What changed in this filing

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Item 1. Business

2025-03-24 compared with 2024-03-15 · 232 added, 249 removed, 29 unchanged (94% of the section changed)

Company Overview

We are a communications software innovator that

powers multimedia social applications.

Our product portfolio includes Paltalk, Camfrog and Tinychat, which together host a large collection

of video-based communities.

Our other products include ManyCam and Vumber.

ManyCam is a live streaming software and virtual camera that

allows users to deliver professional live videos on streaming platforms, video conferencing apps and distance learning tools.

is a telecommunications services provider that enables users to communicate privately by having multiple phone numbers with any area

code through which calls can be forwarded to a user’s existing telephone number.

We have an over 20-year history of technology

innovation and hold 8 patents.

We were incorporated under the laws of the State

of Delaware in 2005.

Prior to the completion of the Transactions, we

operated a network of consumer applications.

Our product portfolio included Paltalk, Camfrog and Tinychat, which together hosted a large

collection of video-based communities.

Our other products included Vumber, which is a telecommunications services provider that enables

users to communicate privately by having multiple phone numbers with any area code through which calls can be forwarded to a user’s

existing telephone number.

As discussed below, following the Transactions, we continue to support our ManyCam software, which is a live

streaming software and virtual camera that allows users to deliver professional live videos on streaming platforms, video conferencing

apps and distance learning tools.

Following the Transactions, we provide a comprehensive

range of IT-related services, including dedicated server hosting, cloud hosting, data storage, managed security, backup and disaster recovery,

and other related services including consulting and implementing technology solutions for large enterprise and commercial clients across

the United States as well as small-and-medium sized businesses.

We have an over 20-year history of technology innovation and hold eight

We were incorporated under the laws of the State of Delaware in 2005.

Our principal executive office is located at 30 Jericho Executive Plaza Suite 400E, Jericho, NY 11753.

Our Consumer Application Products

We operate a network of consumer applications

that we believe create a unique social media enterprise where users can meet, see, chat, broadcast, play online card games and board

games and message in real time in a secure environment with others in our network.

The proprietary technology underlying our products

allows us to operate thousands of simultaneous streams, including on mobile platforms, which support interactions on a one-on-one, one-to-many

and many-to-many basis.

Our consumer applications generate revenue principally from subscription fees, including virtual goods, and advertising

arrangements.

We believe that the scale of our user base presents

a competitive advantage in the video social networking industry and provides growth opportunities to advance our existing products with

up-sell opportunities and build future brands with cross-sell offers.

We also believe that our proprietary consumer app technology platform

can scalably support large communities of users in activities such as video, voice and text chat, online card games and board games and

provide robust user monetization tools.

Live Video Chat

We have three existing products in the video

Paltalk, Camfrog and Tinychat.

Our major revenue-generating live video chat products are Paltalk and Camfrog.

enables individuals to self-organize around topics and users with common affinities.

Tinychat is web-based, enables adaptations of our

video technology and does not require a download.

It is primarily targeted for use in alternative markets and is focused on a younger

demographic user base.

Paltalk and Camfrog are both available on Windows,

Mac OS, iOS, Android and other tablet devices.

Together, these products power a large collection of video-based communities, with proprietary

technology to host thousands of simultaneous live group conversations on topics such as politics, financial markets, music and dating,

among others.

Our proprietary client server technology helps maintain high-quality video and audio, even as many users simultaneously

watch a particular broadcaster.

Paltalk and Camfrog both attract a demographically and geographically diverse user base, with users in

over 180 different countries.

Paltalk users are approximately one-third domestic and two-thirds international, and Camfrog users have

an even larger international presence, with a particular concentration in Southeast Asia.

Live Streaming Software

In 2022, we acquired ManyCam, a live streaming

software and virtual camera that allows users to deliver professional live videos on streaming platforms, video conferencing apps and

distance learning tools.

The ManyCam software provides multiple camera feeds, backgrounds and effects while also enabling users to share

presentations, spreadsheets and documents.

Telecommunications

We own and operate a small telecommunications

services provider called Vumber that enables users to have multiple phone numbers in any area code through which calls can be forwarded

to a user’s existing cell phone or land line telephone number.

