7GC & (VII) - 2024 Q4 - Annual Report

PART I This section covers Banzai's business operations, industry context, growth strategies, and key risk factors, alongside corporate and legal disclosures Item 1. Business Banzai is a SaaS MarTech company expanding its platform through M&A and customer growth, operating on a recurring subscription model Overview - Banzai is a SaaS MarTech company with over 90,000 global customers, including Amazon, Dell, and Salesforce[14] - Growth strategies include acquiring new customers, expanding the platform through M&A, and cross-selling additional solutions to existing customers[15] - Between Q1 2024 and Q1 2025, Banzai acquired ClearDoc, Inc. (OpenReel) and Vidello, Ltd., and entered into a definitive agreement to acquire Act-On, Inc[16] - As of December 31, 2024, the company had over 3,070 customers in over 90 countries, with no single customer representing more than 1% of revenue, operating on a recurring subscription license model[17] Industry Background and Trends - The MarTech industry is experiencing rapid growth and transformation, with increasing demand for efficient solutions driven by global competition and pressure for profitability[19] - The MarTech landscape is highly fragmented, with over 14,000 vendors and a 27.8% year-over-year growth in companies, presenting significant acquisition opportunities and intense competition[20] Market Size Projected B2B MarTech Market Opportunity (2026) | Metric | Projected Value (Billion USD) | CAGR (2020-2026) | | :----- | :---------------------------- | :--------------- | | TAM | $39.42 | 11.80% | | SAM | $8.37 | 16.07% | - The Serviceable Addressable Market (SAM) includes U.S. B2B spending on measurement and attribution, demand generation, and digital events platforms[23] Products and Services - As of December 31, 2024, Banzai's platform offers five SaaS products: OpenReel, Demio, Boost, Curate, and Reach[25] - OpenReel: An AI-powered video creation platform for remote recording, editing, hosting, and sharing high-quality videos[26] - Demio: A browser-based webinar platform with robust engagement tools and an AI Moderator for real-time audience interaction[30][31] - Vidello: A comprehensive video hosting and marketing platform with customizable players, A/B testing, and automatic video SEO[28][29] - Reach: A targeted outreach tool for demand generation, creating tailored contact lists and personalized outreach[33] - Curate: An AI-driven newsletter platform for fully automated, targeted, and branded newsletters[34] Product Roadmap and Enhancements - Banzai's product roadmap focuses on identifying and prioritizing underserved customer and market needs, leveraging data and AI to increase customer value[35] - The company uses a unique management framework to align engineering, sales, and marketing teams towards shared goals, maximizing efficiency and effectiveness[36][37] - Customer expansion is key to the long-term vision, aiming to increase average revenue per customer (ACV) through feature development and add-on products[39] Research and Development Expenses - Significant investment in technology, including maintenance of existing products and development of new ones, is considered essential for long-term success and competitive advantage[40] - The company plans to utilize a combination of in-house employees and development partners to maintain and improve its technology[40] Our Growth Strategies - Key growth strategies include cost-efficient customer acquisition, customer retention and expansion, product improvements, new product introductions, and a strategic acquisition approach[42] - The OpenReel merger closed on December 18, 2024, acquiring ClearDoc, Inc. for $19.6 million in Banzai Common Stock and Pre-Funded Warrants[41][44][45] - The Vidello Limited acquisition closed on January 31, 2025, for approximately $2.7 million in cash and 898,204 shares of Banzai Class A Common Stock. Vidello had over $6.5 million in TTM revenue and $2 million in TTM EBITDA, expected to reduce combined operating losses by $1.3 million annually[52][54] - A definitive agreement to acquire Act-On Software Inc. was announced on January 23, 2025, with an expected closing in Q2 2025 for approximately $35.05 million in cash and Class A Common Stock[55][276] Sales and Marketing - Banzai focuses on increasing mid-market and enterprise customers, demonstrated by the OpenReel acquisition and a 14-fold increase in multi-host Demio customers from January 2021 to December 2024[57] - The company uses a hybrid self-service and direct sales go-to-market approach, with leads generated from organic traffic, affiliates, paid ads, and various marketing activities[58][59] - Most products are sold using a recurring subscription license model, with pricing based on the number of users, desired feature sets, and product capabilities[60] Competition, Strengths, and Differentiation - Banzai competes across various B2B MarTech categories, including digital events and webinars, demand generation, video creation, engagement platforms, marketing automation, and measurement and attribution[61] - Company strengths include recognizable brands, an existing customer base for cross-selling, and operational competency in customer success[62] - Differentiation is achieved through data-driven solutions, product integrations, and the use of AI and machine learning to deliver new capabilities and improved performance[63] Intellectual Property - Banzai relies on trademarks, trade secrets, license agreements, and confidentiality procedures to protect its proprietary rights[64] - As of December 31, 2024, the company held three registered trademarks in the United States: "Banzai", "Demio", and "OpenReel"[64] Government Regulation - Banzai is subject to federal, state, and foreign legal requirements common to the SaaS and MarTech industries, including data privacy