8-K: Banzai Secures $2.33M in Latest Convertible Note Offering

Banzai International, Inc. announced the closing of an additional private placement, raising $2.33 million through a senior secured convertible note and associated warrants.

Summary

• Banzai International, Inc. (the Company) completed an additional closing of a private placement on February 13, 2026, issuing a Senior Secured Convertible Note (the February Note) with an original principal amount of $2,333,333.33.
• The February Note has an initial conversion price of $1.11 per share, a floor price of $0.2540, and matures on February 13, 2027.
• The note was issued with an Original Issue Discount (OID) of 10.0% and accrues interest at a rate of 10.0% per annum.
• Additional warrants (the February Warrants) were issued to purchase up to 420,420 shares of Common Stock at an initial exercise price of $1.11 per share, exercisable for three years.
• The net proceeds to the Company from this February Closing were approximately $1,599,168, after deducting financial advisory fees and estimated offering expenses.
• The Company intends to use the net proceeds for general corporate purposes and working capital.
• This is the fourth closing under a Securities Purchase Agreement, with previous notes issued on June 30, 2025 ($2.2M), August 19, 2025 ($2.2M), and October 8, 2025 ($2.5M), bringing the total aggregate original principal amount of notes to $9,233,333.33.
• The buyer of the notes and warrants is limited to beneficially owning no more than 4.99% (or up to 9.99% with prior notice) of the Company's outstanding Common Stock.
• Rodman & Renshaw LLC acted as the exclusive financial advisor, receiving a cash fee equal to 7% of the gross proceeds, a management fee of 1.0% of the gross proceeds, and warrants to purchase 133,770 shares of Common Stock at an exercise price of $1.3875 per share.

Sentiment

Score: 4

Explanation: StockSavvy.ai views this as a necessary but costly financing event. While it provides immediate capital, the dilutive potential, high interest rate, and significant fees reflect challenges in securing more favorable terms, indicating underlying financial pressure or a high-risk profile.

Positives

• Secured additional funding of $2,333,333.33 in gross proceeds, providing necessary capital for operations.
• Net proceeds of approximately $1,599,168 will be used for general corporate purposes and working capital, supporting ongoing business activities.
• The convertible nature of the notes offers a mechanism to potentially reduce debt obligations if converted into equity.
• The issuance of warrants provides future potential capital if exercised by the holders.

Negatives

• The note was issued with a 10.0% Original Issue Discount (OID), meaning the Company received less cash than the principal amount, effectively increasing the cost of capital.
• A high interest rate of 10.0% per annum on the senior secured convertible note adds to the Company's debt servicing costs.
• Significant fees were paid to the financial advisor, including a 7% cash fee, a 1.0% management fee, and warrants for 133,770 shares, which are substantial for a capital raise of this size.
• The conversion price of $1.11 is subject to a floor price of $0.2540, indicating potential for significant dilution for existing shareholders if the stock price declines.
• The Company is restricted from issuing other dilutive securities or filing other registration statements without the prior written consent of the required holders, limiting future financing flexibility.

Risks

• Dilution Risk: The conversion price of $1.11 per share, with a floor of $0.2540, means that if the stock price falls, more shares will be issued upon conversion, leading to significant dilution for existing shareholders.
• Debt Obligation: The Company has a 10.0% interest-bearing senior secured convertible note, adding to its debt burden and requiring regular payments.
• Event of Default: Numerous conditions can trigger an Event of Default, including failure to file/maintain registration statements, trading suspensions, failure to deliver shares, failure to pay amounts due, other indebtedness defaults, and material adverse effects. An Event of Default allows the holder to demand redemption at a 15% premium or convert at an 'Alternate Conversion Price' which could be lower.
• Liquidity Risk (for company): The Company must maintain sufficient authorized and unreserved shares (250% of maximum convertible shares) to satisfy conversion obligations. Failure to do so (Authorized Share Failure) could force the Company to pay cash for shares it cannot issue.
• Financing Restrictions: Covenants restrict the Company from incurring other indebtedness (with exceptions), creating liens (with exceptions), making restricted payments/investments, redeeming/repurchasing capital stock, transferring assets outside ordinary course, or changing its business nature.
• Market Price Volatility: The conversion and exercise prices are tied to market prices (VWAP, Closing Sale Price), making the number of shares issued and potential dilution highly sensitive to stock performance.
• Shareholder Approval: Increasing authorized shares to meet conversion obligations may require stockholder approval, which could be difficult to obtain.
• Legal and Enforcement Costs: The Company is liable for the holder's legal fees and disbursements if the note is placed for collection or enforcement.

