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Banzai International(BNZI) - 2025 Q2 - Quarterly Report

PART I. FINANCIAL INFORMATION Item 1. Financial Statements This section presents Banzai International, Inc.'s unaudited condensed consolidated financial statements and comprehensive notes detailing financial disclosures Condensed Consolidated Balance Sheets Balance sheets show significant asset growth and a shift from stockholders' deficit to positive equity by June 30, 2025 | Metric | June 30, 2025 (Unaudited) | December 31, 2024 | | :-------------------------------------------------------------------------------- | :------------------------ | :------------------ | | ASSETS | | | | Cash | $2,253,903 | $1,087,497 | | Total current assets | $3,820,898 | $2,667,492 | | Intangible assets, net | $8,635,827 | $3,883,853 | | Goodwill | $21,991,721 | $18,972,475 | | Total assets | $34,675,878 | $25,674,078 | | LIABILITIES AND STOCKHOLDERS' DEFICIT | | | | Total current liabilities | $30,244,142 | $28,260,148 | | Total liabilities | $31,517,499 | $28,437,880 | | Stockholders' equity (deficit) | $3,158,379 | $(2,763,802) | | Total liabilities and stockholders' equity (deficit) | $34,675,878 | $25,674,078 | Unaudited Condensed Consolidated Statements of Operations Revenue and gross profit grew substantially, but increased operating and other expenses led to higher net losses | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Revenue | $3,262,250 | $1,068,197 | $6,641,333 | $2,147,669 | | Cost of revenue | $554,515 | $330,008 | $1,160,514 | $711,388 | | Gross profit | $2,707,735 | $738,189 | $5,480,819 | $1,436,281 | | Total operating expenses | $7,413,349 | $4,110,495 | $15,093,128 | $8,210,847 | | Operating loss | $(4,705,614) | $(3,372,306) | $(9,612,309) | $(6,774,566) | | Total other expenses, net | $3,319,111 | $576,398 | $1,982,364 | $1,465,202 | | Net loss | $(7,793,756) | $(3,955,328) | $(11,437,235) | $(8,245,459) | | Net loss per share (Basic and diluted) | $(4.08) | $(14.09) | $(7.24) | $(30.43) | | Weighted average common shares outstanding (Basic and diluted) | 1,911,276 | 280,675 | 1,578,814 | 270,940 | Unaudited Condensed Consolidated Statements of Stockholders' Equity (Deficit) Stockholders' equity shifted from a $2.76 million deficit to a $3.16 million positive balance, driven by share issuances despite net losses | Metric | Balance December 31, 2024 | Balance June 30, 2025 | | :-------------------------------- | :------------------------ | :-------------------- | | Common Stock Amount | $80 | $245 | | Additional Paid-in Capital | $75,515,831 | $92,875,082 | | Accumulated Deficit | $(78,279,713) | $(89,716,948) | | Total Stockholders' Equity (Deficit) | $(2,763,802) | $3,158,379 | - Issuance of shares to Yorkville under the SEPA agreement contributed $7,071,606 and $6,521,147 to equity during the six months ended June 30, 202512 - Shares issued for Vidello acquisition added $1,661,677 to equity during the six months ended June 30, 202512 Unaudited Condensed Consolidated Statements of Cash Flows Net cash increased, primarily from financing activities, offsetting substantial cash used in operations and investing | Cash Flow Activity | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :----------------------------------- | :----------------------------- | :----------------------------- | | Net cash used in operating activities | $(9,022,726) | $(3,812,695) | | Net cash used in investing activities | $(2,677,480) | $0 | | Net cash provided by financing activities | $12,866,612 | $2,190,724 | | Net increase (decrease) in cash | $1,166,406 | $(1,621,971) | | Cash at end of period | $2,253,903 | $471,747 | - Key non-cash investing and financing activities for the six months ended June 30, 2025, included consideration transferred for the acquisition of Vidello ($1,661,677) and assets acquired in the acquisition of Vidello ($8,393,172)17 Notes to Unaudited Condensed Consolidated Financial Statements These notes detail financial position, performance, and cash flows, covering accounting policies, acquisitions, debt, equity, and segment reporting 1. Organization Banzai, a Delaware-incorporated enterprise SaaS platform, underwent reverse stock splits and operates as an emerging growth company - Banzai International, Inc. was incorporated in Delaware on September 30, 2015, and operates as a leading enterprise SaaS Video Engagement platform19 - The company effected a 1-for-50 reverse stock split on Class A Common Stock on September 19, 2024, and a 1-for-10 reverse stock split on both Class A and Class B Common Stock effective July 8, 20252021 - Banzai is an 'emerging growth company' and has elected not to opt out of the extended transition period for complying with new or revised financial accounting standards2324 2. Going Concern Recurring losses and accumulated deficit raise substantial doubt about Banzai's ability to continue as a going concern without further financing - As of June 30, 2025, Banzai had cash of approximately $2.3 million and an accumulated deficit of approximately $89.7 million, having used $9.0 million in cash for operating activities during the six months ended June 30, 202525 - These factors raise substantial doubt about the Company's ability to continue as a going concern within one year25 - The company plans to obtain future debt and equity financings (Yorkville SEPA) but cannot guarantee success, which may require reducing spending or securing financing on unfavorable terms27 3. Summary of Significant Accounting Policies This section outlines Banzai's key accounting policies, including interim financial statements, intangible assets, warrant liabilities, loss per share, and fair value options - The unaudited condensed consolidated financial statements are prepared in conformity with GAAP and SEC regulations for interim financial information29 Intangible Assets, Net | Intangible Asset | Estimated Useful Life (years) | June 30, 2025 Fair Value, Net | | :----------------------- | :---------------------------- | :---------------------------- | | Customer relationships | 6 - 7 | $1,139,710 | | Trade name | 10 - 15 | $1,635,600 | | Technology | 6 - 8 | $6,425,010 | | Total | | $9,200,320 | | Less: Accumulated amortization | | $(564,493) | | Intangible assets, net | | $8,635,827 | - Warrant liabilities (Public Warrants and GEM Warrants) are recognized as derivative liabilities at fair value, with changes in fair value recognized in the consolidated statements of operations3335 - The company elected the fair value option for Bridge Notes and Private Placement Convertible Notes to align accounting and reduce operational effort for embedded features41 - Basic and diluted net loss per share are the same due to the company's net loss position, with various securities excluded as anti-dilutive3739 4. Acquisition of Vidello Banzai acquired Vidello Limited for $2.75 million cash and shares, enhancing revenue and market position, resulting in $3.02 million goodwill - Banzai acquired Vidello Limited on January 31, 2025, to enhance revenue growth and strengthen its competitive market position through cross-selling opportunities50 Consideration Transferred for Vidello Acquisition | Consideration Transferred | Amount | | :-------------------------- | :------------- | | Cash paid at closing | $2,745,031 | | Common stock issued | $1,661,677 | | Fair value of Holdback Amount | $1,861,039 | | Total consideration paid | $6,267,747 | Assets Acquired / Liabilities Assumed in Vidello Acquisition | Assets Acquired / Liabilities Assumed | Amount | | :------------------------------------ | :------------- | | Total identifiable net assets | $3,248,501 | | Goodwill recorded | $3,019,246 | | Total consideration | $6,267,747 | - Vidello contributed approximately $163 thousand and $484 thousand to net income for the three and six months ended June 30, 2025, respectively57 5. Related Party Transactions Related party transactions include assumed liabilities, promissory and convertible notes, a debt restructuring, and a CEO advance - Banzai assumed a $67,118 liability from 7GC's sponsor upon the Merger's closing, which remains outstanding as of June 30, 202560 - The company entered into a debt restructuring agreement with CP BF on September 5, 2024, consolidating existing debt into a new convertible note and issuing equity for debt reduction62 - The CEO of the Company loaned Banzai $100,000 on September 12, 2024, which is non-interest bearing and remains outstanding63 6. Revenue Revenue is recognized over time from video engagement solutions, disaggregated by region, with Americas as the largest contributor - Revenue is recognized over time as performance obligations are satisfied, reflecting the transfer of control of services to the customer65 - The company's products include Demio (webinars/virtual events), Reach (audience acquisition, being phased out), OpenReel (subscription-based SaaS for video projects), and Vidello (video hosting/marketing platform)69707173 Revenue by Geographic Region | Region | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :----------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Americas | $2,525,013 (77%) | $587,712 (55%) | $5,137,057 (77%) | $1,170,539 (55%) | | Europe, Middle East and Africa (EMEA) | $555,651 (17%) | $360,666 (34%) | $1,112,122 (17%) | $746,916 (34%) | | Asia Pacific | $181,586 (6%) | $119,819 (11%) | $392,154 (6%) | $230,214 (11%) | | Total | $3,262,250 (100%) | $1,068,197 (100%) | $6,641,333 (100%) | $2,147,669 (100%) | - Capitalized sales commissions, amortized over the contract term, were $52,616 at June 30, 2025, up from $31,504 at December 31, 20247980 7. Fair Value Measurements Banzai uses a three-level fair value hierarchy, with most instruments classified as Level 3 due to unobservable inputs, impacting operations - The company uses a three-level hierarchy for fair value measurements, with Level 3 measurements representing unobservable inputs for instruments like convertible notes, warrant liabilities, and bifurcated embedded derivatives434482 Fair Value Measurements by Level | Description | Level | June 30, 2025 | December 31, 2024 | | :---------------------------------------------------- | :---- | :-------------- | :------------------ | | Bifurcated embedded derivative asset - related party | 3 | $1,000 | $63,000 | | Definite-lived intangibles** | 3 | $8,635,827 | $3,883,853 | | Goodwill** | 3 | $21,991,721 | $18,972,475 | | Warrant liabilities - public | 1 | $4,600 | $2,300 | | GEM warrant liabilities | 3 | $3,000 | $15,000 | | Agile term notes | 3 | $4,131,000 | $3,143,000 | | 1800 Diagonal convertible notes | 3 | $530,000 | $432,000 | | Private Placement Convertible Notes | 3 | $2,676,000 | $0 | | Private Placement Warrants | 3 | $361,000 | $0 | - For the six months ended June 30, 2025, the company recognized a loss of approximately $238,000 from changes in the fair value of Yorkville convertible notes and a loss of $361,000 on the issuance of Private Placement Warrants92105 8. Property and Equipment Net property and equipment increased to $10,703 by June 30, 2025, with $2,210 in depreciation expense for the six-month period Property and Equipment, Net | Metric | June 30, 2025 | December 31, 2024 | | :------------------------ | :-------------- | :------------------ | | Computers and equipment | $43,848 | $34,474 | | Less: accumulated depreciation | $(33,145) | $(30,935) | | Property and equipment, net | $10,703 | $3,539 | - Depreciation expense for the six months ended June 30, 2025, was $2,210, compared to $2,825 for the same period in 2024106 9. Prepaid Expenses and Other Current Assets Prepaid expenses and other current assets increased to $757,513, driven by higher prepaid insurance and employee receivables