and protection laws such as GDPR, CCPA, TCPA, CASL, and CAN-SPAM[65][66] - Violations could result in significant fines, criminal sanctions, prohibitions on doing business, and damage to reputation, though no material fines or penalties have been experienced to date[67] Employees and Management - As of December 31, 2024, Banzai had 28 full-time employees and 44 contractors[68] - The company's culture is defined by four core values: Learning, Serving Others, Game Changing, and "10,000 Years" (long-term vision)[68][76] Business Combination - On December 14, 2023, 7GC & Co. Holdings Inc. (legal acquirer) consummated a business combination with Legacy Banzai (accounting acquirer), subsequently changing its name to Banzai International, Inc[69] - The historical financial statements of Legacy Banzai became the historical financial statements of the combined company[69] Reverse Stock Split - A 1-for-50 reverse stock split for the Company's Class A Common Stock was implemented on September 19, 2024, following securityholder approval on August 29, 2024[70] Nasdaq Listing - Banzai's Common Stock was phased down from The Nasdaq Global Market to The Nasdaq Capital Market on October 31, 2024, due to prior noncompliance[71] - The company regained compliance with Nasdaq's Minimum Bid Price Requirement by October 18, 2024, and with the Market Value of Listed Securities requirement by November 7, 2024[72][73][74] - As of February 12, 2025, Nasdaq confirmed that the company had demonstrated compliance with all listing requirements[75] Available Information - Banzai files annual, quarterly, and current reports with the SEC, which are available free of charge on the SEC website (www.sec.gov) and the company's corporate website (https://ir.banzai.io/financial-information/sec-filings)[77](index=77&type=chunk) Item 1A. Risk Factors Banzai faces significant business and industry risks, including historical losses, intense competition, and acquisition challenges, alongside risks related to securities ownership and internal control weaknesses Risks Factors Summary - The report provides a summary of principal risks that could materially adversely affect Banzai's business, financial condition, or results of operations[79] - Risks are categorized into 'Risks Related to our Business and Industry' and 'Risks Related to Ownership of Our Securities'[80][81] Risks Related to our Business and Industry - Banzai has incurred significant operating losses ($13.5 million in 2024, $9.8 million in 2023) and may never achieve or maintain profitability, with substantial doubt about its ability to continue as a going concern[84][85] - The company has a limited operating history with its current offerings, making it difficult to evaluate future business prospects and increasing investment risk[88] - Revenue growth depends on existing customers renewing and expanding subscriptions; failure to retain customers or attract new ones cost-effectively would harm the business[89][90] - Acquisitions and investments may not yield expected benefits, and the inability to successfully integrate acquired businesses could negatively impact financial results[100] - Banzai faces significant competition from established and new companies offering marketing, sales, and engagement software, including Adobe, Vimeo, Zoom, Mailchimp, Marketo, and Hubspot[103][105][108] - Cybersecurity and data security breaches, as well as compliance with privacy laws (GDPR, CCPA), could create financial liabilities, damage reputation, and increase costs[120][123][125] - Failure to protect or enforce intellectual property rights could harm the business and results of operations[139] Risks Related to Ownership of Our Securities - Future sales of Class A Common Stock, including issuances under the SEPA and warrant exercises, could result in substantial dilution and negatively impact the market price[157][158][162][164][166] - Nasdaq may delist Banzai's securities, potentially subjecting them to "penny stock" rules if the price falls below $5.00 per share, limiting investors' ability to trade[167][168] - The dual-class common stock structure concentrates voting power with CEO Joseph Davy (approximately 65.13% as of April 10, 2025), limiting other investors' influence on important transactions[169] - Banzai has identified material weaknesses in its internal control over financial reporting, which, if not remediated, could adversely affect financial reporting accuracy and stock price[177][178] - As an "emerging growth company" and "smaller reporting company," Banzai benefits from reduced reporting requirements, which may make its shares less attractive to some investors[189][191][192] - Outstanding warrants may never be in the money and could expire worthless; their terms can be amended in a manner adverse to holders with approval from at least 50% of outstanding warrants[214][216] Item 1B. Unresolved Staff Comments There are no unresolved staff comments to report - No unresolved staff comments[220] Item 1C. Cybersecurity Banzai implements a cyber risk management program aligned with NIST CSF, including third-party assessments and incident response, overseen by management and the Audit Committee - Banzai maintains a cyber risk management program aligned with the National Institute of Standards and Technology (NIST) Cybersecurity Framework (CSF)[221][222] - The program includes annual third-party assessments to identify, quantify, and categorize material cyber risks, leading to the development of Risk Mitigation Plans[223] - Policies cover information security, incident management, business continuity, IT change and configuration management, acceptable use, and access on/offboarding[224] - Management, the Chief Technology Officer, and cybersecurity service providers oversee the program, with the Audit Committee reviewing cybersecurity risk exposures at least annually[230][231] - Prior