Parabolic Technologies, Inc.: Form 10-Q for the period ended Mar 31, 2026

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our unaudited condensed consolidated financial statements and related notes that are included elsewhere in this Quarterly Report on Form 10-Q ("Report"). In addition to historical condensed 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 more fully described in this report and those more fully described elsewhere in this Report and in the "Risk Factors" section of our Annual Report on Form 10-K for the year ended December 31, 2025.

Unless otherwise indicated, all dollar amounts included in this Management’s Discussion and Analysis are presented in thousands. 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 condensed 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.

First Quarter 2026 Financial and Operational Highlights

• Revenue decreased 20.2% to $2.7 million for first quarter 2026 compared to first quarter 2025. Total cost of revenue decreased by 14.0% quarter over quarter.
• Gross profit reached $2.2 million for first quarter 2026, compared to $2.8 million in first quarter 2025. Gross profit was 80.7% in first quarter 2026 compared to 82.1% in first quarter 2025.
• Net loss increased to $8.4 million for first quarter 2026, compared to $3.6 million in first quarter 2025, which represents a $4.8 million decline quarter over quarter.
• Stockholders' equity remained at $8.1 million as of March 31, 2026; we converted $3.8 million of debt to equity, and raised an additional $3.3 million from the SEPA and ATM during first quarter 2026.
• Closed an additional tranche of $2.3 million debt in February 2026 as part of our $11 million debt facility with an institutional investor to support ongoing operations and solidify the foundation for future growth.

Transaction Announcement

As previously disclosed, on March 23, 2026, the Company announced that it reached an agreement on terms to acquire assets of

ConnectAndSell, Inc. (“ConnectAndSell”), an AI-powered sales enablement platform serving B2B organizations across financial services, healthcare, technology, and other industries. The acquisition is expected to increase Banzai’s annual revenue. The two companies have executed a non-binding letter of intent and continue to negotiate material terms of the transaction. Since the transaction is subject to execution of a definitive agreement and closing conditions, we cannot accurately estimate the closing date at this time. There can be no assurance that we will be able to complete this acquisition.

Nasdaq Listing Compliance

As more fully described herein, we effected a 1-for-20 reverse stock split of our Class A Common Stock as of May 8, 2026 in an effort to remain compliant with Nasdaq Rule 5550(a)(2), which pertains to the minimum required bid price of our Class A Common Stock. Although we believe the reverse stock split allowed us to be in compliance with such Nasdaq rule, there can be no assurance that we will be able to maintain compliance with that or any other Nasdaq listing standard.

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.

Results of Operations

($ in Thousands)

The percentage changes included in the tables herein present favorable period-over-period amounts and percentages as positive and unfavorable as negative, and percentages not considered meaningful as “NM."

Comparison of the three months ended March 31, 2026 and 2025

Revenue Analysis

($ in Thousands)

Revenue from Banzai Operating, OpenReel and Vidello decreased by approximately $134, $65, and $484 respectively, for the three months ended March 31, 2026.

Cost of Revenue Analysis

($ in Thousands)

48

Cost of revenue from OpenReel and Vidello decreased by approximately $10, and $88, respectively, partially offset by Banzai Operating, which increased by approximately $13 for the three months ended March 31, 2026.

Gross Profit Analysis

($ in Thousands)

Gross profit from Banzai Operating, OpenReel and Vidello decreased by approximately $147, $55 and $396, respectively, for the three months ended March 31, 2026.

Operating Expense Analysis

($ in Thousands)

Total operating expenses remained essentially flat compared to the prior period. Salaries, taxes and benefits, as well as stock-based compensation expense increased during the three months ended March 31, 2026 driven by Banzai Operating and OpenReel. These were partially offset by decreases in marketing expenses and technology expenses during the three months ended March 31, 2026 at Banzai Operating and OpenReel, respectively.

Other Expense Analysis

($ in Thousands)

For the three months ended March 31, 2026, we reported total other income of approximately $2.7 million. The change in other expenses (income), net was primarily driven by the following:

• Total interest expense of approximately $0.2 million recognized during the three months ended March 31, 2026 compared to $0.4 million during the three months ended March 31, 2025.
• Gain on extinguishment of liabilities of approximately $4.3 million recognized during the three months ended March 31, 2025.
• Loss on issuance of debt of approximately $49 during the three months ended March 31, 2026 compared to $0.3 million during the three months ended March 31, 2025.
• Loss on Private Placement Issuance of debt of approximately $1.6 million during the three months ended March 31, 2026.
• Loss on extinguishment of debt, net of approximately $6 during the three months ended March 31, 2026 compared to $1.8 million during the three months ended March 31, 2025.
• Loss on SEPA advances to Yorkville of approximately $28 during the three months ended March 31, 2026 compared to $0.4 million three months ended March 31, 2025.
• Other (income) expense was approximately $550 expense during the three months ended March 31, 2026 compared to approximately $125 income during the three months ended March 31, 2025.

Provision for Income Taxes

($ in Thousands)

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 March 31, 2026, we had no unrecognized tax benefits that would impact our effective tax rate if recognized.

Critical Accounting Estimates

Our critical accounting estimates are described in our Annual Report on Form 10‑K for the year ended December 31, 2025. There were no material changes to those critical accounting estimates during the three months ended March 31, 2026.

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
• 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

($ in Thousands)

The Adjusted EBITDA decrease is primarily attributable to increased general and administrative expenses.

