Banzai International(BNZI) - 2021 Q2 - Quarterly Report

PART I. FINANCIAL INFORMATION This section presents the unaudited condensed financial statements and management's discussion for 7GC & Co. Holdings, Inc., detailing its financial position, operations, cash flows, and related disclosures as a blank check company Item 1. Condensed Financial Statements This section presents the unaudited condensed financial statements for 7GC & Co. Holdings, Inc. as of June 30, 2021, highlighting its status as a blank check company with no operations, a balance sheet primarily consisting of cash and investments in a trust account, and net income driven by non-cash changes in derivative warrant liabilities Condensed Balance Sheets As of June 30, 2021, the company held $230.0 million in its Trust Account, with total assets of $231.4 million and total liabilities of $26.5 million, primarily from derivative warrant liabilities and deferred underwriting commissions, while $200.0 million of Class A common stock is classified as temporary equity Condensed Balance Sheet Highlights (June 30, 2021 vs. December 31, 2020) | Metric | June 30, 2021 (unaudited) | December 31, 2020 | | :--- | :--- | :--- | | Assets | | | | Cash | $979,212 | $1,724,354 | | Investments held in Trust Account | $230,011,596 | $230,000,189 | | Total Assets | $231,425,039 | $232,279,953 | | Liabilities | | | | Derivative warrant liabilities | $17,300,500 | $25,856,500 | | Deferred underwriting commissions | $8,050,000 | $8,050,000 | | Total Liabilities | $26,450,879 | $34,050,517 | | Equity | | | | Class A common stock subject to possible redemption | $199,974,150 | $193,229,430 | | Total stockholders' equity | $5,000,010 | $5,000,006 | Unaudited Condensed Statements of Operations For the six months ended June 30, 2021, the company reported a net income of $6.7 million, primarily due to an $8.6 million non-cash gain from derivative warrant liabilities, offsetting $1.8 million in operating losses, while the three-month period recorded a net loss of $4.3 million driven by a $2.9 million loss on warrant fair value changes Statement of Operations Summary | Metric | Three Months Ended June 30, 2021 | Six Months Ended June 30, 2021 | | :--- | :--- | :--- | | Loss from operations | $(1,403,427) | $(1,822,683) | | Change in fair value of derivative warrant liabilities | $(2,901,000) | $8,556,000 | | Gain on investments held in Trust Account | $5,735 | $11,407 | | Net (Loss) Income | $(4,298,692) | $6,744,724 | | Basic and diluted net (loss) income per share, Class B | $(0.75) | $1.17 | Condensed Statement of Changes in Stockholders' Equity For the six months ended June 30, 2021, total stockholders' equity remained stable at approximately $5.0 million, influenced by reclassifications of redeemable common stock and the period's net income, which was partially offset by a net loss in the second quarter - Total stockholders' equity remained consistent, starting at $5,000,006 on December 31, 2020, and ending at $5,000,010 on June 30, 2021[16] - The retained earnings (accumulated deficit) account shifted from a deficit of $(6,051,790) at year-end 2020 to retained earnings of $692,934 at June 30, 2021, primarily due to the net income recorded in the first half of the year[16] Unaudited Condensed Statement of Cash Flows For the six months ended June 30, 2021, net cash used in operating activities totaled $745,142, resulting from a net income of $6.7 million adjusted for a significant non-cash gain of $8.6 million from derivative warrant liabilities, leading to a decrease in the cash balance from $1.7 million to $979,212 Cash Flow Summary for the Six Months Ended June 30, 2021 | Metric | Amount | | :--- | :--- | | Net income | $6,744,724 | | Adjustments (Change in fair value of derivative warrant liabilities) | $(8,556,000) | | Net cash used in operating activities | $(745,142) | | Cash - beginning of the period | $1,724,354 | | Cash - end of the period | $979,212 | Notes to Unaudited Condensed Financial Statements The notes detail the company's formation as a SPAC, its December 2020 IPO, and its objective to complete a Business Combination within 24 months, outlining key accounting policies for derivative warrants and redeemable stock, related party transactions, and a going concern uncertainty due to expected acquisition costs - The company is a blank check company formed to effectuate a Business Combination and has not commenced any operations as of June 30, 2021[22][23] - The company consummated its Initial Public Offering (IPO) of 23,000,000 units at $10.00 per unit on December 28, 2020, generating gross proceeds of $230.0 million[24] - The company has until December 28, 2022 (24 months from IPO closing) to complete a Business Combination, or it will be required to liquidate and return funds from the Trust Account to public stockholders[34] - Management has identified conditions that raise substantial doubt