cybersecurity incidents have not had a material adverse effect on the company's business, financial condition, results of operations, or cash flows[232] Item 2. Properties Banzai's principal executive office in Bainbridge Island, Washington, spans approximately 1,800 square feet under a lease expiring in October 2027 - Banzai's principal executive office is located at 435 Ericksen Ave NE, Suite 250, Bainbridge Island, WA 98110[233] - The office consists of approximately 1,800 square feet, with the current lease terms extended to expire in October 2027[233] Item 3. Legal Proceedings Banzai is not currently involved in any legal proceedings that management believes would individually or collectively have a material adverse effect on its business, operating results, financial condition, or cash flows - Banzai is not presently party to any legal proceedings that, if determined adversely, would have a material adverse effect on its business, operating results, financial condition, or cash flows[234] Item 4. Mine Safety Disclosures This item is not applicable to Banzai International, Inc - This item is not applicable[235] PART II This section details Banzai's market information, equity ownership, financial condition, operational results, and internal controls Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Banzai's Class A Common Stock and Public Warrants are Nasdaq-listed; the company has not paid dividends and has issued unregistered securities for financings and debt equitization Market Information - Banzai's Class A Common Stock and Public Warrants are listed on Nasdaq under the symbols "BNZI" and "BNZIW", respectively[237] - The Class B Common Stock is not publicly traded[237] Holders of Record Holders of Record (as of April 10, 2025) | Class | Number of Holders | | :-------------------- | :---------------- | | Class A Common Stock | 60 | | Class B Common Stock | 1 | | Public Warrants | 1 | Dividend Policy - Banzai has not declared or paid any cash dividends on its Common Stock and expects to retain future earnings for operations, expansion, and debt repayment[239] - No plans to declare or pay cash dividends on Common Stock for the foreseeable future[239] Performance Graph - This item is not applicable as Banzai is a smaller reporting company[240] Recent Sales of Unregistered Securities - 5,750,000 shares of 7GC Class B Common Stock were issued in connection with 7GC's organization and automatically converted into Common Stock at the Business Combination Closing[241][242] - 147,000 private placement warrants purchased by the Sponsor were forfeited in connection with the Business Combination[243][244] - A GEM Warrant was issued on December 15, 2023, granting the right to purchase 16,571 shares of Common Stock at an adjusted exercise price of $1.83 per share[245] - Between January 1, 2024, and October 14, 2024, 454,158 shares of Common Stock were issued upon conversion of Yorkville Promissory Notes, with a cash payment of $750,000 made in May 2024. The aggregate principal was fully satisfied by December 31, 2024[249][250] - A GEM Promissory Note for $1.0 million was issued on February 5, 2024, and settled with 190,001 shares of Common Stock ($784,943) and a cash payment of $215,057 by Q1 2025[251] - As of April 10, 2025, 1,597,944 shares were issued to creditors in exchange for the cancellation of $5,068,547 of debt as part of the Debt Reorganization[256] Purchases of Equity Securities by the Issuer and Affiliated Purchasers - There were no purchases of equity securities by the issuer or affiliated purchasers[261] Item 6. [Reserved] This item is reserved and contains no information - Item is reserved[261] Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations Banzai reported a $31.5 million net loss in 2024, driven by increased expenses, despite M&A activities and financing efforts, raising going concern doubts due to recurring losses Overview - Banzai is a Marketing Technology (MarTech) company founded in 2015, providing data-driven marketing and sales solutions, with products including Reach, Demio (acquired 2021), and Boost (launched 2023)[264][265] - As of December 31, 2024, Banzai served over 3,070 customers in over 90 countries, focusing on increasing mid-market and enterprise customers for Demio[265] Key Financial Performance (in millions USD) | Metric | FY 2024 (approx.) | FY 2023 (approx.) | | :---------------- | :---------------- | :---------------- | | Revenue | $4.5 | $4.6 | | Net Loss | $31.1 | $14.4 | | Accumulated Deficit | $78.3 | $46.8 | Summary of our Mergers and Acquisitions - The Business Combination with 7GC closed on December 14, 2023, with Legacy Banzai deemed the accounting acquirer[268] - The OpenReel merger closed on December 18, 2024, acquiring ClearDoc, Inc. for $19.6 million in Banzai Common Stock (930,558 shares) and Pre-Funded Warrants (11,769,501)[269][271][272] - The Vidello Limited acquisition closed on January 31, 2025, for approximately $2.7 million in cash and 898,204 shares of Banzai Class A Common Stock[273] - A definitive agreement to acquire Act-On Software Inc. was entered into on January 22, 2025, expected to close in Q2 2025, with an aggregate merger consideration of approximately $35.05 million in cash and Class A Common Stock[275][276] Reverse Stock Split - A 1-for-50 reverse stock split for the Company's Class A Common Stock was effected on September 19, 2024, following securityholder approval[285] Nasdaq Listing - Banzai's Common Stock was phased down from The Nasdaq Global Market to The Nasdaq Capital Market on October 31, 2024[286] - The company regained compliance with Nasdaq's Minimum Bid Price Requirement by October 18, 2024, and with the Market Value of Listed Securities requirement by November 7, 2024[287][288][289] - Nasdaq confirmed full compliance with all listing requirements on February 12, 2025[290] 2024 