Banzai International, Inc. 10-K

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations. The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our consolidated audited financial statements and related notes included in Part II, Item 8 of this Form 10-K. In addition to historical consolidated financial information, the following discussion contains forward-looking statements that reflect our plans, estimates and beliefs. Our actual results could differ materially from those discussed in the forward-looking statements. Factors that could cause or contribute to these differences include those discussed below and elsewhere particularly in the section titled “Risk Factors” and elsewhere in this Form 10-K. Certain figures, such as interest rates and other percentages, included in this section have been rounded for ease of presentation. Percentage figures included in this section have not in all cases been calculated on the basis of such rounded figures but on the basis of such amounts prior to rounding. For this reason, percentage amounts in this section may vary slightly from those obtained by performing the same calculations using the figures in our consolidated financial statements or in the associated text. Certain other amounts that appear in this section may similarly not sum due to rounding. Overview Banzai is a Marketing Technology (MarTech) company that produces data-driven marketing and sales solutions for businesses of all sizes. Our mission is to help our customers accomplish their mission - by enabling better marketing, sales, and customer engagement outcomes. Banzai endeavors to acquire companies strategically positioned to enhance our product and service offerings, increasing the value provided to current and prospective customers. Banzai was founded in 2015. The first product Banzai launched was Reach, a SaaS and managed services offering designed to increase registration and attendance of marketing events, followed by the acquisition of Demio, a SaaS solution for webinars designed for marketing, sales, and customer success teams, in 2021 and the launch of Boost, a SaaS solution for social sharing designed to increase attendance for Demio-hosted events by enabling easy social sharing by event registrants, in 2023. We acquired OpenReel in 2024, and both Vidello and the assets of Superblocks in 2025, further expanding our platform and customer base. Our customer base comes from a variety of industries, including (among others) healthcare, financial services, e-commerce, technology and media, in over 90 countries. Our customers range in size from solo entrepreneurs and small businesses to Fortune 500 companies. No single customer represents more than 10% of our revenue. Since 2021, we have focused on increasing mid-market and enterprise customers for Demio. We sell our products using a recurring subscription license model typical in SaaS businesses. Pricing tiers for our main product, Demio, are based on the number of host-capable users, desired feature sets, and maximum audience size. Boost pricing tiers are based on the Demio plan to which the customer subscribes. Reach pricing is based on the number of event campaigns a customer has access to run simultaneously or the maximum number of registrations a customer is allowed to generate per subscription period. Our customer contracts vary in term length from single months to multiple years. Full Year 2025 Financial and Operational Highlights • Revenue grew 168.6% to $12.2 million for full year 2025 compared to 2024. Total cost of revenue increased only 53.8% year over year, resulting in improved gross profit. • Gross profit reached $10.0 million for full year 2025, compared to $3.1 million in 2024. Gross profit was 82.0% in full year 2025 compared to 68.6% in 2024. • Net loss decreased to $22.5 million for full year 2025, compared to $31.5 million in 2024, which represents a $9.0 million improvement year over year. • Stockholders' equity increased $10.8 million to $8.1 million as of December 31, 2025. The company made substantial improvements to the balance sheet during 2025. • Executed a payoff and debt conversion agreement for approximately $4.3 million in outstanding senior secured debt. The decision by senior debt holders to convert into equity reflects a strong vote of confidence in our vision and trajectory. • Secured an $11 million debt facility in June 2025 with an institutional investor to support ongoing operations and solidify the foundation for future growth. 40 • Expanded our customer base to over 150,000 cumulative total customers that have used Banzai products as of December 31, 2025. Customers include blue chip names across healthcare, financial services, e-commerce, technology, and media, with customers in over 90 countries. • Acquired Vidello, a platform of a suite of products for 3D video creation, royalty free music, and video marketing. Vidello offers a comprehensive video hosting and marketing suite that provides entrepreneurs, startups, agencies, and online businesses with tools to grow their businesses. • Acquired the assets of Superblocks, an agentic AI platform for developing and hosting SEO-optimized websites, landing pages, and registration pages. The platform allows marketers to create and host websites using conversational AI, addressing problems that traditionally