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Item 1A. Risk Factors

2025-03-24 compared with 2024-03-15 · 620 added, 1004 removed, 91 unchanged (95% of the section changed)

Below is a summary of our risk factors with a

more detailed discussion following.

The risks below are those that we believe are the material risks that we currently face but are not

the only risks facing us and our business.

If any of these risks actually occur, our business, financial condition and results of operations

could be materially adversely affected.

The success of our

consumer applications is principally dependent on our active users and our engagement with our user base.

We operate in an intensely competitive

industry and any failure to attract new users could diminish or suspend our development and possibly cease our operations.

The online live

video industry is characterized by rapid technological change and the development of enhancements and new applications, and if we

fail to keep pace with technological developments or launch new applications, our business may be adversely affected.

We may make or attempt

to make acquisitions in the future, which could require significant management attention, disrupt our business, dilute our stockholders

and seriously harm our business.

Our business may

be significantly affected by a change in the economy, including inflation and any resulting effect on consumer or business spending.

Our mobile applications

are substantially dependent on interaction with mobile platforms and operating systems that we do not control.

Our business depends

on developing, establishing and maintaining strong brands.

If we are unable to maintain and enhance our brands, we may be unable

to expand or retain our active user and paying subscriber bases.

Our future success

is dependent, in part, on the performance and continued service of our executive officers.

Without their continued service, we may

be forced to interrupt or eventually cease our operations.

We plan to continue

expanding our operations internationally and may be subject to increased business and economic risks that could seriously harm our

Foreign governments restricting access

to our applications could materially adversely impact our business.

If our goodwill

or other intangible assets become impaired, we may be required to record a significant charge to earnings, which could seriously

harm our operating results.

Our mobile applications

rely on high-bandwidth data capabilities, which are subject to hardware, networks, regulations and standards that we do not control.

Security breaches,

computer viruses and cybersecurity incidents could harm our business, results of operations or financial condition.

We have faced, and

we expect that we will continue to face, chargeback liability when our credit card providers resolve chargebacks in favor of their

We cannot accurately anticipate the extent of these liabilities, and if not properly addressed, these liabilities could

increase our operating expenses or preclude us from accepting certain credit cards as a method of payment, either of which would

materially adversely affect our results of operations and financial condition.

We face certain risks related to the

physical and emotional safety of users and third parties.

Our subscription

metrics and other estimates are subject to inherent challenges in measurement, and real or perceived inaccuracies in those metrics

may seriously harm and negatively affect our reputation and our business.

Because we recognize

revenue from subscriptions over the term of the subscription, the full impact of downturns or upturns in subscription sales may not

be immediately reflected in our results of operations or financial condition.

A portion of our revenue is dependent

on third-party resellers, the efforts of which we do not control.

Our business depends

in large part upon the availability of cost-effective advertising space through a variety of media and keeping pace with trends in

consumer behavior.

Interruption, maintenance

or failure of our programming code, servers or technological infrastructure could hurt our ability to effectively provide our applications,

which could damage our reputation and harm our results of operations.

We may be liable as a result of information

retrieved from or transmitted over the internet.

Changes in laws

or regulations, including laws and regulations that impact the use of the internet, such as internet neutrality laws, or laws that

relate to content provided over the internet or monitoring such content, could adversely affect our business, results of operations

or financial condition.

Changes in tax laws

could materially affect our financial condition, results of operations and cash flows.

If we are subject

to intellectual property infringement claims, it could cause us to incur significant expenses, pay substantial damages or royalties

and prevent us from offering our applications.

If we are unable to protect our intellectual

property rights, we may be unable to compete with competitors developing similar technologies.

If we fail to maintain

an effective system of internal controls over financial reporting, we may not be able to accurately report our financial results

or prevent fraud and our business may be harmed and our stock price may be adversely impacted.

Our common stock

is historically thinly traded, stockholders may be unable to sell at or near ask prices or at all and the price of our common stock

may be volatile.

The ownership of

our common stock is significantly concentrated in a small number of investors, some of whom are affiliated with our Board of Directors

and management, which could prevent stockholders from having input on the course of our operations or otherwise lead to actual or

potential conflicts of interest.

Risks Related to Our Business

The success of our consumer applications

is principally dependent on our active users and our engagement with our user base.

On an annual basis the Company has millions of

however, compared to the total number of users in any given period, only a small portion of our users are active users or purchasers

of virtual gifts.

We primarily generate revenue through the sale of subscriptions and virtual gifts to this small portion of users and

secondarily generate revenue through paid advertisements.

Accordingly, the success of our consumer applications is substantially dependent

on our ability to convert our users into active users and to sell our users virtual gifts.

Users discontinue the use of our applications

in the ordinary course of business, and to sustain our revenue levels, we must attract, retain and increase the number of users or more

effectively monetize our existing users.

Falling user retention, growth or engagement could also make our applications less attractive

to advertisers, which could harm our business.

There are a number of factors that could negatively

impact user retention, growth and engagement, including, among other things:

users may adopt

competing products instead of ours;

we may fail to introduce

new products and services or improve upon our existing applications, or those new products and services or improvements we introduce

may be poorly received;

our products may

fail to operate effectively on mobile or other platforms;

we may be unable

to combat spam or other hostile or inappropriate usage on our products;

there may be adverse

changes in user sentiment about the quality or usefulness of our existing products;

there may be concerns

about the privacy implications, safety or security of our products;

technical or other

problems may frustrate the experience of our users, particularly if those problems prevent us from delivering our products in a fast

and reliable manner;

we may fail to provide

adequate service to our users;

we or other companies

in our industry may be the subject of adverse media reports or other negative publicity;

we may not maintain

our brand image or our reputation may be damaged;

we may be subject

to denial of service or other attacks from hackers that result in service downtime.

To retain existing users, and particularly those

users who are paying subscribers, we must devote significant resources so that our applications retain their interest.

If we fail to

grow or sustain the number of our users, or if the rates at which we attract and retain existing users declines or the rate at which

users become paying subscribers declines, it could have a material adverse effect on our business, results of operations or financial

We operate in an intensely competitive

industry and any failure to attract new users could diminish or suspend our development and possibly cease our operations.

The industry in which we compete is highly competitive

and has few barriers to entry.

If we are unable to efficiently and effectively attract new users as a result of intense competition or

a saturated market, we may not be able to continue the provision, development and enhancement of our consumer applications or become

profitable on a consistent basis in the future.

Important factors affecting our ability to successfully compete include:

the usefulness,

novelty, performance, ease of use, and reliability of our consumer applications compared to our competitors;

the timing and market

acceptance of our consumer applications, including developments and enhancements of our competitors’ consumer applications;

our ability to effectively

monetize our consumer applications and the availability of free or cheaper alternatives from our competitors;

our ability to hire

and retain talented employees, including technical employees, executives, and marketing experts;

the success of our

customer service and support efforts;

our reputation and

brand strength compared to our competitors;

competition for

acquiring users that could result in increased user acquisition costs;

reliance upon the

platforms through which our consumer applications are accessed and the platform owner’s ability to control our activities on

such platforms;

the effectiveness

of the marketing and advertisement of our services and consumer applications;

our ability to maintain

advertisers’ interest in advertising through our consumer applications;

our ability to innovate

in the ever-changing consumer applications industry in which we operate;

changes as a result

of new legislation or regulation within the consumer applications industry;

acquisitions or

consolidations within the consumer applications industry.

Many of our current and potential competitors

offer similar services and have longer operating histories, significantly greater capital, financial, technical, marketing and other

resources and larger user or subscriber bases than we do.

These factors may allow our competitors to more quickly respond to new or emerging

technologies and changes in client or consumer preferences.

These competitors may engage in more extensive research and development efforts,

undertake more far-reaching marketing campaigns and adopt more aggressive pricing strategies that may allow them to build larger user

bases consisting of greater numbers of paying users.

Our competitors may develop applications and software that are equal or superior

to our applications and software or that achieve greater market or industry acceptance.

It is possible that a new application developed

or offered by one of our competitors could gain rapid scale at the expense of existing brands through harnessing a new technology or

distribution channel, creating a new approach to connecting people.

Certain entities that we do not directly compete

with but that have large or dominant positions in one or more markets could use those positions to gain a competitive advantage against

us by integrating competing video chat or social media platforms into products they control, such as search engines, web browsers or

mobile device operating systems.

Costs for consumers to switch between products

in the video chat industry are generally low, and consumers have a propensity to try new products to connect with new people.

new entrants and business models are likely to continue to emerge in our industry.

These activities could attract users and subscribers

away from our applications and reduce our market share.

If we are unable to effectively compete, we may

fail to obtain new users for our products or our users may discontinue the use of our products and we may lose active users, either of

which would have a material adverse effect on our business, results of operations and financial condition.

The online live video industry is characterized

by rapid technological change, including the development of enhancements and new applications, and if we fail to keep pace with technological

developments or launch new applications, our business may be adversely affected.

The online live video industry is characterized

by rapid change, and our future success is dependent upon our ability to adopt and innovate.

To attract new users and increase revenues

from existing users, we need to enhance, add new features to and improve our existing applications, introduce new applications in the

future and where applicable, cross-market such applications.

The success of any enhancements or new features and applications depends

on several factors, including timely completion, introduction and market acceptance.

