BNB Standard Corp (BNC) Risk Analysis

Digital assets such as BNB were only introduced within the past 15 years, and the medium-to-long-term value of our common stock is subject to a number of factors over time relating to the capabilities and development of blockchain technologies, such as the recentness of their development, their dependence on the internet and other technologies, their dependence on the role played by users, developers, validators and the potential for malicious activity. BNB itself was launched only in 2017. For example, the realization of one or more of the following risks could materially adversely affect the value of our common stock: digital asset networks, including BNB Chain, and the software used to operate them are in the early stages of development. Given the recentness of the development of digital asset networks, digital assets may not function as intended and parties may be unwilling to use digital assets, which would dampen the growth, if any, of digital asset networks. Because BNB is a digital asset, the value of our common stock is subject to a number of factors relating to the fundamental investment characteristics of digital assets, including the fact that digital assets are bearer instruments and loss, theft, compromise, or destruction of the associated private keys could result in permanent loss of the asset. BNB Chain, including the cryptographic and algorithmic protocols associated with the operation of BNB Chain, has only been in existence since 2017, and BNB markets have a limited performance record, making them part of a new and rapidly evolving industry that is subject to a variety of factors that are difficult to evaluate. For example, the following are some of the risks that could materially adversely affect the value of our common stock: - Digital assets, including BNB, are controllable only by the possessor of both the unique public key and private key or keys relating to the BNB Chain address, or "wallet", at which the digital asset is held. Private keys must be safeguarded and kept private in order to prevent a third party from accessing the digital asset held in such wallet. The loss, theft, compromise or destruction of a private key required to access a digital asset may be irreversible. If a private key is lost, stolen, destroyed or otherwise compromised and no backup of the private key is accessible, the owner would be unable to access the digital asset corresponding to that private key and the private key will not be capable of being restored by the digital asset network, resulting in the total loss of the value of the digital asset linked to the private key. - Digital asset networks are dependent upon the internet. A disruption of the internet or a digital asset network, such as BNB Chain, would affect the ability to transfer digital assets, including BNB, and, consequently, their value. - The foregoing notwithstanding, BNB Chain's protocol is informally overseen by a collective of core developers who propose amendments to the relevant network's source code. Core developers' roles evolve over time, largely based on self-determined participation. If a significant majority of users and validators were to adopt amendments to BNB Chain based on the proposals of such core developers, BNB Chain would be subject to new protocols that may adversely affect the value of BNB. - To the extent that any validators cease to record transactions that do not include the payment of a transaction fee in solved blocks or do not record a transaction because the transaction fee is too low, such transactions will not be recorded on BNB Chain until a block is validated by a validator who does not require the payment of transaction fees or is willing to accept a lower fee. Any widespread delays in the recording of transactions could result in a loss of confidence in a digital asset network. - Many digital asset networks, including BNB Chain, face significant scaling challenges and are being upgraded with various features designed to increase the speed of digital asset transactions and the number of transactions that can be processed in a given period (known as "throughput"). These attempts to increase the volume of transactions may not be effective, and such upgrades may fail, resulting in potentially irreparable damage to BNB Chain and the value of BNB. - Moreover, in the past, bugs, defects and flaws in the source code for digital assets have been exposed and exploited, including flaws that disrupted normal blockchain network or DApp and smart contract operations or disabled related functionality for users, exposed users' personal information and/or resulted in the theft of users' digital assets. The cryptography underlying BNB Chain or BNB as an asset could prove to be flawed or ineffective, or developments in mathematics and/or technology, including advances in digital computing, algebraic geometry and quantum computing, could result in such cryptography becoming ineffective. In any of these circumstances, a malicious actor may be able to compromise the security of BNB Chain or take the treasury's BNB, which would adversely affect the value of our common stock. Moreover, normal operations and functionality of BNB Chain may be negatively affected. Such losses of functionality could lead to BNB Chain losing attractiveness to users, nodes, validators, or other stakeholders, thereby dampening demand for BNB. Even if another digital asset other than BNB were affected by similar circumstances, any reduction in confidence in the source code or cryptography underlying digital assets generally could negatively affect the demand for digital assets and therefore adversely affect the value of our common stock. - BNB Chain is still in the process of developing and making significant decisions that will affect policies that govern the supply and issuance of BNB as well as other BNB Chain protocols. The open-source nature of many digital asset network protocols, such as the protocol for BNB Chain, means that developers and other contributors are generally not directly compensated for their contributions in maintaining and developing such protocols. As a result, the developers and other contributors of a particular digital asset may lack a financial incentive to maintain or develop the network, or may lack the resources to adequately address emerging issues. Alternatively, some developers may be funded by companies whose interests are at odds with other participants in a particular digital asset network. If BNB Chain does not successfully develop its policies on supply and issuance, and other major design decisions or does so in a manner that is not attractive to network participants it could lead to a decline in adoption of BNB Chain and price of BNB. - Software applications running on top of BNB Chain (often referred to as "decentralized applications" or "Dapps", whether or not decentralized in fact) and smart contract developers depend on being able to obtain BNB to be able to run their programs and operate their businesses. In particular, decentralized applications and smart contracts require BNB in order to pay the transaction fees needed to pay validators to execute transactions and smart contract operations. As such, they represent a significant source of demand for BNB. BNB's price volatility (particularly where BNB prices increase), or BNB Chain's wider inability to meet the demands of decentralized applications and smart contracts in terms of inexpensive, reliable, and prompt transaction execution (including during congested periods), or to solve its scaling challenges or increase its throughput, may discourage such decentralized application and smart contract developers from using BNB Chain as the foundational infrastructure layer for building their applications and smart contracts. If decentralized application and smart contract developers abandon BNB Chain for other blockchain or digital asset networks or protocols for whatever reason, the value of BNB could be negatively affected. Moreover, because digital assets, including BNB, have been in existence for a short period of time and are continuing to develop, there may be additional risks in the future that are impossible to predict as of date hereof.

