BNB Plus (BNBX) Risk Analysis

We have engaged, and may in the future engage, in transactions with affiliates and other related parties. These transactions may not have been, and may not be, on terms as favorable to us as they could have been if obtained from non-affiliated persons. While an effort has been made, and will continue to be made, to enter into transactions with affiliated persons and other related parties at rates and on terms as favorable as would be charged by others, there will always be an inherent conflict of interest between our interests and those of our affiliates and related parties. The Company may be adversely impacted if any related party agreement or transaction is made on unfavorable terms.

As of December 13, 2024, we had 52,294,359 shares of Common Stock issued and outstanding, outstanding options to purchase 108,176 shares of Common Stock, outstanding warrants to purchase 136,325,980 shares of Common Stock, and 269,069 shares available for grant under our 2005 and 2020 Equity Incentive Plans. The issuance of shares upon exercise of our outstanding options and warrants will cause immediate and substantial dilution to our stockholders and any sale thereof may depress the market price of our common stock.

On May 29, 2024 we closed on such date a public offering (the "May 2024 Offering") of Common Stock and warrants, including 9,230,769 series A common stock purchase warrants ("May 2024 Series A Warrants") and 9,230,769 series B common stock purchase warrants ("May 2024 Series B Warrants", and, with the May 2024 Series A Warrants, the "May 2024 Series Warrants"), with Craig-Hallum Capital Group LLC ("Craig-Hallum") and Laidlaw & Company (UK) Ltd. ("Laidlaw") as placement agents. As part of the May 2024 Offering, the Company entered into a Placement Agency Agreement, dated May 28, 2024, with Craig-Hallum and Laidlaw (the "May 2024 Placement Agency Agreement"). If the May 2024 Series B Warrants are exercised by way of an alternative cashless exercise, such exercising holder will receive three times the number of shares of Common Stock they would receive in a cash exercise for each May 2024 Series B Warrant they exercise, without any cash payment to us. In addition, the May 2024 Series A Warrants and May 2024 Series B Warrants each include a provision that resets their exercise price in the event of a reverse split of our Common Stock, to a price equal to the lesser of (i) the then exercise price and (ii) lowest volume weighted average price (VWAP) during the period commencing five trading days immediately preceding and the five trading days commencing on the date we effect a reverse stock split in the future with a proportionate adjustment to the number of shares underlying the applicable warrant. In addition, subject to certain exemptions, the May 2024 Series A Warrants provide for an adjustment to the exercise price and number of shares underlying the May 2024 Series A Warrants if we sell, enter into an agreement to sell, or grant any option to purchase, or sell, enter into an agreement to sell, or grant any right to reprice (excluding Exempt Issuances, as defined in the May 2024 Placement Agency Agreement), or otherwise dispose of or issue (or announce any offer, sale, grant or any option to purchase or other disposition) any shares of Common Stock, at an effective price per share less than the exercise price of the May 2024 Series A Warrants then in effect (the "Price Reset Mechanism"). On October 30, 2024, the Company and certain holders of the May 2024 Series A Warrants entered into an amendment to such holders' May 2024 Series A Warrants (the "Warrant Amendment"), pursuant to which the Price Reset Mechanism became subject to a floor equal to $0.20. The Price Reset Mechanism of the May 2024 Series A Warrants, when triggered, would reduce the exercise price of the May 2024 Series A Warrants to the lower of the price per share of the Common Stock issued or (i) $0.20 with respect to the May 2024 Series A Warrants as amended by the Warrant Amendment or (ii) the lowest volume weighted average price (VWAP) during the five consecutive trading days immediately following such dilutive issuance or announcement thereof with respect to the remaining May 2024 Series A Warrants not amended by the Warrant Amendment. The number of shares issuable upon exercise after the Price Reset Mechanism has been triggered will be proportionately adjusted such that the aggregate exercise price will remain unchanged. In connection with the October 2024 Offering (as described below), the Price Reset Mechanism in the May 2024 Series A Warrants was triggered, which resulted in the number of shares of Common Stock issuable upon exercise of the May 2024 Series A Warrants increasing from 9,230,769 to 91,890,698. The exercise price of the May 2024 Series A Warrants was adjusted from $1.99 per share to $0.20 per share with respect to the May 2024 Series A Warrants amended by the Warrant Amendment, and to $0.19 with respect to the May 2024 Series A Warrants not amended by the Warrant Amendment. If any of the above provisions in the May 2024 Series Warrants are further utilized, our stockholders may suffer substantial dilution.