Prepaid Expenses and Other Current Assets | Category | June 30, 2025 | December 31, 2024 | | :--------------------------------- | :-------------- | :------------------ | | Prepaid insurance costs | $235,451 | $130,345 | | Service trade | $177,055 | $239,041 | | Prepaid software costs | $129,168 | $59,855 | | Prepaid commissions | $52,616 | $31,504 | | Employee receivable | $113,567 | $800 | | Total prepaid expenses and other current assets | $757,513 | $643,674 | 10. Goodwill Goodwill increased to $21.99 million due to the Vidello acquisition, with a $2.7 million impairment identified for OpenReel Goodwill by Segment | Segment | Goodwill - December 31, 2024 | Additions to goodwill (Note 4) | Goodwill - June 30, 2025 | | :---------------- | :--------------------------- | :----------------------------- | :----------------------- | | Banzai Operating Co. | $2,171,526 | $3,019,246 | $2,171,526 | | Vidello | $0 | $0 | $3,019,246 | | OpenReel | $16,800,949 | $0 | $16,800,949 | | Consolidated | $18,972,475 | $3,019,246 | $21,991,721 | - As of December 31, 2024, an impairment of $2.7 million was identified for the OpenReel reporting unit, as its carrying value exceeded its fair value109 11. Accrued Expenses and Other Current Liabilities Accrued expenses and other current liabilities rose to $4.41 million, driven by tax provisions, payroll, and sales tax increases Accrued Expenses and Other Current Liabilities | Category | June 30, 2025 | December 31, 2024 | | :------------------------------------ | :-------------- | :------------------ | | Accrued accounting and professional services costs | $2,294,770 | $2,419,829 | | Provision for tax payable | $539,339 | $0 | | Sales tax payable | $532,350 | $452,508 | | Accrued legal costs | $154,150 | $315,764 | | Accrued payroll and benefit costs | $353,128 | $207,970 | | Total accrued expenses and other current liabilities | $4,405,626 | $3,891,018 | 12. Deferred Revenue Deferred revenue increased to $4.21 million, with $2.87 million recognized from prior year and $1.92 million from current year Deferred Revenue | Metric | Six Months Ended June 30, 2025 | Year Ended December 31, 2024 | | :------------------------------------ | :----------------------------- | :----------------------------- | | Deferred revenue, beginning of period | $3,934,627 | $1,214,096 | | Billings | $4,628,355 | $4,362,730 | | Revenue recognized (prior year deferred revenue) | $(2,867,837) | $(1,214,096) | | Revenue recognized (current year deferred revenue) | $(1,923,747) | $(3,091,333) | | Vidello deferred revenue - short-term | $324,449 | $0 | | Deferred revenue - short-term, end of period | $4,095,847 | $3,934,627 | | Deferred revenue - long-term, end of period | $115,725 | $0 | | Total deferred revenue, end of period | $4,211,572 | $3,934,627 | 13. Debt Banzai's debt portfolio includes various convertible and term notes, with significant restructuring, repayments, and new issuances impacting fair value - The GEM Promissory Note, initially $1.0 million, was fully satisfied by June 30, 2025, through cash payments ($215,057) and issuance of 19,000 Class A Common Stock114116 - Yorkville Convertible Notes, totaling $3.5 million in principal, were fully repaid by June 30, 2025, with payments of approximately $3.64 million, including $140,000 in payment premiums131135136 - The 2024 CP BF Convertible Note, with a principal of $10.76 million, was issued as part of a debt restructuring, resulting in a $6.53 million loss on debt extinguishment. Its carrying value was $8.43 million at June 30, 2025143144151 - Agile Term Notes, including new issuances in March and June 2025, led to a $1.77 million loss on debt extinguishment in March 2025. Their fair value was $4.13 million at June 30, 2025157158165 - 1800 Diagonal Notes, with multiple issuances in 2025, had a fair value of $530,000 at June 30, 2025, and accrued interest of $97,176173177 - A Private Placement Offering with 3i, LP on June 27, 2025, involved $11.0 million in senior secured convertible notes, with $2.2 million drawn and $1.725 million in net proceeds received by June 30, 2025178180186 14. Warrant Liabilities Warrant liabilities (Public, GEM, Private Placement) are derivative liabilities measured at fair value, with changes recognized in earnings - Public Warrants, exercisable into 23,000 shares of Class A Common Stock, are measured at fair value based on their listed market price, with a fair value of $4,600 at June 30, 20258688187 - GEM Warrants, granting the right to purchase 1,657 shares, are measured using a Monte Carlo simulation due to non-indexed features, with a fair value of $3,000 at June 30, 202590193195 - Private Placement Warrants (Buyer Warrants and Financial Advisor Warrants) were issued on June 27, 2025, with a fair value of $361,000 at June 30, 2025, and are also valued using a Monte Carlo simulation due to variable price and change of control features104198202204 15. Commitments and Contingencies Commitments include operating leases and debt repayment agreements, resulting in settlement gains and Act-On merger termination fees Operating Lease Commitments | Year Ending December 31, | Undiscounted Cash Flows | | :----------------------- | :---------------------- | | Remainder of 2025 | $14,375 | | 2026 | $29,466 | | 2027 | $25,167 | | Total undiscounted cash flows | $69,008 | | Present value of lease liabilities | $61,664 | - The company recognized a gain on settlement of approximately $1.1 million with Cooley LLP and approximately $3.2 million with Sidley Austin LLP for previously provided legal services, as all required payments were made by June 30, 2025216218 - Banzai paid approximately $1.38 million in termination fees to Act-On Software, Inc. by June 30, 2025, following the termination of their merger agreement222 - The company is subject to possible loss contingencies from third-party litigation and regulatory