Financings - In May 2024, Banzai priced a public offering for 104,556 Class A common stock shares, 173,222 pre-funded warrants, and 277,778 common warrants at $9.00 per aggregate share[292] - The public offering generated approximately $2.5 million in aggregate gross proceeds[292] Recent Wainwright Private Financing - In September 2024, Banzai closed a private placement, issuing pre-funded warrants, Series A warrants, and Series B warrants for a combined purchase price of $4.249 per unit[294] - The private placement generated approximately $4.4 million in net proceeds, intended for general corporate purposes and working capital[297] - The exercise price of the Series A and Series B Warrants was reduced from $4.00 to $2.50 per share in consideration for a waiver related to the OpenReel merger[300] Debt Equitization Plan - From August 23, 2024, to December 31, 2024, Banzai reorganized outstanding debt from various creditors, issuing 1,597,944 shares of Class A Common Stock in exchange for the cancellation of $5,068,547 of debt[303] - Agreements included settling debt with J.V.B Financial Group, Roth Capital Partners, Activate, Cooley LLP, CohnReznick LLP, Sidley Austin LLP, Donnelley Financial LLC, and Verista Partners, Inc. through a mix of shares, cash, and reduced payment terms[304][306][307][309][310][312][313][314] Alco and CP BF - On September 5, 2024, Banzai and CP BF agreed to consolidate $10,758,775 of outstanding debt into a single convertible note (2024 CP BF Convertible Note) with a 15.5% PIK interest rate, convertible at $3.89 per share[317][321] - As part of the CP BF restructuring, $2,000,000 in debt was converted into 260,849 shares of Class A Common Stock, warrants for 565,553 shares, and pre-funded warrants for 304,704 shares[319] - On September 19, 2024, Banzai and Alco agreed to convert $4,708,099 of debt into 282,420 shares of Common Stock, warrants for 1,331,340 shares, and pre-funded warrants for 1,048,920 shares[322] 2025 Financings - On January 30, 2025, Banzai entered into a $3.5 million convertible promissory note with Yorkville as an advance under its SEPA[325] - The note matures on July 31, 2025, bears 0% interest for the first 90 days then 6% (18% on default), and is repayable in installments starting February 28, 2025[326] - It is convertible into shares of Class A Common Stock at a conversion price of $2.00 per share[326] Operating Metrics Revenue Contribution by Product | Product | Year Ended Dec 31, 2024 | Year Ended Dec 31, 2023 | | :------ | :---------------------- | :---------------------- | | Reach | 3.8 % | 4.5 % | | Demio | 91.0 % | 94.9 % | | Other | 5.2 % | 0.6 % | Demio Operating Metrics (YoY Change) | Metric | FY 2024 | FY 2023 | YoY Change | | :-------------------------------- | :------ | :------ | :--------- | | Average Monthly NRR | 96.7 % | 95.5 % | +1.2 pp | | New Customer ACV | $1,428 | $1,355 | +$73 | | Total Average ACV | $1,545 | $1,406 | +$139 | | Customer Acquisition Cost (CAC) | $1,519 | $1,030 | +$489 | | Average Monthly Churn - Revenue | 5.7 % | 6.9 % | -1.2 pp | | Average Monthly Churn - Customer (Logo) | 6.3 % | 7.9 % | -1.6 pp | | MRR (New Customers) | $129 | $117 | +$12 | | Customer Life (months) | 17.5 | 14.5 | +3.0 months| | LTV (New Customers) | $2,078 | $1,635 | +$443 | | LTV / CAC Ratio | 1.5 | 1.6 | -0.1 | Analysis of the Impact of Key Business Drivers on Financial Performance - Banzai aims to maximize revenue growth by optimizing key business metrics such as ACV, NRR, LTV/CAC ratio, and churn, relative to industry benchmarks and historical performance[354] - This is achieved through increasing revenue per customer, expanding the customer base via efficient acquisition, and improving customer retention, supported by customer success, product development, and company initiatives[354] Identification of Operational Risk Factors - Internal operational risks include ineffective leadership, operational inefficiencies, financial mismanagement, employee-related challenges, and technological obsolescence[356] - External risks include economic factors (downturns, inflation), intense competition, legal and regulatory changes, technological disruptions, and unforeseen events (natural disasters, geopolitical instability, pandemics)[356] Analysis of the Impact of Operational Risks on Financial Performance - Operational risks can significantly impact Banzai's financial performance by affecting its ability to generate and grow revenue, contain costs, and inhibit profitability and cash flow[356] - The company conducts comprehensive risk monitoring and analysis to make informed decisions and develop mitigation strategies, ensuring transparent communication with investors and stakeholders[356] The Business Combination and Public Company Costs - The Business Combination was accounted for as a reverse recapitalization, with Legacy Banzai treated as the accounting acquirer, meaning its historical financial statements became the basis for the combined company[357][359] - Becoming a public company has led to increased annual expenses for regulatory requirements, directors' and officers' liability insurance, director fees, and additional internal and external accounting, legal, and administrative resources[360] - As an "emerging growth company," Banzai benefits from certain disclosure and regulatory relief[360] Results of Operations Consolidated Statements of Operations (in Thousands USD) | Metric | FY 2024 | FY 2023 | YoY Change ($) | YoY Change (%) | | :-------------------------------- | :-------- | :-------- | :------------- | :------------- | | Revenue | $4,528 | $4,561 | $(33) | -0.7% | | Cost of revenue | $1,423 | $1,445 | $(22) | -1.5% | | Gross profit | $3,105 | $3,116 | $(11) | -0.4% | | Total operating expenses | $16,573 | $12,912 | $3,661 | 28.4% | | Operating loss | $(13,468) | $(9,796) | $(3,672) | 37.5% | | Total other expenses (income) | $18,045 | $4,610 | $13,435 | 291.4% | | Loss before income taxes | $(31,513) | $(14,406) | $(17,107) | 118.7% | | Net loss | $(31,513) | $(14,406) | $(17,107) | 118.7% | | Net loss per share (Basic and Diluted) | $(6.97) | $(6.00) | $(0.97) | 16.2% | Revenue Analysis - Total revenue for the year ended December 31, 2024, was approximately $4,528 thousand, a decrease of 0.7% compared to $4,561 thousand in 2023[363] - The decrease was primarily due to lower Reach revenue (down $19 thousand) and Demio revenue (down $223 thousand) from churn and lower new sales[363] Cost of Revenue Analysis - Cost of revenue decreased by approximately $22 thousand (1.5%) to $1,423 thousand in 2024 from $1,445 thousand in 2023[364] - This decrease was mainly due to a lower customer base, resulting in approximately 5% lower average cost per customer, driven by reduced contracted services and infrastructure costs[364] Gross Profit Analysis - Gross profit decreased slightly by $11 thousand (0.4%) to $3,105 thousand in 2024 from $3,116 thousand in 2023, reflecting the changes in revenue and cost of revenue[365] Operating Expense Analysis - Total operating expenses increased by approximately $3.7 million (28.4%) to $16.6 million in 2024 from $12.9 million in 2023[366] - This increase was primarily driven by higher salaries and related expenses ($0.4 million), marketing expenses ($0.7 million), technology expenses ($0.3 million), and audit, technical accounting, and legal professional services ($1.7 million)[366] - A reduction in force in September 2024 (24 employees, 34% of headcount) is expected to reduce annual operating expenses by an additional $1.3 million starting in Q4 2024[367] Other Expense Analysis - Total other expenses increased significantly by approximately $13.4 million (291.4%) to $18.0 million in 2024 from $4.6 million in 2023[368] - Key drivers included losses on conversion and settlement of CP BF notes ($6.5 million) and Alco promissory notes ($4.8 million), loss on debt issuance ($0.7 million), loss on extinguishment of term notes ($1.1 million), and goodwill impairment ($2.7 million)[370] - Offsetting factors included a gain on extinguishment of debt ($0.7 million) and a $1.2 million gain from changes in the fair value of warrant liabilities[370] Provision for Income Taxes - Banzai reported $0 thousand in income tax expense for both the years ended December 31, 2024, and 2023[369][371] - Due to a history of losses since inception, a full valuation allowance has been provided against net deferred tax assets, as realization of these assets is not considered more likely than not[372] Net Loss Analysis - Net loss for 2024 was approximately $31.5 million, an increase of 118.7% from $14.4 million in 2023[374] - The higher net loss was primarily driven by a $13.4 million increase in total other expenses and a $3.7 million increase in operating expenses[374] Critical Accounting Estimates - Key accounting estimates include impairment of goodwill, recognition and measurement of convertible notes and SAFEs, fair value of warrant liabilities and debt instruments, and purchase price allocation for business combinations[376] - Goodwill is reviewed for impairment at least annually. In 2024, a $2.7 million impairment loss was recorded for the OpenReel reporting unit due to its carrying value exceeding fair value[377][384] - Business combinations are accounted for under the acquisition method, recognizing acquired tangible and identifiable intangible assets and assumed liabilities at their acquisition date fair values[386] Non-GAAP Financial Measures - Banzai uses Adjusted EBITDA as a non-GAAP measure to evaluate operational performance, excluding irregular, non-cash, and non-operational expenses[387][388] Adjusted EBITDA (Loss) (in Thousands USD) | Metric | FY 2024 | FY 2023 | YoY Change ($) | YoY Change (%) | | :----------------- | :-------- | :--------- | :------------- | :------------- | | Adjusted EBITDA (Loss) | $(6,506) | $(11,944) | $5,438 | -45.5% | - The decrease in Adjusted EBITDA loss is primarily attributable to increased general and administrative expenses[390] Liquidity and Capital Resources - As of December 31, 2024, Banzai had cash of approximately $1.1 million, a working capital deficit of $25.6 million, and an accumulated deficit of $78.3 million[393][394] - The company has incurred recurring net losses and negative cash flows from operating activities since inception, raising substantial doubt about its ability to continue as a going concern[393][397] - Banzai plans to seek additional funding through its SEPA arrangement and other equity financings in 2025[395] - A workforce reduction in September 2024 (24 employees, 34% of headcount) is expected to reduce annual operating expenses by approximately $1.3 million starting in Q4 2024[396] Cash Flows (in Thousands USD) | Metric | FY 2024 | FY 2023 | YoY Change ($) | YoY Change (%) | | :-------------------------------- | :-------- | :-------- | :------------- | :------------- | | Net cash used in operating activities | $(9,575) | $(1,551) | $(8,024) | 517.3% | | Net cash provided by investing activities | $82 | $0 | $82 | nm | | Net cash provided by financing activities | $8,487 | $2,621 | $5,866 | 223.8% | | Net increase / (decrease) in cash | $(1,006) | $1,070 | $(2,076) | -194.0% | Capital Expenditure Commitments and Financing Requirements (as of Dec 31, 2024, in Thousands USD) | Category | Total | Less than 1 year | 1 - 3 Years | | :-------------------------------------------- | :------- | :--------------- | :---------- | | Debt principal - 15.5% CP BF convertible notes| $8,259 | $0 | $8,259 | | Debt principal - GEM promissory note | $215 | $215 | $0 | | Debt principal - Agile | $2,270 | $2,270 | $0 | | Debt principal - 1800 Diagonal | $371 | $371 | $0 | | Interest on debt | $485 | $116 | $369 | | Operating leases | $29 | $29 | $0 | | Total | $11,629| $3,001 | $8,628 | Contractual Obligations and Commitments - Revenue is recognized over time as performance obligations are satisfied, based on agreed-upon terms and conditions[434] - Banzai has operating leases for real estate, accounted for under ASC 842, with remaining lease terms of approximately 2.83 years as of December 31, 2024[435][865] - The $4.0 million deferred underwriting fee liability to Cantor Fitzgerald was derecognized as of December 31, 2024, as the company satisfied its registration rights obligations[437] - A $2.0 million GEM commitment fee liability, recognized in 2023, was settled in Q1 2025 through cash and share issuances[440][441][786] Off-Balance Sheet Arrangements - Banzai had no off-balance sheet arrangements as of December 31, 2024[443] Item 7A. Quantitative and Qualitative Disclosures About Market Risk This item is not applicable to Banzai International, Inc. as it is a smaller reporting company - This item is not applicable as Banzai is a smaller reporting company[444] Item 8. Financial Statements and Supplementary Data The required financial statements and supplementary data are included at the end of this Annual Report, beginning on page F-1 - The information required by this Item 8 is included at the end of this Annual Report beginning on page F-1[445] Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure There were no changes in or disagreements with accountants on accounting and financial disclosure - None[446] Item 9A. Controls and Procedures Banzai's disclosure controls and internal financial reporting controls were ineffective as of December 31, 2024, due to material weaknesses, with remediation efforts underway and integration impacts from the OpenReel merger Evaluation of Disclosure Controls and Procedures - As of December 31, 2024, Banzai's Principal Executive Officer and Principal Financial Officer concluded that disclosure controls and procedures were not effective due to material weaknesses in internal control over financial reporting[447] Management's Annual Report on Internal Controls over Financial Reporting - Management assessed the effectiveness of internal control over financial reporting as of December 31, 2024, using the COSO Integrated Framework (2013) and concluded it was not effective[451][452] - Material weaknesses were identified in IT General Controls (provisioning, deprovisioning, user access reviews, service organization reviews), COSO Entity Level Controls (related party identification/monitoring, delegation of authority), and the period-end financial close and reporting process (unrestricted administrative access to GL system)[453][454] Remediation of Material Weaknesses - Banzai is committed to remediating identified material weaknesses, including utilizing external consultants to review and enhance IT general controls and entity-level controls[455][457] - Specific actions include assessing and performing remedial actions for overall security role design and privileged user access for in-scope applications, including the general ledger system[456] - The company cannot provide absolute assurance that material weaknesses will be remediated in a timely manner[456] Changes in Internal Control over Financial Reporting - The merger transaction with OpenReel on December 18, 2024, is considered a significant corporate event that materially affected Banzai's internal control environment[459][460] - Management has begun assessing and adjusting internal control processes to accommodate the integration of systems, personnel, and financial reporting functions of the combined entity[460] Item 9B. Other Information There is no other information to report under this item - None[461] Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections This item is not applicable to Banzai International, Inc - Not applicable[462] PART III This section details Banzai's corporate governance, executive compensation, security ownership, related party transactions, and principal accounting fees Item 10. Directors, Executive Officers and Corporate Governance Banzai's governance structure includes executive leadership and a staggered, independent Board overseeing risk, with a Code of Conduct and indemnification provisions for directors and officers Executive Officer Biographies - Joseph P. Davy serves as Chief Executive Officer, Chairman, and Director, having co-founded Legacy Banzai in 2015 and possessing extensive venture capital and executive experience[466] - Alvin Yip is the Interim Chief Financial Officer, previously serving as Legacy Banzai's Corporate Controller since 2022[467] - Simon Baumer is the Chief Technology Officer, having served as Legacy Banzai's CTO since 2021[468] Non-Executive Director Biographies - Jack Leeney, a Founding Partner of 7GC & Co Sarl, brings extensive venture capital experience to the Board[469] - Mason Ward, CFO of Alco Investment Company, contributes extensive finance and accounting expertise[470][471] - Paula Boggs, founder of Boggs Media, LLC and former Starbucks executive, provides governance and Fortune 500 experience[472] - Kent Schofield, CFO of Welcome Tech and former Goldman Sachs/Uber executive, offers public market investing and financial experience[473] Role of Board in Risk Oversight - The Board directly oversees the company's risk management process, with specific committees addressing risks in their respective areas[474] - The Audit Committee is responsible for overseeing major financial risk exposures, legal and regulatory compliance, and internal controls[474] - The Compensation Committee assesses and monitors risks related to compensation plans, policies, and programs[474] Composition of the Board - The Board currently consists of five members, with Joseph Davy serving as Chairman[475] - The Board is divided into three classes (Class I, II, III) with staggered three-year