Banzai Announces $5 Million Private Placement Priced At-The-Market Under Nasdaq Rules

Rhea-AI Summary

Banzai International (NASDAQ: BNZI) announced a $5 million private placement of 1,176,471 shares of Class A common stock or pre-funded warrants, along with Series A and Series B warrants to purchase up to 1,176,471 shares each. The purchase price is $4.25 per share, and the warrants have an exercise price of $4.00 per share. The Series A warrants will expire in five years, while the Series B warrants will expire in 18 months. The closing is expected around September 26, 2024, subject to customary conditions. H.C. Wainwright & Co. is the exclusive placement agent. Gross proceeds are expected to be approximately $5 million, before deducting fees and expenses. The net proceeds will be used to pay off an outstanding credit facility with Yorkville Advisors and for working capital and general corporate purposes. The securities are offered under Section 4(a)(2) of the Securities Act and Regulation D and are not registered under the Securities Act or state securities laws.

Positive

• Gross proceeds of approximately $5 million.
• Net proceeds to be used for paying off outstanding credit facility and working capital.

Negative

• Potential shareholder dilution due to issuance of new shares and warrants.

Insights

Financial Analyst

This private placement is a significant move for Banzai, raising $5 million through the issuance of shares and warrants. The pricing at $4.25 per share, slightly above the $4.00 warrant exercise price, suggests investor confidence. However, the dilutive effect of potentially 2,352,942 new shares (if all warrants are exercised) is considerable given Banzai's small market cap.

The immediate use of proceeds to pay off the Yorkville Advisors credit facility is positive for the balance sheet, reducing debt obligations. The remaining funds for working capital could provide a short-term liquidity boost, but may not be sufficient for long-term growth initiatives.

Investors should note the complexity of this offering, with multiple warrant types and a pre-funded warrant option, which could impact future share price and ownership structure. The at-the-market pricing and involvement of H.C. Wainwright as placement agent lend credibility to the deal, but also indicate potential challenges in raising capital through traditional means.

Legal Expert

This private placement raises several legal considerations. Firstly, the offering is conducted under Section 4(a)(2) of the Securities Act and Regulation D, exempting it from registration requirements. This limits the pool of potential investors to accredited individuals or institutions, potentially impacting liquidity.

The company's commitment to file a resale registration statement is important for investors, as it will eventually allow for public trading of these securities. However, until effective, these shares and warrants will be restricted, which could affect their value and transferability.

The use of at-the-market pricing under Nasdaq rules demonstrates compliance with listing requirements, which is important for maintaining Banzai's Nasdaq status. However, investors should be aware that this offering could trigger certain reporting requirements or impact the company's compliance with continued listing standards, depending on the size relative to outstanding shares.

SEATTLE, Sept. 24, 2024 (GLOBE NEWSWIRE) -- Banzai International, Inc. (NASDAQ: BNZI) (“Banzai” or the “Company”), a leading marketing technology company that provides essential marketing and sales solutions, today announced that it has entered into definitive agreements for the issuance and sale of an aggregate of 1,176,471 shares of Class A common stock (or pre-funded warrant in lieu thereof), accompanying Series A warrants to purchase up to 1,176,471 shares of Class A common stock and accompanying short-term Series B warrants to purchase up to 1,176,471 shares of Class A common stock at a purchase price of $4.25 per share (or per pre-funded warrant in lieu thereof) and accompanying warrants in a private placement priced at-the-market under the rules of the Nasdaq Stock Market. The Series A and the short-term Series B warrants will have an exercise price of $4.00 per share and will be exercisable immediately upon issuance. The Series A warrants will expire five years from the issuance date and the short-term Series B warrants will expire 18 months from the issuance date. The closing of the offering is expected to occur on or about September 26, 2024, subject to the satisfaction of customary closing conditions.

H.C. Wainwright & Co. is acting as the exclusive placement agent for the offering.

The gross proceeds from the offering are expected to be approximately $5 million, prior to deducting placement agent’s fees and other offering expenses payable by the Company. Banzai intends to use the net proceeds from the offering to pay off in full its outstanding credit facility with Yorkville Advisors and for working capital and other general corporate purposes.

