements requires it to make estimates and judgments that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of expenses during the reported period.
The preparation of our consolidated financial statements requires us to make estimates and judgments that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of expenses during the reported period.
If the trading price for our Common Stock is less than the exercise price per share of a Warrant, we expect that a warrantholder would not exercise their Warrants. To the extent that any Warrants are exercised on a "cashless basis" under certain conditions, we would not receive any proceeds from the exercise of such Warrants.
If the trading price for our Common Stock is less than the exercise price per share of a warrant, we expect that a warrant holder would not exercise their warrants. To the extent that any warrants are exercised on a “cashless basis” under certain conditions, we would not receive any proceeds from the exercise of such warrants.
Recent Accounting Pronouncements See Note B to our consolidated financial statements found elsewhere in this Annual Report on Form 10-K for a description of recent accounting pronouncements applicable to our consolidated financial statements. Off-Balance Sheet Arrangements We have no obligations, assets or liabilities that would be considered off-balance sheet arrangements as of December 31, 2024 .
Recent Accounting Pronouncements See Note B to our consolidated financial statements, found in our 2024 Annual Report for a description of recent accounting pronouncements applicable to our consolidated financial statements. Off-Balance Sheet Financing Arrangements We have no obligations, assets or liabilities that would be considered off-balance sheet arrangements as of December 31, 2025.
Change in fair value of warrant liabilities Change in fair value of the warrant liabilities for the year ended December 31, 2024 was approximately $1.0 million associated with the non-cash charge for changes in the fair value of the warrant liabilities that is subject to re-measurement at each balance sheet date.
The change in the fair value of the warrant liabilities during the year ended December 31, 2024 was $994,687 associated with the non-cash charge for changes in the fair value of the warrant liabilities that is subject to re-measurement at each balance sheet date.
As described in Note A of our audited consolidated financial statements and consolidated financial statements, we have incurred recurring losses and negative cash flows from operations since inception and had an accumulated deficit of approximately $47.0 million at December 31, 2024 .
As described in Note A of our consolidated financial statements, we have incurred recurring losses and negative cash flows from operations since inception and had an accumulated deficit of approximately $55,642,584 at December 31, 2025.
The Company bases its estimates on historical experience, known trends and events and various other factors that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources.
We base our estimates on historical experience, known trends and events and various other factors that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. We evaluate our estimates and assumptions on an ongoing basis.
Critical Accounting Estimates The Company’s consolidated financial statements are prepared in accordance with U.S. GAAP.
Critical Accounting Policies Our consolidated financial statements are prepared in accordance with U.S. GAAP.
We still hold significant intellectual property in the form of a patent portfolio that we believe will be a cornerstone of our artificial intelligence solutions for certain industries that we expect to target, including the automotive, healthcare, and financial services industries. Recent Events Cohen Convertible Note On April 12, 2024, we issued a convertible promissory note to J.V.B.
We still hold significant intellectual property in the form of a patent portfolio that we believe will be a cornerstone of our artificial intelligence solutions for certain industries that we expect to target, including the automotive, healthcare, and financial services industries.
Depreciation and amortization expenses Depreciation and amortization expenses for the year ended December 31, 2024 were approximately $2.7 million , an increase of approximately $2.1 million , compared to the year ended December 31, 2023. The increase was primarily due to the amortization expense associated with the developed technology placed into service in the second quarter of 2024.
Depreciation and amortization expenses Depreciation and amortization expenses for the year ended December 31, 2025 were approximately $3,865,381 an increase of approximately $1,136,970 compared to the year ended December 31, 2024. The increase was primarily due to the amortization expense associated with the developed technology placed into service in mid-2024.
Investing activities Cash used in investing activities during the year ended December 31, 2024 was approximately $0.3 million , which consisted primarily of capitalized internal-use software costs.
Cash used in investing activities during the year ended December 31, 2024 was approximately (281,390), which consisted primarily of capitalized internal-use software costs and purchase of fixed assets and equipment.
