{"url_path":"/sec/bnai/10-q/2026/item-1","section_key":"item-1","section_title":"Item 1 Legal Proceedings**","topic":"sec","document":{"doc_type":"10-Q","doc_date":"2026-05-15","source_url":"https://www.sec.gov/Archives/edgar/data/1838163/0001493152-26-023892-index.html","accession_number":"0001493152-26-023892","cik":"0001838163","ticker":"BNAI","issuer_name":"Brand Engagement Network Inc.","edgar_url":"https://www.sec.gov/Archives/edgar/data/1838163/0001493152-26-023892-index.html","primary_entity_key":"0001838163","primary_entity_name":"Brand Engagement Network Inc."},"word_count":424,"has_tables":true,"body_markdown":"**Item\n1. Legal Proceedings**\n\n** **\n\nOn\nJanuary 16, 2025, the Company filed a lawsuit against AFG and its Chief Executive Officer, Ralph Wright Brewer III, in the Northern District\nof Texas, Dallas Division alleging fraudulent misrepresentation, breach of contract, and the concealment of a ransomware attack on its\nown network shortly before the Reseller Agreement was executed. Given that the litigation remains in its early stages, the Company is\ncurrently unable to estimate the potential range of recoverable damages or the potential loss or range of loss, if any, resulting from\na favorable or unfavorable outcome.\n\n \n\nOn\nMarch 26, 2025, the Company filed a First Amended Complaint against AFG in the Southern District of New York alleging breach of contract\nagainst AFG with respect to the AFG Subscription Agreement. Specifically, the Company alleges that AFG failed to fund its required March\n13, 2025 payment in the amount of $6,500,000. In the lawsuit, the Company seeks actual damages in the amount of the missed payment, pre-\nand post-judgment interest, consequential damages and attorneys’ fees and costs. It also seeks a declaration from the court that\nAFG was and is obligated to purchase an aggregate of $6.5 million of additional shares of the Company’s Common Stock on each of\nthe first four anniversaries of the Initial Offering Closing Date and Business Combination Closing (as defined in the AFG Subscription\nAgreement) pursuant to the AFG Subscription Agreement. On May 12, 2025, AFG filed an Answer and Counterclaims in which it denies the\nallegations of the lawsuit and asserts counterclaims for an unspecified amount of damages against the Company. Given that the litigation\nremains in its early stages, the Company is currently unable to estimate the potential range of recoverable damages or the potential\nloss or range of loss, if any, resulting from a favorable or unfavorable outcome.\n\n \n\nFrom\ntime to time, we may become involved in legal proceedings or be subject to claims arising in the ordinary course of our business. Apart\nfrom the foregoing, we are not presently a party to any other legal proceedings that we believe, if determined adversely to us, would\nindividually or taken together have a material adverse effect on our business, operating results, cash flows or financial condition.\nDefending such proceedings is costly and can impose a significant burden on management and employees. The results of any current or future\nlitigation cannot be predicted with certainty, and regardless of the outcome, litigation can have an adverse impact on us because of\ndefense and settlement costs, diversion of management resources and other factors."}