required rigid template-based site builders or extensive web development expertise. • • An institutional investor increased their direct equity stake to 18.7% following the exercise of warrants. We believe this demonstrates their confidence in our long-term strategy. • Established strong pipeline focused on the BFSI (banking, financial services, insurance, and FinTech) segment with multiple seven-figure deals. We are seeing substantial improvements in our pipeline, especially for mid-market and enterprise customers. • Successfully shifted CreateStudio revenue model from one-time license to recurring subscription revenue. The vast majority of CreateStudio revenue is now recurring, with a very effective customer upsell program running. Summary of our recent acquisitions Superblocks On November 7, 2025, we acquired the assets of Superblocks, a privately-held Agentic AI platform for developing and hosting launch-ready SEO-optimized websites. The Superblocks platform allows marketers to easily create and host websites, landing pages, and simple web applications using conversational AI. Vidello On January 31, 2025, we acquired Vidello, a platform of a suite of products for 3D video creation, royalty free music, and video marketing. Vidello offers a comprehensive video hosting and marketing suite that provides entrepreneurs, startups, agencies, and online businesses with tools to grow their businesses. At the acquisition date, Vidello had over 90,000 customers, and their flagship CreateStudio product has been named a Top 3 Best Rated product in the video maker category by Capterra, and a High Performer by G2. OpenReel On December 18, 2024, we acquired OpenReel, a leading enterprise video creation and management solution that empowers companies to create high-quality content at scale and on brand. OpenReel enables businesses of all sizes to cut down on the time-and resource-intensive process of video creation and scale content creation initiatives efficiently, effectively, and securely. OpenReel is trusted by a wide range of customers from small businesses to Fortune 500 companies. OpenReel is based in New York, with its team distributed worldwide. OpenReel’s enterprise customer base includes global organizations, such as Bristol Myers Squibb, Ingram Micro, DXC Technology, Insider Inc., and US Steel. These acquisitions are a key part of our vision to build a comprehensive suite of AI-powered marketing tools that make marketers' lives faster and easier. For more information regarding these acquisitions, See Note 4 – Acquisitions included in our consolidated financial statements in this Report. Transaction Announcement As noted in Item 1. Business, on March 23, 2026, the Company announced that it reached an agreement on terms to acquire assets of ConnectAndSell. The acquisition is expected to increase Banzai’s annual revenue by approximately $15 million. The two companies have executed a non-binding letter of intent, and the final transaction is expected to close in early second quarter 2026, subject to execution of a definitive agreement and closing conditions. 41 Terminated Act-On Merger We entered into an Agreement and Plan of Merger, dated January 22, 2025, with Act-On Software, Inc., a Delaware corporation (“Act-On”). Although the Company worked diligently to complete all closing conditions of the Plan of Merger, due to market conditions, on June 6, 2025, Act-On served Banzai with a notice of termination to terminate the Merger Agreement and any related agreements (collectively, the “Transaction Documents”). As per the Transaction Documents, within five calendar days, the Company was required to pay certain termination fees including $500,000 in liquidated damages to cover certain transaction expenses that Act-On incurred in connection with the merger and $882,030 in additional interest and extension fees associated with one of Act-On’s outstanding debts that the Company had intended to payoff in connection with the merger. As of December 31, 2025, the Company had paid the total amount owed of approximately $1,382,030 to Act-On. The Business Combination and Public Company Costs The Business Combination was accounted for as a reverse recapitalization. Under this method of accounting, 7GC was treated as the acquired company for financial statement reporting purposes. Accordingly, for accounting purposes, the financial statements of Banzai represent a continuation of the financial statements of Legacy Banzai with the Business Combination treated as the equivalent of Legacy Banzai issuing stock for the net assets of 7GC, accompanied by a recapitalization. The net assets of 7GC were stated at historical cost, with no goodwill or other intangible assets recorded. Operations prior to the Business Combination are those of Legacy Banzai in this and future reports of Banzai. Due to the Business Combination, we became the successor to an SEC-registered and Nasdaq-listed company, which required Banzai to hire additional personnel and implement procedures and processes to address public company regulatory requirements and customary practices. We incurred and expect to incur additional annual expenses as a public company for, among other things, directors’ and officers’ liability insurance, director fees and additional internal and external accounting, legal and administrative resources, including increased audit and legal fees. We are classified as a “smaller reporting company.” As a result, we have been provided with certain disclosure and regulatory relief. Our future results of operations and financial position may not be comparable to Legacy Banzai’s historical results of operations and financial position as a result of the Business Combination. 