If we cease to become an emerging growth company, we will become subject to the provisions and requirements under Section 404(b) of the Sarbanes-Oxley Act of 2002, which will require us to undergo audits of our internal controls over financial reporting as part of our yearly financial statement audits, resulting in a significant increase in consultant and audit costs over previous levels going forward.
We also expect to incur substantial additional expenses for, among other things, directors’ and officers’ liability insurance, director compensation and fees, listing fees, SEC registration fees, and additional costs for investor relations, accounting, audit, legal and other functions. 50 If we cease to become an emerging growth company, we will become subject to the provisions and requirements under Section 404(b) of the Sarbanes-Oxley Act of 2002, which will require us to undergo audits of our internal controls over financial reporting as part of our yearly financial statement audits, resulting in a significant increase in consultant and audit costs over previous levels going forward.
Depreciation and amortization Depreciation expense relates to property and equipment which consists of equipment, furniture and capitalized software. Amortization expense relates to intangible assets. 50 Table of Contents Research and development cost Costs incurred in connection with research and development activities are expensed as incurred.
Depreciation and amortization Depreciation expense relates to property and equipment which consists of equipment, furniture and capitalized software. Amortization expense relates to intangible assets. Research and development cost Costs incurred in connection with research and development activities are expensed as incurred. These costs include rent for facilities, hardware and software equipment costs, consulting fees for technical expertise, prototyping, and testing.
Instead, we intend to seek additional funds, primarily through the issuance of debt or equity securities for cash to operate our business, including through the business development activities discussed above to continue to support our operations.
We intend to seek additional funds, primarily through the issuance of debt or equity securities for cash to operate our business, including through the business development activities discussed above to continue to support our operations. Therefore, the availability or unavailability of any proceeds from the exercise of our warrants is not expected to affect our ability to fund our operations.
We have financed operations to date with proceeds from the Promissory Note, transactions with AFG, sales of our Common Stock, the SEPA, warrant exercises and debt issuances to related and non-related parties.
Liquidity and Capital Resources Capital Resources and Available Liquidity As of December 31, 2025, our principal source of liquidity was cash of approximately $172,124. We have financed operations to date with proceeds from the Yorkville Promissory Note, transactions with AFG, sales of our Common Stock, warrant exercises and debt issuances to related and non-related parties.
The net loss included non-cash charges of approximately $17.2 million , which consisted of approximately $13.5 of impairment of our deferred customer acquisition costs, $2.7 million of depreciation and amortization expense, $1.8 million in equity-based compensation expense, including the issuance of restricted shares, $1.4 million of write offs of deferred financing fees, and $0.5 million of financing costs related to the SEPA, $0.1 million in non-cash interest charges from the debt discount on our Standby Equity Purchase Agreement, partially offset by $1.9 million in gains on debt extinguishment and $0.9 million in changes in fair value of the warrant liabilities.
The net loss included non-cash charges of approximately $17,209,820, which consisted of approximately $13,475,000 of impairment on deferred customer acquisition costs, $1,427,729 of write offs of deferred financing fees, $1,814,048 in equity-based compensation expense, including the issuance of restricted shares, $2,728,411 of depreciation and amortization expense, partially offset by $(1,946,310) in gains on debt extinguishment and $(994,687) in changes in fair value of the warrant liabilities.
Our auditors also included an explanatory paragraph in their report on our consolidated financial statements as of and for the year ended December 31, 2024 with respect to this uncertainty. On January 17, 2025, the Company delivered the Notice to AFG terminating the Reseller Agreement.
Our auditors also included an explanatory paragraph in their report to our consolidated financial statements as of and for the year ended December 31, 2025 with respect to this uncertainty. The Company will need to raise additional capital to continue to fund operations and product research and development.
Other income (expenses) Interest expense Interest expense consists of interest on our related party note payable and short-term debt. Interest income Interest income consists of interest earned on our excess cash. Gain on debt extinguishment Gain on debt extinguishment is related to settlement of accounts payable through issuance of shares of Common Stock and negotiated cash settlement.