matters but does not currently possess sufficient information to determine a range of reasonably possible liability for early-stage cases223 16. Equity Equity includes Class A and B Common Stock and preferred stock, with significant issuances under SEPA, for acquisitions, and other financing - Banzai is authorized to issue 275,000,000 shares of common stock (250,000,000 Class A and 25,000,000 Class B) and 75,000,000 shares of preferred stock224227 - As of June 30, 2025, 2,478,587 shares of common stock were outstanding (2,247,473 Class A and 231,114 Class B)226 - Under the Yorkville SEPA, Banzai issued Advance Notices for the purchase of 501,000 shares (Option 1) and 763,680 shares (Option 2) of Class A common stock during the six months ended June 30, 2025, generating approximately $4.26 million and $8.61 million in proceeds, respectively234235236 - Shares were issued for various purposes, including business advisory services to Hudson ($232,500 and $400,000), partial settlement of debt to Verista ($49,800), Vidello acquisition ($1,661,677), RSU exercises (77,452 shares), and a private placement ($330,000 gross proceeds)238239240241242243 17. Stock-Based Compensation Banzai's stock-based compensation plans granted options and RSUs, resulting in $50,052 for options and $1,042,639 for RSUs expense - The 2023 Employee Stock Purchase Plan and 2023 Equity Incentive Plan allow for the purchase and granting of common stock, with 26,039 shares and 695,748 stock options remaining available, respectively, as of June 30, 2025244245 Stock-Based Compensation Expense | Metric | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------------ | :----------------------------- | :----------------------------- | | Stock-based compensation expense (Stock Options) | $50,052 | $37,311 | | Weighted-average grant-date fair value per option | $12 | $85 | | Unrecognized compensation expense (Stock Options) | $270,624 | $1,262,655 | | Stock-based compensation expense (RSUs) | $1,042,639 | $208,178 | | Unrecognized compensation cost (RSUs) | $2,335,545 | $263,144 | 18. Income Taxes Banzai reported a $157 thousand income tax benefit from Vidello's UK operations, with no US benefit due to net losses and valuation allowance - The worldwide effective tax rate for the three months ended June 30, 2025, is 2.88%, driven by Vidello's operations in England and Wales (25% statutory corporate tax rate)251 - No U.S. federal or state income taxes are expected or recorded due to the company's history of net losses and a full valuation allowance on deferred tax assets in the U.S. taxing jurisdiction251252 - As of June 30, 2025, Banzai had no unrecognized tax benefits that would reduce its effective tax rate253 19. Segment Reporting Banzai operates three SaaS segments (Banzai Operating Co, OpenReel, Vidello), with OpenReel and Vidello contributing positively to revenue and Adjusted EBITDA - Banzai has three reportable operating segments: Banzai Operating Co, Inc., Banzai Reel Acquisition Inc. (OpenReel), and Vidello Limited (Vidello)254 Segment Performance (Six months ended June 30, 2025) | Metric (Six months ended June 30, 2025) | Banzai Operating Co. | OpenReel | Vidello | Total Consolidated | | :-------------------------------------- | :------------------- | :------- | :------ | :----------------- | | Revenue | $2,306,292 | $2,828,481 | $1,506,560 | $6,641,333 | | Gross profit | $1,561,221 | $2,675,979 | $1,243,619 | $5,480,819 | | Adjusted EBITDA | $(5,785,202) | $1,411,302 | $651,159 | $(3,722,741) | | EBITDA | $(10,807,051) | $1,090,820 | $651,159 | $(9,065,072) | Revenue Percentage by Product | Revenue % (Six months ended June 30, 2025) | 2025 | 2024 | | :--------------------------------------- | :--- | :--- | | Reach | 1.7% | 2.0% | | Demio | 27.0% | 97.4% | | OpenReel | 35.8% | 0.0% | | Vidello | 35.5% | 0.0% | | Other | 0.0% | 0.6% | | Total | 100.0% | 100.0% | 20. Subsequent Events Subsequent events include a new CFO, 1800 Diagonal note conversions and issuances, and additional Yorkville Advance Notice Settlements - Mr. Dean Ditto was appointed as Banzai's Chief Financial Officer on July 2, 2025263 - Between July 22 and August 11, 2025, 1800 Diagonal converted $143,604 of outstanding notes into 59,800 shares of Class A Common Stock264265266466 - On July 23, 2025, Banzai issued a new convertible promissory note to 1800 Diagonal for $295,550, with a maturity date of May 30, 2026, and a 12% annual interest rate267268 - Between July 1 and August 7, 2025, Banzai settled additional Yorkville Advance Notices by selling 880,000 shares of Class A Common Stock for approximately $3.1 million270 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations This section analyzes Banzai's business, M&A, financial performance, operating metrics, accounting estimates, liquidity, and capital resources, highlighting growth and losses Overview Banzai, a MarTech SaaS company, expanded product offerings through acquisitions, serving over 4,590 customers, but has incurred significant net losses - Banzai is a MarTech company founded in 2015, offering data-driven marketing and sales solutions via a recurring subscription SaaS model273275 - The company's product portfolio includes Reach, Demio (acquired 2021), Boost (launched 2023), OpenReel (acquired 2024), and Vidello (acquired 2025)274277280 - As of June 30, 2025, Banzai served over 4,590 customers in over 90 countries, with a focus on increasing mid-market and enterprise customers for Demio274 - Banzai reported net losses of approximately $11.4 million and $8.2 million for the six months ended June 30, 2025 and 2024, respectively, with an accumulated deficit of $89.7 million as of June 30, 2025276 Summary of our recent Mergers and Acquisitions Banzai completed OpenReel and Vidello acquisitions, expanding video solutions, but terminated the Act-On merger, incurring $1.38 million in fees - On December 