Brand Engagement Network Inc.

Good afternoon, and welcome to the Brand Engagement Network, Inc.' 's second quarter 2025 earnings conference call. Today's call is being recorded. At this time, all participants are in a listen-only mode. After management's prepared remarks, we will open the call for question and answer session. Before we begin, please note that during this call, our speakers may make forward-looking statements regarding future results and performance. please refer to the cautionary language included in Ben's filings with the Securities and Exchange Commission, included in their Form 10-K and 10-Q for additional information concerning factors that could cause actual results to differ materially from those forward-looking statements. I would now like to turn the call over to Tyler Luck, Acting CEO and Co-Founder of Brand Engagement Network. Tyler, please go ahead.

Thank you, operator, and thank you all for joining us today. I'd like to begin by addressing the timing of this report. While our Q2 TANQ filing was delayed, I want to be clear that this was not the result of negative financial performance. Instead, the delay reflected deliberate decisions to strengthen the company's foundation. First, We focused on reducing ongoing expenses by negotiating with prior and existing vendors to ensure we operate with greater financial discipline. Second, we made positive management changes, including re-engagement with our trusted outside accounting firm that supported us from 2021 to 2024, while continuing with our independent audit firm. These steps required time, but were taken to build confidence in our financial processes. I've been with this company since day one. I know our technology, our customers, and our mission. And I can tell you that the entrepreneurial spirit at Bend is alive and strong. Capital has always been a precious commodity, and we are treating it with the discipline and creativity that investors expect. I'd also like to highlight that our team in Seoul, Korea. Today, our Korean Innovation Lab is home to more than 30 employees, and I'm incredibly proud of the work that they are doing to drive product innovation and client success. This team embodies the energy, expertise, and commitment that defines them globally. In addition to these foundational efforts, I'm pleased to share some key milestones that underscore our progress in building partnerships and expanding our AI solutions. For instance, we entered a global partnership with Swiss Life, a process that began before our merger in March 2024. The announcement in April 2025 marked an important milestone, and as acting CEO, I had the opportunity to attend their global conference in London a few weeks ago. It was encouraging to see firsthand the positive feedback from attendees around the world. And we are focused on supporting their partners globally to benefit from the efficiencies of our conversational AI. We've also made strategic inroads in emerging markets, such as our entry into Mexico with a partner just over a year ago. And this decision aligns well with markets that prioritize data sovereignty, allowing us to test and refine our products while positioning us for potential expansion and execution on our current pipeline. In the pharmacy sector, our launch at a conference in Boston a year ago provided valuable market feedback on our AI solutions. We are pleased with the results so far, though as with any innovation in regulated industries, reviews take time as corporations are rightfully cautious of this new era. But these steps are setting a solid foundation for future developments. Looking at verticals like automotive, we see opportunities where AI can help build trusted consumer engagement, a longstanding challenge in the industry. The integrations we've completed today position us well for initiatives we're planning in the coming quarters. And finally, with AI top of mind for many enterprises, it's important to note that brands and regulated sectors approach new technologies with caution to avoid risks from inaccurate engagements. So this is where Ben's emphasis on trusted data shines. By focusing on brand-specific data sovereignty rather than broad web data, we enable authentic and reliable consumer interactions. These efforts reflect our commitment to delivering solutions that meet enterprise needs. And looking ahead, we've already scheduled our next earnings call on November 4, 2025, and our annual shareholder meeting on November 26, 2025. We see this as the start of a new chapter for Ben, one that's built on transparency, accountability, and growth. And with that, let me turn the call over to our CFO and CEO, Waleed Kiari, who will walk you through our financial performance.

Thank you, Tyler, and good afternoon, everyone. Our Q2 results demonstrate significant progress in stabilizing operations as well as strengthening our financial positions. By reducing expenses by over 55%, we've gained greater flexibility to execute our strategy and accelerate growth initiatives in regulated industries. Looking ahead, we're shifting our focus towards driving revenue growth, supported by a stronger foundation and the operational capacity to launch new customers more rapidly across our target verticals. As for financial highlights, I'll mention a few. Revenue, we did $5,000 of revenue in Q2 compared to none in Q2 of last year, 2024, which reflects early traction in some of our conversation AI solutions. As far as operating expenses go, they've decreased, as I mentioned, by 55.6% to $2.8 million for the quarter, down from $6.3 million in the same quarter of 2024, which was driven by streamlined operations and strategic cost optimization. As for other income, plus $3.7 million, primarily from a gain on debt extinguishment of $4 million, which was partially offset by changes in the fair value warrants. Net income, about $900,000 in Q2 of this year compared to a net loss of $3 million in Q2 of 2024. And our stockholders' equity increased 126% to $5.9 million from $2.6 million at the year-end of 2024, which reflects improved financial health. A detailed summary of Ben's recorded financial results is included in the company's form thank you for the quarter, which ended June 30th, 2025, which we filed with the SEC. And with that, I'll hand it back to the operator to begin our Q&A session.

Thank you, Waleed. We will now begin the question and answer session. At this time, if you would like to ask a question, press star, then the number one on your telephone keypad. To withdraw your question, simply press star one again. We will pause for just a moment to compile the Q&A roster. Your first question comes from the line of Jack Vanderaag with Maximum Group. Please go ahead.