42 Results of Operations Year Ended December 31, Year-over-Year ($ in Thousands) 2025 2024 $ % Operating income: Revenue $ 12,161 $ 4,528 $ 7,633 168.6 % Cost of revenue 2,189 1,423 766 53.8 % Gross profit 9,972 3,105 6,867 221.2 % Operating expenses: General and administrative expenses 27,287 16,549 10,738 64.9 % Depreciation and amortization expense 1,150 24 1,126 nm Total operating expenses 28,437 16,573 11,864 71.6 % Operating loss (18,465 ) (13,468 ) (4,997 ) 37.1 % Other expenses (income): GEM settlement fee expense — 200 (200 ) -100.0 % Interest income (3 ) — (3 ) nm Interest expense 1,228 — 1,228 nm Interest expense – related party 1,157 3,047 (1,890 ) -62.0 % Gain on extinguishment of liabilities (4,489 ) (681 ) (3,808 ) 559.2 % Gain on release of Vidello revenue holdback (973 ) — (973 ) nm Loss on debt issuance 444 653 (209 ) -32.0 % Loss on Private Placement Issuance 4,874 — 4,874 nm Loss on issuance of term notes 111 — 111 nm Loss on issuance of convertible bridge notes 153 — 153 nm Loss on conversion and settlement of Alco promissory notes – related party — 4,809 (4,809 ) -100.0 % Loss on conversion and settlement of CP BF notes – related party — 6,529 (6,529 ) -100.0 % Loss on extinguishment of debt, net 2,403 1,072 1,331 124.2 % Change in fair value of warrant liability (1,244 ) (626 ) (618 ) 98.7 % Change in fair value of warrant liability – related party (2 ) (573 ) 571 -99.7 % Change in fair value of bifurcated embedded derivative assets – related party 54 (51 ) 105 -205.9 % Change in fair value of convertible notes (1,987 ) 693 (2,680 ) -386.7 % Change in fair value of term notes 173 89 84 94.4 % Change in fair value of convertible bridge notes (46 ) (10 ) (36 ) 360.0 % Yorkville prepayment premium expense — 81 (81 ) -100.0 % Loss on Yorkville SEPA advances 974 — 974 nm Vidello earnout expense 486 — 486 nm Failed acquisition costs 1,382 — 1,382 nm Goodwill impairment — 2,725 (2,725 ) -100.0 % Other (income) expense, net (727 ) 88 (815 ) nm Total other expenses, net 3,968 18,045 (14,077 ) -78.0 % Loss before income taxes (22,433 ) (31,513 ) 0.0 % Income tax expense 61 — 61 nm Net loss $ (22,494 ) $ (31,513 ) $ 9,019 -28.6 % 43 The percentage changes included in the tables herein that are not considered meaningful are presented as “nm." Comparison of years ended December 31, 2025 and 2024 Revenue Analysis Year Ended December 31, Year-over-Year ($ in Thousands) 2025 2024 $ % Revenue $ 12,161 $ 4,528 $ 7,633 168.6 % The revenue increase was primarily due to the acquisitions of OpenReel in December 2024 and Vidello in January 2025. Revenue from OpenReel and Vidello was approximately $5,473 thousand and $2,261 thousand, respectively, for the year ended December 31, 2025. Revenue from Banzai Operating increased by approximately $121 thousand. Cost of Revenue Analysis Year Ended December 31, Year-over-Year ($ in Thousands) 2025 2024 $ % Cost of revenue $ 2,189 $ 1,423 $ 766 53.8 % The cost of revenue increase was primarily due to the acquisitions of OpenReel and Vidello. Cost of revenue from OpenReel and Vidello was approximately $310 thousand and $402 thousand, respectively, for the year ended December 31, 2025. Cost of revenue from Banzai Operating increased by approximately $69 thousand. Gross Profit Analysis Year Ended December 31, Year-over-Year ($ in Thousands) 2025 2024 $ % Gross profit $ 9,972 $ 3,105 $ 6,867 221.2 % The gross profit increase was primarily due to the acquisitions of OpenReel and Vidello as described above. Gross profit from OpenReel and Vidello was approximately $5,163 thousand and $1,860 thousand, respectively, for the year ended December 31, 2025, and Banzai Operating was approximately $52 thousand. Operating Expense Analysis Year Ended December 31, Year-over-Year ($ in Thousands) 2025 2024 $ % Total operating expenses $ 28,437 $ 16,573 $ 11,864 71.6 % Total operating expenses increased primarily due to the acquisitions of OpenReel and Vidello, which were approximately $6.1 million and $1.9 million, respectively, for the year ended December 31, 2025. Additionally the increase was due to an overall increase in salaries and related expenses of approximately $1.6 million primarily driven by stock-based compensation expense, marketing expenses by approximately $0.6 million, and costs associated with audit, technical accounting, and legal and other professional services of approximately $1.8 million. Other Expense Analysis Year Ended December 31, Year-over-Year ($ in Thousands) 2025 2024 $ % Total other expenses, net $ 3,968 $ 18,045 $ (14,077 ) -78.0 % 44 For the year ended December 31, 2025, we reported total other income of approximately $4.0 million. The change in other expenses (income), net was primarily driven by the following: ▪ Total interest expense of approximately $2.4 million recognized during the year ended December 31, 2025 compared to $3.0 million during the year ended December 31, 2024. ▪ Gain on extinguishment of