18, 2024, Banzai acquired OpenReel for $19.6 million in Common Stock and Pre-Funded Warrants, integrating its enterprise video creation and management solution277278279 - On January 31, 2025, Banzai acquired Vidello Limited for approximately $2.7 million in cash and 89,820 shares of Class A common stock, aiming to enhance its video hosting and marketing platform280281 - The planned merger with Act-On Software, Inc. was terminated on June 6, 2025, leading Banzai to pay approximately $1.38 million in termination fees282 Reverse Stock Split Banzai implemented two reverse stock splits to regain Nasdaq minimum bid price compliance - A 1-for-50 reverse stock split on Class A Common Stock was effective September 19, 2024283 - A 1-for-10 reverse stock split on both Class A and Class B Common Stock was effective July 8, 2025284 - These reverse stock splits were primarily aimed at regaining compliance with Nasdaq's minimum bid price requirement283284455 Nasdaq Listing Banzai faced Nasdaq noncompliance, was phased down, but regained compliance, though future minimum bid price compliance remains a risk - Banzai was phased down to the Nasdaq Capital Market due to noncompliance with Nasdaq listing rules285 - The company demonstrated compliance with Nasdaq Capital Market listing requirements by February 12, 2025, and its securities remain listed286 - Despite recent reverse stock splits, there is no guarantee that Nasdaq will confirm compliance with the Minimum Bid Price Requirement, and a series of reverse stock splits may undermine investor confidence455456 2025 Financings Banzai plans additional 2025 capital raises via SEPA and other financings, having secured convertible notes from 1800 Diagonal, Agile, and 3i, LP - Banzai intends to seek additional capital through a private placement leveraging its SEPA and other equity financings in 2025287381 - The company entered into convertible promissory notes with 1800 Diagonal for $230,000 (April 17, 2025) and $163,000 (May 9, 2025)382 - A promissory note with Agile Lending, LLC for $262,500 was entered into on June 12, 2025382 - A private placement convertible note with 3i, LP for $2,200,000 was entered into on June 30, 2025382 Hudson Global Ventures, LLC Consulting Services Agreement Banzai issued 15,000 restricted shares to Hudson Global Ventures, LLC for business advisory services - On January 3, 2025, Banzai issued 15,000 restricted shares of Common Stock to Hudson Global Ventures, LLC for business advisory services288460 CP BF Pre-Funded Warrant Exercise Banzai issued 4 Class A Common Stock shares to CP BF upon pre-funded warrant exercise - On January 7, 2025, Banzai issued 4 shares of Class A Common Stock to CP BF upon the exercise of four pre-funded warrants289461 Yorkville Advanced Notice Settlements Banzai settled Yorkville obligations by selling 2,144,680 Class A Common Stock shares for approximately $16.6 million - On January 3, 2025, Banzai settled an Advance Notice from December 30, 2024, selling 3,049 shares of Class A Common Stock to Yorkville for approximately $48,000290 - Between January 10, 2025, and August 7, 2025, Banzai sold an aggregate of 2,144,680 shares of Class A Common Stock to Yorkville for approximately $16,597,000 through Advance Notice settlements291 RSU Issuance to Executives Banzai issued 337,773 RSUs to executives as part of the fiscal 2024 bonus plan - On January 21, 2025, Banzai issued 337,773 RSUs to executives as part of the fiscal 2024 bonus plan292462 Convertible promissory note issuance to YA II PN, LTD. Banzai issued a $3.5 million convertible promissory note to Yorkville under SEPA, fully repaid by June 30, 2025 - On January 30, 2025, Banzai issued a $3.5 million convertible promissory note to Yorkville under the SEPA293 - The note had a maturity date of July 31, 2025, and interest rates ranging from 0% to 6%, increasing to 18% upon an event of default293 - The note was fully repaid by June 30, 2025295 Shares of Class A Common Stock issued to Winterberry Banzai issued 3,000 Class A Common Stock shares to Winterberry Group to cancel outstanding debt - On February 4, 2025, Banzai issued 3,000 shares to Verista Partners, Inc. (Winterberry Group) to cancel $16,666 of outstanding debt297463 Bridge Note Issuances to Agile Lending, LLC Banzai issued two high-interest subordinated secured promissory notes to Agile Lending, LLC in March ($4.0 million) and June ($262,500) 2025 - On March 31, 2025, Banzai issued a $4.0 million subordinated secured promissory note (March Agile Note) with a 44% interest rate, maturing November 12, 2025298 - On June 12, 2025, Banzai issued a $262,500 subordinated secured promissory note (June Agile Note) with a 48% interest rate, maturing December 15, 2025299 Bridge Note Issuances to 1800 Diagonal Lending, LLC Banzai issued three 12% annual interest promissory notes to 1800 Diagonal Lending, LLC in February, April, and May 2025 - On February 7, 2025, Banzai issued a $124,200 promissory note (February 1800 Diagonal Note) with a 12% interest rate, maturing December 15, 2025300 - On April 17, 2025, Banzai issued a $230,000 promissory note (April 1800 Diagonal Note) with a 12% interest rate, maturing February 15, 2026301 - On May 9, 2025, Banzai issued a $163,300 promissory note (May 1800 Diagonal Note) with a 12% interest rate, maturing February 15, 2026302 Private Placement Offering (3i, LP) Banzai entered a private placement with 3i, LP for $11.0 million in convertible notes and warrants, drawing $2.2 million in principal - On June 27, 2025, Banzai entered into a private placement with 3i, LP for $11.0 million in senior secured convertible notes and warrants303 - The notes have a 10.0% original issue discount, accrue interest at 10.0% per annum, and mature on June 30, 2026304 - By June 30, 2025, Banzai drew $2.2 million in principal, receiving $1.725 million in net proceeds, intended for general