Hey, guys. Good afternoon. Thanks for taking my questions. So in Tyler, welcome to the CEO role. I don't believe we've spoken last quarter. So we'd love to get your just kind of thoughts on – what you're planning to focus on and if there's any changes on the horizon. Just talk about your management style and what you're focused on.

Thanks. Hi, Jack. Nice to meet you. Yeah, we haven't met before.

So I think it's an exciting time to be leading then And I would say my focus is really on three core priorities, the first being execution and discipline, making sure we're delivering against the commitments we've made to our customers and partners and certainly our shareholders. I believe we have built a strong foundation and now it's about consistent, reliable delivery. And secondly, I'd say the commercial acceleration kind of translating the momentum we're seeing into scalable revenue. That's super important. That means really tightening our go-to-market motion, deepening customer relationships, and I'd say expanding our footprint in the verticals that we're already winning. And third, being also the chief product officer, I think it's super important for our focus on product leadership. So continuing to push the boundaries of responsible, reliable AI engagement and Ben's technology has the potential to redefine how people really interact with brands and You know, we intend to lead that shift. So, in short, it's about priority, focus, and forward motion, just really ensuring that Ben not only grows, but grows with purpose.

Okay, great. I appreciate that. And maybe just to follow up, something that was kind of a major ongoing development was the pending acquisition of Cataneo, obviously. I know that that was terminated, but just maybe can you just touch on what happened there, or are you still working with them on other opportunities, maybe not M&A related, but just other business verticals and opportunities? And then also, can you just touch on the media space maybe in general and how that fits into your focus going forward in terms of verticals? Thanks.

Hi, Jack. This is really good to hear from you. To answer your question, yes, we're continuing to work with the team at CAPNEO. Uh, we still think that, you know, our partnership is strong and, um, in effect, uh, we've been working in the field together for quite some time now, and that's good momentum. Uh, among our customers as well as potential customers. So we see that continuing. I had mentioned in past calls that, um, the advertising side of the business, which is related to media is, is a very important pillar. of this business going forward alongside automotive, healthcare, and financials. And we see that continuing. The media space evolves probably the fastest. I think Tyler alluded to earlier the fact that some of the regulated industries, by definition, and rightfully so, as Tyler mentioned, move much slower. This is one that moves very, very fast. And so being nimble through a combination of buy, build, partner approach I think is going to be critical. There will be M&A, but there will always be both partnership opportunities in that space. on an ad hoc basis, as well as aligning with our general strategy to keep rejuvenating the stack dedicated, the technical stack dedicated to the advertising space around AI. And of course, under titles of leadership, continuing on the build side of the strategy by continuing to build our product. which have a common foundation but find different use cases across industry verticals.

Excellent. Okay. I appreciate that, Wally.

Maybe a follow-up, too, for you. The $5,000 revenue that came in the quarter, I'm not sure if this is – not that I'm trying to parse that necessarily, but I would be curious to know, was this a pilot program, and was it a series of customers? Just maybe walk me through that, and then what do you expect kind of going forward in terms of – are there more revenue pickups like this one, or is this a one-time development?

Thanks. Tyler, do you want to take that one?

Yeah, so the 5000 relates to a pilot program for a client we are working with in Armenia relating to hospitality customer service in the hotel sector.

And we expect this to be recurring. Excellent. Okay, great.

No, I appreciate that. And then just maybe a follow-up, too. Just all of the pilot programs you guys have had in the past over the last few years, a lot of them sound pretty promising, and they've been ongoing for a while. Maybe just get a quick update on anything in the pharmaceutical healthcare space. Are these past pilot programs and collaborations, are they still ongoing, or is I guess, when do you determine if you're moving forward and what to focus on? Because there's quite a number of these. I'm not sure how you're tackling it anymore. So, just an update on any of the prior pilots, just so we have a sense of where we're headed.

Yeah.

So, I would say all of our pilots are moving forward. I think initially when we started to take them on we were really more perhaps in the generative AI space and naturally as any business comes to ask what is the ROI on this and so that's when we've started to move more into the agentic AI or at least a combination so every um ai pilot that we are building and deploying needs to have um you know measurable impact and so really the next phase which most if not all that are progressing is really about converting these pilots into scalable recurring relationships and we're moving in that direction with momentum and I'd say we expect to share more detailed results of those programs formalized into commercial agreements in the near future, ideally.

Okay. Fantastic. Well, I appreciate the color, guys. I'll hop back in the queue. Thank you. Thanks, John.

That concludes the Q&A session. I will now turn the call back over to Tyler Luck for closing remarks.

Thanks, operator.

To close, I want to emphasize once again that Ben is really regaining its entrepreneurial momentum. We are disciplined, focused, and committed to creating value for our shareholders through strategic partnerships, market expansions, and innovative AI solutions. We look forward to updating you again on our upcoming November 4th earnings call for Q3 results. And we invite you to join us at our annual shareholders meeting scheduled for November 26, 2025. Thank you, everyone, for your time and continued support.

Thank you. That wraps up today's call. Transcripts of this call will be posted on Ben's Investor Relations website. We appreciate your interest in the Brand Engagement Network, Inc.