Future Outlook

The company intends to use the net proceeds from the February Closing for general corporate purposes and working capital. The notes have monthly installment repayments, which can be made in cash or, under certain conditions, in shares of Common Stock, providing flexibility in managing debt obligations.

Management Comments

• The Company intends to use the net proceeds received from the February Closing for general corporate purposes and working capital.

Industry Context

StockSavvy.ai notes that securing additional convertible debt financing is a common strategy for growth-stage companies, particularly those on the Nasdaq Capital Market, to fund operations and expansion without immediate equity dilution. However, the terms, including a 10% OID and 10% interest rate, suggest a higher cost of capital, which can be typical for companies with limited access to traditional bank financing or those perceived as higher risk. The structure with warrants and anti-dilution provisions is standard for institutional private placements, aiming to protect the investor's position.

Comparison to Industry Standards

• The 10% OID and 10% annual interest rate on the convertible note are relatively high, indicating a more expensive form of financing compared to investment-grade corporate bonds which might yield 3-6% or even lower for established companies. This suggests Banzai may be perceived as having a higher credit risk or limited access to cheaper capital.
• The conversion price of $1.11 per share, with a floor of $0.2540, provides a significant downside protection for the investor, but also implies substantial potential dilution for existing shareholders if the stock price declines below the initial conversion price. This is a common feature in distressed or high-growth company financings, but the low floor price is notable.
• The financial advisory fees of 7% cash and 1% management fee, plus warrants, are on the higher end for capital raises, especially for a transaction of this size. For larger, more established companies, advisory fees typically range from 1-5% for similar debt or equity offerings.
• The 4.99% (or 9.99% with notice) beneficial ownership limitation for the buyer is a standard provision to avoid triggering beneficial ownership reporting requirements under Section 13(d) of the 1934 Act, which is common in private placements to institutional investors.

Stakeholder Impact

• Shareholders: Potential for significant dilution if the convertible notes are converted, especially if the stock price falls towards the $0.2540 floor. The issuance of warrants also represents future dilution.
• Creditors/Note Holders: The notes are senior secured, providing a higher claim on assets compared to unsecured creditors. They also benefit from a 10% interest rate and redemption premiums upon certain events.
• Employees: The capital raise provides working capital, which could support ongoing operations and job security.

Next Steps

• The Company will continue to make monthly installment repayments on the notes, either in cash or common stock.
• The Company will use the net proceeds for general corporate purposes and working capital.
• The Company must ensure it maintains sufficient authorized and unreserved shares for future conversions.
• The Company is restricted from certain actions (e.g., issuing other dilutive securities) until the February Closing Expiration Date (180 days after February 13, 2026) or until no notes remain outstanding.

Key Dates

Recommendation

While the capital raise provides necessary liquidity for Banzai International, the terms of the financing, including a high OID, substantial interest rate, and significant potential for dilution at a low floor price, suggest underlying financial challenges. The restrictions on future financing and the cost of capital indicate a cautious outlook. Investors should hold, monitoring the company's ability to improve its operational performance and secure more favorable financing terms in the future, as well as the impact of potential dilution.

Keywords

Convertible Note, Private Placement, Warrants, Debt Financing, Dilution, SEC Filing, Corporate Finance, Capital Raise, BNZI, Nasdaq Capital Market, Securities Purchase Agreement, Original Issue Discount, Anti-dilution