Vumber serves both the retail and small business communities.

not only allows individuals to communicate while protecting privacy, but also gives business professionals the ability to add a new business

line with any chosen area code to their cell phones.

Vumber also provides an in-depth data analytics platform that can track, record

and analyze calls to gain new insights into one’s business.

Product Payment Options

Our users have a variety of methods by which

to purchase product subscriptions across all of our consumer applications.

Users can pay by credit card, PayPal, Western Union, check,

local e-wallet providers, or complete an in-app purchase through the Apple App Store or Google Play Store for Android users.

Apple generally retains up to 15% of the revenue

that is generated from sales on our iPhone applications through in-app purchases in the United States.

Google also generally retains

up to 15% of the revenue that is generated from sales on Android applications via Google wallet through in-app purchases in the United

All of our credit card transactions are processed

through various payment providers.

Video chat users in certain international territories also have an option to purchase through local

Local resellers prepay in bulk for services and debit the prepaid balance as one-time subscriptions and virtual gifts are

sold to end users.

Regardless of which payment method is utilized, users may access our products through any of the gateways we offer.

During fiscal year 2023, we engaged Cleverbridge,

a growth engine for global technology companies, to, among other things, facilitate and authenticate payments in international geographic

markets to reduce fraud and increase acceptance rates.

Company Business Strategy

Our IT and Cloud-Based Solutions

We sell and provide a range of services across

five core areas, each as further described below:

managed IT security services, professional services, procurement services, secure private

cloud hosting, managed backup and disaster recovery and web hosting.

Managed IT Security Services

Our managed IT security services provide clients

with ongoing management and support of their IT systems and services under a subscription or contract-based model.

Our managed IT security

services include proactive monitoring, regular system maintenance, comprehensive cybersecurity management, data backup, and disaster recovery,

as well as help desk support for users.

Managed IT security services are intended to ensure that a client’s IT infrastructure and

services remain operational, secure and optimized.

Customers of our managed IT security services typically pay a recurring fee, often

based on service-level agreements that define the specific services and performance metrics.

Professional Services

Our professional services include the design and

implementation of a wide range of IT products and services, such as cybersecurity, software planning, IT infrastructure, data center design

and configuration, designing and implementing on-premises, hybrid or cloud computing solutions, website development, developing or integrating

systems and software and IT cost management.

Customers of our professional services are typically invoiced either based on a time and

materials basis or on a straight-line basis for all fixed fee arrangements.

Procurement Services

We offer two types of procurement services to our customers.

(i) obtain software and hardware products on behalf of our customers, in which case our vendors drop ship the products to our

end customers, or (ii) obtain hardware or software on behalf of our customers and perform additional configuration and/or add additional

inputs to the products before the products are shipped to our customers.

In the instance where we sell hardware and software products

as a solution bundled with services, we typically obtain the products or software from our vendors, add the additional inputs/configuration

as detailed in the customer contract, and then ship the products to the end customer.

For each type of procurement service, our customers

have their own negotiated contract and payment terms.

When we provide a combination of hardware and software products with the provision

of services, we will separately identify our performance obligations under the contract and the hardware and/or software products or services

that will be provided.

The total transaction price for an arrangement with multiple performance obligations is typically allocated at

contract inception to each performance obligation in proportion to the stand-alone selling price of the hardware or software.

price is the price at which we would sell a promised good or service separately to a customer.

We estimate the price based on observable

inputs, including direct labor hours and allocable costs, or use observable stand-alone prices when they are available.

Secure Private Cloud Hosting

Our secure private cloud hosting offerings include

a digital infrastructure which consists of dedicated and fully isolated cloud environments designed to deliver security, control and compliance

for business-critical applications and client data.

We operate a secure private cloud from private

suites in completely isolated areas that are leased within two Tier 3 data center facilities located in Phoenix, Arizona, and Edison,

New Jersey (the “Data Centers”), pursuant to certain license agreements.

The terms of the license agreements for the Data

Centers located in Arizona and New Jersey extend through 2027 and 2026, respectively.

Although we do not own or operate the Data Centers,

we aim to use the high-level operations and standards provided by the Data Centers through our license agreements to provide our customers

with secure and flexible cloud services.