Building a new brand or product is generally an

iterative process that occurs over a meaningful period of time and involves considerable resources and expenditures, and we may expend

significant time and resources developing and launching an application that may not result in revenues in the anticipated timeframe or

at all or may not result in revenue growth that is sufficient to offset increased expenses.

If we are unable to successfully develop

enhancements, new features or new applications to meet user trends and preferences, our business and operating results could be adversely

In addition, our applications are designed to

operate on a variety of network, hardware and software platforms using internet tools and protocols and we need to continuously modify

and enhance our applications to keep pace with technological changes.

If we are unable to respond in a timely and cost-effective manner,

our current and future applications may become less marketable and less competitive or even obsolete.

Our business may be significantly affected

by a change in the economy, including inflation and any resulting effect on consumer or business spending.

Our business may be affected by changes in the

economy generally, including as a result of pandemics, terrorist attacks, natural disasters or other events outside our control, and

any resulting effect on spending by our customers.

Furthermore, prolonged periods of inflation have affected, and may continue to affect,

our ability to target new customers as well as keep existing customers engaged and may ultimately have a correlating effect on our users’

discretionary spending.

While some of our customers may consider our applications to be a cost-saving purchase, others may view a subscription

to our applications as a discretionary purchase, and our customers may reduce their discretionary spending on our platform during an

economic downturn.

Moreover, while we continue to add paid users to our customer base, our user growth may continue to slow or decline

as the impact of the highly inflationary environment, which makes products like ours more discretionary in nature.

In addition, increased inflation may result in

increased operating costs (including labor and consulting costs), reduced liquidity, and limitations on our ability to access credit

or otherwise raise debt and equity capital.

In addition, the United States Federal Reserve has raised, and may continue to raise, interest

rates in response to concerns about inflation.

Increases in interest rates, especially if coupled with reduced government spending and

volatility in financial markets, may have the effect of further increasing economic uncertainty and heightening these risks.

In an inflationary

environment, we may be unable to raise the prices of our subscriptions at or above the rate at which our costs increase, which could/would

reduce our profit margins and have a material adverse effect on our financial results and liquidity.

A reduction in our revenue would

be detrimental to our profitability and financial condition and could also have an adverse impact on our future growth.

Our mobile applications are substantially

dependent on interaction with mobile platforms and operating systems that we do not control.

A portion of our revenue, primarily our revenue

from mobile platforms, is derived from the Apple iOS platform and the Google Android platform.

Although we believe that we have a good

relationship with Apple and Google, any deterioration in our relationship with either could materially harm our business, results of

operations or financial condition.

We are subject to each of Apple’s and Google’s

standard terms and conditions for application developers, which govern the promotion, distribution and operation of our applications

on their respective storefronts.

Each of Apple and Google has broad discretion to change its standard terms and conditions.

these standard terms and conditions can be vague and subject to changing interpretations by Apple or Google.

In addition, each of Apple

and Google has the right to prohibit a developer from distributing applications on the storefront if the developer violates the standard

terms and conditions.

In the event that either Apple or Google ever determines that we are in violation of its standard terms and conditions

and prohibits us from distributing our applications on its storefront, it could materially harm our business, results of operations or

financial condition.

The number of people who access the internet

through devices other than personal computers, including smart phones, cell phones and handheld tablets, has increased dramatically in

the past several years and is projected to continue to increase.

Accordingly, we are substantially dependent on interoperability with

popular mobile platforms that we do not control, including the Apple App Store and the Google Play Store, and a portion of our revenue

is derived from these two digital storefronts.

There have been occasions in the past when these digital storefronts were unavailable

for short periods of time or where there have been issues with the in-App purchasing functionality from the storefront.

that either the Apple App Store or the Google Play Store is unavailable or if in-App purchasing functionality from the storefront is

non-operational for a prolonged period of time, it could have a material adverse effect on our business, results of operations or financial

In addition, each of the Apple App Store and

Google Play Store provides consumers with products that compete with ours.

If either of these platforms give preferential treatment to

competitive products, it could seriously harm the usage of our products on mobile devices.

Our business depends on developing, establishing

and maintaining strong brands.

If we are unable to maintain and enhance our brands, we may be unable to expand or retain our user and

paying subscriber bases.

We believe that developing, establishing and

maintaining awareness of our application brands is critical to our efforts to achieve widespread acceptance of our applications and is

an important element to expanding our subscriber base.

Successful promotion of our application brands will depend largely on the effectiveness

of our advertising and marketing efforts and on our ability to provide reliable and useful applications at competitive prices.

do not perceive our products to be of high quality, or if our products are not favorably received by users, the value of our brands could

diminish, thereby decreasing the attractiveness of our software, services and applications to users.

In addition, advertising and marketing

activities may not yield increased revenue, and even if they do, any increased revenue may not offset the expenses we incurred in building

If we fail to successfully promote and maintain

our application brands or incur substantial expenses in unsuccessfully attempting to promote and maintain our brands, we may fail to

attract enough new subscribers or retain our existing subscribers to the extent necessary to realize a sufficient return on our advertising

and marketing activities, and it could have a material adverse effect on our business, results of operations or financial condition.

If our goodwill or other intangible assets

become impaired, we may be required to record a significant charge to earnings, which could seriously harm our operating results.

We are required to test goodwill for impairment

at least annually or more frequently if there are indicators that the carrying amount of the goodwill exceeds its carried value.

December 31, 2023, we had recorded a total of $6.3 million of goodwill and $2.7 million of other intangible assets.

An adverse change

in domestic or global market conditions, particularly if such change has the effect of changing one of our critical assumptions or estimates

made in connection with the impairment testing of goodwill or intangible assets, could result in a change to the estimation of fair value

that could, in turn, result in an impairment charge to our goodwill or other intangible assets.

If we divest or discontinue product categories

or products that we previously acquired, or if the value of those parts of our business become impaired, we also may need to evaluate

the carrying value of our goodwill.

Any such material charges may have a negative impact on our operating results.

We could be adversely affected by information

security breaches or cyber security attacks.

Our web and cloud services involve the storage

and transmission of our customers’ and employees’ proprietary information.

Our business relies on our digital technologies,

computer and email systems, software and networks to conduct our operations.

Our technologies, systems and networks may become the target

of criminal cyber-attacks or information security breaches that could result in the unauthorized release, gathering, monitoring, misuse,

loss or destruction of confidential, proprietary and other information of us or third parties with whom we deal, or otherwise disrupt

our or our customers’ or other third parties’ business operations.

It is critical to our business strategy that our facilities

and infrastructure remain secure and are perceived by the marketplace to be secure.

Although we believe we employ appropriate security

technologies, we cannot guarantee that the security technologies (including data encryption processes, intrusion detection systems) we

employ, the comprehensive risk assessments we conduct, or our other internal control procedures will ensure the security of our customers’

If our security measures are breached due to third-party action, employee error or otherwise, and as a result, our customers’

data becomes available to unauthorized parties, we could incur liability and our reputation would be damaged, which could lead to the

loss of current and potential customers.

Furthermore, we maintain a work-from-home policy

for our employees.

Remote work and remote access increase our vulnerability to cybersecurity attacks.

We may see an increase in cyberattack

volume, frequency and sophistication driven by the global enablement of remote workforces.

We seek to detect and investigate unauthorized

attempts and attacks against our network, products and services and to prevent their recurrence where practicable through changes to our

internal processes and tools and changes or updates to our products and services;

however, we remain potentially vulnerable to additional

known or unknown threats.

In some instances, we and our customers can be unaware of an incident or its magnitude and effects.

Additionally,

the rapid evolution and increasing prevalence of AI technologies may also increase our cybersecurity risks.

Moreover, globally there has

been an increase in cybersecurity attacks since Russia invaded Ukraine.

The risk of state-supported and geopolitical-related cyber-attacks

may increase in connection with the war in Ukraine and any related political or economic responses and counter-responses.

We may not discover

all such incidents or activity or be able to respond or otherwise address them promptly, in sufficient respects or at all.

In addition, we have in the past and may in the

future be required to expend significant capital and other resources to detect, remedy, protect against or alleviate breaches of our network

and security, and we may not be able to remedy these problems in a timely manner, or at all.

Because techniques used by outsiders to obtain

unauthorized network access or to sabotage systems change frequently and generally are not recognized until launched against a target,

we may be unable to anticipate these techniques or implement adequate preventative measures.

For example, in early 2018, following an unauthorized

third party misappropriating three of NTS’s domain names, NTS’s management and forensic investigators determined that attackers

compromised a portion of its shared webhosting system, and may have acquired certain customer information limited to its shared webhosting

customers and/or gained access to certain of its shared webhosting servers.

In response, NTS took a range of steps designed to further

secure its systems, enhance its security protections, enhance access controls and prevent future unauthorized activity.

Further, any breaches to our security measures

in the future as a result of third-party action, employee error or otherwise could increase the cost of cybersecurity insurance, which,

in turn, could adversely affect our financial condition and results of operations.

Our existing general liability insurance coverage and

the coverage we carry for cyber-related liabilities may not continue to be available on acceptable terms or be available in sufficient

amounts to cover one or more large claims or that the insurer will not deny coverage as to any future claim.