liabilities of approximately $4.5 million recognized during the year ended December 31, 2025 compared to $0.7 million recognized during the year ended December 31, 2024. ▪ Loss on issuance of debt of approximately $0.4 million during the year ended December 31, 2025 compared to $0.7 million during the year ended December 31, 2024. ▪ Loss on Private Placement Issuance of debt of approximately $4.9 million during the year ended December 31, 2025. ▪ Loss on extinguishment of debt, net of approximately $2.4 million during the year ended December 31, 2025 compared to $1.1 million during the year ended December 31, 2024. ▪ Change in fair value of convertible notes was a gain of approximately $2.0 million during the year ended December 31, 2025 compared to a loss of approximately $0.7 million during the year ended December 31, 2024. ▪ Loss on SEPA advances to Yorkville of approximately $1.0 million during the year ended December 31, 2025. ▪ Costs related to the terminated Act-On acquisition of $1.4 million during the year ended December 31, 2025. ▪ Loss on conversion and settlement of CP BF notes of approximately $6.5 million during the year ended December 31, 2024. ▪ Loss on conversion and settlement of Alco promissory notes of approximately $4.8 million during the year ended December 31, 2024. ▪ Goodwill impairment loss associated with the OpenReel acquisition of approximately $2.7 million during the year ended December 31, 2024. Provision for Income Taxes Year Ended December 31, Year-over-Year ($ in Thousands) 2025 2024 $ % Income tax expense $ 61 $ — $ 61 1614.3 % Due to our history of losses since inception, there is not enough evidence at this time to support that we will generate future income of a sufficient amount and nature to utilize the benefits of our net deferred tax assets associated with the U.S. taxing jurisdiction. Accordingly, the U.S. deferred tax assets have been reduced by a full valuation allowance, since we cannot currently support that realization of our deferred tax assets is more likely than not. At December 31, 2025, we had no unrecognized tax benefits that would impact our effective tax rate if recognized. Critical Accounting Estimates Our consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States. The preparation of these consolidated financial statements requires us to make judgments and estimates that affect the reported amounts of assets, liabilities, revenues and expenses, and the disclosure of contingent assets and liabilities in our financial statements. We base our estimates on historical experience, known trends and events and various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Our actual results may differ from these estimates under different assumptions or conditions. On a recurring basis, we evaluate our judgments and estimates in light of changes in circumstances, facts, and experience. The effects of material revisions 45 in an estimate, if any, will be reflected in the consolidated financial statements prospectively from the date of the change in the estimate. We believe that the following accounting policies are those most critical to the judgments and estimates used in the preparation of our financial statements. Impairment of goodwill Goodwill represents the excess of the purchase price over the fair value of the net identifiable assets acquired in a business combination. Goodwill is reviewed for impairment at least annually, in December, or more frequently if a triggering event occurs between impairment testing dates. As of December 31, 2025, the Company had three operating segments, which were deemed to be its reporting units, for the purpose of evaluating goodwill impairment, and the annual impairment test is performed as of December 31. The Company’s impairment assessment begins with a qualitative assessment to determine whether it is more likely than not that the fair value of the reporting unit is less than its carrying value. Qualitative factors may include, macroeconomic conditions, industry and market considerations, cost factors, and other relevant entity and Company specific events. If, based on the qualitative test, the Company determines that it is "more likely than not” that the fair value of a reporting unit is less than its carrying value, then we evaluate goodwill for impairment by comparing the fair value of our reporting unit to its respective carrying value, including its goodwill. If it is determined that it is not likely that the fair value of the reporting unit is less than its carrying value, then no further testing is required. The selection and assessment of qualitative factors used to determine whether it is more likely than not that the fair value of a reporting unit exceeds the carrying value involves significant judgment and estimates. Fair values may be determined using a combination of both income and market-based approaches. As of the annual impairment testing date of December 31, 2025, the Company performed a quantitative assessment by estimating the fair value of the Company using the market capitalization method of the market approach and an income valuation methodology, consisting of a discounted cash flow analysis and market valuation methodologies, consisting of the guideline public company and guideline transaction methods. The market capitalization method calculated