corporate purposes and working capital305427 2024 Financings In May 2024, Banzai completed a public offering of Class A common stock, pre-funded warrants, and common warrants for $9.00 per share - In May 2024, Banzai completed a public offering of Class A common stock, pre-funded warrants, and common warrants at $9.00 per aggregate share306 - A.G.P./Alliance Global Partners received a cash fee of $174,939 and warrants to purchase 1,667 shares of Class A Common Stock at $10.00 per share307 2024 Wainwright Private Financing Banzai completed a September 2024 private placement, raising $4.4 million, and later reduced warrant exercise price for an OpenReel merger waiver - In September 2024, Banzai completed a private placement, issuing pre-funded warrants and Series A and B warrants, with net proceeds of approximately $4.4 million308311 - H.C. Wainwright & Co., LLC received cash fees and warrants to purchase 8,824 shares of Common Stock at $5.3125 per share312 - The exercise price of the warrants issued to the Wainwright Investor was reduced from $4.00 to $2.50 per share in exchange for a waiver of protective provisions related to the OpenReel merger315 Debt Equitization Plan Banzai's Debt Reorganization plan converted $5.07 million of debt into 1.60 million Class A Common Stock shares - From August 23, 2024, to December 31, 2024, Banzai converted $5,068,547 of debt into 1,597,944 shares of Class A Common Stock through its Debt Reorganization plan318 Operating Metrics Banzai monitors NRR, ACV, CAC, Churn, and LTV to evaluate performance, showing improved NRR and LTV/CAC, increased CAC, and decreased churn Key Operating Metrics | Metric | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------------- | :----------------------------- | :----------------------------- | | Average Monthly NRR | 97.5% | 96.1% | | New Customer ACV | $10,049 | $1,510 | | Total Average ACV | $13,885 | $1,569 | | Customer Acquisition Cost (CAC) | $1,844 | $1,480 | | Average Monthly Churn - Revenue | 5.1% | 6.3% | | Average Monthly Churn - Customer (Logo) | 5.4% | 7.3% | | MRR (New Customers) | $1,157 | $131 | | Customer Life (months) | 19.8 | 16.2 | | LTV (New Customers) | $16,563 | $2,040 | | LTV / CAC Ratio | 12.4 | 1.4 | - NRR measures revenue retention from existing customers, ACV calculates expected annual revenue per customer, CAC evaluates the cost of acquiring new customers, Churn % tracks customer deactivations, and LTV estimates total revenue from a customer over their relationship322326329333336 Analysis of the Impact of Key Business Drivers on Financial Performance Banzai aims to maximize revenue growth and optimize costs by improving key business metrics, customer success, product development, and data-driven positioning - Banzai strives to maximize revenue growth within a reasonable cost structure by optimizing key business metrics like ACV, NRR, customer acquisition efficiency (LTV/CAC), and customer retention344 - Improved performance is driven by customer success and onboarding, product development and support, and company initiatives focused on trial experience, on-demand adoption, and data-driven product positioning344 Identification of Operational Risk Factors Banzai faces internal operational risks like ineffective leadership and financial mismanagement, and external risks including economic factors and competition - Internal risks include ineffective leadership, operational inefficiencies, financial mismanagement, employee-related challenges (high turnover, lack of skilled staff), and technological obsolescence346 - External risks include economic factors (downturns, inflation), competition, legal and regulatory changes, technological disruptions, and unforeseen events (natural disasters, geopolitical instability)346 Analysis of the Impact of Operational Risks on Financial Performance Operational risks can significantly impact Banzai's financial performance, which the company mitigates through monitoring, analysis, and transparent communication - Operational risks can lead to lower sales, impaired unit economics, reduced revenue, increased costs relative to revenue generation, and insufficient return on investment or profit margins346 - Banzai manages these risks through comprehensive risk monitoring, analysis, quantification of potential severity, and development of mitigation strategies346 - Accurate financial reporting and disclosures are crucial for transparent communication with investors and stakeholders regarding the impact of risks346 The Business Combination and Public Company Costs The Business Combination, a reverse recapitalization, increased public company costs, making future financial results not comparable to historical performance - The Business Combination was accounted for as a reverse recapitalization, with Banzai treated as the accounting acquirer347 - Becoming a public company has led to increased annual expenses for directors' and officers' liability insurance, director fees, and additional internal and external accounting, legal, and administrative resources348349 - Banzai's future results of operations and financial position may not be comparable to Legacy Banzai's historical results due to the Business Combination349 Results of operations for the three months ended June 30, 2025 and 2024 For the six months ended June 30, 2025, revenue and gross profit grew significantly, but increased expenses led to a 38.7% higher net loss Consolidated Results of Operations ($ in Thousands) | Metric ($ in Thousands) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | Period-over-Period $ Change | Period-over-Period % Change | | :-------------------------------- | :----------------------------- | :----------------------------- | :-------------------------- | :-------------------------- | | Revenue | $6,641 | $2,148 | $4,493 | 209.2% | | Cost of revenue | $1,161 | $711 | $450 | 63.3% | | Gross