terms, which may delay or prevent changes in the company's control or management[476][478] Director Independence - All directors, except Joseph Davy, qualify as independent directors under Nasdaq listing rules and SEC rules[479] - The Board consists of a majority of "independent directors"[479] Board Committees and Committee Composition - The Board has three standing committees: Audit, Compensation, and Nominating and Corporate Governance, each operating under a written charter[480] - The Audit Committee consists of Kent Schofield (chairperson), Mason Ward, and Paula Boggs, with Mr. Schofield qualifying as an "audit committee financial expert"[483][485] - The Compensation Committee consists of Mason Ward (chairperson), Paula Boggs, and Kent Schofield, all of whom are independent[487] - The Nominating and Corporate Governance Committee consists of Paula Boggs (chairperson), Jack Leeney, and Mason Ward, all of whom are independent[489] Code of Business Conduct and Ethics - Banzai has a Code of Business Conduct and Ethics that applies to its directors, officers, and employees, available on its corporate website[490] Compensation Committee Interlocks and Insider Participation - None of the Compensation Committee members are current or former officers or employees of the company[491] - No executive officers currently serve, or have served, as a member of the board or compensation committee of any entity that has one or more executive officers serving on Banzai's Board or Compensation Committee[491] Limitation on Liability and Indemnification of Directors and Officers - Banzai's Charter eliminates each director's liability for monetary damages for breaches of fiduciary duty, except as prohibited by law (e.g., duty of loyalty violations, bad faith)[495] - The Charter requires the company to indemnify and advance expenses to its directors, officers, and agents to the fullest extent permitted by applicable law[495] - These provisions are intended to attract and retain qualified persons as directors and officers[495] Delinquent Section 16(a) Reports - Certain executive officers and directors (Mr. Davy, Mr. Schofield, Mr. Ward, Mrs. Levesque, Mrs. Boggs, and Mr. Musburger) filed their Form 5 reports late in 2024, though all have since been filed[496] Item 11. Executive Compensation This section outlines Banzai's executive and director compensation for 2023-2024, including salaries, equity awards, and 401(k) contributions, noting the company's emerging growth company status exemptions Executive Officer Compensation - Named executive officers for the fiscal year ended December 31, 2024, included Joseph P. Davy (CEO), Mark Musburger (CFO, resigned June 5, 2024), Simon Baumer (CTO), and Ashley Levesque (VP of Marketing, resigned May 29, 2024). Alvin Yip was appointed Interim CFO on June 14, 2024[497][499][503] 2024 Summary Compensation Table 2024 Summary Compensation Table (in USD) | Name and Principal Position | Year | Salary | Option Awards | Non-Equity Incentive Plan Compensation | All Other Compensation | Total | | :-------------------------- | :--- | :---------- | :------------ | :------------------------------------- | :--------------------- | :---------- | | Joseph P. Davy | 2024 | $310,417 | $529,700 | $— | $12,000 | $852,117 | | Chief Executive Officer | 2023 | $300,000 | $— | $— | $12,000 | $312,000 | | Alvin Yip | 2024 | $220,833 | $60,455 | $— | $— | $281,288 | | Interim Chief Financial Officer | 2023 | $71,250 | $84,569 | $— | $— | $155,819 | | Mark Musburger | 2024 | $106,714 | $— | $— | $125,000 | $231,714 | | Chief Financial Officer | 2023 | $216,000 | $1,133,105 | $— | $— | $1,349,105 | | Simon Baumer | 2024 | $291,223 | $7,425 | $— | $— | $298,648 | | Chief Technology Officer | 2023 | $241,574 | $271,920 | $— | $— | $513,494 | | Ashley Levesque | 2024 | $78,750 | $— | $— | $3,150 | $81,900 | | Vice President of Marketing | 2023 | $180,000 | $617,768 | $— | $7,200 | $804,968 | Narrative Disclosure to Summary Compensation Table - Named executive officers are eligible for annual performance-based cash bonuses, but none received such bonuses for fiscal years ended December 31, 2024, or 2023[502] - Equity compensation, primarily stock options, is granted to align executive officers' interests with stockholders and focus on long-term performance[504] - Stock options typically vest 25% on the one-year anniversary of the vesting commencement date, and then 1/48th of total shares vest in 36 equal monthly installments[505] Equity Grants - In December 2024, Joseph Davy received 304,878 RSU shares as a $500,000 compensation bonus, and Alvin Yip received 32,895 RSU shares as a $50,000 compensation bonus[507] 2025 Compensation Update Approved Salary Increases (effective January 1, 2025) | Name | Title | Current Base Salary | New Base Salary | | :--------------- | :-------------------------- | :------------------ | :-------------- | | Sergei Dolukhanov| VP of Sales & Customer Success | $125,000 | $150,000 | | Rachel Meyrowitz | Director of Demand Generation | $150,000 | $157,500 | - In December 2024, the Board approved increasing Alvin Yip's salary to $241,500 per year, effective January 1, 2025[503] Outstanding Equity Awards as of December 31, 2024 Outstanding Equity Awards (as of December 31, 2024) | Name | Unexercised Options () Exercisable | Unexercised Options () Unexercisable | Option Exercise Prices ($) | Option Expiration Date | Unearned RSUs () | Market Value of Unearned RSUs ($) | | :------------- | :---------------------------------- | :------------------------------------ | :------------------------- | :--------------------- | :---------------- | :-------------------------------- | | Joseph P. Davy | - | 12,000 | $50.00 - $250.00 | 5/14/2034 | 304,878 | $500,000 | | Simon Baumer | 1,280 | 1,975 | $50.00 - $419.00 | 7/14/2031 - 5/14/2034 | - | - | | Alvin Yip | 103 | 339 | $14.65 - $419.00 | 5/14/2034 - 12/2/2033 | 32,895 | $48,356 | Additional Narrative Disclosure - Banzai maintains a 401(k) plan for eligible U.S. employees, allowing tax-advantaged retirement savings with employer contributions[513] - In December 2024, non-employee directors received $371,507 in RSU compensation (equivalent to 30,049 shares of Class A Common Stock)[514] - A director compensation program adopted in December 2023 includes an annual base retainer of $100,000, plus committee chair and member retainers[514][520] Disclosure of Policies and Practices Related to the Grant of Certain Equity Awards Close in Time to the Release of Material Nonpublic Information. - Banzai does not currently grant new stock options, stock appreciation rights, or similar option-like instruments within four business days before or one business day after the release of material nonpublic information (MNPI) in SEC filings[518] Disclosure of Registrant's Action to Recover Erroneously Awarded Compensation - Banzai was not required to prepare an accounting restatement that triggered compensation recovery under its policy during or after the last completed fiscal year[516] Rule 10b5-1 Sales Plans - Directors and executive officers may adopt Rule 10b5-1 plans to buy or sell shares on a periodic basis, subject to compliance with insider trading policy and lock-up agreements[517] 2024 Policies and Practices Related to the Grant of Certain Equity Awards - Banzai does not currently grant new awards of stock options, stock appreciation rights, or similar option-like instruments within four business days before or one business day after the release of a Form 10-Q, 10-K, or 8-K that discloses material nonpublic information[518] Emerging Growth Company Status - As an "emerging growth company," Banzai is exempt from certain executive compensation requirements, including nonbinding advisory votes on executive compensation and CEO pay ratio disclosure[519] Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters This section outlines Banzai's security ownership, highlighting 658,263 outstanding equity compensation securities and CEO Joseph Davy's 65.13% total voting power Securities Authorized for Issuance under Equity Compensation Plans Equity Securities Authorized for Issuance (as of December 31, 2024) | Category | Number of Securities | Weighted Average Exercise Price | | :-------------------------------------------- | :------------------- | :------------------------------ | | Outstanding options, warrants and rights | 658,263 | $6.34 | | Remaining available for future issuance | 9,255,910 | N/A | - The total number of securities remaining available for future issuance reflects the expansion of the 2023 Equity Incentive Plan to 10,000,000 shares, approved by shareholders on February 28, 2025[522] Security Ownership of Certain Beneficial Owners and Management Beneficial Ownership of Common Stock (as of April 10, 2025) | Name and Address of Beneficial Owner | Class A Common Share | Class B Common Share | Total Voting Power % | | :----------------------------------- | :------------------- | :------------------- | :------------------- | | Joseph Davy | 307,966 | 2,311,134 | 65.13% | | All Directors and Executive Officers as a Group (7 Individuals) | 372,622 | 2,311,134 | 65.31% | - Joseph Davy, CEO and Co-Founder, holds approximately 65.13% of the outstanding voting power due to his Class B Common Stock, which carries 10 votes per share[527][529] Item 13. Certain Relationships and Related Transactions, and Director Independence Banzai has engaged in various related party transactions, including registration rights and debt agreements, and is adopting a formal policy for Audit Committee review and approval of such transactions Related Party Transactions - Banzai entered into an Amended and Restated Registration Rights Agreement with the 7GC Sponsor and certain securityholders, granting them customary demand and piggyback registration rights for Class A Common Stock[528] - Lock-Up Agreements were executed with certain stockholders and executives, restricting the sale of shares for 180 days after the Business Combination Closing[531] - Share Transfer Agreements with Alco involved the 7GC Sponsor forfeiting Class B Common Stock in exchange for Alco receiving Class A Common Stock at the Closing[532] - Banzai assumed 7GC Promissory Notes totaling $2.55 million from the 7GC Sponsor, which converted into 17,812 shares of Class A Common Stock on February 2, 2024[533][535] - Legacy Banzai issued convertible promissory notes totaling approximately $10.0 million (of which $6.8 million was to related parties) in 2022 and 2023, which converted into Class A Common Stock at the Business Combination Closing[537] - Subordinate promissory notes totaling $4.4 million in principal were issued to Alco (August, September, November, and December Promissory Notes) in 2023, bearing 8% interest[539][541][542][543] Related Person Transactions Policy - Banzai is in the process of formally adopting a written related person transactions policy[544] - Related person transactions will be identified, reviewed, and approved by the Audit Committee or disinterested, independent Board members[546] - Approval will be based on factors such as transaction size, the nature of the related party's interest, potential conflicts of interest, and terms compared to unaffiliated third parties[547][548] Item 14. Principal Accounting Fees and Services Banzai's audit fees to Marcum LLP increased to $770,000 in 2024 from $560,000 in 2023, with all services pre-approved by the Audit Committee Principal Accounting Fees and Services (in USD) | Category | For the Year Ended December 31, 2024 | For the Year Ended December 31, 2023 | | :---------------- | :----------------------------------- | :----------------------------------- | | Audit Fees | $770,000 | $560,000 | | Audit-Related Fees| $0