the aggregate market value of the Company based on the total number of outstanding shares of common and preferred stock and the market prices of the shares as of the assessment date. The discounted cash flow (“DCF”) estimated the present value of future cash flows. A DCF analysis requires significant judgment to model financial forecasts, which included revenue growth, cost of sales as a percentage of revenue, gross profit margin, operating expenses as a percentage of revenue, EBITDA margin, EBITDA growth, industry and economic trends, and other relevant considerations. For periods beyond those forecasted, a terminal value was estimated based on an assumed long-term growth rate, which was derived using the Gordon Growth Model. The discount rate applied to the forecasted cash flows was calculated using a build-up approach, which starts with the risk-free interest rate, which was then calibrated for market and small stock risk premiums, including a beta, equity risk, size, and small stock risk premiums to reflect risks and uncertainties in the financial market and in the Company’s business projections. The market approach for the guideline public company method utilizes observable market data from comparable public companies, including revenue multiples, to estimate the Company’s fair value. This approach also incorporates a control premium to represent the Company’s expectation of a hypothetical acquisition. The market approach for the guideline transaction method utilizes observable transactions of actual prices paid for target companies that operated in comparable industries or markets facing similar risks. Both methods of the market approach require judgment in the selection of comparable companies or comparable transactions and includes those with similar business activities, and related operating environments. The results of the quantitative assessment indicated that the fair value of each of the Company's reporting units exceeded its carrying value, therefore no goodwill impairment was recognized for the year ended December 31, 2025. Significant negative industry or economic trends, including declines in the market price of the Company’s stock, reduced estimates of future cash flows or business disruptions could result in impairments to goodwill in the future, which would result in recording an impairment loss. Any resulting impairment loss could have a material adverse impact on the Company’s financial condition and results of operations. Management evaluates the economic conditions in between reporting periods for triggering events. 46 Business combinations The Company accounts for business combinations under the acquisition method of accounting, which requires the recognition of acquired tangible and identifiable intangible assets and assumed liabilities at their acquisition date fair values. These fair values are a result of valuation techniques that use significant assumptions that are subject to a high degree of judgment. The excess of the acquisition price over the fair value of assets acquired and liabilities assumed is recorded as goodwill. Results of operations related to acquired entities are included prospectively beginning with the date of acquisition. Acquisition-related costs are expensed as incurred. Fair value estimates under the Fair Value Option The Company measures certain debt instruments at fair value on a recurring basis. Fair value is defined as the price that would be paid to transfer a liability in an orderly transaction between market participants at the measurement date. The determination of fair value requires management judgment, including the selection of valuation methodologies and the use of assumptions that may not be observable in the market. The Company has elected the fair value option for certain debt instruments that contain conversion features. When the fair value option is elected, the note is measured at fair value at each reporting date as a single unit of account, and changes in fair value are recognized in earnings. The Company’s election of the fair value option results in recurring fair value measurements that are considered a critical accounting estimate due to the judgment required in estimating fair value and the sensitivity of the measurement to changes in assumptions. The fair value of these debt instruments are estimated using valuation techniques that incorporate inputs that may not be observable in the market and, accordingly, the fair value measurements are generally classified within Level 3 of the fair value hierarchy. Key assumptions used to estimate fair value may include, among other things, the Company’s credit risk, discount rates, the expected timing and amount of future cash flows, and assumptions related to the conversion feature, including the Company’s stock price and expected volatility. These assumptions are inherently subjective and may change from period to period. As a result, the estimated fair value could differ materially from amounts that would be paid to transfer the liability in a current market transaction, and changes in these assumptions could materially affect the Company’s consolidated financial statements and results of operations. Non-GAAP Financial Measures Adjusted EBITDA In addition to our results determined in accordance with U.S. GAAP, we believe that Adjusted