The successful assertion

of one or more large claims against us that are not covered or exceed available insurance coverage, or the occurrence of changes in our

insurance policies, including premium increases or the imposition of large deductible or co-insurance requirements, could harm our business.

We rely on third-party license agreements

with the owners of the Data Centers to operate our secure private cloud which, if terminated, could have an adverse material effect on

our business.

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,

We are party to license agreements with Aligned Data Centers (Phoenix) PropCo, LLC and Iron Mountain Data Centers LLC with

respect the Data Centers located in Phoenix, Arizona, and Edison, New Jersey, respectively, through which we offer our secure private

cloud hosting services.

The Data Centers host our critical infrastructure and are designed to conform to the global standards for such

Although the terms of the license agreements for the Data Centers located in Arizona and New Jersey currently extend through

2027 and 2026, respectively, such license agreements may not continue to be available on commercially reasonable terms, or at all.

Additionally,

termination of such license agreements would require us to identify replacement facilities for our secure private cloud hosting services,

which may not be available at all.

Any delay or interruption in our ability to meet demand for our secure private cloud hosting services

and other IT-related services will result in the loss of potential revenues and could have a material adverse effect on our business,

results of operations, and financial condition.

We operate in a highly competitive industry

in which technological change can be rapid.

The information technology industry involves a

broad range of rapidly changing technologies, including AI.

Our equipment and the technologies on which it is based may not remain competitive

over time, and others may develop superior technologies that render our products non-competitive, without significant additional capital

expenditures.

Some of our competitors are significantly larger and have substantially greater market presence, as well as greater financial,

technical, operational, marketing and other resources and experience than we do.

In the event that such a competitor expends significant

sales and marketing resources in one or several markets in which we operate, we may not be able to compete successfully in such market(s).

We believe that competition will continue to increase, placing downward pressure on prices.

Such pressure could adversely affect our gross

margins if we are not able to reduce our costs commensurate with such price reductions.

We rely on a limited number of customers

for a material portion of our revenues and income.

Prior to the consummation of the Transactions,

during the 2023 and 2024 fiscal years, NTS relied on a limited number of customers for a material portion of its revenues.

Additionally,

during 2024, NTS’s second largest customer informed NTS it would cease utilizing its services due to a consolidation of its vendors.

Following the completion to the Transactions, this customer has since resumed utilizing our services, but we cannot be certain at what

level, or for what period, the customer relationship will continue.

A loss of one or more of our customers, if not replaced, could adversely

impact our financial condition and prospects.

Our technology solutions business depends

on the efficient and uninterrupted operation of our Data Centers and computer and communications hardware systems and infrastructure.

Despite precautions we implement against possible

failure of our systems, interruptions could result from natural disasters, power loss, the inability to acquire fuel for our backup generators,

telecommunications failure, terrorist attacks and similar events.

We also lease telecommunications lines from local, regional and national

carriers whose service may be interrupted.

Our business, financial condition and results of operations could be harmed by any damage or

failure that interrupts or delays our operations.

Our insurance may not cover all of the losses or compensate us for the possible loss

of clients occurring during any period that we are unable to provide service.

Additionally, since the Data Centers through which

we operate rely on third parties to provide power sufficient to meet operational needs, the Data Centers could have a limited or inadequate

amount of electrical resources necessary to meet our customer requirements.

The operators for the Data Centers attempt to limit exposure

to system downtime due to power outages by using backup generators and power supplies.

However, these protections may not limit our exposure

to power shortages or outages entirely.

Any system downtime resulting from insufficient power resources or power outages could cause physical

damage to equipment, increase our susceptibility to security breaches, damage our reputation and lead us to lose current and potential

customers, which would harm our business, financial condition and results of operations.

Failure to have reliable Internet, telecommunications

and fiber optic network connectivity and capacity from third-party providers may adversely affect our results of operations.

Our success depends in part upon the capacity,

reliability and performance of our network infrastructure, including our Internet, telecommunications and fiber optic network connectivity

We depend on these companies to provide uninterrupted and error-free service through their telecommunications networks.

of these providers are also our competitors.

We exercise little control over these providers, which increases our vulnerability to problems

with the services they provide.

We have experienced, and expect to continue to experience, interruptions or delays in network service.

Any failure on our part or the part of our third-party suppliers to achieve or maintain high data transmission capacity, reliability or

performance could significantly reduce customer demand for our services and have a material and adverse effect on our business, financial

condition and results of operations.

As our customers’ usage of telecommunications

capacity increases, we will be required to make additional investments in our capacity to maintain adequate data transmission speeds,

the availability of which may be limited or the cost of which may be on terms unacceptable to us.

If adequate capacity is not available

to us as our customers’ usage increases, our network may be unable to achieve or maintain sufficiently high data transmission capacity,

reliability or performance.

In addition, our business and results of operations would suffer if our network suppliers increased the prices

for their services and we were unable to successfully pass along the increased costs to our customers.

Real or perceived errors, failures or bugs

in our customer solutions, software or technology could adversely affect our business, financial condition and results of operations.

Undetected real or perceived errors, failures,

bugs or defects may be present or occur in the future in our customer solutions, software or technology or the technology or software

we license from third parties, including open source software.

Despite testing by us, real or perceived errors, failures, bugs or defects

may not be found until our customers use our services.

Real or perceived errors, failures, bugs or defects in our customer solutions could

result in negative publicity, loss of or delay in market acceptance of our services and harm to our brand, weakening of our competitive

position, claims by customers for losses sustained by them or failure to meet the stated service level commitments in our customer agreements.

In such an event, we may be required, or may choose, for customer relations or other reasons, to expend significant additional resources

to help correct the problem.

Any real or perceived errors, failures, bugs or defects in our customer solutions could also impair our ability

to attract new customers, retain existing customers or expand their use of our services, which could adversely affect our business, financial

condition and results of operations.

If we are unable to attract new customers,

retain existing customers and sell additional services at comparable gross margins to customers, our revenue and results of operations

could be adversely affected.

Our ability to maintain or increase our revenues

and make a profit may be impacted by a number of factors, including our ability to attract new customers, retain existing customers and

sell additional services at comparable gross margins to our customers.

In addition, as we seek to grow our customer base, we expect to

incur higher customer acquisition costs and, to the extent we are unable to retain and sell additional services to existing customers,

our revenue and results of operations may decrease.

Growth in the demand for our services may be

inhibited, and we may be unable to profitably maintain or grow our customer base for a nu mber

of reasons, such as:

inability to provide compelling services or effectively market them to new and existing customers;

migration to platforms that we do not have expertise in managing;

inability of customers to differentiate our services from those of our competitors or our

inability to effectively communicate such distinctions;

decision of customers to host internally, in third-party cloud infrastructure, or in third-party

colocation facilities as an alternative to the use of our services;

decision of customers to use internal or other third-party resources to manage their platforms

and applications;

in IT spending by customers or potential customers;

reduction in the demand for our services due to macroeconomic factors in the markets in which

inability to strengthen awareness of our brand;

or future cybersecurity-related incidents;

● reliability,

quali ty or compatibility problems with our services.

Moreover, we may face difficulty retaining existing

customers over the long term.

Certain customer contracts, frequently have initial terms (typically from 24 to 36 months) and, unless terminated,

may be renewed or automatically extended for shorter, rolling periods after the initial term.

Our customers have no obligation to renew

their services after their initial contract periods expire and any termination fees associated with an early termination may not be sufficient

to recover our costs associated with such contracts.

In addition, most of our services can be canceled at any time without penalty.

a result, we may face high rates of customer churn if we are unable to meet our customer needs, requirements and preferences.

Our costs associated with generating revenue from

existing customers are generally lower than costs associated with generating revenue from new customers, and depending on the customer

and the service offering, there may be substantial variation in the gross margins associated with existing and new customers.

by us in continuing to attract new customers or grow our revenue from existing customers could have a material and adverse effect on our

business, financial condition and results of operations.

Our business depends on Microsoft Corporation

and others for the licenses to use software and other intellectual property in the managed technology solutions business.

Our managed technology business is built on technological

platforms that rely on the Microsoft Windows products and other intellectual property that we currently license.

As a result, if we are

unable to continue to have the benefit of those licensing arrangements, or if the products upon which our platform is built become obsolete,

our business could be materially and adversely affected.

If we fail to hire and retain qualified

employees and management personnel, our strategies and our business could be harmed.

Our ability to be successful and to execute on

our strategies depends on our ability to identify, hire, train and retain qualified executives, IT professionals, technical engineers,

software developers, operations employees and sales and senior management personnel who maintain relationships with our customers and

who can provide the technical, strategic and marketing skills required for our company to grow.

Our ability to execute on our sales strategy

is also dependent on our ability to identify, hire, train and retain a sufficient number of qualified sales personnel.

There is a shortage

of qualified personnel in these fields, and like many other companies we have recently encountered additional challenges in hiring and

retaining qualified personnel.

We compete with other companies for this limited pool of potential employees.

Furthermore, the implementation

of our strategies may result in changes throughout our business, which may create uncertainty for our employees.

Such uncertainties may

impair our ability to attract, retain and motivate key personnel and could cause customers, suppliers and others who deal with us to seek

to change existing business relationships.

In addition, the industry in which we operate is generally characterized by significant competition

for skilled personnel, and as our industry becomes more competitive, it could become especially difficult to retain personnel with unique

in-demand skills and knowledge, whom we would expect to become recruiting targets for our competitors.

