# Brand Engagement Network Inc.: Form 10-Q for the period ended Mar 31, 2026

- Company: [Brand Engagement Network Inc.](/companies/bnai.md) (CIK 1838163)
- Form: 10-Q
- Filed: 2026-05-15
- Accepted by EDGAR: May 15, 2026, 20:49 ET
- Period: 2026-03-31
- Accession: 0001493152-26-023892
- Inline XBRL: yes
- Main document: https://www.sec.gov/Archives/edgar/data/1838163/000149315226023892/form10-q.htm
- All documents and exhibits: https://www.sec.gov/Archives/edgar/data/1838163/000149315226023892/

## Figures reported in this filing

Standardized XBRL line items for the period ended 2026-03-31.

| Line item | Period | Value | XBRL concept |
| --- | --- | ---: | --- |
| Revenue | 3 months, 2026-01-01 to 2026-03-31 | $104.3k | us-gaap:RevenueFromContractWithCustomerExcludingAssessedTax |
| Research and development | 3 months, 2026-01-01 to 2026-03-31 | $26.9k | us-gaap:ResearchAndDevelopmentExpense |
| Operating income | 3 months, 2026-01-01 to 2026-03-31 | −$3.3m | us-gaap:OperatingIncomeLoss |
| Interest expense | 3 months, 2026-01-01 to 2026-03-31 | $57.6k | us-gaap:InterestExpenseNonoperating |
| Income tax | 3 months, 2026-01-01 to 2026-03-31 | $47.0k | us-gaap:IncomeTaxExpenseBenefit |
| Net income | 3 months, 2026-01-01 to 2026-03-31 | −$3.1m | us-gaap:NetIncomeLoss |
| Diluted EPS | 3 months, 2026-01-01 to 2026-03-31 | −$0.51 | us-gaap:EarningsPerShareDiluted |
| Basic EPS | 3 months, 2026-01-01 to 2026-03-31 | −$0.51 | us-gaap:EarningsPerShareBasic |
| Diluted shares (weighted) | 3 months, 2026-01-01 to 2026-03-31 | 5,967,831 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Operating cash flow | 3 months, 2026-01-01 to 2026-03-31 | −$3.7m | us-gaap:NetCashProvidedByUsedInOperatingActivities |
| Cash and equivalents | at 2026-03-31 | $1.8m | us-gaap:CashAndCashEquivalentsAtCarryingValue |
| Current assets | at 2026-03-31 | $3.6m | us-gaap:AssetsCurrent |
| Total assets | at 2026-03-31 | $16.3m | us-gaap:Assets |
| Current liabilities | at 2026-03-31 | $8.3m | us-gaap:LiabilitiesCurrent |
| Total liabilities | at 2026-03-31 | $9.0m | us-gaap:Liabilities |
| Short-term borrowings | at 2026-03-31 | $318.5k | us-gaap:ShortTermBorrowings |
| Shareholders' equity | at 2026-03-31 | $7.3m | us-gaap:StockholdersEquity |

## Management's discussion and analysis

As filed, 21,823 characters.

*The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our unaudited condensed consolidated financial statements and the notes related thereto which are included elsewhere in this Quarterly Report on Form 10-Q (this “Report”). 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. 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 unaudited condensed consolidated financial statements and related notes thereto presented in this Report.*

### 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. 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.

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

During the quarter ended March 31, 2026, Brand Engagement Network Inc. (the “Company”) implemented a comprehensive realignment of its financial and operational framework. Management initiated a strategic program directed at the systematic retirement of legacy reorganization liabilities. These strategic actions, combined with debt conversions, resulted in a $2,814,047 reduction of the Company’s total liabilities compared to the quarter ended March 21, 2025.

#### Operational Results and Strategic Milestones:

*Africa Licensing Agreement:* On January 20, 2026, the Company executed a licensing partnership with Valio Technologies (Pty) Ltd. This agreement facilitates the Company’s entry into the African market and includes a clinical AI pilot at Nelson Mandela University to evaluate the ELM™ technology in regulated healthcare and academic environments. Under the terms of the agreement, the Company maintains a 25% equity interest in the regional venture and a 35% recurring revenue share.

*Settlement of Legacy Debt and Conversions:* On January 29, 2026, the Company satisfied its remaining obligations under the May 2023 Asset Purchase Agreement by completing a final payment of $630,332.46 to Hana Bank (South Korea). Additionally, during the quarter ended March 31, 2026, the Company completed $596,005 in debt-to-equity conversions, further reducing outstanding liabilities.

*Termination of Financing Facility:* On February 4, 2026, the Company formally terminated its $50 million Standby Equity Purchase Agreement (SEPA) facility to further streamline its capital structure.