about the Company's ability to continue as a going concern within one year, as it expects to incur significant costs in pursuit of its acquisition plans[39] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the company's status as a blank check company with no operating revenue, where net income is driven by non-cash changes in derivative warrant liabilities, highlighting liquidity concerns and a going concern uncertainty due to expected acquisition costs exceeding operating cash, and explaining critical accounting policies for warrants and redeemable stock - The company is a blank check company with the purpose of effecting a business combination and has not generated any operating revenues since inception[114][124] Results of Operations Summary | Period | Net (Loss) Income | Key Drivers | | :--- | :--- | :--- | | Three months ended June 30, 2021 | $(4.3 million) | $2.9M loss on warrant fair value, $1.4M G&A expenses | | Six months ended June 30, 2021 | $6.7 million | $8.6M gain on warrant fair value, offset by $1.7M G&A expenses | - A substantial doubt about the company's ability to continue as a going concern is raised due to expected significant costs in pursuit of a business combination, with accrued expenses being greater than the cash balance in the operating account[122] - Critical accounting policies include classifying public and private warrants as derivative liabilities measured at fair value each period, and classifying Class A common stock subject to redemption as temporary equity[132][133] Item 3. Quantitative and Qualitative Disclosures About Market Risk The company reports minimal market or interest rate risk, as proceeds from its Initial Public Offering are conservatively invested in short-term U.S. government securities or money market funds, and it has not engaged in any hedging activities - The company's market risk is considered minimal as funds in the Trust Account are invested in short-term U.S. government securities or money market funds holding such securities[141] - The company has not engaged in any hedging activities since its inception and does not plan to do so[142] Item 4. Controls and Procedures Management concluded that the company's disclosure controls and procedures were ineffective as of June 30, 2021, due to a previously disclosed material weakness in internal control over financial reporting, despite believing the financial statements are fairly presented, and has implemented remediation steps including an improved review process for complex securities - Disclosure controls and procedures were concluded to be ineffective as of June 30, 2021, due to a material weakness in internal control over financial reporting[143] - Management has implemented remediation steps, such as improving the review process for complex securities, and plans to further enhance this process by consulting with third-party professionals and considering additional experienced staff[145] PART II. OTHER INFORMATION This section provides additional disclosures including legal proceedings, risk factors, equity sales, defaults, mine safety, and a list of exhibits Item 1. Legal Proceedings The company reports that it is not currently aware of any legal proceedings or claims that would have a material adverse effect on its business, financial condition, or results of operations - As of the filing date, the company is not a party to any material legal proceedings[148] Item 1A. Risk Factors The company states that there have been no material changes to its risk factors from those disclosed in its previously filed Annual Report on Form 10-K for the fiscal year ended December 31, 2020 - No material changes in risk factors have occurred since the company's Annual Report on Form 10-K filed on May 28, 2021[149] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds from Registered Securities This section indicates that there were no unregistered sales of equity securities or changes in the use of proceeds from registered securities during the reporting period - The company reported no unregistered sales of equity securities[150] Item 3. Defaults Upon Senior Securities The company reports that there have been no defaults upon senior securities - The company reported no defaults upon senior securities[150] Item 4. Mine Safety Disclosures This section is not applicable to the company - Mine safety disclosures are not applicable to the company's business[151] Item 5. Other Information The company reports that there is no other information to disclose for the period - The company reported no other information[152] Item 6. Exhibits This section lists the exhibits filed with the Form 10-Q, which include officer certifications as required by the Sarbanes-Oxley Act (Sections 302 and 906) and Inline XBRL financial data files - Exhibits filed include Certifications of the Principal Executive Officer and Principal Financial Officer, and Inline XBRL documents[153]