We may not be able to recruit or

retain qualified personnel or successfully transition knowledge from departing employees, and any failure to do so could cause a dilution

of our service-oriented culture and weaken our ability to develop and deliver existing or new operations and services, either of which

could cause our business to be negatively impacted.

Our future success is dependent, in part,

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We are dependent to a great extent upon the experience,

abilities and continued service of Jason Katz, our Chief Executive Officer and Chairman of the Board of Directors, and Kara B.

our Chief Financial Officer and director.

The loss of the services of these individuals would substantially affect our business or operations

and could have a material adverse effect on our business, results of operations or financial condition.

Our subscription metrics and other estimates

are subject to inherent challenges in measurement, and real or perceived inaccuracies in those metrics may seriously harm and negatively

affect our reputation and our business.

We regularly review metrics to evaluate growth

trends, measure our performance, and make strategic decisions.

These metrics are calculated using internal Company data and have not

been validated by an independent third party.

While these numbers are based on what we believe to be reasonable estimates of our user

base for the applicable period of measurement, there are inherent challenges in measuring how our products are used across large populations

Some of our demographic data may be incomplete

or inaccurate.

For example, because users self-report their dates of birth, our age-demographic data may differ from our users’

If our users provide us with incorrect or incomplete information regarding their age or other attributes, our estimates

may prove inaccurate.

In addition, our business strategy is guided

by data analytics that we compute internally based on data collection, data processing, cloud-based platforms, statistical projections

and forecasting, mobile computing, social media analytics and other applications and technologies.

We use these internally derived data

analytics to guide decisions concerning the development and modification of features on our applications, monetization strategies for

our applications and the development of new applications, among other things.

The inability to accurately derive our metrics

or data analytics could result in incorrect business decisions and inefficiencies.

For instance, if a significant understatement or overstatement

of our active users were to occur, we may expend resources to implement unnecessary business measures or fail to take required actions

to attract a sufficient number of subscribers to satisfy our growth strategies.

If advertisers or investors do not perceive our subscription,

geographic or other demographic metrics to be accurate representations of our user base, or if we discover material inaccuracies in our

subscription, geographic or other demographic metrics, our reputation may be seriously harmed.

At the same time, advertisers may be less

willing to allocate their budgets or resources to our products, which could seriously harm our business, results of operation or financial

abilities and continued service of Jason Katz, our Chief Executive Officer and Chairman of the Board of Directors (the “Board”),

Jenny, our Chief Financial Officer and director, Jared Mills, our President, and Adam Zalko, our Chief Operating Officer.

loss of the services of these individuals would substantially affect our business or operations and could have a material adverse effect

on our business, results of operations or financial condition.

Because we recognize revenue from subscriptions

over the term of the subscription, the full impact of downturns or upturns in subscription sales may not be immediately reflected in

our results of operations or financial condition.

We recognize subscription revenue from customers

monthly over the term of the subscription, and subscriptions are generally offered in one-, three-, six-, twelve- and twenty-four- month

terms, depending on the particular product.

As a result, much of the subscription revenue we report in each period is deferred revenue

from subscription agreements entered into during previous periods.

Consequently, a decline in new or renewed subscriptions in any one

quarter will negatively affect our revenue in future quarters.

In addition, we might not be able to immediately adjust our costs and

expenses to reflect these reduced revenues.

Accordingly, the effect of significant downturns in user acceptance of our applications may

not be fully reflected in our results of operations until future periods.

Our subscription model also makes it difficult for us to quickly

increase our revenue through additional sales in any period, as revenue from new subscribers must be recognized over the term of the

subscription.

As a result, you should not rely on the amount of subscription revenue generated in prior quarters as an indication of

future results.

We plan to continue expanding our operations

internationally and may be subject to increased business and economic risks that could seriously harm our business.

Presently, we derive a significant portion of

revenue from users located outside of the United States.

In addition, we rely on outsourced development services from companies with

consultants based in Russia, India and elsewhere.

The invasion of Ukraine by Russia has escalated tensions among the United States, the

North Atlantic Treaty Organization (“NATO”) member states, and Russia.

The United States, other NATO member states, as well

as non-member states, have imposed sanctions against Russia and certain Russian banks, enterprises and individuals.

These and any future

additional sanctions and any resulting conflict between Russia, the United States and other countries may, on a short term, disrupt,

or in the future could disrupt, the consulting services provided by our third-party developers residing in Russia.

This conflict may

increase our costs with respect to any current or future planned development services in Russia or could result in negative publicity.

We may enter new international markets where

we have limited or no experience in marketing, selling and deploying our products.

If we fail to deploy or manage our operations in international

markets successfully, our business may suffer.

As our international operations increase our operating results may become more greatly

affected by fluctuations in the exchange rates of the currencies in which we do business.

In addition, we are subject to a variety of

risks inherent in doing business internationally, including:

political, social,

and economic instability;

risks related to

the legal and regulatory environment in foreign jurisdictions, including with respect to privacy, free speech and unexpected changes

in laws, regulatory requirements, and enforcement;

potential damage

to our brand and reputation due to compliance with local laws, including potential censorship and requirements to provide user information

to local authorities;

fluctuations in

currency exchange rates;

higher levels of

credit risk and payment fraud;

complying with multiple

tax jurisdictions;

reduced protection

for intellectual-property rights in some countries;

difficulties in

staffing and managing global operations and the increased travel, infrastructure and compliance costs associated with multiple international

regulations that

might add difficulties in repatriating cash earned outside the United States and otherwise preventing us from freely moving cash;

import and export

restrictions and changes in trade regulation;

complying with statutory

equity requirements;

complying with the

Foreign Corrupt Practices Act, the U.K.

Bribery Act and similar laws in other jurisdictions;

the impact of the

United Kingdom’s exit from the European Union;

export controls

and economic sanctions administered by the Department of Commerce Bureau of Industry and Security and the Treasury Department’s

Office of Foreign Assets Control.

If we are unable to expand internationally and

manage the complexity of our global operations successfully, our business could be seriously harmed.

A portion of our revenue is dependent on third-party resellers,

the efforts of which we do not control.

We are dependent on the efforts of third parties

who resell our subscriptions for a portion of our revenue.

In particular, video chat users in certain international territories have

an option to purchase subscriptions through local resellers.

These local resellers prepay in bulk for services and debit the prepaid

balance as one-time subscriptions and virtual gifts are sold to end users.

We do not control the efforts of these resellers.

If they fail to market or sell our subscriptions successfully, merge or consolidate with other businesses, declare bankruptcy or depart

from their respective industries, our business could be harmed.

If we are unable to maintain or replace our contractual relationships

with resellers, efficiently manage our relationships with them or establish new contractual relationships with other third parties, we

may fail to retain subscribers or acquire potential new subscribers and may experience delays and increased costs in adding or replacing

subscribers that were lost, any of which could materially affect our business, operating results and financial condition.

Foreign governments restricting access to our applications could

materially adversely impact our business.

We have continued to focus on increasing the

international presence of our applications by expanding the localized and translated versions for additional international countries

that are culturally aligned with our products.

Foreign data protection, privacy, consumer protection, content regulation, and other laws

and regulations are often more restrictive than those in the United States.

Foreign governments may censor our products in their countries,

restrict access to our products from their countries entirely, or impose other restrictions that may affect their citizens’ ability

to access our products for an extended period of time or even indefinitely.

Foreign governments may seek to restrict access to our products

if they think we are violating their laws or for other reasons, which would give our competitors an opportunity to penetrate geographic

markets that we cannot access.

As a result, our ability to grow our international user base would be impaired, we may not be able to

maintain or grow our revenue as anticipated and our business could be seriously harmed.

Our mobile applications rely on high-bandwidth

data capabilities, which are subject to hardware, networks, regulations and standards that we do not control.

Our mobile applications require high-bandwidth

data capabilities.

If the costs of data usage increase or access to cellular networks is limited, our user growth and retention on mobile

platforms may be seriously harmed.

Additionally, to deliver high-quality video and other content over mobile cellular networks, our products

must work well with a range of mobile technologies, systems, networks, regulations and standards that we do not control, and any changes

to those mobile technologies, systems, networks, regulations or standards could impact the usability of our mobile applications, which

would materially adversely affect our business, results of operations or financial condition.

Our business depends, in large part, upon

the availability of cost-effective advertising space through a variety of media and keeping pace with trends in consumer behavior.

We depend upon the availability of advertising

space through a variety of media, including third-party applications on platforms such as Facebook, to recruit new users and subscribers,

generate activity from existing users and subscribers and direct traffic to our applications.

Historically, we have had to increase our

marketing expenditures in order to attract and retain users and sustain our growth.

The availability of advertising space varies, and

a shortage of advertising space in any particular media or on any particular platform, or the elimination of a particular medium on which

we advertise, could limit our ability to generate new subscribers, generate activity from existing subscribers or direct traffic to our

applications, any of which could have a material adverse effect on our business, results of operations and financial condition.

evolving consumer behavior can affect the availability of profitable marketing opportunities.

For example, as consumers communicate less

via email and more via text messaging and other virtual means, the reach of email campaigns designed to attract new and repeat users

(and retain current users) for our applications is adversely impacted.