profit | $5,480 | $1,437 | $4,043 | 281.4% | | Total operating expenses | $15,093 | $8,211 | $6,882 | 83.8% | | Operating loss | $(9,613) | $(6,774) | $(2,839) | 41.9% | | Total other expenses (income) | $1,981 | $1,465 | $516 | 35.2% | | Net loss | $(11,437) | $(8,245) | $(3,192) | 38.7% | Components of results of operations for the six months ended June 30, 2025 and 2024 Revenue grew 209.2% to $6.64 million due to acquisitions, but operating and other expenses also rose, increasing net loss by 38.7% to $11.44 million - Revenue increased by 209.2% to $6.64 million for the six months ended June 30, 2025, primarily driven by OpenReel ($2.83 million) and Vidello ($1.51 million) acquisitions351352 - Cost of revenue increased by 63.3% to $1.16 million, mainly due to additional costs from OpenReel ($153 thousand) and Vidello ($263 thousand) products353 - Gross profit increased by 281.4% to $5.48 million, reflecting the substantial revenue growth354 - Total operating expenses increased by 83.8% to $15.1 million, primarily due to OpenReel and Vidello expenses ($1.6 million and $0.6 million, respectively), increased salaries ($0.7 million), and professional services ($1.2 million)355 - Total other expenses increased by 35.2% to $1.98 million, influenced by a $4.5 million gain on extinguishment of liabilities, $1.3 million loss on debt issuance, and $1.8 million loss on extinguishment of term notes356361 - Net loss increased by 38.7% to $11.44 million, driven by higher operating and other expenses, despite gross profit growth360 Critical Accounting Estimates Critical accounting estimates involve judgments for business combinations and goodwill impairment, leading to a $2.7 million impairment loss for OpenReel - Critical accounting estimates require significant judgments and estimates, especially for business combinations and goodwill impairment361363 - Goodwill is reviewed for impairment at least annually, using qualitative and quantitative assessments, including market capitalization and discounted cash flow methodologies364365367369 - As of December 31, 2024, a $2.7 million goodwill impairment loss was recognized for the OpenReel reporting unit because its carrying amount exceeded its fair value371 Non-GAAP Financial Measures Banzai uses Adjusted EBITDA, a non-GAAP measure, which showed a $3.72 million loss, a slight decrease in earnings due to various gains and losses - Adjusted EBITDA is used to evaluate operational performance, excluding irregular, non-cash, and non-operational expenses374 - For the six months ended June 30, 2025, Adjusted EBITDA was a loss of $3.72 million, a $0.23 million decrease in earnings compared to a $3.49 million loss in the prior year376 - The change in Adjusted EBITDA is primarily attributable to increased gain on extinguishments of liabilities offset by loss on issuance of term notes and increased transaction related expenses376 Adjusted EBITDA Reconciliation ($ in Thousands) | Metric ($ in Thousands) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------------------- | :----------------------------- | :----------------------------- | | Net loss | $(11,437) | $(8,245) | | Depreciation expense | $547 | $3 | | Stock based compensation | $667 | $245 | | Interest expense | $0 | $847 | | Interest expense - related party | $895 | $963 | | Income tax expense | $(157) | $6 | | Gain on extinguishment of liabilities | $(4,489) | $(528) | | Loss on debt issuance | $443 | $171 | | Loss on extinguishment of term notes | $1,769 | $0 | | Loss on Private Placement Issuance | $837 | $0 | | Change in fair value of warrant liability | $(12) | $(562) | | Change in fair value of warrant liability - related party | $2 | $(345) | | Change in fair value of bifurcated embedded derivative liabilities - related party | $62 | $0 | | Change in fair value of convertible notes | $238 | $578 | | Change in fair value of term notes | $316 | $0 | | Change in fair value of convertible bridge notes | $(38) | $0 | | Loss on yorkville sepa advances | $747 | $0 | | Other expense, net | $1,211 | $60 | | Transaction related expenses | $4,677 | $3,175 | | Adjusted EBITDA (Loss) | $(3,722) | $(3,492) | Liquidity and Capital Resources Banzai faces going concern doubt due to recurring losses and a $26.4 million working capital deficit, relying on SEPA and other financings - As of June 30, 2025, Banzai had cash of approximately $2.3 million, a working capital deficit of $26.4 million, and an accumulated deficit of $89.7 million379380 - The company's ability to continue as a going concern is dependent on securing additional funding through its SEPA arrangement and other equity financings in 2025381383 - During the six months ended June 30, 2025, Banzai raised approximately $9.5 million in capital under the SEPA through share issuances380 Cash Flow Summary ($ in Thousands) | Cash Flow Activity ($ in Thousands) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :---------------------------------- | :----------------------------- | :----------------------------- | | Net cash used in operating activities | $(9,023) | $(3,813) | | Net cash used in investing activities | $(2,677) | $0 | | Net cash provided by financing activities | $12,867 | $2,191 | | Net increase / (decrease) in cash | $1,166 | $(1,622) | Capital Expenditure Commitments and Financing Requirements Banzai's capital expenditure and financing commitments total $14.63 million, with $6.21 million due within one year, managed through debt restructuring Capital Expenditure Commitments and Financing Requirements at June 30, 2025 ($ in Thousands) | Commitment ($ in Thousands) | Total | Less than 1 year | 1 - 3 Years | | :------------------------------------------ | :---- | :--------------- | :---------- | | Debt principal - 15.5% CP BF convertible notes | $7,389 | $0 | $7,389 | | Debt principal - Agile | $2,755 | $2,755 | $0 | | Debt principal - 1800 