The securities described above are being offered in a private placement under Section 4(a)(2) of the Securities Act of 1933, as amended (the “Securities Act”), and/or Regulation D promulgated thereunder and, along with the shares of Class A common stock underlying the warrants, have not been registered under the Securities Act, or applicable state securities laws. Accordingly, the warrants and underlying shares of Class A common stock may not be offered or sold in the United States except pursuant to an effective registration statement or an applicable exemption from the registration requirements of the Securities Act and such applicable state securities laws. Pursuant to a registration rights agreement with investors, the Company has agreed to file a resale registration statement covering the securities described above.

This press release shall not constitute an offer to sell or a solicitation of an offer to buy these securities, nor shall there be any sale of these securities in any state or other jurisdiction in which such offer, solicitation or sale would be unlawful prior to the registration or qualification under the securities laws of any such state or other jurisdiction.

About Banzai

Banzai is a marketing technology company that provides essential marketing and sales solutions for businesses of all sizes. On a mission to help their customers achieve their mission, Banzai enables companies of all sizes to target, engage, and measure both new and existing customers more effectively. Banzai customers include Square, Hewlett Packard Enterprise, Thermo Fisher Scientific, Thinkific, Doodle and ActiveCampaign, among thousands of others. Learn more at www.banzai.io. For investors, please visit https://ir.banzai.io.

Forward-Looking Statements

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements often use words such as “believe,” “may,” “will,” “estimate,” “target,” “continue,” “anticipate,” “intend,” “expect,” “should,” “would,” “propose,” “plan,” “project,” “forecast,” “predict,” “potential,” “seek,” “future,” “outlook,” and similar variations and expressions. Forward-looking statements are those that do not relate strictly to historical or current facts. Examples of forward-looking statements may include, among others, statements regarding Banzai International, Inc.’s (the “Company’s”): ability to consummation of the private placement, the satisfaction of the closing conditions of the private placement and the use of proceeds therefrom as well as future financial, business and operating performance and goals; annualized recurring revenue and customer retention; ongoing, future or ability to maintain or improve its financial position, cash flows, and liquidity and its expected financial needs; potential financing and ability to obtain financing; acquisition strategy and proposed acquisitions and, if completed, their potential success and financial contributions; strategy and strategic goals, including being able to capitalize on opportunities; expectations relating to the Company’s industry, outlook and market trends; total addressable market and serviceable addressable market and related projections; plans, strategies and expectations for retaining existing or acquiring new customers, increasing revenue and executing growth initiatives; and product areas of focus and additional products that may be sold in the future. Because forward-looking statements relate to the future, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict and many of which are outside of our control. Forward-looking statements are not guarantees of future performance, and our actual results of operations, financial condition and liquidity and development of the industry in which the Company operates may differ materially from those made in or suggested by the forward-looking statements. Therefore, investors should not rely on any of these forward-looking statements. Factors that may cause actual results to differ materially include changes in the markets in which the Company operates, customer demand, the financial markets, economic, business and regulatory and other factors, such as the Company’s ability to execute on its strategy. More detailed information about risk factors can be found in the Company’s Annual Report on Form 10-K and the Company’s Quarterly Reports on Form 10-Q under the heading “Risk Factors,” and in other reports filed by the Company, including reports on Form 8-K. The Company does not undertake any duty to update forward-looking statements after the date of this press release, except as required by law.

Investor Contacts:
Chris Tyson
Executive Vice President
MZ Group - MZ North America
949-491-8235
BNZI@mzgroup.us
www.mzgroup.us

Media
Rachel Meyrowitz
Director, Demand Generation, Banzai
rachel.meyrowitz@banzai.io

FAQ

What is the total amount raised in Banzai's (BNZI) private placement?

Banzai raised approximately $5 million in the private placement.

What is the purchase price per share in Banzai's (BNZI) private placement?

The purchase price per share is $4.25.

When is the expected closing date for Banzai's (BNZI) private placement?

The closing is expected to occur on or about September 26, 2024.

What are the exercise prices and expiry dates for the Series A and Series B warrants in Banzai's (BNZI) private placement?

The exercise price for both Series A and Series B warrants is $4.00 per share. Series A warrants expire in five years, and Series B warrants expire in 18 months.

How will Banzai (BNZI) use the net proceeds from the private placement?

The net proceeds will be used to pay off an outstanding credit facility with Yorkville Advisors and for working capital and general corporate purposes.