To continue to reach potential users and grow our business, we

must devote more of our overall marketing expenditures to newer advertising channels, which may be unproven and undeveloped, and we may

not be able to continue to manage and fine-tune our marketing efforts in response to these trends.

Any future marketing efforts may be

ineffective or inadequate to attract potential users or retain existing users.

Interruption, maintenance or failure of

our programming code, servers or technological infrastructure could hurt our ability to effectively provide our applications, which could

damage our reputation and harm our results of operations.

The availability of our applications depends

on the continued operation of our programming code, databases, servers and technological infrastructure.

Any damage to, or failure of,

our systems could result in interruptions in service for our applications, which could damage our brands and have a material adverse

effect on our business, results of operations or financial condition.

Our systems are vulnerable to damage or interruption from terrorist

attacks, floods, fires, power loss, telecommunications failures, computer viruses, computer denial of service attacks or other attempts

to harm our systems.

Some of our systems are not fully redundant, and our disaster recovery planning cannot account for all eventualities.

In addition, from time to time we experience

limited periods of server downtime due to maintenance or enhancements.

If our applications are unavailable during these periods of downtime

or if our users are unable to access our applications within a reasonable amount of time, users may not return to our applications in

the future, or at all.

As our user base and the volume and types of information shared on our applications continues to grow, we will

need an increasing amount of technology infrastructure, including network capacity and computing power, to continue to satisfy our users’

It is possible that we may fail to effectively scale and grow our technology infrastructure to accommodate these increased demands.

Any failure to support and scale our technology infrastructure could adversely impact the reputation of our brands and harm our results

of operations.

Security breaches, computer viruses and

cybersecurity incidents could harm our business, results of operations or financial condition.

We receive, process, store and transmit a significant

amount of personal user and other confidential information, including credit card information, and enable our users to share their personal

information with each other.

In some cases, we retain third party vendors to store this information.

We continuously develop and maintain

systems to protect the security, integrity and confidentiality of this information, but cannot guarantee that inadvertent or unauthorized

use or disclosure will not occur or that third parties will not gain unauthorized access to this information despite our efforts.

any such event were to occur, we may not be able to remedy the event, and we may have to expend significant capital and resources to

mitigate the impact of such an event, and to develop and implement protections to prevent future events of this nature from occurring.

Security breaches, computer malware and cybersecurity

incidents have become more prevalent in our industry and may occur on our systems in the future.

Although it is difficult to determine

what, if any, harm may directly result from an interruption or attack, any security breach caused by hacking, including efforts to gain

unauthorized access to our applications, servers or websites, or to cause intentional malfunctions or loss or corruption of data, software,

hardware or other computer equipment, and the inadvertent transmission of computer viruses could harm our business, financial condition

and results of operations.

If a breach of our security (or the security of our vendors and partners) occurs, the perception of the effectiveness

of our security measures and our reputation may be harmed, we could lose current and potential users and the recognition of our various

brands and their competitive positions could be diminished, any or all of which could adversely affect our business, financial condition

and results of operations.

Spammers may attempt to use our products to send

targeted and untargeted spam messages to users, which may embarrass or annoy users and make our products less user friendly.

be certain that the technologies that we have developed to repel spamming attacks will be able to eliminate all spam messages from our

Our actions to combat spam may also require diversion of significant time and focus of our engineering team from improving

our products.

As a result of spamming activities, our users may use our products less or stop using them altogether, and result in continuing

operational cost to us.

Furthermore, the adoption of certain technologies, such as cloud computing, artificial intelligence and machine

learning may increase the risks associated with cyber attacks.

Similarly, terror and other criminal groups may

use our products to promote their goals and encourage users to engage in terror and other illegal activities.

We expect that as more

people use our products, these groups will increasingly seek to misuse our products.

Although we invest resources to combat these activities,

including by suspending or terminating accounts we believe are violating our Terms of Service, we expect these groups will continue to

seek ways to act inappropriately and illegally on our products.

Combating these groups requires our engineering team to divert significant

time and focus from improving our products.

In addition, we may not be able to control or stop our products from becoming the preferred

application of use by these groups, which may become public knowledge and seriously harm our reputation or lead to lawsuits or attention

from regulators.

If these activities increase, our reputation, user growth and user engagement, and operational cost structure could

be seriously harmed.

Furthermore, many governments have enacted laws requiring companies to provide notice of data security incidents

involving certain types of personal data.

Such laws are inconsistent, and compliance in the event of a widespread data breach is costly.

We maintain a work-from-home policy for our employees.

Remote work and remote access increase our vulnerability to cybersecurity attacks.

We may see an increase in cyberattack volume, frequency

and sophistication driven by the global enablement of remote workforces.

We seek to detect and investigate unauthorized attempts and

attacks against our network, products and services and to prevent their recurrence where practicable through changes to our internal

processes and tools and changes or updates to our products and services;

however, we remain potentially vulnerable to additional known

or unknown threats.

In some instances, we and the users of our applications can be unaware of an incident or its magnitude and effects.

Moreover, globally there has been an increase in cybersecurity attacks since Russia invaded Ukraine.

The risk of state-supported and

geopolitical-related cyber-attacks may increase in connection with the war in Ukraine and any related political or economic responses

and counter-responses.

We may not discover all such incidents or activity or be able to respond or otherwise address them promptly, in

sufficient respects or at all.

Our existing general liability insurance coverage

and the coverage we carry for cyber-related liabilities may not continue to be available on acceptable terms or be available in sufficient

amounts to cover one or more large claims or that the insurer will not deny coverage as to any future claim.

The successful assertion

of one or more large claims against us that are not covered or exceed available insurance coverage, or the occurrence of changes in our

insurance policies, including premium increases or the imposition of large deductible or co-insurance requirements, could harm our business.

We have faced, and we expect that we will

continue to face, chargeback liability when our credit card providers resolve chargebacks in favor of their customers.

We cannot accurately

anticipate the extent of these liabilities, and if not properly addressed, these liabilities could increase our operating expenses or

preclude us from accepting certain credit cards as a method of payment, either of which would materially adversely affect our results

of operations and financial condition.

We depend on the ability to accept credit and

debit card payments from our subscribers and our ability to maintain the good standing of our merchant account with our credit card providers

to process subscription payments.

In the event that one of our customers initiates a billing dispute and one of our credit card providers

resolves the dispute in the customer’s favor, the transaction is normally charged back to us and the purchase price is credited

or otherwise refunded to the customer.

In addition, under current credit card practices, a merchant is liable for fraudulent credit card

transactions when, as is the case with the transactions we process, that merchant does not obtain a cardholder’s signature.

We have suffered losses and we expect that we

will continue to suffer losses as a result of subscriptions placed with fraudulent credit card data, as well as users who chargeback

their purchases.

Any failure to adequately control fraudulent credit card transactions or keep our chargebacks under an acceptable threshold

would result in significantly higher credit card-related costs and, therefore, materially increase our operating expenses.

We face certain risks related to the physical and emotional

safety of users and third parties.

We cannot control our users’ communications

with each other or physical actions towards one another.

There is a possibility that users or third parties could be physically or emotionally

harmed following interaction with another user.

We warn our users that we do not screen other users and, given our lack of physical presence,

we do not take any action to ensure personal safety on a meeting between users or subscribers arranged following contact initiated via

our applications or ensure personal safety of our users against self-harming following contact with other users initiated via our applications.

If an unfortunate incident of this nature occurred in a meeting of two people following contact initiated on our applications or that

of one of our competitors, any resulting negative publicity could materially and adversely affect us or the online video chat industry

Any such incident involving our applications could damage our reputation and our brand, which could have a material adverse

effect on our business, results of operations or financial condition.

In addition, the affected users or third parties could initiate

legal action against us, which could divert management attention from operations, cause us to incur significant expenses, whether we

are successful or not, and damage our reputation.

over the term of the subscription, the full impact of downturns or upturns in subscription sales may not be immediately reflected in our

results of operations or financial condition.

We recognize subscription revenue from ManyCam

customers monthly over the term of the subscription, which are offered in twelve- and twenty-four-month terms.

As a result, much of the

subscription revenue we report in each period is deferred revenue from subscription agreements entered into during previous periods.

Consequently,

a decline in new or renewed subscriptions in any one quarter will negatively affect our revenue in future quarters.

In addition, we might

not be able to immediately adjust our costs and expenses to reflect these reduced revenues.

Accordingly, the effect of significant downturns

in user acceptance of ManyCam may not be fully reflected in our results of operations until future periods.

Our subscription model for

ManyCam also makes it difficult for us to quickly increase revenue generated from ManyCam through additional sales in any period, as revenue

from new subscribers must be recognized over the term of the subscription.

As a result, you should not rely on the amount of subscription

revenue generated in prior quarters as an indication of future results.

Our business is affected by general economic

conditions, including inflation, and uncertainties affecting markets in which we operate, and economic volatility could adversely impact

our business.

Our overall performance depends in part on worldwide

economic and geopolitical conditions.

The United States has experienced cyclical downturns from time to time in which economic activity

was impacted by rising inflation, falling demand for a variety of goods and services, restricted credit, poor liquidity, reduced corporate

profitability, volatility in credit and fluctuating interest rates, equity and foreign exchange markets, bankruptcies and overall uncertainty

with respect to the economy.