Interest expense Interest expense consists of interest on our related party note payable and short-term debt. Interest income Interest income consists of interest earned on our excess cash.
The net cash inflow of approximately $2.5 million from changes in our operating assets and liabilities was primarily due to an increase in accounts payable of $6.0 million, partially offset by a decrease of accrued expenses of $2.6 million , an increase in prepaid expense and other current assets of $0.8 million .
The net cash inflow of approximately $2,468,195 from changes in our operating assets and liabilities was primarily due to an increase in accounts payable of $6,012,259, partially offset by a decrease of accrued expenses of $(2,610,971), an decrease in prepaid expense and other current assets of $(824,281). 54 Investing activities Cash used in investing activities during the year ended December 31, 2025 was approximately (786,228) which consisted primarily of capitalized internal-use software costs and purchase of fixed assets and equipment.
Financing activities 58 Table of Contents Cash provided by financing activities during the year ended December 31, 2024 was approximately $12.8 million, which consisted primarily of proceeds received from the sale of Common Stock, exercise of options and warrants, partially offset by payment of a related party note.
Financing activities Cash provided financing activities during the year ended December 31, 2025 was approximately 7,517,503, which consisted of proceeds received from the sale of Common Stock and proceeds from warrant exercises and short term loans.
Management's Discussion and Analysis of Financial Condition and Results of Operations The following discussion and analysis should be read in conjunction with “Cautionary Note Regarding Forward-Looking Statements,” “Business,” “Risk Factors” and the consolidated financial statements and accompanying notes related thereto appearing elsewhere in this Annual Report on Form 10-K.Unless the context otherwise requires, all references in this section to “we,” “us,” “our,” the “Company” or “BEN” refer to Brand Engagement Network Inc., a Delaware corporation.
Unless the context otherwise requires, all references in this section to “we,” “us,” “our,” the “Company” or “BEN” refer to Brand Engagement Network Inc., a Delaware corporation.
Cash Flows The following table summarizes our cash flows for the periods presented: Years Ended December 31, 2024 2023 Cash used in operating activities $ (14,039,704) $ (5,054,749) Cash used in investing activities (281,390) (1,139,035) Cash provided by financing activities 12,785,354 7,876,787 Net (decrease) increase in cash and cash equivalents $ (1,535,740) $ 1,683,003 Operating activities Cash used in operating activities was approximately $14.0 million during the year ended December 31, 2024 primarily due to our net loss of approximately $33.7 million .
Cash used in operating activities was approximately (14,039,704) during the year ended December 31, 2024 primarily due to our net loss of approximately $(33,715,429).
Such revenues were immaterial during the year ended December 31, 2023. General and administrative expenses General and administrative expenses for the year ended December 31, 2024 were approximately $19.2 million , an increase of approximately $8.4 million , compared to year ended December 31, 2023 .
General and administrative expenses General and administrative expenses for the year ended December 31, 2025 were approximately $8,872,915, decrease of approximately $10,369,656, compared to the year ended December 31, 2024. The decrease was primarily due to transaction costs of $3.1 million incurred in connection with the Business Combination in the prior period.
We did not have such impairment during the year ended December 31, 2023. Gain on debt extinguishment Gain on extinguishment of debt for the year ended December 31, 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, respectively, of Common Stock and negotiated cash settlement.
Gain on debt extinguishment Gain on extinguishment of debt for the year ended December 31, 2025 was approximately $4,191,074, related to settlement of accounts payable through the issuance of shares of Common Stock and negotiated cash settlement. 52 Change in fair value of warrant liabilities Change in fair value of the warrant liabilities for the year ended December 31, 2025 was approximately $197,292 loss associated with the non-cash charge for changes in the fair value of the warrant liabilities that is subject to re-measurement at each balance sheet date.