*Commercial Deployment:* On March 2, 2026, the Company’s AI Concierge transitioned from pilot phase to active guest-facing deployment at the Seven Visions Resort & Places, The Dvin. This deployment serves as a commercial validation of the Engagement Language Model (ELM™) within the hospitality sector.

*Private Placement and Warrant Activity:* On March 25, 2026, the Company closed a $1.518 million private placement with Ben Capital Fund I, LLC at a price of $63.25 per share. During the quarter, the Company also received approximately $4.47 million in cash proceeds from the exercise of outstanding warrants.

*Leadership Transition:* Effective March 31, 2026, Jon Leibowitz was appointed as Chairman of the Board of Directors, succeeding Bernard Puckett. Mr. Leibowitz previously served as the Chairman of the Federal Trade Commission (FTC) and as a senior partner at Davis Polk & Wardwell LLP. The Board believes his extensive experience in regulatory policy, consumer protection, and corporate governance supports the Company’s strategic focus on privacy and enterprise-grade AI security. This transition was part of a planned governance update and did not result from any disagreement regarding the Company’s operations or policies.

### 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) filed with the SEC on January 15, 2026.

### Key Factors and Trends Affecting our Business

### Productions and Operations

We expect to continue to incur significant operating costs that will impact our future profitability, including research and development expenses as we introduce new products and improves existing offerings; capital expenditures for the expansion of our development and sales capacities and driving brand awareness; additional operating costs and expenses for production ramp-up; general and administrative expenses as we scale our operations; interest expense from debt financing activities; and selling and distribution expenses as we build our brand and market our products. To date, we have not yet sold any of our products beyond their pilot stage. As a result, we will require substantial additional capital to develop products and fund operations for the foreseeable future.

### Revenues

We are a development stage company and have not generated any significant revenue to date.

### Public Company Costs

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.

### Components of Results of Operations

### Operating expenses

### General and administrative expenses

General and administrative expenses consist of employee-related expenses including salaries, benefits, and stock-based compensation as well as fees paid for legal, accounting and tax services, consulting fees and facilities costs not otherwise included in research and development expense. We have and expect to further incur significant expenses as a result of being a public company, including expenses related to compliance with the rules and regulations of the SEC and Nasdaq, additional insurance, investor relations and other administrative expenses and professional services.

### 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.

### 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.

### Change in fair value of warrant liabilities

Change in fair value of warrant liabilities reflected the non-cash charge for changes in the fair value of the warrant liability that is subject to re-measurement at each balance sheet date.

### Other expenses

Other expenses primarily consists of foreign currency gains or losses as a result of exchange rate fluctuations on transactions denominated in Korean won.

### Results of Operations

#### Comparison of the Three Months Ended March 31, 2026 and 2025

|  | For the three months ended March 31, 2026 | 2025 | Increase (Decrease) $ |
| --- | ---: | ---: | ---: |
| Revenue | $104,311 | $10,000 | $94,311 |
| Operating expenses |  |  |  |
| General and administrative expenses | 2,363,904 | 3,214,189 | (850,285) |
| Research and development | 26,944 | 10,697 | 16,247 |
| Depreciation and amortization | 1,047,411 | 939,206 | 108,205 |
| Total operating expenses | 3,438,259 | 4,164,092 | (725,833) |
| Loss from operations | (3,333,948) | (4,154,092) | 820,144 |
| Other income (expense) |  |  |  |
| Interest expense, net | (57,067) | (125,042) | 67,435 |
| Change in fair value of warrant liabilities | 294,293 | 614,892 | (320,599) |
| Gain (loss) on debt extinguishment | 89,340 | - | 89,340 |
| Other income (expense), net | (6,066) | 54,012 | (60,078) |
| Total other income, net | 319,960 | 543,862 | (2,23,902) |
| Loss before income tax benefit | (3,013,988) | (3,610,230) | 596,242 |
| Income tax benefit (expense) | (46,989) | - | (46,989) |
| Net loss | $(3,060,977) | $(3,610,230) | $549,253 |

#### Revenues

During the three months ended March 31, 2026 and 2025, revenue was immaterial.

#### General and administrative expenses

General and administrative expenses for the three months ended March 31, 2026 were approximately $2.4 million, decrease of approximately $0.8 million, compared to the three months ended March 31, 2025. The decrease was primarily due to a decrease of $0.2 million in professional fees, a decrease of in employee related costs of $0.5 million, and by a decrease in insurance of $0.1 million. We have only recently begun to raise proceeds through the offering of our Common Stock and convertible notes to investors and therefore expect, in the near term at a minimum, to continue to utilize the issuance of equity based instruments as compensation to reduce our cash outlays.

#### Depreciation and amortization expenses

Depreciation and amortization expenses for the three months ended March 31, 2026 were approximately $1.0 million, an increase of approximately $0.1 million, compared to the three months ended March 31, 2025. The increase was primarily due to dates assets placed in service.