These economic conditions can arise suddenly, and the full impact of such conditions can remain uncertain.

In addition, geopolitical developments, such as existing and potential wars, trade wars or other conflicts, changes in foreign policy

and other events are beyond our control.

Any form of civil unrest or other conflict can increase levels of political and economic unpredictability

regionally or globally and has the potential to increase the volatility of global financial markets.

Any of these effects could have a

material and adverse impact on our business, financial condition and results of operations.

Sustained levels of high inflation could cause

Federal Reserve and other central banks to continue to increase interest rates, which could have the effects of raising the cost

of capital and depressing economic growth, either of which, or the combination thereof, could hurt the financial and operating results

of our business and impact our ability to raise capital.

We may need additional capital to execute

our business plan.

If we do not obtain additional financing, it could have a material adverse effect on our business, results of operations

or financial condition.

We might need to raise additional capital or

financing through debt or equity offerings to support our expansion, marketing efforts and application development programs in the future.

For instance, we might require additional capital or financing to:

hire and retain

talented employees, including technical employees, executives, and marketing experts;

effectuate our long-term

growth strategy and expand our application development programs;

market and advertise

our applications to attract more paying subscribers.

We may be unable to obtain future capital or

financing on favorable terms or at all.

If we cannot obtain additional capital or financing, we may need to reduce, defer or cancel application

development programs, planned initiatives, marketing or advertising expenses or costs and expenses.

The failure to obtain necessary additional

capital or financing on favorable terms, if at all, could have a material adverse effect on our business, results of operations or financial

If the distribution of our products through

application stores increases, we may incur additional fees from the developers of application stores.

As the user base of our consumer applications

continues to shift to mobile solutions, we increasingly rely on the Apple iOS and Google Android platforms to distribute our products.

While our products are free to download from these stores, we offer our users the opportunity to purchase paid memberships and certain

premium features through our products.

We determine the prices at which these memberships and features are sold and, in exchange for

facilitating the purchase of these memberships and features through our products to users who download our products from these stores,

we pay Apple or Google, as applicable, a share, which is currently up to 15% of the revenue we receive from these transactions.

future, other distribution platforms that we utilize may charge us fees for the distribution of our applications.

If the distribution

of our products through application stores increases, the amount of fees that we must pay to the developers of these application stores

will also increase.

Unless we find a way to offset these fees, our business, financial condition and results of operations could be adversely

If we are not able to obtain additional financing, it could have a material adverse effect on our business, results

of operations or financial condition.

We might need to raise additional capital or financing

through debt or equity offerings to support our expansion, marketing efforts and application development programs in the future.

For instance,

we might require additional capital or financing to:

● hire and retain talented employees,

including technical employees, executives, and marketing experts;

● effectuate our long-term growth

strategy and expand our application development programs;

● market and advertise our products

and solutions to acquire additional customers.

We may be unable to obtain future capital or financing

on favorable terms or at all.

If we cannot obtain additional capital or financing, we may need to reduce, defer or cancel planned initiatives,

marketing or advertising expenses or costs and expenses.

The failure to obtain necessary additional capital or financing on favorable

terms, if at all, could have a material adverse effect on our business, results of operations or financial condition.

We may make or attempt to make acquisitions

in the future, which could require significant management attention, disrupt our business, dilute our stockholders and seriously harm

in the future, which could require significant management attention, disrupt our business, dilute our stockholders and significantly harm

our business.

As part of our business strategy, we have made

and intend to make acquisitions to add specialized employees and complementary companies, products and technologies.

In the future, we

may not be able to find other suitable acquisition candidates, and we may not be able to complete acquisitions on favorable terms, if

Our previous and future acquisitions may not achieve our goals, and any future acquisitions we complete could be viewed negatively

by users, advertisers or investors.

In addition, if we fail to successfully close transactions or integrate new teams, or integrate the

products and technologies associated with these acquisitions into our company, our business could be seriously harmed.

Any integration

process may require significant time and resources, and we may not be able to manage the process successfully.

We may not successfully

evaluate or use the acquired products, technology and personnel, or accurately forecast the financial impact of an acquisition transaction,

including accounting charges.

in the past, and intend to make in the future, acquisitions to add specialized employees and complementary companies, products and technologies.

In the future, we may not be able to find suitable acquisition candidates, and we may not be able to complete acquisitions on favorable

terms, if at all.

Our previous and future acquisitions may not achieve our goals, and any future acquisitions we complete could be viewed

negatively by customers, advertisers or investors.

In addition, if we fail to successfully close transactions or integrate new teams,

or integrate the products and technologies associated with these acquisitions into our company, our business could be seriously harmed.

Any integration process may require significant time and resources, and we may not be able to manage the process successfully.

not successfully evaluate or use the acquired products, technology and personnel, or accurately forecast the financial impact of an acquisition

transaction, including accounting charges.

We may also incur unanticipated liabilities that we assume as a result of acquiring companies.

to pay cash, incur debt or issue equity securities to pay for any acquisition, any of which could negatively impact our business and

financial condition.

We may have to pay cash, incur debt or issue equity securities to pay for any acquisition, any of which could negatively impact our business

and financial condition.

Issuing equity to finance any such acquisitions would also dilute our existing stockholders.

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increase our fixed obligations and could also include covenants or other restrictions that would impede our ability to manage our operations.

We may conduct a portion of our operations

through informal relationships, partnerships, strategic alliances or joint ventures, and our failure to continue such relationships or

resolve any material disagreements with these third parties could have a material adverse effect on the success of these operations,

our financial condition and our results of operations.

We may conduct a portion of our operations through

partnerships, strategic alliances or joint ventures and therefore we may depend on third parties for elements of these arrangements that

are important to the success of the relationship, such as the development of features or technologies to be incorporated into our applications.

The performance of these third-party obligations or the ability of third parties to meet their obligations under these arrangements would

be outside of our control.

If these third parties do not meet or satisfy their obligations under these arrangements, the performance

and success of these arrangements, and their value to us, would be adversely affected.

If our current or future partners are unable to

meet their obligations, we may be forced to undertake the obligations ourselves and/or incur additional expenses in order to have some

other party perform such obligations.

In such cases we may also be required to seek legal enforcement of our rights, the outcome of which

would be uncertain.

If any of these events occur, they may adversely impact us, our financial performance and results of operations,

and/or adversely impact our ability to enter into similar relationships in the future.

Strategic arrangements with third parties could involve risks not

otherwise present when we directly manage our operations, including, for example:

third parties may

share certain approval rights over major decisions within the scope of the relationship;

the possibility

that these third parties might become insolvent or bankrupt;

the possibility

that we may incur liabilities as a result of an action taken by one of these third parties;

these third parties

may be in a position to take action contrary to our instructions or requests or contrary to our policies or objectives;

disputes between

us and these third parties may result in litigation or arbitration that would increase our expenses, delay or terminate projects

and prevent our officers and directors from focusing their time and effort on our business.

Risks Related to the Transactions

Shares issuable upon conversion of the Series

A Preferred Stock, could depress our stock price.

As partial consideration for the Acquisition,

we issued Newtek 4,000,000 shares of the Company’s Series A Non-Voting Common Equivalent Stock, par value $0.001 per share (the

“Series A Preferred Stock”).

As of March 14, 2025, Newtek owns approximately 30.2% of our issued and outstanding common stock

or common-equivalent equity (on an as-converted and fully-diluted basis), calculated based on the number of shares of our common stock

outstanding as of March 14, 2025.

As a holder of our Series A Preferred Stock, Newtek does not have voting rights, except with respect

to certain protective matters, such as amendments to the Charter or Series A Preferred Stock Certificate of Designations (the “Certificate

of Designations”) that significantly and adversely affect the preferences, rights, privileges or powers of the Series A Preferred

The Series A Preferred Stock is convertible into

common stock only upon certain qualifying transfers to third parties.

In addition, we entered into a Registration Rights Agreement with

Newtek at the closing of the Acquisition (the “Registration Rights Agreement”), pursuant to which, among other things, we

are obligated to use our reasonable best efforts to prepare and file a registration statement registering the resale the shares of our

common stock issuable upon conversion of the Series A Preferred Stock.

Once registered, the shares of common stock issuable upon conversion

of the Series A Preferred Stock held by Newtek generally will not require further registration under the Securities Act, provided ,

however, that to the extent that Newtek is deemed to be our affiliate for purposes of the Securities Act, its sales of common stock issuable

upon conversion of the Series A Preferred Stock will be subject to the resale restrictions of Rule 144 under the Securities Act.

Pursuant to the Registration Rights Agreement,

Newtek is subject to certain lockup and transfer restrictions with respect to the Series A Preferred Stock for one year following the

closing of the Acquisition.

Following this lockup period, Newtek may wish to dispose of some or all of its Series A Preferred Stock, and

as a result, may seek to sell its shares of Series A Preferred Stock, which would automatically convert into shares of our common stock

upon the occurrence of certain qualifying transfers.

Any such sale (or the perception that any such a sale may occur), coupled with the

increase in the outstanding number of shares of our common stock following the conversion of the Series A Preferred Stock upon transfer,

could have a dilutive effect to our existing stockholders and may affect the market for, and the market price of, shares of common stock

in an adverse manner.