Removed
Risk Relating to Forward-Looking Statements This discussion and analysis contains forward-looking statements, which reflect our current views with respect to, among other things, our operations and financial performance. You can identify these forward-looking statements by the fact that they do not strictly relate to historical or current facts.
Added
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our audited financial statements and the notes related thereto which are included elsewhere in this Annual Report on Form 10-K (this “Report”).
Removed
They use words such as “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “outlook,” “plan,” “potential,” “predict,” “seek,” “should,” “will,” “would,” the negative version of these words, or other comparable words or phrases. Such forward-looking statements are subject to various risks and uncertainties.
Added
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our audited consolidated financial statements and related notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2025 (“2025 Annual Report”) and with the consolidated financial statements and related notes thereto presented in this Report.
Removed
In particular, these include statements relating to future actions, statements regarding future performance or results and anticipated services or products, sales efforts, expenses, the outcome of contingencies, trends in operations and financial results. Actual results could differ materially from those expressed or implied in the forward-looking statements.
Added
Overview We are an emerging provider of conversational artificial intelligence (“AI”) assistants, with the purpose of transforming engagement and analytics for businesses through our security-focused, multimodal communication and human-like AI assistants. Our AI assistants are built on proprietary natural language processing, anomaly detection, multisensory awareness, sentiment and environmental analysis, as well as real-time individuation and personalization capabilities.
Removed
See “- Cautionary Note Regarding Forward-Looking Statements.” Overview We are a generative AI ("GenAI") company specializing in conversational AI solutions. Through our secure, human-like AI agents ("AI Agents"), available in different modalities, we seek to transform consumer engagement and elevate customer experience, productivity, and business performance.
Added
We believe these powerful tools will empower businesses to elevate customer experiences, optimize cost management and supercharge operational efficiency. Our platform is designed to configure, train and operate AI assistants that engage with professionals and consumers through multiple channels, boosting customer experience and providing instant personalized assistance for consumers in the automotive and healthcare markets.
Removed
Our AI Agents are built on 16+ advanced AI modules spanning perception, understanding, and response, with advanced capabilities in natural language processing ("NLP"), multisensory awareness, sentiment and environmental analysis, and real-time individuation and personalization.
Added
Recent Events Financing Registration Statements We currently do not have an effective registration statement on file with the Securities and Exchange Commission other than our Registration Statement on Form S-8 (File No. 333-292748) and our Registration Statement on Form S-4 (file No. 333-275058).
Removed
Our conversational AI solutions are tailored to meet the unique needs of our business customers - from AI Agent customization in look, sound, and feel, to conversation design, business system integration, and cross-platform execution.
Added
Research and development expenses Research and development expenses for the year ended December 31, 2025 were approximately $162,973 a decrease of approximately $964,806, compared to the year ended December 31, 2024. The decrease in research and development expenses was primarily due to the sponsorship agreement with Korea University no longer being active and a decrease in stock compensation expense.
Removed
Financial Group, LLC, acting through its Cohen & Company Capital Markets division in the principal amount of $1.9 million (the "Cohen Convertible Note"), to settle outstanding invoices totaling $1.9 million related to investment banking services rendered to the Company in connection with its merger with Prior BEN and DHC Acquisition Corp. (the "Business Combination").
Added
Sales of substantial numbers of such shares in the public market could adversely affect the market price of our Common Stock, which increases the likelihood of periods when our Warrants will not be in the money prior to their expiration. 53 Cash Flows The following table summarizes our cash flows for the periods presented: For the year ended December 31, 2025 2024 Cash used in operating activities $ (5,086,356 ) $ (14,039,704 ) Cash used in investing activities $ (23,512 ) $ (281,390 ) Cash provided by financing activities $ 5,132,720 $ 12,785,354 Net decrease in cash and cash equivalents $ 22,852 $ (1,535,740 ) Operating activities Cash used in operating activities was approximately $(5,086,356) during the year ended December 31, 2025 primarily due to our net loss of approximately $(8,625,435) The net loss included non-cash charges of approximately $555,532 which consisted of approximately $3,865,381 of depreciation and amortization expense, $822,430 in equity-based compensation expense, including the issuance of restricted shares, and non-cash interest expense, offset by $(197,292) gain due to the change in fair value of warrant liabilities and a gain on forgiveness of debt of $(4,191,073) The net cash inflow of approximately $2,983,547 from changes in our operating assets and liabilities was primarily due to a decrease in accrued expenses of 620,283, decrease in accounts payable of $2,980,386, an decrease in prepaid expense and other current assets of $(168,379) and a decrease in operating lease liability of $(199,511).
