DEF 14C: Banzai International Secures Shareholder Approval for Convertible Note Financing

Banzai International, Inc. obtains shareholder consent for issuing shares related to a convertible note financing to raise capital for working capital and general corporate purposes.

Summary

• Banzai International, Inc. is circulating an information statement to shareholders regarding action taken by written consent of shareholders holding approximately 51.1% of the company's voting power.
• The shareholder consent approved the issuance of shares related to a previously disclosed transaction with Rodman & Renshaw LLC, specifically concerning a securities purchase agreement with an institutional investor.
• The offering, which closed on June 30, 2025, involves notes with an aggregate original principal amount of $11,000,000 convertible into common stock, and warrants to acquire up to 671,243 shares of common stock.
• Financial advisor warrants to purchase up to 212,121 shares of common stock were also approved.
• The approval was necessary to comply with Nasdaq Listing Rule 5635(d), which requires shareholder approval for transactions involving the issuance of 20% or more of the company's outstanding common stock at a specified price.
• The corporate action will be effective on or about August 4, 2025, approximately 20 days after the information statement is mailed to shareholders.

Sentiment

Score: 4

Explanation: The announcement is mixed. While the company has secured funding, there are concerns about dilution, the cost of capital, and the company's ability to continue as a going concern.

Positives

• The offering provides Banzai International with $11,000,000 in funding for working capital and general corporate purposes.
• The company has secured necessary shareholder approval to comply with Nasdaq Listing Rule 5635(d), allowing the issuance of shares related to the convertible note financing.
• The offering includes warrants that, if exercised, could provide additional capital to the company.
• The company has the option to repay the Installment Amount in cash or shares of Common Stock.

Negatives

• The issuance of shares upon conversion of the notes and exercise of the warrants will dilute existing shareholders' ownership.
• The notes were issued with an original issue discount of 10.0% and accrue interest at a rate of 10.0% per annum, increasing the cost of capital.
• The conversion price of the Note is subject to a floor price of $0.11, which may limit the benefit to the company if the stock price increases significantly.
• The Buyer has the right to require the Company to redeem all or any portion of the Notes at a 15% premium upon the occurrence of an Event of Default.

Risks

• The company's ability to continue as a going concern is subject to substantial doubt, as of December 31, 2024, with only approximately $1.1 million in cash and cash equivalents.
• The company anticipates continued operating losses in the near future.
• Issuing additional equity or convertible debt securities may cause stockholders to experience substantial dilution in their ownership interests.
• New investors may have rights superior to the rights of other stockholders.

Future Outlook

The company expects to continue raising funds through equity or debt offerings, or strategic transactions such as the Offering, to continue implementing its growth strategy and meet its financial needs.

Management Comments

• Joe Davy, Chief Executive Officer: The company consummated the Offering to raise additional capital to be used for working capital and other general corporate purposes during the year ending December 31, 2025.

Industry Context

Many small-cap companies rely on convertible note financing to raise capital when traditional funding sources are limited. This type of financing can be attractive due to its flexibility, but it often comes with higher costs and potential dilution for existing shareholders.

Comparison to Industry Standards

• The terms of the convertible note, including the interest rate (10.0%) and original issue discount (10.0%), are within the typical range for similar financings for companies with a similar risk profile.
• The use of warrants is a common feature in convertible note financings, providing investors with additional upside potential.
• Comparable companies that have recently used convertible note financings include [Placeholder for Company A], [Placeholder for Company B], and [Placeholder for Company C].
• The management fee of 1.0% and cash fee of 7% paid to Rodman & Renshaw are within the typical range for similar financings.

Stakeholder Impact

• Shareholders will experience dilution due to the issuance of new shares.
• The company's ability to fund its operations and growth strategy is improved.
• The offering could impact the company's stock price.

Next Steps

• The corporate action will become effective on or about August 4, 2025.
• The company will file a registration statement with the SEC registering the resale of the Conversion Shares, the Warrant Shares and the shares of Common Stock underlying the Financial Advisor Warrants, no later than thirty (30) days after the date of the Registration Rights Agreement.
• The company will use its best efforts to have the registration statement declared effective as promptly as practical thereafter, and in any event no later than sixty (60) days following the date of the Registration Rights Agreement (or ninety (90) days following the date of the Registration Rights Agreement in the event of a full review by the SEC).

Key Dates

Recommendation

Keywords

convertible note financing, shareholder approval, Nasdaq Listing Rule 5635(d), dilution, warrants, Rodman & Renshaw, capital raise, SEC filing, Banzai International