The Data Centers each conform to The Uptime Institute’s Tier 3 Certification, which is

a globally recognized standard for validating critical data center infrastructure.

The Tier 3 classification provides us with a degree

of confidence that the Data Centers provide the necessary power, cooling, maintenance, and fault tolerance required for secure and reliable

Our critical infrastructure, hosted within the Data Centers, is designed to meet and exceed Tier 3 standards in all relevant

This allows us to deliver secure and compliant services to customers within heavily regulated industries, including financial

services, healthcare, and other highly regulated industries.

Additionally, we incorporate a redundant, carrier-neutral network design

for communications paths, along with multiple hosting locations for our services, which improve the availability and resilience of our

cloud services.

We leverage state-of-the-art security measures,

including data encryption, network segmentation, advanced firewalls, multi-factor authentication and continuous monitoring to safeguard

against unauthorized access and cyber threats.

We believe our secure private cloud hosting provides our clients with strong availability,

data integrity and reliable performance, while meeting stringent compliance requirements.

Our secure private cloud hosting solutions are

backed by 24/7 support from our expert team, with the goal of delivering secure, flexible and resilient infrastructure tailored to each

client’s unique business needs.

In the future, we plan to make arrangements with third parties to incorporate artificial intelligence

(“AI”) features into our secure private cloud offerings.

Revenue from such cloud services is recognized ratably over the period

in which the cloud services are provided.

Managed Backup and Disaster Recovery

Our managed backup and disaster recovery solutions

provide comprehensive protection for customers’ critical data and IT infrastructure, which is intended to ensure business continuity

and rapid recovery in the event of data loss, cyberattacks or system failures.

We utilize advanced backup technologies with automated,

regular data backups, off-site replication and secure storage to prevent data corruption or loss.

Our disaster recovery solutions are

designed to offer quick restoration of systems and data with minimal downtime, supported by flexible recovery plans tailored to meet customers’

specific needs.

With continuous monitoring, end-to-end encryption, and expert support available 24/7, we aim to ensure that our customers’

data is secure, accessible and compliant with industry standards.

Pricing for our managed backup and disaster recovery solutions is based

upon the customer contract and depends on the amount of backup storage needed.

Customers are typically charged set rates per the contract

and are charged monthly based on usage.

Our web hosting services consist of several advanced

security measures, including Secure Sockets Layer and Transport Layer Security (“SSL/TLS”) encryption, firewalls, distributed

denial-of-service (“DDoS”) protection, malware scanning, and secure server configurations.

Our web hosting services include

features such as regular data backups, web application firewalls, strict access control policies and continuous monitoring and expert

support, all of which are intended to ensure our customers’ compliance with industry standards and provide a reliable and secure

environment for our customers’ online presence.

Our web hosting services are designed to provide customer websites with an additional

layer of protection from cyber attacks and threats.

Each of our customers has their own contract and payment terms with respect to our

web hosting services.

The duration of such contracts is typically between one and four years, although the term may vary based on the

needs of each particular customer.

Customers of our web hosting services are invoiced on a monthly basis and pay a monthly fee, with revenue

recognized on a monthly basis.

Our ManyCam Software Product

Following the Transactions, we continue to support

our ManyCam software, which is a live streaming software and virtual camera that allows users to deliver professional live videos on streaming

platforms, video conferencing apps and distance learning tools.

The ManyCam software provides multiple camera feeds, backgrounds and effects

while also enabling users to share presentations, spreadsheets and documents.

We anticipate integrating ManyCam as an offering for our

new customers and seek to optimize our cross-selling efforts of ManyCam with our other technology solutions.

We serve a diverse customer

base across various industries including, among others, finance, legal, healthcare and manufacturing, providing innovative solutions that

enhance operational reliability and prevent cybersecurity risk.

Other than our procurement

services, our business generally does not experience significant seasonality, and demand for our solutions remains steady throughout the

Our procurement services experience a seasonal pattern as revenues will typically be lower as our customers get closer to the end

of their budgeted spending periods, which generally tend to be the fourth quarter.

Employees and Human Capital

We are committed to fostering a diverse and inclusive workplace, investing

in employee development, and maintaining a strong culture of innovation and collaboration.

As of March 14, 2025, we had 55 full-time employees

and one part-time employee.