On October 30, 2024, we entered into a securities purchase agreement (the "October 2024 Purchase Agreement") with certain institutional investors (each, an "October 2024 Purchaser" and, collectively, the "October 2024 Purchasers"), pursuant to which the Company agreed to issue and sell, (i) in a registered direct public offering (the "October 2024 Registered Direct Offering") of 19,247,498 shares of the Company's Common Stock and pre-funded warrants ("October 2024 Pre-Funded Warrants") to purchase up to 1,065,002 shares of Common Stock, and (ii) in a concurrent private placement (the "October 2024 Private Placement", and together with the October 2024 Registered Direct Offering the "October 2024 Offering"), unregistered Series C Common Stock Purchase Warrants ("October 2024 Series C Warrants") to purchase up to 20,312,500 shares of Common Stock and unregistered Series D Common Stock Purchase Warrants ("October 2024 Series D Warrants", and together with the October 2024 Series C Warrants, the "October 2024 Series Warrants") to purchase up to 20,312,500 shares of Common Stock. Craig-Hallum acted as placement agent in connection with the October 2024 Offering. The Company also agreed to issue to Craig-Hallum, or its respective designees, Placement Agent Warrants ("October 2024 Placement Agent Warrants", and, with the October 2024 Series Warrants, the "October 2024 Private Placement Warrants") to purchase up to 1,015,625 shares of Common Stock. If the October 2024 Series D Warrants are exercised by way of an alternative cashless exercise, assuming receipt of Warrant Stockholder Approval (as defined below), such exercising holder will receive one share of Common Stock for each share of Common Stock they would receive in a cash exercise for each October 2024 Series D Warrant they exercise, without any cash payment to us. In addition, the October 2024 Series D Warrants include a provision that resets their exercise price in the event of a reverse split of our Common Stock, to a price equal to the lesser of (i) the then exercise price and (ii) lowest volume weighted average price (VWAP) during the period commencing five trading days immediately preceding and the five trading days commencing on the date we effect a reverse stock split in the future with a proportionate adjustment to the number of shares underlying the October 2024 Series D Warrants, subject to a floor of $0.0634. If any of the above provisions in the October 2024 Series D Warrants are utilized, our stockholders may suffer substantial dilution.

The exercisability of the October 2024 Private Placement Warrants will be available only upon receipt of such stockholder approval (the "Warrant Stockholder Approval") as may be required by the applicable rules and regulations of The Nasdaq Stock Market LLC. Each October 2024 Series C Warrant has an exercise price of $0.32 per share of Common Stock, will become exercisable upon the first trading day (the "Stockholder Approval Date") following the Company's notice to warrantholders of Warrant Stockholder Approval, and will expire on the five-year anniversary of the Stockholder Approval Date. Each October 2024 Series D Warrant has an exercise price of $0.32 per share of Common Stock, will become exercisable upon the Stockholder Approval Date, and will expire on the 18-month anniversary of the Stockholder Approval Date. Each October 2024 Placement Agent warrant has an exercise price of $0.32, will become exercisable upon the Stockholder Approval date and will expire on October 30, 2029. While we intend to promptly seek Warrant Stockholder Approval for these mechanisms, there is no guarantee that it will ever be obtained. In the event that we cannot obtain Warrant Stockholder Approval, the October 2024 Private Placement Warrants may never become exercisable and may have no value. We have agreed to hold a special meeting of shareholders (which may also be at the annual meeting of shareholders) at the earliest practicable date after the date hereof, but in no event later than ninety days after the closing of the offering, in order to obtain Warrant Stockholder Approval. There is no guarantee we will be able to hold a special meeting within this timeframe, or at all. If we do not obtain Warrant Stockholder Approval at the first meeting, we are obligated to call a meeting every ninety days thereafter to seek Warrant Stockholder Approval until the earlier of the date on which Stockholder Approval is obtained or the October 2024 Series Warrants are no longer outstanding.

Under certain of our warrants sold privately that have registration rights, in the event of a "Fundamental Transaction" (as defined in the related warrant agreement, which generally includes any merger with another entity, the sale, transfer or other disposition of all or substantially all of our assets to another entity, or the acquisition by a person of more than 50% of our Common Stock), each warrant holder will have the right at any time prior to the consummation of the Fundamental Transaction to require us to repurchase the warrant for a purchase price in cash equal to the Black Scholes value (as calculated under the warrant agreement) of the then remaining unexercised portion of such warrant on the date of such Fundamental Transaction, which may materially adversely affect our financial condition and/or results of operations and may prevent or deter a third party from acquiring us.