#### Research and development expenses

Research and development expenses for the three months ended March 31, 2026 were approximately $0.02, an increase of approximately $0.01 million, compared to the three months ended March 31, 2025. The increase in research and development expenses were primarily due to consulting related expenses.

#### Change in fair value of warrant liabilities

Change in fair value of the warrant liabilities for the three months ended March 31, 2026 was approximately $0.3 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 was minimal during the three months ended March 31, 2025.

### Liquidity and Capital Resources

### Capital Resources and Available Liquidity

The accompanying unaudited condensed consolidated financial statements have been prepared as though the Company will continue as a going concern, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business. As of March 31, 2026, the Company had an accumulated deficit of $58,703,561, a net loss of $3,060,977 and net cash used in operating activities of $4,467,029 during the three months ended March 31, 2026. Management expects to continue to incur operating losses and negative cash flows from operations for at least the next 12 months. The Company has financed its operations to date from proceeds from the sale of Common Stock, exercises of warrants, the issuance of promissory notes and convertible debt, and its transactions with AFG Companies Inc. (“AFG”). The Company’s current liquidity position raises substantial doubt about the Company’s ability to continue as a going concern.

The Company believes that its existing cash and cash equivalents and proceeds from the May SPA, August SPA, and Yorkville Promissory Note (Note G) will be insufficient to meet its anticipated cash requirements for at least the next 12 months from the date the consolidated financial statements are issued. The Company will need to raise additional capital to continue to fund operations and product research and development. 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. However, the Company cannot conclude these are probable of being implemented or, if probable of being implemented, being in sufficient enough amounts to satisfy the Company’s contractual amounts as they presently exist that are coming due over the next 12 months as of the date of such filing.

The assumptions upon which the Company has based its estimates are routinely evaluated and may be subject to change. The actual amount of the Company’s expenditures will vary depending upon several factors including but not limited to the design, timing, and the progress of the Company’s research and development programs, and the level of financial resources available. The Company can adjust its operating plan spending based on available financial resources.

### 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. 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. 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.

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 will continue to evaluate the probability of warrant exercise over the life of our warrants and the merit of including potential cash proceeds from the exercise thereof in our liquidity sources and capital resources planning.

To the extent such warrants are exercised, additional Common Stock will be issued, which will result in dilution to the holders of our Common Stock and increase the number of shares of Common Stock eligible for resale in the public market. 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.

### Cash Flows

The following table summarizes our cash flows for the periods presented:

|  | For the three months ended March 31, 2026 | 2025 |
| --- | ---: | ---: |
| Cash used in operating activities | $(3,724,697) | $(2,627,862) |
| Cash used in investing activities | (140,095) | (110,274) |
| Cash provided by financing activities | 5,493,679 | 2,825,092 |
| Net decrease in cash and cash equivalents | $1,628,887 | $86,956 |

#### Operating activities

Cash used in operating activities was approximately $3.7 million during the three months ended March 31, 2026 primarily due to our net loss of approximately $3.1 million. The net loss included non-cash charges of approximately $0.9 million, which consisted of approximately $1.0 million of depreciation and amortization expense, and noncash interest expense, partially offset by $0.3 million gain due to the change in fair value of warrant liabilities. The net cash outflow of approximately $2.2 million from changes in our operating assets and liabilities was primarily due to a decrease in accounts payable of $1.6 million, offset by an increase in prepaid expense and other current assets of $0.5 million and a decrease in operating lease liability of $0.0 million.

Cash used in operating activities was approximately $2.6 million during the three months ended March 31, 2025 primarily due to our net loss of approximately $3.6 million. The net loss included non-cash charges of approximately $0.8 million, which consisted of approximately $0.9 million of depreciation and amortization expense, $0.4 million in equity-based compensation expense, including the issuance of restricted shares, and noncash interest expense, partially offset by $0.6 million gain due to the change in fair value of warrant liabilities. The net cash inflow of approximately $0.2 million from changes in our operating assets and liabilities was primarily due to an increase in accounts payable of $0.9 million, offset by an increase in prepaid expense and other current assets of $0.6 million and a decrease in operating lease liability of $0.1 million.

#### Investing activities

Cash used in investing activities during the three months ended March 31, 2026 was approximately $0.1 million, which consisted primarily of capitalized internal-use software costs.

Cash used in investing activities during the three months ended March 31, 2025 was approximately $0.2 million, which consisted primarily of capitalized internal-use software costs.

#### Financing activities

Cash provided financing activities during the three months ended March 31, 2026 was approximately $5.5 million, which consisted of proceeds received from the proceeds from warrant exercises

Cash provided financing activities during the three months ended March 31, 2025 was approximately $2.8 million, which consisted of proceeds received from the sale of Common Stock and proceeds from warrant exercises.