EBITDA, a non-GAAP measure as defined below, is useful in evaluating our operational performance distinct and apart from certain irregular, non-cash, and non-operational expenses. We use this information for ongoing evaluation of operations and for internal planning purposes. We believe that non-GAAP financial information, when taken collectively with results under GAAP, may be helpful to investors in assessing our operating performance and comparing our performance with competitors and other comparable companies. Non-GAAP measures should not be considered in isolation or as a substitute for analysis of our results as reported under GAAP. We endeavor to compensate for the limitation of Adjusted EBITDA, by also providing the most directly comparable GAAP measure, which is net loss, and a description of the reconciling items and adjustments to derive the non-GAAP measure. Some of these limitations are: ▪ Adjusted EBITDA does not consider the potentially dilutive impact of stock-based compensation ▪ Although depreciation and amortization are non-cash charges, the assets being depreciated and amortized may have to be replaced in the future, and Adjusted EBITDA does not reflect cash capital expenditure requirements for such replacements or for new capital expenditures or contractual commitments ▪ Adjusted EBITDA does not reflect impairment and restructuring costs ▪ Adjusted EBITDA does not reflect interest expense or other income ▪ Adjusted EBITDA does not reflect income taxes ▪ Adjusted EBITDA does not reflect audit, legal, incremental accounting and other expenses tied to M&A or the Business Combination; and 47 ▪ Other companies, including companies in our own industry, may calculate Adjusted EBITDA differently from the way we do, limiting its usefulness as a comparative measure. Because of these limitations, Adjusted EBITDA should only be considered alongside results prepared in accordance with GAAP, including various cash-flow metrics, net income (loss) and our other GAAP results and financial performance measures. Adjusted EBITDA Analysis Year Ended December 31, Year-over-Year ($ in Thousands) 2025 2024 $ % Adjusted EBITDA (Loss) $ (7,267 ) $ (6,506 ) $ (761 ) 11.7 % The Adjusted EBITDA decrease is primarily attributable to increased general and administrative expenses. Net Income/(Loss) to Adjusted EBITDA Reconciliation Year Ended December 31, Year-over-Year ($ in Thousands) 2025 2024 $ % Net loss $ (22,494 ) $ (31,513 ) $ 9,019 -28.6 % Interest expense 1,228 — — nm Interest income (3 ) — (3 ) nm Interest expense – related party 1,157 3,047 (1,890 ) -62.0 % Income tax expense 61 — 61 nm Depreciation and amortization expense 1,150 24 1,126 4691.7 % Stock based compensation 2,679 1,166 1,513 129.8 % GEM commitment fee expense — 200 (200 ) nm Gain on extinguishment of liabilities (4,489 ) (681 ) (3,808 ) 559.2 % Gain on release of Vidello revenue holdback (973 ) — (973 ) nm Loss on debt issuance 444 653 (209 ) -32.0 % Loss on Private Placement Issuance 4,874 — 4,874 nm Loss on issuance of term notes 111 — 111 nm Loss on issuance of convertible bridge notes 153 — 153 nm Loss on conversion and settlement of Alco promissory notes - related party — 4,809 (4,809 ) -100.0 % Loss on conversion and settlement of CP BF notes – related party — 6,529 (6,529 ) -100.0 % Loss on extinguishment of debt, net 2,403 1,072 1,331 124.2 % Change in fair value of warrant liability (1,244 ) (626 ) (618 ) 98.7 % Change in fair value of warrant liability – related party (2 ) (573 ) 571 -99.7 % Change in fair value of bifurcated embedded derivative assets – related party 54 (51 ) 105 -205.9 % Change in fair value of convertible notes (1,987 ) 693 (2,680 ) -386.7 % Change in fair value of term notes 173 89 84 94.4 % Change in fair value of convertible bridge notes (46 ) (10 ) (36 ) 360.0 % Yorkville prepayment premium expense — 81 (81 ) -100.0 % Loss on Yorkville SEPA advances 974 — 974 nm Vidello earnout expense 486 — 486 nm Failed acquisition costs 1,382 — 1,382 nm Goodwill impairment — 2,725 (2,725 ) -100.0 % Other expense, net (727 ) 88 (815 ) -926.1 % Transaction related expenses* 7,369 5,772 1,597 27.7 % Adjusted EBITDA $ (7,267 ) $ (6,506 ) $ (761 ) 11.7 % 48 * Transaction related expenses include Year Ended December 31, Year-over-Year ($ in Thousands) 2025 2024 $ % Professional fees - audit $ 801 $ 499 $ 302 60.4 % Professional fees - legal 467 1,969 (1,502 ) -76.3 % Incremental accounting 981 1,726 (745 ) -43.2 % Market study, M&A support 5,121 1,578 3,543 224.5 % Transaction related expenses $ 7,369 $ 5,772 $ 1,597 27.7 % Liquidity and Capital Resources Going Concern As of December 31, 2025 we had cash of approximately $0.3 million. For the year ended December 31, 2025, while we generated revenue of approximately $12.2 million, we used approximately $15.7 million in cash from operating activities and had a net loss of approximately $22.5 million. We have incurred recurring net losses from operations and negative cash flows from operating activities since inception. As of December 31, 2025, we had a working capital deficit of approximately $21.0 million and an accumulated deficit of approximately $100.8 million. These factors raise substantial doubt regarding the Company’s ability to continue as a going concern within one year of the date these financial statements