Removed
Beginning on October 14, 2024, interest will accrue at the fixed rate of 8% per annum on the outstanding principal amount until the Cohen Convertible Note is paid in full. Interest is payable monthly in cash or in-kind at the election of the Company.
Added
During the fourth quarter of 2025, the Company entered into an agreement with Skye Inteligencia LATAM, which included a preferred capital contribution with a contractual stated amount of $5,000,000 to the Company associated with the licensing and commercialization of its AI technology in Latin America.
Removed
The Company may prepay the Cohen Convertible Note in whole or in part at any time or from time to time without penalty or premium. The Company may be required to prepay all or a portion of the Cohen Convertible Note upon the consummation of certain capital raising activities as described therein.
Added
However, given Skye’s financial condition, lack of operating history and the contingent nature of the instrument, the Company concluded the fair value at inception was nominal, recorded the preferred equity at nominal value under ASC 321, and did not recognize revenue under ASC 606 at that time.
Removed
The Cohen Convertible Note matured on March 14, 2025.
Added
Cash provided by financing activities during the year ended December 31, 2024 was approximately 12,785,354, consisted primarily of proceeds received from the sale of Common Stock. Operating Results Improvement During the year ended December 31, 2025, the Company reduced its net loss by approximately $25.1 million compared to 2024, reflecting improved operating performance. Net loss improved from $(33,715,429) to $(8,625,435).
Removed
May Private Placement On May 28, 2024, the Company entered into a Securities Purchase Agreement (the "May SPA") with certain investors (the "May Purchasers"), pursuant to which the Company sold to the May Purchasers an aggregate of 1,980,000 shares of common stock, par value $0.0001 per share ("Common Stock") and 3,960,000 warrants, consisting of warrants to purchase 1,980,000 shares of Common Stock with a term of one year (the "May One-Year Warrants") and warrants to purchase 1,980,000 shares of Common Stock with a term of five years (the "May Five-Year Warrants" and, together with the May One-Year Warrants, the "May Warrants"), for aggregate proceeds consisting of approximately $4.4 million in cash and approximately $0.5 million through the offset of an obligation of the Company to the Purchasers.
Added
This improvement was driven by both reduced operating expenses and the absence of certain non-recurring charges recognized in the prior year. Loss from operations improved from $(36,473,971) to $(12,626,149), and total operating expenses decreased from $36,573,761 to $12,901,269. In particular, the Company reduced general and administrative expenses by approximately $10.3 million.
Removed
All May Warrants were originally exercisable for shares of Common Stock at an exercise price of $2.50 per share. 45 Table of Contents July Private Placement On July 1, 2024, the Company entered into a July Securities Purchase Agreement with The Williams Family Trust (the "July Securities Purchase Agreement") for the issuance and sale of 120,000 shares of Common Stock and 240,000 warrants, consisting of 120,000 July Warrants with a term of one year (the "July One-Year Warrants") and 120,000 July Warrants with a term of five years (the "July Five-Year Warrants," together with the July One-Year Warrants, the "July Warrants") to The Williams Family Trust for an aggregate purchase price of $0.3 million.
Added
In addition, the Company did not incur a $13.5 million impairment related to customer acquisition costs associated with AFG that was recognized in 2024. Balance Sheet Improvement The Company also reduced total liabilities from $15,505,376 as of December 31, 2024 to $11,842,656 as of December 31, 2025, representing a reduction of approximately $3.6 million.