### Critical Accounting Policies

Our consolidated financial statements are prepared in accordance with U.S. GAAP. 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. 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. Our actual results may differ from these estimates under different assumptions and conditions.

During the three months ended March 31, 2026, 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 2025 Annual Report.

### Recent Accounting Pronouncements

See Note B to our consolidated financial statements, found in our 2025 Annual Report for a description of recent accounting pronouncements applicable to our unaudited condensed 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 March 31, 2026. We do not participate in transactions that create relationships with unconsolidated entities or financial partnerships, often referred to as variable interest entities, which would have been established for the purpose of facilitating off-balance sheet arrangements. We have not entered into any off-balance sheet financing arrangements, established any special purpose entities, guaranteed any debt or commitments of other entities, or purchased any non-financial assets.

### Emerging Growth Company Status

We are an “emerging growth company,” as defined in the Jumpstart Our Business Startups Act (“JOBS Act”). Under the JOBS Act, emerging growth companies can delay adopting new or revised accounting standards issued subsequent to the enactment of the JOBS Act until such time as those standards apply to private companies.

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. As a result, our financial statements may not be comparable to companies that comply with new or revised accounting pronouncements as of public company effective dates.

## Market risk

As filed, 238 characters.

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.

## Controls and procedures

As filed, 5,603 characters.

### Evaluation of Disclosure Controls and Procedures

Under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, we conducted an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures as of March 31, 2026, as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act.

Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include controls and procedures designed to ensure that information required to be disclosed in our reports filed under the Exchange Act is accumulated and communicated to management, including our Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure. Based upon the evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls were not effective as of March 31, 2026, based on the material weaknesses identified below.

### Material Weakness in Internal Control over Financial Reporting

As discussed in the 2025 Report, the Company disclosed a material weakness in internal controls over financial reporting. Management has concluded this material weakness has not been remediated as an internal control deficiency was identified relating to the lack in investment of resources into accounting and reporting functions to properly account for and prepare U.S. GAAP compliant financial statements on a timely basis and to properly document risks affecting financial statements and controls in place to mitigate those risks in accordance with the requirements for a functioning internal control system. Notwithstanding this material weakness, management has concluded that our unaudited condensed consolidated financial statements included in the 2025 Report are fairly stated in all material respects in accordance with U.S. GAAP for each of the periods presented herein.

This material weakness could result in a misstatement of account balances or disclosures that would result in a material misstatement of our annual or interim consolidated financial statements that may not be detected.

### Plan for Remediation of the Material Weakness in Internal Control over Financial Reporting

In response, the Company’s management has continued implementation of a plan to remediate this material weakness. These remediation measures are ongoing and include the following; hiring a Chief Financial Officer, which was completed in the fourth quarter of 2024, and adding additional review procedures by qualified personnel over complex accounting matters, which include engaging third-party professionals with whom to consult regarding complex accounting applications.

The material weaknesses will be considered remediated once management completes the design and implementation of the measures described above and the controls operate for a sufficient period of time, and management has concluded, through testing, that these controls are effective. We believe we are making progress toward achieving the effectiveness of our internal controls and disclosure controls; however, we cannot provide any assurance that these remediation efforts will be successful or that our internal control over financial reporting will be effective as a result of these efforts.

### Changes in Internal Control over Financial Reporting

Other than the changes made to the material weakness described above, there were no changes in our internal control over financial reporting identified in connection with the evaluation required by Rules 13a-15(d) and 15d-15(d) of the Exchange Act that occurred during the three months ended March 31, 2026, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

### Limitations on the Effectiveness of Disclosure Controls and Procedures

Our management, including our Chief Executive Officer and Chief Financial Officer, does not expect that our disclosure controls and procedures or internal control over financial reporting will prevent all errors and all fraud. A control system, no matter how well designed and implemented, can provide only reasonable, not absolute, assurance that the control system’s objectives will be met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues within a company are detected. The inherent limitations include the realities that judgments in decision-making can be faulty and that

breakdowns can occur because of simple errors or mistakes. Controls can also be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the controls. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and may not be detected. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions or that the degree of compliance with the policies or procedures may deteriorate.

## Risk factors

As filed, 486 characters.

As of the date of this Report, there have been no material changes from the risk factors disclosed in our 2025 Annual Report. Any of these factors could result in a significant or material adverse effect on our result of operations or financial conditions. Additional risk factors not presently known to us may also impair our business or results of operations. We may disclose changes to such factors or disclose additional factors from time to time in our future filings with the SEC.

Filed May 15, 2026.
Source: SEC EDGAR, the filing index for accession 0001493152-26-023892. Last ingested by Listed: Oct 24, 2026, 15:15 ET. No prices; not investment advice.