We believe that our future success depends, in part, on our continued ability to hire, assimilate and retain

qualified personnel.

We attract and retain employees by offering training, bonus opportunities, competitive salaries and a comprehensive

benefits package.

Company Business Strategies

Cloud Infrastructure and Cybersecurity Solutions

Our continued growth depends on attracting new

consumer application users through the introduction of new applications, features and partnerships and further penetration of our existing

Our principal growth strategy is to invest in the development of proprietary software, expand our sales and marketing efforts

with respect to such software, and increase our consumer application user base through potential platform partnerships and new and existing

advertising campaigns that we run through internet and mobile advertising networks, all while balancing the capital needs of the business.

customers through the introduction of new services and further penetration of the cloud infrastructure and cybersecurity sectors.

principal growth strategy is to invest in the development of proprietary solutions, expand our sales and marketing efforts with respect

to such solutions, and increase our customer base through potential platform partnerships and new and existing advertising campaigns that

we run through internet and mobile advertising networks, all while balancing the capital needs of our business.

With respect to our cloud

infrastructure solutions, we intend to drive growth by leveraging strategic partnerships, expanding our market reach by leveraging our

high-performance, scalable solutions, and optimizing deployment speed to meet the evolving needs of enterprises migrating to the cloud.

Our strategy for cybersecurity solutions focuses on delivering cutting-edge, compliance-driven security solutions through an integrated

approach, prioritizing proactive threat mitigation, automation, and seamless implementation to enhance customer trust and accelerate adoption.

Our strategy is to approach these opportunities

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Our strategy also includes acquiring, or investing

in technologies, solutions or business that complement our business and cross-selling them to additional synergistic businesses.

In furtherance

of this strategy, we have strategically added specialized employees and complementary companies, products and technologies to our existing

In addition, we continue to explore strategic opportunities, including, but not limited to, potential mergers or acquisitions

of other assets or entities that are synergistic to our business.

Enhance Existing Live Video Chat Applications

We continue to develop our existing live video

chat applications by implementing programs and features that enhance our users’ experience on our platforms.

For example, in the

fourth quarter of 2023, we launched the first version of our “Chat History,” a feature that retains messages posted in chat

When fully implemented, we expect to offer our users a searchable database that users can refer to for content.

In addition, we plan to continue leveraging our

integration of the ManyCam product into Paltalk products through upselling initiatives and are developing a user-friendly version of

ManyCam that will be optimized for both consumer and enterprise applications.

Our Paltalk platform’s rewards loyalty

program, “Paltalk Rewards Points”, has 25 reward tiers such as specialty coins, subscriptions, stickers, flair, and other

popular buttons.

Additionally, a real-time asynchronous message board called the “Paltalk Feed” is available on our Paltalk

platform, which grants users the ability to interact with the platform without a live video cam.

The Paltalk Feed also allows our users

to comment, add photos or videos and contribute to conversations around shared interests on a digital message board.

In 2022, we integrated Hive Automated Content

Moderation Solutions into our Paltalk and Camfrog platforms, which reduces spam and objectionable content on our applications.

More recently

in 2023, we made certain updates to the ManyCam product, which now, and following the acquisition, we subsequently released software updates

to provide users with greater ease of use, dark and light modes and enhanced overall rendering performance for high resolution users,

as well as improved quality and performance with regard to virtual backgrounds.

Implementation of Enhanced Processors

As discussed above, during fiscal year 2023,

we engaged Cleverbridge, a growth engine for global technology companies.

Cleverbridge’s robust suite of global payment and eCommerce

capabilities has allowed us to optimize our international markets while minimizing risk and administrative work.

We believe that this

is an important aspect of our business strategy given that Paltalk and Camfrog both attract a demographically and geographically diverse

user base, with users in over 180 different countries.

Paltalk users are domestic and international, and Camfrog users have an even larger

international presence, with a particular concentration in Southeast Asia.

Beyond facilitating and authenticating payments, we believe

Cleverbridge’s chargeback prevention algorithms can help us with acceptance rates and reduce fraud.

in technologies, solutions or businesses that complement our business and cross-selling them to additional synergistic businesses.

furtherance of this strategy, we have strategically added specialized employees and complementary companies, products and technologies

to our existing business.