were issued. The ability to continue as a going concern is dependent on Management’s plans, which include potential asset acquisitions, mergers or business combinations with other entities, further implementation of its business plans and continuing to raise capital through debt or equity financings, which is not assured. The accompanying consolidated financial statements have been prepared assuming Banzai will continue as a going concern, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business. If we are unable to raise sufficient additional capital, through future debt or equity financings or through strategic and collaborative ventures with third parties, we will not have sufficient cash flows and liquidity to fund our planned business for 12 months from the issuance of these financial statements. There can be no assurances that we will be able to secure alternate forms of financing at terms that are acceptable to management, or at all. In that event, we might be forced to limit many of our business plans and consider other means of creating value for our stockholders. See also Note 2 – Going Concern to our consolidated financial statements in this Report. Capital structure and sources of liquidity We have historically funded our operations through a combination of equity and debt financings, including convertible instruments. During 2025, we raised capital through multiple equity and debt financing arrangements with Yorkville, 3i, LP, 1800 Diagonal, Agile, and CP BF, and other lenders and investors, and we intend to seek additional funding through the Yorkville SEPA, the ATM Agreement, as well as other equity and debt financings in 2026. See Note 12 – Debt and Note 15 – Equity to our consolidated financial statements in this Report for further discussion of these arrangements . Certain of these arrangements still have remaining capacity that may serve as sources of future liquidity to us, however, our ability to access amounts under these facilities is subject to a number of conditions, limitations, and market and other factors, including factors described in our Risk Factors elsewhere in this Report, and there can be no assurance that we will be able to access the full remaining capacity, or access it on terms or in amounts sufficient to meet our liquidity needs. If we are unable to raise such funding, we will have to pursue an alternative course of action to seek additional capital through other debt and equity financing. We may seek to raise additional capital through a combination of debt and equity financings, including continued use of our at-the-market facility and our SEPA, to support our operations and expansion through acquisition. 49 Cash Flows The following table sets forth our cash flows for the years ended December 31, 2025 and 2024. See also our consolidated statement of cash flows in this Report: Year Ended December 31, Year-over-Year ($ in Thousands) 2025 2024 $ % Net loss $ (22,492 ) $ (31,513 ) $ 9,021 -28.6 % Net cash used in operating activities (15,707 ) (9,575 ) (6,132 ) 64.0 % Net cash provided by (used in) investing activities (2,679 ) 82 (2,761 ) -3367.1 % Net cash provided by financing activities 17,634 8,487 9,147 107.8 % Net decrease in cash (828 ) (1,006 ) 178 -17.7 % Cash at beginning of period 1,087 2,094 (1,007 ) -48.1 % Cash at end of period 259 1,087 (828 ) -76.2 % Cash Flows for the Year Ended December 31, 2025 Net cash used in operating activities was primarily driven by the net loss, and by working capital adjustments totaling $0.3 million (unfavorable), partially offset by adjustments for non-cash items totaling $4.3 million (favorable). The non-cash items primarily consisted of addbacks for stock-based compensation expense of approximately $2.7 million and depreciation and amortization of approximately $1.2 million, the net impact of debt-related transactions (including gain on extinguishment of debt, loss on issuance of debt and non-cash interest expense) totaling $4.7 million favorable, and the net impact of change in fair value adjustments (including debt under the fair value option, warrants and derivatives) totaling $4.3 million unfavorable. Net cash used in investing activities was primarily related to our acquisition of Vidello. Net cash provided by financing activities was primarily driven by proceeds from issuance of shares under the SEPA totaling approximately $18.6 million, proceeds from issuances of debt (both convertible and term) totaling approximately $17.1 million, proceeds from issuances of shares and warrants totaling $3.9 million, partially offset by repayments of debt totaling $18.6 million. Cash Flows for the Year Ended December 31, 2024 Net cash used in operating activities was approximately $9.6 million for the year ended December 31, 2024. Net cash used in operating activities consists of net loss of approximately $31.5 million, offset by total adjustments of approximately $22.0 million for non-cash items and the effect of changes in working capital. Non-cash adjustments primarily included loss on conversion and settlement of Alco promissory notes of approximately $4.8 million, loss on conversion and settlement of CP BF notes of approximately $6.5 million, non-cash settlement of the GEM commitment fee of approximately $0.2 million, non-cash share issuance for marketing expenses of