Removed
The July Warrants are exercisable for Common Stock at a price of $2.50 per share and were immediately issued upon the closing date of July 1, 2024.
Added
Our actual results may differ from these estimates under different assumptions and conditions. During the year ended December 31, 2025, there were no material changes to our critical accounting policies and estimates from those described under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations of BEN”, found in our 2024 Annual Report.
Removed
August Private Placement On August 26, 2024 2024 (the “SEPA Effective Date”), we consummated a series of transactions for an aggregate purchase price of $5,925,000 (the "August Financing") whereby we (i) agreed to issue 1,185,000 shares of our Common Stock at a price per share of $5.00 pursuant to that certain Securities Purchase Agreement (the "August SPA"), dated August 26, 2024, by and among the Company and certain investors signatory thereto (the "August Purchasers"), (ii) issued 960,000 warrants (the "August Warrants") to purchase our Common Stock at an exercise price of $5.00 pursuant to that certain Warrant Purchase Agreement ("Warrant Purchase Agreement"), dated August 26, 2024, by and among the Company and certain purchasers signatory thereto and (iii) facilitated the transfer of 1,185,000 shares held by DHC Sponsor, LLC ("Sponsor") issued in connection with the Company's predecessor, DHC Acquisition Corp.'s ("DHC") initial public offering to the August Purchasers, pursuant to that certain share assignment and lockup release agreement (the "Assignment Agreement") with certain members of Sponsor and certain other existing stockholders and affiliates of the Company and the August Purchasers in exchange for releases from certain restrictions on transfer contained in either a (i) prior letter agreement by and among the Company's predecessor, DHC, Sponsor and the other signatories thereto or (ii) in certain lock-up agreements executed by certain members of Sponsor in connection with the consummation of the Company's prior business combination.
Removed
On August 30, 2024, the Company issued to the August Purchasers an aggregate of 100,000 shares of Common Stock and 960,000 August Warrants, and the August Purchasers paid an aggregate of $0.5 million in connection with the closing of the August Financing.
Removed
The remaining shares were issued to an escrow account and such shares remain in escrow until the conditions in the August SPA are satisfied. The August Purchasers are required to pay to the Company monthly cash installments in the amounts and on the dates as determined in the August SPA ending on April 5, 2025.
Removed
For every $5.00 paid to the Company, the Company will release one share of Common Stock under the August SPA and one share of Common Stock under the Assignment Agreement to the August Purchasers.
Removed
If an investor fails to pay its required funding by the respective deadline, the investor's entire commitment under the August SPA will become immediately due and payable. As of March 27, 2025, a total of 110,000 shares of Common Stock have been issued to the August Purchasers for gross proceeds of $550.000.
Removed
As of March 27, 2025, the August SPA has been terminated with respect to certain Purchasers who have exercised their portion of the Committed Warrants under the January Warrant Exercise Agreement. As of the date hereof, one Purchaser has failed to make its required exercises for the January 31, 2025 exercise date under the January Warrant Exercise Agreement.
Removed
To the extent a Purchaser fails to exercise its portion of the Committed Warrants, the obligations of such Purchaser under the August SPA and such obligations of any investor under the August SPA who is not a Purchaser under the January Warrant Exercise Agreement, shall remain, and the August SPA will only terminate as to the Purchasers who have completed their January 31, 2025 exercise pursuant to the terms of the January Warrant Exercise Agreement.
Removed
For additional information, please see " Warrant Exercise and Reload Agreement " below. Standby Equity Purchase Agreement On August 26, 2024, the Company issued 280,899 shares (the "Commitment Shares") of Common Stock to YA II PN, Ltd. ("Yorkville"), pursuant a Standby Equity Purchase Agreement (the "SEPA"), dated August 26, 2024.
