Brand Engagement Network Inc. Debt Disclosure

NOTE G — DEBT

 

Convertible Notes

 

On April 12, 2024, the Company issued a convertible promissory note to J.V.B. Financial Group, LLC, acting through its Cohen & Company Capital Markets division (“CCM”) in the principal amount of $1,900,000 (the “Cohen Convertible Note”), to settle outstanding invoices totaling $1,900,000 related to investment banking services rendered to the Company in connection with the Business Combination. 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. 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. The maturity date of the Cohen Convertible Note was March 14, 2025. During the year ended December 31, 2025, the Company recognized $5,779.64 in interest expense related to the Cohen Convertible Note. As of December 31, 2025, the Company was in default of the Cohen Convertible Note. As of the date of this filing, Company management is in the process of negotiating with Cohen and Cohen has not initiated any actions against the Company.

 

On December 14, 2024 (the “First Conversion Date”), $760,000 of the Cohen Convertible Note converted into 63,333 shares of Common Stock at $12.00 per share (the “Floor Price”). On the 14th day of each successive month commencing with January 14, 2025 (each such day, an “Additional Conversion Date” and together with the First Conversion Date, the “Conversion Dates”), CCM may convert a portion of Cohen Convertible Note to a number of shares equal to (i) up to 20% of the outstanding principal balance of the Cohen Convertible Note plus accrued interest due under the Cohen Convertible Note divided by (ii) a price per share (the “Conversion Purchase Price”) equal to 92.75% of the arithmetic average of the Daily Volume-Weighted Average Price (“VWAP”) for the five VWAP Trading Days (as defined therein) ending on the VWAP Trading Day immediately preceding the applicable Conversion Date (subject to the Floor Price). During the years ended December 31, 2025 and December 31, 2024, $380,000 and $0, respectively, of the Cohen Convertible Note converted into 31,667 shares of Common Stock at $12.00 per share, respectively. As of December 31, 2025, the remaining balance of $760,000 was included within the convertible note in the accompanying consolidated balance sheets.

 

 

Short-term Debt Related to Acquisition of DM Lab

 

As of December 31, 2025, the Company had four loans outstanding that were assumed in the DM Lab transaction, totaling $891,974, a decrease of $252,601 from the acquisition date due to the amount converted to equity on May 25, 2023. The loans carry varying interest rates ranging from 4.667% to 6.69%. During the year ended December 31, 2025 and 2024 the Company incurred interest expense of 0 and $11,627, respectively, which is included in interest expense in the consolidated statement of operations. During the years ended December 31, 2025 and 2024 the Company incurred interest expense of 0 and 0, respectively, which is included in interest expense in the consolidated statement of operations. All loans are due within 12 months from the balance sheet date and have no optional or mandatory redemption or conversion features. These obligations have been classified as current liabilities on the balance sheet and the fair value of the loans approximates the carrying amount due to their short-term nature. Additionally, there are no associated restrictive covenants, third-party guarantees, or pledged collateral. As of the reporting date, there have been no defaults on these loans. In January 2025, the Company obtained a waiver to extend the due dates of $668,674 of its short-term debt to January 2026.

 

Short-term loans

 

As of December 31, 2025, the Company had a short-term loans with an outstanding principal balance of $288,500.

 

During the year ended December 31, 2025, the Company received loan proceeds of $1,843,713, of which $1,555,213 was converted into equity pursuant to the terms of the agreement. The remaining unpaid balance of $288,500 remains outstanding as of year-end.

 

The loan bears interest at a rate of 12% per annum and mature upon demand.