Diagonal | $461 | $461 | $0 | | Debt principal - Private Placement convertible notes | $2,200 | $2,200 | $0 | | Interest on debt | $1,807 | $779 | $1,028 | | Operating leases | $14 | $14 | $0 | | Total capital expenditure commitments and financing requirements at June 30, 2025 | $14,626 | $6,209 | $8,417 | - The 2024 CP BF Convertible Note has an outstanding principal of $7.39 million and matures on February 19, 2027393106 - Agile Notes and 1800 Diagonal Notes are carried at fair value due to embedded features, with Agile Notes having an outstanding principal of $2.75 million and 1800 Diagonal Notes having $461 thousand as of June 30, 2025406408418420115 - The Private Placement Convertible Notes with 3i, LP have a principal of $2.2 million and mature on June 30, 2026424115 Contractual Obligations and Commitments Contractual obligations include revenue recognition, operating leases, and the GEM commitment fee, which was fully settled - Revenue is recognized over time as performance obligations are satisfied, reflecting the transfer of control of services to the customer434 - Banzai has operating leases for real estate, with lease expense recorded on a straight-line basis435 - The GEM commitment fee liability, initially $2.0 million, was settled through a $1.2 million cash payment and a $1.0 million unsecured promissory note, which was fully paid by June 30, 2025, through cash and Class A Common Stock issuances438439441 Off-Balance Sheet Arrangements Banzai had no off-balance sheet arrangements as of June 30, 2025 - Banzai had no off-balance sheet arrangements as of June 30, 2025442 Item 3. Quantitative and Qualitative Disclosures About Market Risk As a smaller reporting company, Banzai is not required to provide market risk disclosures - Banzai International, Inc. is a smaller reporting company and is not required to provide quantitative and qualitative disclosures about market risk443 Item 4. Controls and Procedures Disclosure controls were ineffective due to material weaknesses in IT General Controls, COSO adherence, and financial reporting, with remediation efforts underway - Banzai's disclosure controls and procedures were not effective as of June 30, 2025, due to material weaknesses in IT General Controls, COSO Integrated Framework adherence, and the financial close and reporting process444 - The company is committed to remediating these material weaknesses and continuously improving its internal control over financial reporting445 - The Vidello merger on January 31, 2025, is considered a significant corporate event that has materially affected the company's internal control environment, requiring assessment and adjustment of control processes447448 PART II. OTHER INFORMATION Item 1. Legal Proceedings Banzai is subject to routine litigation, but management believes no current proceedings will materially adversely affect the company - Banzai is subject to litigation and claims incident to the ordinary course of business452 - Management believes there are no current legal proceedings that would have a material adverse effect on the company's business, operating results, financial condition, or cash flows452 Item 1A. Risk Factors As a smaller reporting company, Banzai refers to its 10-K for risk factors, highlighting potential Nasdaq delisting due to noncompliance - Banzai is a smaller reporting company and refers to its Annual Report on Form 10-K for a comprehensive description of risk factors453 - A significant risk is the potential delisting from the Nasdaq Capital Market if the company fails to maintain compliance with the minimum bid price and stockholders' equity requirements454 - Despite two recent reverse stock splits (1-for-50 in September 2024 and 1-for-10 in July 2025), there is no guarantee of regaining or maintaining Nasdaq compliance, and repeated splits may erode investor confidence455456 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds Banzai issued unregistered equity securities for advisory services, warrant exercises, RSU issuances, debt cancellation, private placements, and note conversions - Banzai issued 150,000 restricted shares to Hudson Global Ventures, LLC for business advisory services on January 3, 2025460 - On March 6, 2025, 337,773 shares of Class A common stock were issued related to RSUs for executives462 - In May 2025, a private placement resulted in the sale of 31,884 shares of Class A common stock and 32,352 prefunded warrants, generating $330,000 in gross proceeds465 - Between July 22 and August 11, 2025, 59,800 shares of Class A Common Stock were issued to 1800 Diagonal upon conversion of $143,604 in notes466 Item 3. Defaults Upon Senior Securities Banzai International, Inc. reported no defaults upon senior securities - There were no defaults upon senior securities reported467 Item 4. Mine Safety Disclosures This item is not applicable - This item is not applicable468 Item 5. Other Information No director or officer adopted or terminated a Rule 10b5-1 trading arrangement during the six months ended June 30, 2025 - No director or officer adopted or terminated a Rule 10b5-1 or non-Rule 10b5-1 trading arrangement during the six months ended June 30, 2025469 Item 6. Exhibits This section lists all exhibits to the Quarterly Report on Form 10-Q, including merger agreements, corporate documents, and financial agreements - The exhibits include various agreements such as merger agreements (e.g., Vidello, Act-On), certificates of incorporation, bylaws, and warrant agreements470471473474 - Key financial agreements listed include promissory notes with Yorkville, GEM, Agile, and 1800 Diagonal, as well as the Standby Equity Purchase Agreement (SEPA) with Yorkville470471473474 - Repayment agreements with legal and accounting firms (e.g., Perkins Coie, Cooley LLP, CohnReznick LLP, Sidley Austin LLP, Donnelley Financial LLC, Verista Partners, Inc.) are also included473