Removed
The issuance of such shares to Yorkville pursuant to the SEPA was not registered under the Securities Act. As of March 27, 2025, the Company has issued 2,462,023 shares to Yorkville under the SEPA.
Removed
The Cataneo Purchase Agreement On October 29, 2024, Company entered into a Share Purchase and Transfer Agreement with Christian Unterseer, in his individual capacity ("Unterseer"), CUTV GmbH, a limited liability company incorporated under the laws of the Federal Republic of Germany ("CUTV"), and CUNEO AG, a stock corporation incorporated under the laws of the Federal Republic of Germany ("Cuneo" and together with Unterseer and CUTV, the "Sellers") (as amended by the Addendum, the "Purchase Agreement") pursuant to which the Sellers have agreed to sell all of the outstanding equity interests of Cataneo 46 Table of Contents GmbH, a limited liability company incorporated under the laws of the Federal Republic of Germany ("Cataneo") to the Company for an aggregate purchase price of $19.5 million, consisting of (i) $9.0 million in cash (the "Cash Consideration") and (ii) 4,200,000 shares of the Company's Common Stock at an agreed upon value of $2.50 per share ("Equity Consideration," collectively with the Cash Consideration, the "Consideration Shares") (the transactions governed by the Purchase Agreement, the "Acquisition"), subject to customary adjustments.
Removed
Prior to the closing of the Acquisition (the "Cataneo Closing Date"), the Sellers may elect to convert a portion of the Equity Consideration to cash for up to $3.0 million at a price per share of $2.50 (the "Cash Election").
Removed
Additionally, an aggregate of 400,000 shares of Common Stock issued as part of the Equity Consideration shall be subject to an escrow arrangement for a period of one year (the "Escrow Period") following Cataneo Closing Date (the "Escrow Shares").
Removed
The Escrow Shares may be utilized to offset certain claims, fines, penalties, outstanding debts or other costs owed by the Sellers following the Cataneo Closing Date.
Removed
Thirty days prior to the end of the Escrow Period, certain of the Sellers shall have the right, but not the obligation, to cause the Company to repurchase their portion of the Escrow Shares at a price per share of $2.50. The Purchase Agreement contains customary representations, warranties and covenants, as well as indemnification provisions subject to specified limitations.
Removed
Among other things, the Sellers have agreed, subject to certain exceptions, to cause Cataneo to conduct its business in the ordinary course, consistent with past practice, from the date of the Purchase Agreement until the Cataneo Closing Date and not to take certain actions prior to the Cataneo Closing Date without the prior written consent of the Company.
Removed
The transaction is expected to close in the first half of 2025 and is subject to conditions, including, (i) the making of the Cash Election, (ii) the initiation of the process to register for resale the Equity Consideration, (iii) written confirmation that the Company has not received any delisting notice or similar notification affecting its listing status with Nasdaq, (iv) the execution by one or several of the Company's major stockholders of a personal guarantee of the Agreed Share Value (as defined therein) for a period of one year following the Cataneo Closing Date (the "Personal Guarantee"), (v) the obtaining of joint approval of the terms of the financing of the cash purchase price of the Acquisition by the Company and the Sellers, (vi) the receipt of customary third-party approvals and the release of the Sellers from customary bank guarantees, securities and indemnities, and (vii) the Company's board of directors' approval of the Company's due diligence investigation (collectively, the "Closing Conditions").
Removed
The Company intends to finance the transaction through third-party financing, which may take the form of debt or equity.
Removed
The Purchase Agreement contains certain customary termination rights, as amended and described below, for the Company and the Sellers, including the right to terminate the Purchase Agreement if (i) not all of the Closing Conditions have been satisfied by January 29, 2025 (which has been extended as described below), (ii) a party has not performed all of its Closing Actions (as defined therein) within ten business days of the Cataneo Closing Date, or (iii) the registration process of the Equity Consideration has not been initiated prior to the Cataneo Closing Date to the satisfaction of the Sellers.