On December 26, 2025, in connection with defending against the Consent Solicitation in the best interest of all shareholders, the Board adopted a stockholder rights agreement (the "Stockholder Rights Agreement"), which is currently scheduled to expire on December 26, 2026. While in force or if otherwise extended, the Stockholder Rights Agreement may have certain anti-takeover effects. Specifically, the rights issued pursuant to the Stockholder Rights Agreement will cause substantial dilution to a person or group that acquires beneficial ownership of more than a specified percentage of our outstanding common stock without the prior approval of our Board. The Stockholder Rights Agreement contains an exception for holders whose beneficial ownership equaled or exceeded the threshold immediately prior to the public announcement of the Stockholder Rights Agreement, so long as they do not thereafter increase their beneficial ownership beyond the limits specified in the Stockholder Rights Agreement. YZILabs, our largest stockholder, is subject to that exception. As a result, the Stockholder Rights Agreement does not cause dilution to YZILabs in respect of its existing position, including shares issuable upon exercise of the warrants it holds. YZILabs is separately prohibited from acquiring additional voting securities under the Cooperation Agreement described above, subject to an exception permitting exercise of warrants it already holds, and those restrictions continue for the term of that agreement, which extends beyond the scheduled expiration of the Stockholder Rights Agreement. The Stockholder Rights Agreement is not intended to interfere with any merger or other business combination approved by the Board, but the Stockholder Rights Agreement may deter certain parties from pursuing strategic transactions involving us, including potential acquisitions, and may make it more difficult for stockholders to change our management or Board. Following expiration of the Stockholder Rights Agreement, we would no longer have these protections unless our Board adopts a new rights plan, and we can give no assurance that we would do so or that any new plan would be adopted on comparable terms.