In addition, we continue to explore strategic opportunities, including, but not limited to, potential mergers

or acquisitions of other assets or entities that are synergistic to our business.

Defend our Intellectual Property

We have a portfolio of 8 issued patents.

successfully defended certain of our intellectual property in the past and have generated tens of millions of dollars in licensing fees

for the use of our patents.

We have a portfolio of eight issued patents.

have successfully defended certain of our intellectual property in the past and have historically generated revenue through licensing

fees for the use of our patents.

We intend to continue defending our intellectual property rights.

Marketing Strategy

We invest in advertising and marketing primarily

for the purpose of acquiring users for our consumer applications.

We adapt our marketing expenditures and channels as we gather the data

to analyze the success of our campaigns.

We primarily advertise through internet and mobile advertising networks and run hundreds of

campaigns at any given time, targeting various audiences of users, and focusing on campaigns that we believe will produce a positive

return over the lifetime of new users.

We also generate new sign-ups organically, as people find our sites and applications through brand

recognition and word of mouth, search engines and product review websites.

During 2022, we engaged two marketing agencies

to help us drive consumer engagement through the Paltalk and Camfrog applications, but we subsequently scaled back the marketing agencies’

efforts during the fourth quarter of 2022 in response to the overall macro-economic environment.

During 2023, we leveraged our in-house

resources in an effort to further define and refine our renewal strategy and optimize cost per new customer acquisition.

in advertising and marketing primarily for the purpose of acquiring customers for our products and solutions.

By emphasizing our

deep expertise in cloud infrastructure, cybersecurity, and managed services, we differentiate from commodity providers through a consultative

approach that drives strategic value.

We aim to accelerate growth through targeted industry verticals, strategic partnerships, and direct

client engagement, leveraging our proven ability to streamline IT operations, enhance security postures, and enable businesses to focus

on their core objectives.

We believe our proactive, high-touch service model ensures long-term client relationships and sustained competitive

advantage in a rapidly evolving market.

We sell our solutions exclusively through our sales force.

force is comprised of senior account executives that concentrate on named account territories, senior solution architects that provide

dedicated support to our senior account executives and affiliate sales efforts, as well as other sales personnel that manage inbound leads

from our website and referrals from Newtek under our referral arrangement.

In addition to managing client relationships, our sales force

is focused on expanding the number of solutions our customers purchase from us by introducing them to additional solutions.

Going forward,

we plan to utilize search engine optimization, search engine marketing, generative engine optimization and targeted marketing campaigns

in furtherance of our goals.

Competition and Our Industry

Competition in our industry remains fierce.

market for consumer applications is extremely dynamic and is undergoing constant change.

We believe this environment creates significant

opportunities for us as well as our direct and indirect competitors.

Our principal competitors are BIGO Live, Cisco Webex, Facebook Live,

Google Meet, Discord, Instagram Live, Live.ly, Live.me, Microsoft Teams, Skype, Twitch, YouTube Live and Zoom.

market for cloud-managed IT and cybersecurity solutions is extremely dynamic and is undergoing constant change.

We believe this environment

creates significant opportunities for us as well as our direct and indirect competitors.

Our principal competitors are managed IT service

providers, such as Konica Minolta Business Solutions, Rackspace Technology, Inc., Cognizant Technology Solutions Corporation, NTT Ltd.,

All Covered, Flexential, DXC Technology Company, Logicalis Group, Insight Enterprises, Inc., and CDW Corporation.

Many of our competitors have substantially greater

financial, managerial, technological and other resources than we do.

In addition, there are relatively few barriers to entry into the

consumer applications industry, and, as a result, any organization that has adequate financial resources and access to technical expertise

and skilled personnel may become one of our competitors.

financial, managerial, technological and other resources than we do and may be more effective at developing, promoting and supporting

their products.

Additionally, our competitors may offer products and services that we do not provide, which may have desirable features

or may be offered at lower prices.

In addition, many of our competitors have more extensive customer bases and broader customer relationships

than we have, including relationships with our potential customers.

Additionally, in the future, we plan to make arrangements with

third parties to incorporate AI features into our secure private cloud offerings.

Developments in the AI sector are occurring at a rapid

pace, and our competitors’ services may already include AI features.