Net Income/(Loss) to Adjusted EBITDA Reconciliation

($ in Thousands)

* Transaction related expenses include

($ in Thousands)

Liquidity and Capital Resources

Going Concern

As of March 31, 2026 we had cash of approximately $0.1 million. For the three months ended March 31, 2026, while we generated revenue of approximately $2.7 million, we used approximately $5.5 million in cash from operating activities and had a net loss of approximately $8.4 million. We have incurred recurring net losses from operations and negative cash flows from operating activities since inception. As of March 31, 2026, we had a working capital deficit of approximately $20.6 million and an accumulated deficit of approximately $109.2 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 condensed 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 condensed 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 11 – Debt and Note 14 – Equity to our condensed 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.

Cash Flows

The following table sets forth certain information related to our cash flows for the three months ended March 31, 2026 and 2025. See also our unaudited condensed consolidated statements of cash flows in this Report:

($ in Thousands)

Cash Flows for the three months ended March 31, 2026

Net cash used in operating activities was primarily driven by the net loss, and by working capital adjustments totaling $0.8 million (unfavorable), partially offset by adjustments for non-cash items totaling $3.7 million (favorable). The non-cash items primarily consisted of addbacks for stock-based compensation expense of approximately $1.3 million and depreciation and amortization of approximately $0.3 million, the net impact of debt-related transactions (loss on issuance of debt and non-cash interest expense) totaling $1.8 million favorable, and the net impact of change in fair value adjustments (including debt under the fair value option, warrants and derivatives) totaling $0.3 million favorable.

Net cash provided by financing activities was primarily driven by proceeds from issuance of shares under the SEPA totaling approximately $0.7 million, proceeds from issuances of debt (both convertible and term) totaling approximately $2.6 million, proceeds from issuances of shares and warrants totaling $2.7 million, partially offset by repayments of debt totaling $0.7 million.

Cash Flows for the three months ended March 31, 2025

Net cash used in operating activities was approximately $5.0 million for the three months ended March 31, 2025. Net cash used in operating activities consists of net loss of approximately $3.6 million, offset by total adjustments of approximately $1.3 million for non-cash items and the effect of changes in working capital. Non-cash adjustments primarily included loss on extinguishment of term notes of approximately $1.8 million, stock compensation expense of approximately $0.3 million, gain on extinguishment of liability of approximately $4.3 million, loss on issuance of debt of approximately $0.3 million, loss on extinguishment of term notes of approximately $1.8 million, non-cash interest expense of approximately $0.4 million, fair value adjustment of convertible promissory notes of approximately $0.2 million, fair value adjustment of term notes of approximately $0.2 million, consulting expenses paid via share issuance of approximately $0.2 million, depreciation and amortization of intangible assets of approximately $0.7 million and net of change in operating assets and liabilities of approximately $0.9 million.

Net cash provided by investing activities was approximately $2.7 million for the three months ended March 31, 2025 and was related to the net cash paid in the acquisition of Vidello.

Net cash provided by financing activities was approximately $7.3 million for the three months ended March 31, 2025, and was primarily related to proceeds from convertible debt financing of approximately $3.2 million, net proceeds from the issuance of term notes of approximately $4.0 million, proceeds from issuance of shares under the SEPA agreement of approximately $6.7 million, repayment of term notes of approximately $3.7 million, partial repayment of convertible notes with a related party of approximately $0.9 million, repayment of Yorkville convertible notes of approximately $1.9 million, and payment of the GEM commitment fee promissory note of approximately $0.2 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 twelve months and thereafter is summarized in the table below.

($ in Thousands)

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 March 31, 2026 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 March 31, 2026.

Evaluation of Disclosure Controls and Procedures

As of March 31, 2026, under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, we carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a‑15(e) and 15d‑15(e) under the Securities Exchange Act of 1934, as amended) as of the end of the period covered by this Quarterly Report on Form 10‑Q. Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were not effective as of March 31, 2026, due to the previously disclosed material weaknesses in our internal control over financial reporting related to IT general controls, entity‑level controls in accordance with the COSO Integrated Framework, and the period‑end financial close and reporting process, as described in our Annual Report on

Form 10‑K for the year ended December 31, 2025 filed with the SEC on March 31, 2026 (the “2025 Form 10‑K”).We remain committed to remediating the material weaknesses and improving our internal control over financial reporting.

During the quarter ended March 31, 2026, we implemented a new enterprise resource planning (“ERP”) system. We believe the ERP implementation, along with related process enhancements and controls implemented in connection with the new system, is an important step in our remediation efforts and in strengthening our overall control environment. However, our remediation efforts are ongoing, and the material weaknesses will not be considered remediated until the applicable controls have operated for a sufficient period of time and management has concluded, through testing, that such controls are designed and operating effectively. As we continue our evaluation and improve our internal control over financial reporting, management may identify and take additional measures to address control deficiencies. We cannot provide assurance that we will be successful in remediating the material weaknesses in a timely manner.

Changes in Internal Control over Financial Reporting

As required by Rule 13a‑15(d) of the Exchange Act, our management, including our Chief Executive Officer and our Chief Financial Officer, evaluated whether any change in our internal control over financial reporting (as defined in Rules 13a‑15(f) and 15d‑15(f) under the Exchange Act) occurred during the quarter ended March 31, 2026 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting. During the quarter ended March 31, 2026, we implemented a new ERP system, which resulted in changes to our information technology environment, business processes, and certain controls within our financial reporting processes. We have designed and implemented controls related to the new ERP system, including controls related to user access and segregation of duties, change management, and controls supporting transaction processing and period‑end financial reporting. We believe these changes are expected to enhance our internal control environment and support our ongoing remediation efforts. Other than the foregoing, and our ongoing remediation activities related to the previously disclosed material weaknesses, there were no other changes in our internal control over financial reporting during the quarter ended March 31, 2026 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and, as such, are not required to provide the information under this item. A description of risk factors can be found in our Annual Report on Form 10-K for the year ended December 31, 2025 as supplemented and updated by subsequent current reports on Form 8-K that we have filed or will file with the SEC.