Beginning in November 2025, YZILabs, one of our stockholders, conducted a stockholder activism campaign against the Company, including filing preliminary consent solicitation materials seeking to expand the size of our Board and to elect seven YZILabs nominees (the "Consent Solicitation"). Responding to the Consent Solicitation required substantial attention from our Board and management, diverted resources from our operations and strategic plans, caused us to incur significant advisory costs, and created perceived uncertainty as to our future direction, strategy and leadership. On June 23, 2026, we entered into a Cooperation Agreement with YZILabs resolving the Consent Solicitation, under which YZILabs has certain Board designation rights and is subject to standstill and voting commitments. Those commitments are subject to termination or release in specified circumstances and in any event expire at the end of the agreement's term, after which YZILabs would again be free to seek to influence or control the Company. We may face renewed activism from YZILabs or from other stockholders in the future. A change in the composition of a majority of our Board, whether resulting from the exercise of designation rights under the Cooperation Agreement, future stockholder activism, or may impact our business strategy and operations and may result in a default, acceleration or other consequence under certain of our debt instruments, equity plans, employment and other agreements, which could negatively affect our business and trading price of our common stock,

At our 2026 Special Meeting in Lieu of Annual Meetings of Stockholders (the "Special Meeting") held on July 22, 2026, proposals to approve our 2025 Equity Incentive Plan and our 2026 Equity Incentive Plan did not receive the vote required for approval. As a result, we cannot issue awards under either plan. Approval of each plan required the affirmative vote of a majority of shares represented and entitled to vote at the Special Meeting. Under our bylaws in effect at the time of the meeting, broker non-votes were treated as votes cast and therefore had the effect of votes against approval. The 2025 Equity Incentive Plan would not have received the vote required for approval even if broker non-votes had not been counted as present and entitled to vote while the 2026 Equity Incentive Plan would have. We can give no assurance that either plan would be approved if resubmitted for a subsequent vote. Equity compensation is a principal component of the compensation we offer to our executive officers, directors and employees, and our ability to grant equity awards is limited to the shares remaining available under our existing plans, including our 2026 Inducement Plan, which may be used only for awards to newly hired employees in accordance with Nasdaq Listing Rule 5635(c)(4). We are conducting a search for a new Chief Executive Officer, and our ability to offer a competitive compensation package to that candidate and to other prospective executives may be constrained by the limited equity available for grant. Our shares available for grant may also be insufficient to retain and motivate our existing personnel, particularly following a period of significant decline in the market price of our common stock, which has reduced the realizable value of outstanding awards. If we are unable to offer competitive compensation, we may lose key personnel or be required to increase cash compensation, which would increase our operating expenses and use cash that would otherwise be available for our business. Certain awards were granted subject to stockholder approval of the 2025 Equity Incentive Plan. Because stockholder approval is a condition to the establishment of a grant date under applicable accounting guidance, no grant date has been established for those awards and no compensation expense has been recognized with respect to them. If stockholder approval is subsequently obtained, a grant date will be established at that time and the awards will be measured based on the fair value of our common stock on that date, which may differ materially from the value on the date the awards were made and could result in compensation expense materially greater than we would otherwise have recognized. If approval is not obtained, those awards will not become effective, and the affected recipients may seek alternative compensation or terminate their service with us, as applicable.

Nasdaq Listing Rule 5635(b) requires stockholder approval before an issuance of securities that results in a change of control of a listed company. Nasdaq Listing Rule 5640 and related Nasdaq interpretive guidance limit an investor's board representation rights to a level proportionate to its ownership of securities entitled to vote in the election of directors. Nasdaq Listing Rule 5110(a) requires a listed company that experiences a change of control in combination with a change in its business to satisfy Nasdaq's initial listing requirements. Nasdaq applies these rules through the exercise of broad discretionary authority, and its application of them to companies that have adopted digital asset treasury strategies has become more restrictive since 2025. In August 2025 we issued common stock and warrants in a private placement and used the proceeds to acquire BNB. We did not seek stockholder approval in connection with that issuance, and Nasdaq's receipt of our listing of additional shares notifications does not constitute a determination that the transaction complied with its rules. Under the Cooperation Agreement, YZILabs has the right to designate three of our six directors, and its ownership consists principally of warrants, which do not carry the right to vote in the election of directors. Our Board may in the future determine to dispose of or discontinue one or more of our legacy operating businesses. Nasdaq could determine that stockholder approval was required for the private placement or is required for the exercise of outstanding warrants, that YZILabs' designation rights exceed the representation proportionate to its voting ownership, which stockholder approval would not remedy, or that we experienced a change of control in combination with a change in our business, in which case we would be required to satisfy Nasdaq's initial listing requirements and submit an initial listing application, and Nasdaq could suspend trading in our common stock before any hearing. Remedying certain of these determinations may require a reduction in YZILabs' Board representation, which the Cooperation Agreement does not give us the right to compel. Any such determination would have the consequences described in the preceding risk factor.