We may not be able to effectively integrate

the businesses of NTS or realize the anticipated benefits and synergies expected from the Acquisition .

The success of the Acquisition and the transactions

contemplated thereby will depend, in part, on our ability to realize the anticipated benefits from acquiring NTS and its business.

anticipated benefits and estimates of future growth, synergies and optimizations of the Acquisition may not be realized fully or at all,

may take longer to realize than expected or could have other adverse effects that we do not currently foresee.

The failure to realize

the anticipated benefits and synergies expected from the Acquisition could adversely affect our business, financial condition and operating

In addition, we have devoted, and continue to

devote, significant management attention and resources to integrate the respective business practices and operations of NTS.

difficulties that we may encounter as part of the integration process incl ude

the following:

inability to successfully combine our ManyCam product with the business of NTS in a manner that permits us to achieve, on a timely basis

or at all, the enhanced revenue opportunities, cost savings and other benefits anticipated to result from the Acquisition;

● complexities

associated with managing our existing business and NTS, including difficulty addressing possible differences in operational philosophies

and the challenge of integrating complex systems, technology, networks and other assets of NTS in a seamless manner that minimizes any

adverse impact on customers, suppliers, employees and other constituencies;

assumption of contractual obligations with less favorable or more restrictive terms;

unknown liabilities and unforeseen increased expenses or delays associated with the transactions.

of these issues could adversely affect our ability to maintain relationships with customers, suppliers, employees and other constituencies

or achieve the anticipated benefits of the Acquisition or could negatively impact our earnings or otherwise adversely affect our business

and financial results.

Through the Acquisition, we are entering

a new line of business which is highly competitive.

Through the Acquisition, we acquired NTS’s

existing operations.

Entering a new line of business has many risks, including the ability to generate sufficient revenue to fund operations

in the future.

While we believe we have sufficient capital to cover integration expenses, we may have to fund NTS’s operations from

cash on hand until sales are sufficient to fund ongoing operations.

A new business line may never generate significant revenues or have

enough sales to be profitable.

These risks may be further exacerbated by the sale of the Transferred Assets, which have historically been

our main source of revenue.

With respect to any new line of business, we may have competitors that are better established in the market,

have greater experience with such line of business or have greater resources than we do.

Furthermore, certain of our current employees

may have limited experience with dedicated server hosting, cloud hosting, data storage, managed security, backup and disaster recovery

and other related services and may have limited experience with respect to any other line of business we may enter into as we seek to

expand our operations.

Newtek previously identified material weaknesses

in NTS’s internal controls over financial reporting.

If the material weaknesses are not remediated, it may adversely affect our

ability to report our financial condition and results of operations in a timely and accurate manner or lower investor confidence in our

Company and, as a result, negatively affect the value of our common stock.

As disclosed in Newtek’s Annual Report on

Form 10-K for the fiscal year ended December 31, 2023, filed with the SEC on April 1, 2024, Newtek’s management concluded that NTS

did not maintain effective internal controls over financial reporting as of December 31, 2023, as a result of the material weaknesses

related to deficiencies in the conversion of NTS’s system of record for webhosting revenue and ineffective control design and implementation

over revenue recognition.

As we continue to integrate NTS’s operations into our business, we are evaluating our internal controls

over financial reporting, including internal controls related to NTS, following the Acquisition.

As a result of these integration activities,

certain internal controls may be changed.

We are permitted to exclude NTS from our assessment of internal controls over financial reporting

during the first year following the Acquisition.

If we fail to maintain adequate internal controls over financial reporting, we may be

subject to litigation or regulatory scrutiny and investors could lose confidence in our reported financial information, which could have

a negative effect on the trading price of our common stock.

We may record goodwill and other intangible

assets that could become impaired and result in material non-cash charges to our results of operations in the future .

We accounted for the Acquisition using the acquisition

method of accounting in accordance with the accounting principles generally accepted in the United States (“GAAP”).

the acquisition method of accounting, the assets and liabilities of NTS were recorded, as of completion, at their respective fair values

and added to those of the Company.

The reported financial condition and results of operations of the Company for periods after completion

of the Acquisition will reflect NTS’s balances and results after completion of the Acquisition but will not be restated retroactively

to reflect the historical financial position or results of operations of NTS for periods prior to the Acquisition.

Under the acquisition method of accounting, the

total purchase price is allocated to NTS’s tangible assets and liabilities and identifiable intangible assets based on their fair

values as of the Closing Date.

The excess of the purchase price over those fair values is recorded as goodwill.

We expect that the Acquisition

may result in the creation of goodwill based upon the application of the acquisition method of accounting.

To the extent goodwill or intangibles

are recorded and the values become impaired, we may be required to recognize material non-cash charges relating to such impairment.

operating results may be significantly impacted from both the impairment and the underlying trends in the business that triggered the

NTS historically relied on Newtek for managerial,

financial and accounting support and benefitted from Newtek’s referral network, and we expect to rely on Newtek’s referral

network in the future .

NTS historically relied on Newtek for managerial,

financial and accounting support to manage NTS’s business.

We may not be able to effectively manage our operations without the managerial

assistance of Newtek, and the Acquisition may result in the disruption of, or the loss of momentum in, our ongoing businesses or inconsistencies

in standards, controls, procedures and policies, either of which could negatively impact our ability to generate revenue and income at

the levels NTS historically performed.

In addition, NTS materially benefited from Newtek’s

referral network, including Newtek’s patented NewTracker software, to assist NTS in generating new customers and revenues.

historically approximately 40% of new NTS webhosting customers have resulted from internal and external referrals from Newtek without

material expenditures by NTS for marketing or advertising.

In connection with the Acquisition, we entered into a referral arrangement

with Newtek pursuant to which Newtek will continue to refer potential clients to us for a fee.

Our referral arrangement with Newtek is

terminable by either us or Newtek at any time.

If Newtek does not provide customer referrals to us at the same level it provided NTS,

or if Newtek terminates our referral arrangement, our ability to gain new customers would be materially adversely affected.

Newtek historically accounted for a material

portion of NTS’s revenue and income.

Newtek historically was NTS’s largest customer

in terms of revenue and income.

For example, during the fiscal year ended December 31, 2023 and the nine months ended September 30, 2024,

Newtek accounted for 16% and 27% of NTS’s revenue, respectively.

In connection with the Acquisition, we entered into master services

agreements with Newtek and Newtek Bank, National Association (“Newtek Bank”), pursuant to which we provide Newtek and Newtek

Bank with the same level of managed IT services at the same or similar billing rates as NTS provided.

If we are unable to deliver the

contracted services or a party terminates or breaches the agreements, or if Newtek or Newtek Bank fail to renew the agreements at the

end their term, the loss of revenues would materially impact our financial condition.

Legal and Regulatory Risks

We may be liable as a result of information retrieved from or

transmitted over the internet.

We may be sued for defamation, civil rights infringement,

negligence, copyright or trademark infringement, invasion of privacy, personal injury, product liability or under other legal theories

relating to information that is published or made available on our websites or applications.

These types of claims have been brought,

sometimes successfully, against online services in the past.

We also offer messaging services on our applications and we send emails

directly and through third parties to our users, which may subject us to potential risks, such as liabilities or claims resulting from

unsolicited email or spamming, lost or misdirected messages, security breaches, illegal or fraudulent use of email or personal information

or interruptions or delays in email service.

Our insurance does not specifically provide for coverage of these types of claims and, therefore,

may be inadequate to protect us against them.

In addition, we could incur significant costs in investigating and defending such claims,

even if we ultimately are not held liable.

If any of these events occur, our revenue could be materially adversely affected or we could

incur significant additional expense, and the market price of our securities may decline.

Changes in laws or regulations, including

laws and regulations that impact the use of the internet, such as internet neutrality laws, or laws that relate to content provided over

the internet or monitoring such content, could adversely affect our business, results of operations or financial condition.

The adoption of any laws or regulations that

adversely affect the growth or use of the internet, including laws governing internet neutrality, could decrease the demand for our products

and increase our cost of doing business.

In January 2018, the Federal Communications Commission (the “FCC”) released an order

that repealed the “open internet rules,” often known as “net neutrality,” which prohibited internet providers

in the United States from impeding access to most content, or otherwise unfairly discriminating against content providers like us.

rules also prohibited mobile providers from entering into arrangements with specific content providers for faster or better access over

their data networks.

The FCC order repealing the open internet rules went into effect in June 2018.

In response to this decision, California

and a number of states implemented their own net neutrality rules which largely mirrored the repealed federal regulations.

of Justice (“DOJ”) has filed suit to bar implementation of these state laws and their application remains uncertain.

19, 2023, the FCC adopted a new proposal to reclassify broadband internet access service as common carrier services and reinstate net

neutrality rules.

We cannot predict the outcome of similar litigation

or whether the latest FCC proposal or state initiatives regulating providers will be adopted, modified, overturned, or vacated by other

legal action, federal legislation, or the FCC, or the degree to which this repeal would adversely affect our business, if at all.

European Union similarly requires equal access to internet content.

If the FCC, Congress, the European Union or courts modify these open

internet rules, mobile providers may be able to limit our users’ ability to access our applications or make our applications a

less attractive alternative to our competitors’ applications, which could materially adversely affect our business, results of

operations and financial condition.

