$2,142,857 is the face value on the convertible promissory note Banzai International, Inc. (Nasdaq: PARA) agreed to issue in a September 4, 2026 private placement, and the OID math closes immediately: a 30% original issue discount on the initial leg produces exactly $1,500,000 in gross proceeds to the company at Initial Closing. The remaining $1,000,000 is committed in two equal $500,000 tranches contingent on specified future events, which would push aggregate principal to $3,571,428 if both fund.
Tranche and OID structure
| Tranche | Cash in | Principal | Warrants |
|---|---|---|---|
| 1, Initial Closing (reported) | $1,500,000 | $2,142,857 | 779,221 shares |
| 2 (projected) | $500,000 | $714,285 | 259,740 shares |
| 3 (projected) | $500,000 | $714,285 | 259,740 shares |
| Total if all fund | $2,500,000 | $3,571,427 | 1,298,701 shares |
Each projected $500,000 tranche adds $714,285 to the note's face at the same 30% discount; two additional legs on top of the initial $2,142,857 sum to $3,571,427, in line with the $3,571,428 cap in the filing. The note bears 10% annual interest, matures June 4, 2027 (nine months from issuance), and converts at a fixed $2.75 per share. An event of default, which includes delisting from Nasdaq for more than five consecutive trading days, flips the interest rate to 18% per annum and automatically increases outstanding principal by 20%. Voluntary prepayment is available at 110% of the outstanding amount on five trading days' notice. Aegis Capital Corp. served as exclusive placement agent at a 10% fee on gross proceeds.
Conversion caps and warrant terms
The Common Warrant attached to Initial Closing covers 779,221 shares at a $2.75 exercise price, immediately exercisable through the fifth anniversary of issuance. Conversion and exercise are constrained by a 19.99% exchange cap on pre-execution shares outstanding and a 4.99% beneficial ownership limit (extendable to 9.99% on 61 days notice). Stockholder approval is required before Banzai can issue shares above 20% of the count outstanding prior to execution at a deemed discount to the Nasdaq Minimum Price. The company must convene a special or annual meeting within 60 calendar days of closing to seek that approval.
The note bars Banzai from issuing variable-rate securities, paying dividends on common stock, repurchasing shares, or transferring assets outside the ordinary course without the holder's consent. A qualified public offering generating at least $5,000,000 in gross proceeds triggers immediate full repayment; any other subsequent financing requires 50% of net proceeds to be applied against the note balance.