The governance of decentralized networks, such as BNB Chain, is by voluntary consensus and open competition. In other words, BNB Chain has no central decision-making body or clear manner in which participants can come to an agreement other than through voluntary, widespread consensus. As a result, a lack of widespread consensus in the governance of BNB Chain may adversely affect the network's utility and ability to adapt and face challenges, including technical and scaling challenges. If a significant majority of users and validators adopt amendments to a decentralized network based on the proposals of core developers, such network will be subject to new protocols that may adversely affect the value of the relevant digital asset. However, BNB Chain would cease to operate successfully without both validators and users, and the core developers cannot formally compel them to adopt the changes to the source code desired by core developers, or to continue to render services or participate in BNB Chain. As a general matter, the governance of BNB Chain generally depends on most of members of the BNB Chain community ultimately reaching some form of voluntary agreement on significant changes. The decentralized governance of BNB Chain may make it difficult to find or implement solutions or marshal sufficient effort to overcome existing or future problems, especially protracted ones requiring substantial directed effort and resource commitment over a long period of time, such as scaling challenges. BNB Chain's failure to overcome governance challenges could exacerbate problems experienced by the network or cause the network to fail to meet the needs of its users, and could cause users, validators, and developer talent to abandon BNB Chain or to choose competing blockchain protocols, or lead to a drop in speculative interest, which could cause the value of BNB to decline. If the BNB Chain community is unable to reach consensus in the future, it could have adverse consequences for the network or lead to a fork, which could affect the value of BNB.

On May 7, 2026, we received written notice from Nasdaq notifying us that we were not in compliance with Nasdaq Listing Rule 5620(a) for continued listing of shares of our common stock, due to our failure to hold an annual meeting within 12 months of our fiscal year end. As a result, we submitted a plan to Nasdaq to regain compliance and held our 2026 Special Meeting in Lieu of Annual Meetings of Stockholders on July 22, 2026. On August 5, 2026, we received written notice from Nasdaq that we had regained compliance with Listing Rule 5620(a) and that matter is closed. If our common stock ultimately were to be delisted from Nasdaq for any reason, it could negatively impact us by (i) reducing the liquidity and market price of our common stock; (ii) reducing the number of investors willing to hold or acquire our common stock, which could negatively impact our ability to raise equity financing; (iii) limiting our ability to use a registration statement to offer and sell freely tradable securities, thereby preventing us from accessing the public capital markets; and (iv) impairing our ability to provide equity incentives to its employees.

The public trading prices of our securities fluctuate, in some cases substantially, and we expect that they will continue to do so. The price of our securities in the market on any particular day depends on many factors including, but not limited to, the following: - our ability to maintain the listing of our securities on Nasdaq, and our ability to satisfy current continued listing standards;- price and volume fluctuations in the overall stock market from time to time;- investor demand for our shares and warrants;- variations in our operating results and market conditions specific to our business;- the emergence of new competitors or new technologies;- operating and market price performance of other companies that investors deem comparable;- changes in our Board or management;- sales or purchases of our securities by insiders, including sales of our common stock issued to employees, directors and consultants under our equity incentive plans which were registered under the Securities Act under our S-8 registration statement;- commencement of, or involvement in, litigation;- actual or anticipated changes in our earnings, and fluctuations in our quarterly operating results;- general economic conditions and trends; and - departures of any of our key employees. In the past, following periods of volatility in the market price of a company's securities, securities class action litigation has often been brought against that company. Due to the potential volatility of our securities prices, we may therefore be the target of securities litigation in the future. Securities litigation could result in substantial costs and divert management's attention and resources from our business. In addition, if the market for equity stocks of companies in our industry, or the stock market in general, experiences a loss of investor confidence, the market price of our securities could decline for reasons unrelated to our business, financial condition, or results of operations. If any of the foregoing occurs, it could cause the price of our securities to fall and may expose us to lawsuits that, even if unsuccessful, could be costly to defend and a distraction to our Board and management.