In order to compete effectively, we seek to offer

software, services and applications that are differentiated from existing products, superior in quality and more appealing than those

of our competitors.

We believe that our applications compete favorably against those offered by our competitors due to their ability

to scale, their cost-efficiency and their innovative technology.

We also believe that we have the tools and expertise that may enable

us to attract new users through Facebook and other sources at a lower cost per subscriber than certain of our traditional competitors.

Although we believe we have the capability to

compete effectively in the consumer applications industry, our competitors may offer products, services and applications that we do not

provide, and that may have more desirable features or may be offered at lower prices, and they may be able to devote greater resources

to the development, promotion, sale and support of their products.

In addition, many of our competitors have more extensive customer

bases and broader customer relationships than we have, including relationships with our potential customers.

Governmental Regulations

solutions that are differentiated from existing services, superior in quality and more appealing than those of our competitors.

that our solutions compete favorably against those offered by our competitors due to our hands-on, white-glove consulting approach, which

we believe goes beyond standard offerings to deliver personalized, expert driven solutions.

Unlike providers that take a one-size-fits-all-approach,

we aim to strategically advise our customers, enabling businesses to offload complex IT, cloud, and cybersecurity needs to a trusted advisor.

This allows our customers to focus on higher-value initiatives, while we provide execution, proactive problem solving, and a fully-optimized

technology environment tailored to their specific goals.

Governmental Regulations and Other Compliance Obligations

We are subject to a number of U.S.

state laws and regulations that affect companies conducting business on the internet, many of which are still evolving and being litigated

in the courts and could be interpreted in ways that could harm our business.

These laws and regulations may involve user privacy, data

protection, content, intellectual property, distribution, electronic contracts, competition, wiretapping, biometrics, online tracking,

protection of minors, consumer protection, taxation and online payment services.

In particular, we are subject to federal and state laws

regarding privacy and protection of user data, which are constantly evolving and can be subject to significant change.

We are also subject

to diverse and evolving laws and regulations in other countries in which we operate.

The application and interpretation of these laws

and regulations are often uncertain, particularly in the new and rapidly evolving industry in which we operate.

Because our applications

are accessible worldwide and used by residents of some foreign countries, foreign jurisdictions may claim that we must comply with foreign

laws, even in jurisdictions in which we have no local business entity, employees or infrastructure.

We are also subject to federal laws and regulations

regarding online content, user privacy and electronic marketing, including The Communications Decency Act of 1996, as amended.

The Children’s

Online Privacy Protection Act of 1998, as amended, The Video Privacy Protection Act of 1998 (“VPPA”), The Digital Millennium

Copyright Act, The Electronic Communications Privacy Act of 1986, as amended, the USA PATRIOT Act of 2001, and the Controlling the Assault

of Non-Solicited Pornography And Marketing (“CAN-SPAM”) Act of 2003, among others.

The Digital Millennium Copyright Act limits

our liability as an online service provider for linking to or hosting third-party content that infringes copyrights.

The Communications

Decency Act provides statutory protections to online service providers like us who distribute third-party content.

The VPPA restricts

digital video providers from disclosing to third parties personally identifiable information that is tied to the titles of consumers’

viewed videos.

The Children’s Online Privacy Protection Act restricts the ability of online service providers to collect personal

information from children under 13.

Congress, the Federal Trade Commission (“FTC”) and many states have promulgated laws

and regulations regarding email advertising, including the CAN-SPAM Act.

Any changes in these laws or judicial interpretations narrowing

the protections of these laws may subject us to increased risk, increased costs of compliance, and limits on the operation of certain

parts of our business.

Growing public concern about privacy and the

use of personal information may subject us to increased regulatory scrutiny.

Regulation related to treatment of user data by online services

is evolving as several U.S.

state governments have recently adopted new, or modified existing, laws and regulations addressing data privacy

and the collection, processing, storage, transfer and use of data.