Removed
Notwithstanding any termination right, any party may seek specific performance of the other parties to the Purchase Agreement. In the event the Purchase Agreement is terminated by the Sellers by virtue of the failure of the Company to deliver the Personal Guarantee, the Sellers shall be entitled to a termination fee of approximately $0.4 million.
Removed
On February 6, 2025, the Company and the Sellers entered into that certain Addendum to Share Purchase and Transfer Agreement (the "Addendum"), pursuant to which the parties amended certain provisions of the Purchase Agreement to provide the parties additional time to prepare for and close the Acquisition.
Removed
More specifically, the Addendum amends the Purchase Agreement to, among other things: (i) provide that the Company pay to Mr.
Removed
Unterseer, as authorized recipient of the Sellers $0.4 million as a partial down payment ("Initial Down Payment") on the Cash Consideration by February 13, 2025, which amount was paid in full on February 12, 2025 and temporarily suspend Sellers' right to withdraw from the Purchase Agreement until February 28, 2025, unless the Company fails to pay Initial Down Payment; (ii) provide for additional temporary suspensions of Sellers' right to withdraw for two successive one-month periods through April 30, 2025, dependent upon the Company's payment each month of a down payment of $0.1 million to Mr.
Removed
Unterseer, as authorized recipient of the Sellers (each an "Additional Down Payment"), with each Additional Down Payment to be credited toward the Cash Consideration to be owed by the Company; (iii) add a requirement of Sellers to use their best efforts to coordinate and to cause Cataneo to work with the Company and the Company's financial advisors towards the implementation of the percentage of completion method of accounting for past and current customer projects; (iv) provide that Sellers' agree to rescind Sellers' previous notification to exercise their right (the "Election Right") to receive the Equity Consideration in the amount of $3.0 million in cash instead of Consideration Shares as set forth in the Purchase Agreement, provided that the Sellers' may re-exercise such Election Right prior to the Closing of the Acquisition; (v) waive Sellers' right to approve the terms of the financing of the transaction; and (vi) provide that if the Purchase Agreement were to be terminated upon the Company's failure to pay or the expiration of April 30, 2025, or for other reasons the Company withdraws from the Purchase Agreement pursuant to the early termination provisions of the Purchase Agreement or should the Purchase Agreement terminate before Closing, Seller's agree to set-off under certain circumstances any claims Sellers may have pursuant to such early termination provisions of the Purchase Agreement against the Initial Down Payment and any Additional Down Payment; however, the remainder of the Initial Down Payment and any Additional Down Payment 47 Table of Contents will not be repayable to the Company by Sellers.
Removed
On March 14, 2025, the Company paid an Additional Down Payment of $100,000 to be credited toward the Cash Consideration. Yorkville Promissory Note On November 11, 2024, the Company issued a non-convertible unsecured promissory note (the "Promissory Note") in the aggregate original principal amount of approximately $1.7 million to Yorkville.
Removed
The Promissory Note does not bear interest, subject to a potential increase of the interest rate to 18.0% per annum upon the occurrence of certain events of default as described in the Promissory Note. The Promissory Note matured on March 11, 2025, and was issued at an original issue discount of 10%.

… 138 more changes not shown on this page.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

1 edited+0 added−0 removed0 unchanged
Biggest changeItem 7A. Quantitative and Qualitative Disclosures About Market Risk As a “smaller reporting company” as defined by Rule 12b-2 of the Securities Exchange Act of 1934, as amended, (the “Exchange Act”) and pursuant to Item 305 of Regulation S-K, we are not required to disclose information under this section. 61 Table of Contents
Biggest changeItem 7A. Quantitative and Qualitative Disclosures About Market Risk As a “smaller reporting company” as defined by Rule 12b-2 of the Securities Exchange Act of 1934, as amended, (the “Exchange Act”) and pursuant to Item 305 of Regulation S-K, we are not required to disclose information under this section. 55

Other BNAI 10-K year-over-year comparisons