Our articles of incorporation permit our Board to reclassify any authorized but unissued shares of preferred stock into one or more classes. Our Board will generally have broad discretion over the size and timing of any such classification, subject to a finding that the classification and issuance of preferred stock is in our best interests. In the event our Board opts to classify a portion of our unissued shares of preferred stock into a class of preferred stock, those preferred shares would have a preference over our common stock with respect to dividends and liquidation. The class voting rights of any preferred shares we may issue could make it more difficult for us to take some actions that may, in the future, be proposed by the Board and/or the holders of our common stock, such as a merger, exchange of securities, liquidation, or alteration of the rights of a class of our securities, if these actions were perceived by the holders of preferred shares as not in their best interests. These effects, among others, could have an adverse effect on your investment in our common stock.

From time to time, we issue our securities on an unregistered basis, which may be eligible for resale under SEC Rule 144 promulgated under the Securities Act or may require us to register with the SEC the securities for resale. In the event there are securities outstanding that can be sold under Rule 144 or under a registration statement for resale, there may be market pressure on our stock to absorb the securities in respect of the then market value of the company.

We have sold to public investors a substantial number of warrants to purchase common stock that may be exercised from time to time over the next several years. In addition, we have a substantial number of options and public warrants outstanding held by investment bankers who provided us with underwriting and placement services that were issued warrants and employees that were issued options. To the extent that these are exercised for shares, there may be pressure on our stock price while the market absorbs them. The potential of exercise may also have the same effect. Investors should expect that the options and warrants will be exercised when the stock price is substantially above the exercise price.

Sales of our shares of common stock by our officers or senior managers through 10b5-1 plans or otherwise or by large stockholders could adversely and unpredictably affect the price of our common stock. Additionally, the price of our shares of common stock could be affected even by the potential for sales by these persons. We cannot predict the effect that any future sales of our common stock, or the potential for those sales, will have on our share price. Furthermore, due to relatively low trading volume of our stock, should one or more large stockholders seek to sell a significant portion of their stock in a short period of time, the price of our stock may decline.

Our articles of incorporation authorize us to issue shares of our common stock and options, rights, warrants and appreciation rights relating to our common stock for the consideration and on the terms and conditions established by our Board in its sole discretion. We could issue a significant number of shares of common stock in the future in connection with investments or acquisitions. Any of these issuances could dilute our existing stockholders, and such dilution could be significant. Moreover, such dilution could have a material adverse effect on the market price for the shares of our common stock. The future issuance of shares of preferred stock with voting rights may adversely affect the voting power of the holders of shares of our common stock, either by diluting the voting power of our common stock if the preferred stock votes together with the common stock as a single class, or by giving the holders of any such preferred stock the right or ability to block an action on which they have a separate class vote, even if the action were approved by the holders of our shares of our common stock. The future issuance of shares of preferred stock with dividend or conversion rights, liquidation preferences or other economic terms favorable to the holders of preferred stock, when compared to the rights of the common stockholders, could adversely affect the market price for our common stock by making an investment in the common stock less attractive. For example, investors in the common stock may not wish to purchase common stock at a price above the conversion price of a series of convertible preferred stock because the holders of the preferred stock would effectively be entitled to purchase common stock at the lower conversion price, causing economic dilution to the holders of common stock.