These state laws include, for example:

the California Consumer Protection

Act (“CCPA”), the California Privacy Rights Act (“CPRA”), the Virginia Consumer Data Protection Act, the Colorado

Privacy Act, the Connecticut Act Concerning Personal Data Privacy and Online Monitoring, the Utah Consumer Privacy Act, the Delaware

Personal Data Privacy Act, the Indiana Consumer Data Protection Act, the Iowa Consumer Data Protection Act, the Montana Consumer Data

Privacy Act, the Oregon Consumer Privacy Act, the Tennessee Information Protection Act, the Texas Data Privacy and Security Act, and

the New York Stop Hacks and Improve Electronic Data Security (“SHIELD”) Act.

The European Union implemented a privacy regulation

called the Global Data Protection Regulation (“GDPR”) that imposes additional regulatory scrutiny on our processing of personal

data from in the European Economic Area, with possible financial consequences for noncompliance of up to 4% of our worldwide revenues.

In addition, virtually every U.S.

state has passed

laws requiring notification to users when there is a security breach resulting in unauthorized disclosure of certain types of personal

information, many of which are modeled on California’s Information Practices Act.

There are a number of legislative proposals pending

before the U.S.

Congress and various state legislative bodies concerning data protection that could, if adopted, have an adverse effect

on our business.

We are unable to determine if and when such legislation may be adopted.

Many other jurisdictions, including the European

Union, have adopted breach notification and other data protection notification laws designed to inform users of unauthorized disclosure

of personally identifiable information.

The introduction of new privacy and data breach laws and the interpretation of existing privacy

and data breach laws in the United States, Europe and other foreign jurisdictions is constantly evolving.

There is a risk that new laws

may be introduced or that existing laws may be applied in a way that would conflict our current data protection practices or prevent

the transfer of data between countries in which we operate.

In addition, rising concern about the use of

social networking technologies for illegal conduct may in the future produce legislation or other governmental action that could require

changes to our applications or restrict or impose additional costs upon the conduct of our business.

These regulatory and legislative

developments, including excessive taxation, may prevent or significantly limit our ability to expand our business.

Furthermore, some of the video card games that

we offer on our Paltalk application are based upon traditional casino games, such as poker and blackjack.

We have structured and operate

these games and features with gambling laws in mind and believe that these games and features do not constitute gambling.

Our games are

intended to be for entertainment purposes only and do not offer an opportunity to win earnings outside of the platform.

As of March 11, 2024, we had no part-time employees

and 17 full-time employees.

We believe that our future success depends, in part, on our continued ability to hire, assimilate and retain

qualified personnel.

We attract and retain employees by offering training, bonus opportunities, competitive salaries and a comprehensive

benefits package.

state laws, regulations and policies that affect companies conducting business on the internet, many of which are still evolving and being

litigated in the courts and could be interpreted in ways that could harm our business.

These laws and regulations may involve, among other

things, AI, intellectual property, distribution, electronic contracts, competition, wiretapping, consumer protection and taxation.

application and interpretation of these laws, regulations and policies are often uncertain and may have unpredictable consequences, particularly

in the new and rapidly evolving industry in which we operate.

We are subject to periodic examination by regulators

under the authority of the Federal Financial Institutions Examination Council (“FFIEC”) under its Guidance on the Supervision

of Technology Services Providers and the Gramm-Leach-Bliley Act of 1999, and federal, state and other laws that apply to technology service

providers as a result of the services we provide to the institutions and entities they regulate.

As a technology service provider, we

are examined by federal financial regulators on a rotating basis.

These examinations are based on guidance from the FFIEC, which is a

formal interagency body empowered to prescribe uniform principles, standards and report forms for the examination of financial institutions

and to make recommendations to promote uniformity in the supervision of financial institutions.

The examinations cover a wide variety

of subjects, including our management, acquisition and development activities, support and delivery, information technology audits, cybersecurity,

as well as our disaster preparedness and business recovery planning.

The FFIEC has broad supervisory authority to remedy any shortcomings

identified in an examination.

Following an examination, our financial institution customers may request the open section of the report

of examination through their lead examination agency.

The regulatory landscape related to generative

AI and machine learning is rapidly evolving and is likely to remain uncertain for the foreseeable future.

As we develop products or incorporate

technologies from third parties, such as generative AI and machine learning, we must comply with applicable laws and regulation.

Company Internet Site and Availability of SEC Filings

Our corporate website is located at www.paltalk.com .

Our corporate website is located at www.ipm.com .

We make available on that site, as soon as reasonably practicable, our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, proxy

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business