approximately $0.2 million, non-cash share issuance for Yorkville redemption premium of approximately $0.1 million, stock-based compensation expense of approximately $1.2 million, gain on extinguishment of liability of approximately $0.7 million, loss on issuance of debt of approximately $0.7 million, loss on extinguishment of term notes of approximately $1.1 million, non-cash interest expense of approximately $2.3 million (approximately $1.53 million for related party), amortization of debt discount and issuance costs for related party of approximately $1.4 million, amortization of operating lease ROU assets of approximately $0.1 million, fair value adjustment for warrant liabilities gain of approximately $1.2 million (gain of approximately $0.6 million for related party), fair value adjustment to related party bifurcated embedded derivative liabilities gain of approximately $0.1 million, fair value adjustment of convertible promissory notes of approximately $0.7 million, fair value adjustment of term notes of approximately $0.1 million, goodwill impairment loss of approximately $2.7 million, and net of change in operating assets and liabilities of approximately $1.8 million. Net cash provided by investing activities was approximately $0.1 million for the year ended December 31, 2024 and was related to cash acquired in the acquisition of OpenReel. Net cash provided by financing activities was approximately $8.5 million for the year ended December 31, 2024, and was primarily related to proceeds from convertible debt financing of approximately $2.6 million, net proceeds from issuance of common stock of approximately $6.3 million, net proceeds from the issuance of term notes of approximately $2.8 million, proceeds from related party advance of approximately $0.1 million, proceeds from issuance of shares under 50 the SEPA agreement of approximately $0.9 million, repayment of term notes of approximately $1.9 million, partial repayment of convertible notes with a related party of approximately $0.3 million, repayment of Yorkville convertible notes of approximately $0.8 million, and payment of the GEM commitment fee of approximately $1.2 million. Debt Structure, Debt Maturity Profile, Contractual Obligations and Commitments Our material cash requirements include operating expenses to support the business, debt service (including principal and interest), and contractual obligations such as operating lease commitments. The timing of these requirements within the next 12 months and thereafter is summarized in the table below. ($ in Thousands) Principal Accrued Interest Total Principal and Accrued Interest Less than 1 year 1 - 3 Years Debt principal – 15.5% CP BF convertible notes $ 3,365 $ 1,558 $ 4,923 $ — $ 4,923 Debt principal – Agile 1,839 — 1,839 1,839 — Debt principal – Private Placement convertible notes 1,709 171 1,880 1,880 — Debt principal – Yorkville 1,192 34 1,226 1,226 — Debt principal – 1800 Diagonal 722 71 793 793 — Debt principal – Boot Capital 115 2 117 117 — Operating leases 61 - 61 33 28 Total capital expenditure commitments and financing requirements at December 31, 2025 $ 9,003 $ 1,836 $ 10,839 $ 5,888 $ 4,951 Deferred Revenue As a subscription-based SaaS company, we frequently bill customers in advance for access to our platform for a specified subscription term. Amounts invoiced or collected in advance are recorded as deferred revenue, which represents a contract liability where we have performance obligations to provide access to the platform and customer support over the remaining subscription term. As we satisfy the related performance obligations over time, deferred revenue is reduced and we recognized revenue. Operating Lease We have an operating lease for office space. The lease term expires in October 2027. The lease liability balance as of December 31, 2025 represents the future minimum lease payments under non-cancellable leases as liabilities. Off-Balance Sheet Arrangements Banzai had no off-balance sheet arrangements as of December 31, 2025. Nasdaq Listing Compliance As more fully described in " Item 1. Business" above, we effected the September Stock Split during 2024 and the July Stock Split during 2025, which were 1-for-50 and 1-for-10, respectively, in order to regain compliance with Nasdaq Rules. In addition, as previously disclosed, due to prior noncompliance with certain Nasdaq Rules, we had a hearing before the Nasdaq Panel during 2024, after which, our Class A Common Stock was phased down from the Nasdaq Global Market to the Nasdaq Capital Market. We received additional letters from Nasdaq regarding noncompliance with certain Nasdaq Rules, and were subsequently notified by Nasdaq during 2024 and 2025 that we have regained compliance with all Nasdaq Rules and therefore our securities remain listed on The Nasdaq Capital Market. However, there can be no assurance that we will be able to maintain compliance with Nasdaq listing standards. Item 7A. Quantitative and Qualitative Disclosures About Market Risk. This item is not applicable as we are a smaller reporting company. 51 Item 8. Financial Statements and Supplementary Data. The information required by this Item 8 is included at the end of this Report beginning on page F-1 and is incorporated herein by reference. Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure. None.