Banzai International(BNZI) - 2021 Q1 - Quarterly Report

PART I. FINANCIAL INFORMATION This section presents the company's unaudited condensed financial statements and management's discussion and analysis for the period ended March 31, 2021 Item 1. Financial Statements The unaudited condensed financial statements for the three months ended March 31, 2021, show the company's financial position as a special purpose acquisition company (SPAC), with total assets of approximately $232 million primarily in a trust account and a net income of $11.0 million from non-cash gains Condensed Balance Sheet As of March 31, 2021, the company held $230.0 million in investments in its Trust Account, with total liabilities decreasing to $22.8 million and stockholders' equity stable at $5.0 million Condensed Balance Sheet Summary (as of March 31, 2021 vs. December 31, 2020) | Balance Sheet Item | March 31, 2021 (unaudited) | December 31, 2020 | | :--- | :--- | :--- | | Assets | | | | Cash | $1,546,715 | $1,724,354 | | Investments held in Trust Account | $230,005,861 | $230,000,189 | | Total Assets | $232,032,771 | $232,279,953 | | Liabilities & Equity | | | | Derivative warrant liabilities | $14,399,500 | $25,856,500 | | Deferred underwriting commissions | $8,050,000 | $8,050,000 | | Total Liabilities | $22,759,919 | $34,050,517 | | Class A common stock subject to redemption | $204,272,850 | $193,229,430 | | Total stockholders' equity | $5,000,002 | $5,000,006 | Unaudited Condensed Statement of Operations For the three months ended March 31, 2021, the company reported a net income of $11.0 million, primarily driven by a non-cash gain of $11.5 million from the change in fair value of derivative warrant liabilities Statement of Operations Summary (For the three months ended March 31, 2021) | Item | Amount | | :--- | :--- | | Loss from operations | $(419,256) | | Change in fair value of derivative warrant liabilities | $11,457,000 | | Gain on investments held in Trust Account | $5,672 | | Net income | $11,043,416 | Unaudited Condensed Statement of Cash Flows For the three months ended March 31, 2021, net cash used in operating activities was $177,639, leading to a decrease in the company's cash balance from $1.72 million to $1.55 million Cash Flow Summary (For the three months ended March 31, 2021) | Cash Flow Item | Amount | | :--- | :--- | | Net income | $11,043,416 | | Adjustments (incl. change in warrant liabilities) | $(11,451,328) | | Changes in operating assets/liabilities | $241,617 | | Net cash used in operating activities | $(177,639) | | Cash - end of the period | $1,546,715 | Notes to Unaudited Condensed Financial Statements The notes detail the company's formation as a SPAC, its December 2020 IPO raising $230 million, the 24-month deadline for a Business Combination, and key accounting policies for derivative warrant liabilities - The company is a special purpose acquisition company (SPAC) formed in September 2020 to effect a Business Combination and has not yet commenced any operations[20][21] - On December 28, 2020, the company completed its Initial Public Offering (IPO) of 23,000,000 units at $10.00 per unit, generating gross proceeds of $230 million, with net proceeds of $230 million placed in a Trust Account[22][24] - The company must complete a Business Combination by December 28, 2022 (24 months from IPO closing), or it will be required to liquidate and redeem all public shares[31] - The company's public and private placement warrants are recognized as derivative liabilities at fair value, with changes in fair value recorded in the statement of operations, representing a significant accounting policy and estimate[55] Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the company's status as a blank check company, its $11.0 million net income from non-operating gains, and its $1.5 million cash and $1.8 million working capital to fund operations and search for a target business - The company is a blank check company incorporated in September 2020 for the purpose of effecting a Business Combination[103] Q1 2021 Results of Operations Summary | Item | Amount | | :--- | :--- | | Net Income | ~$11.0 million | | Interest Income (Trust Account) | ~$6,000 | | Change in Fair Value of Warrant Liabilities | ~$11.5 million (gain) | | General & Administrative Expenses | ~$370,000 | | Franchise Tax Expense | ~$49,000 | - As of March 31, 2021, the company had approximately $1.5 million in cash and $1.8 million in working capital available to fund its operations and search for a Business Combination[109] - The company must complete a Business Combination within 24 months of its IPO (by December 28, 2022) or it will be forced to liquidate[108] Quantitative and Qualitative Disclosures About Market Risk As a smaller reporting company, the company has no material exposure to market or interest rate risk, with Trust Account funds invested in short-term U.S. government securities - The company is not subject to any material market or interest rate risk as of March 31, 2021[126] - Proceeds from the IPO held in the Trust Account are invested in short-term U.S. government treasury obligations, minimizing interest rate risk[126] Controls and Procedures Management concluded that disclosure controls were ineffective as of March 31, 2021, due to a material weakness in accounting for complex securities, but remediation steps have been implemented - Management concluded that disclosure controls and procedures were not effective as of March 31, 2021[128] - The ineffectiveness was due to a material weakness in internal control over financial reporting, which was later identified and related to the accounting for complex securities[128][130] - Management has implemented remediation steps, including enhancing the review process for complex accounting standards and considering additional staff with relevant experience[130] PART II. OTHER INFORMATION This section covers other required information, including unregistered sales of equity securities and a list of exhibits filed with the report Unregistered Sales of Equity Securities and Use of Proceeds The company reported no unregistered sales of equity securities during the period covered by this report - There were no unregistered sales of equity securities during the quarter[132] Exhibits This section lists the exhibits filed with the Form 10-Q, which include CEO and CFO certifications and XBRL interactive data files - The exhibits filed with this report include certifications from the Chief Executive Officer and Chief Financial Officer, as well as XBRL data files[132]