In addition, it is possible that a number of

additional laws and regulations may be adopted or construed to apply to us, including gambling laws.

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

offered for entertainment purposes only and do not offer an opportunity to win real money.

However, our video card games could in the

future become subject to gambling-related laws and regulations and expose us to civil and criminal penalties.

If were to become subject

to such laws and regulations, we might be required to seek licenses, authorizations or approvals from relevant regulators, the granting

of which may be dependent on us meeting certain capital and other requirements, and we may be subject to additional regulation and oversight,

such as reporting to regulators, all of which could significantly increase our operating costs.

Changes in current laws or regulations

or the imposition of new laws and regulations in the United States, Europe or elsewhere regarding these activities may lessen the growth

of video card game services and impair our business.

Changes in tax laws could materially affect

our financial condition, results of operations and cash flows.

The tax regimes we are subject to or operate

under, including income and non-income taxes, are unsettled and may be subject to significant change.

For example, the Inflation Reduction

Act (the “IRA”) was signed into law on August 16, 2022 and became effective on January 1, 2023.

We do not currently expect

that the IRA will have a material impact on our income tax liability.

We are unable to predict what changes to the tax laws of the U.S.

and other jurisdictions may be proposed or enacted in the future or what effect such changes would have on our business.

Any significant

increase in our future effective tax rate could have a material adverse impact on our business, financial condition, results of operations,

or cash flows.

If there are changes in laws or regulations

regarding privacy and the protection of user data, or if we fail to comply with such laws or regulations, we may face claims brought

against us by regulators or users that could adversely affect our business, results of operations or financial condition.

State, federal and international laws and regulations

govern the collection, use, retention, sharing and security of data that we receive from and about our users.

These laws can be particularly

restrictive in certain states and in countries outside of the United States.

In addition, the application and interpretation of these

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

The European Union has implemented a privacy

regulation called the GDPR that imposes a high level of regulatory scrutiny on our business’ processing of personal data from the

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

The FTC regularly investigates and brings enforcement

actions against companies that have used personally identifiable information in a deceptive or unfair manner or in violation of a posted

If we are accused of violating the terms of our privacy policy, implementing unfair privacy practices or otherwise breaching

data privacy laws, we may be forced to expend significant financial and managerial resources to defend against an action by the FTC,

European Data Protection Authorities, or other state or federal enforcement agencies.

Our user database holds the personal information

of our users and subscribers residing in the United States and other countries, and we could be sued by those users if any of the information

is misused or misappropriated.

Growing public concern about privacy and the

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

Regulations related to treatment of user data by online

services are 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:

CCPA, the CPRA,

which became effective on January 1, 2023, and expands upon the CCPA, 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

In addition, 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

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

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.

Future laws and regulations with respect to the collection, compilation,

use and publication of information and consumer privacy could result in limitations on our operations, increased compliance or litigation

expense, adverse publicity or loss of revenue, any of which could have a material adverse effect on our business, financial condition

and results of operations.

Any failure, or perceived failure, by us to comply

with such laws and regulations, including FTC requirements or industry self-regulatory principles, could result in proceedings or actions

against us by governmental entities or others, which could potentially have an adverse effect on our business.

As a result of such a

failure, or perceived failure, we may be subject to a claim or class-action lawsuit regarding our online services.

The successful assertion

of a claim against us, or a regulatory action against us, could result in significant monetary damages, diversion of management resources

and require us to make significant payments and incur substantial legal expenses.

Any claims with respect to violation of privacy or

misappropriation of user data brought against us may have a material adverse effect on our business, results of operations and financial

It is also possible that we could be prohibited

from collecting or disseminating certain types of data, which could affect our ability to meet our users’ needs.

Customers could potentially expose us to

lawsuits for their lost profits or damages, which could impair our results of operations.

Because our services are critical to many of our

customers’ businesses, any significant disruption in our services could result in lost profits or other indirect or consequential

damages to our customers.

Although we generally require our customers to sign agreements that contain provisions attempting to limit our

liability for service outages, a court may not enforce any contractual limitations on our liability in the event that one of our customers

brings a lawsuit against us as the result of a service interruption or other Internet site or application problems that they may ascribe

The outcome of any such lawsuit would depend on the specific facts of the case and any legal and policy considerations that we

may not be able to mitigate.

In such cases, we could be liable for substantial damage awards that may exceed our insurance coverage by

unknown but significant amounts, which could materially and adversely impair our business, financial condition and results of operations.

As a technology service provider to U.S.

financial institutions, we are subject to regulation, supervision, and enforcement authority of numerous governmental and regulatory bodies

in the jurisdictions in which we operate, which includes banking regulators.

Because we are a technology service provider to

financial institutions and host, secure and manage banking software, we are subject to regular oversight and examination by the FFIEC,

which is an inter-agency body of federal banking regulators.

The FFIEC has broad discretion in the implementation, interpretation and

enforcement of banking and consumer protection laws.

Our failure to comply with these laws, or our failure to meet the supervisory expectations

of the banking regulators, could result in adverse action against us.

The regulators have the power to, among other things, enjoin “unsafe

or unsound” practices, require affirmative actions to correct any violation or practice, issue administrative orders that can be

judicially enforced, direct the sale of subsidiaries or other assets, and assess civil money penalties.

Our failure to comply with these

laws, or our failure to meet the supervisory expectations of the banking regulators, could result in adverse action against us, which

could have a material adverse impact on our business and results of operations.

Government regulation is continuously evolving

and, depending on its evolution, may adversely affect our business, financial condition and results of operations.

We are subject to varying degrees of regulation

in each of the jurisdictions in which we provide services.

Local laws and regulations, and their interpretation and enforcement, differ

significantly among those jurisdictions.

These regulations and laws may cover taxation, privacy, data protection, pricing, content, intellectual

property and proprietary rights, distribution, mobile communications, electronic device certification, electronic waste, electronic contracts

and other communications, consumer protection, web services, the provision of online payment services, unencumbered Internet access to

our services, the design and operation of websites and the characteristics and quality of services.

These laws can be costly to comply

with, can be a significant diversion to management’s time and effort and can subject us to claims or other remedies, as well as

negative publicity.

Many of these laws were adopted prior to the advent of the Internet and related technologies and, as a result, do

not contemplate or address the unique issues that the Internet and related technologies currently produce.

Some of the laws that do reference

the Internet and related technologies have been and continue to be interpreted by the courts, but their applicability and scope remain

largely uncertain.

Additionally,

the increasing focus on the risks and strategic importance of AI technologies has already resulted in regulatory restrictions that target

products and services capable of enabling or facilitating AI and may in the future result in additional restrictions impacting some or

all of our product and service offerings.

Concerns regarding third-party use of AI for purposes contrary to local governmental interests,

including concerns relating to the misuse of AI applications, models, and solutions, could result in unilateral or multilateral restrictions

on products that can be used for training, refining, and deploying large language models.

Such restrictions could limit the ability of

downstream customers and users worldwide to acquire, deploy, and use systems that include our products, software, and services, and negatively

impact our business and financial results.

Risks Related to Our Intellectual Property

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property rights has been a significant aspect of our business and has meaningfully contributed to our results of operations.

our success and ability to compete are often dependent upon the development of intellectual property for our applications.

We aim to protect our confidential proprietary

information, in part, by entering into confidentiality agreements and invention assignment agreements with all our employees, consultants,

advisors and any third parties who access or contribute to our proprietary know-how, information, or technology.

We also rely on trademark,

We have filed various applications

to protect aspects of our intellectual property, and we currently hold a number of issued patents.

In the future we may acquire additional

patents or patent portfolios, which could require significant cash expenditures.

However, third parties may knowingly or unknowingly

infringe our proprietary rights, third parties may challenge proprietary rights held by us, and pending and future trademark and patent

applications may not be approved.

In addition, effective intellectual property protection may not be available in every country in which

we operate or intend to operate our business.

In any of these cases, we may be required to

expend significant time and expense to prevent infringement or to enforce our rights.

Although we have taken measures to protect our

proprietary rights, others may offer products or concepts that are substantially similar to ours and compete with our business.

are unable to protect our proprietary rights or prevent unauthorized use or appropriation by third parties, the value of our brand and

other intangible assets may be diminished, and competitors may be able to more effectively mimic our service and methods of operations.

Any of these events could seriously harm our business.

If we are subject to intellectual property

infringement claims, it could cause us to incur significant expenses, pay substantial damages or royalties and prevent us from offering

our applications.

From time to time, third parties may claim that

our applications infringe or violate their intellectual property rights.

Any claims of infringement could cause us to incur significant

expenses and, if successfully asserted against us, could require that we pay substantial damages and prevent us from using licensed technology

that may be fundamental to our applications.

Even if we were to prevail, any litigation regarding intellectual property could be costly

and time-consuming and divert the attention of our management and key personnel from our business operations.

We maintain insurance to

protect against intellectual property infringement claims and resulting litigation, but such insurance may not cover or may not be sufficient

to cover all potential claims, liability or expenses.

We may also be obligated to indemnify our business partners in any such litigation,

which could further exhaust our resources.

Furthermore, as a result of an intellectual property challenge, we may be prevented from offering

our applications unless we enter into royalty, license or other agreements.

We may not be able to obtain such agreements at all or on

terms acceptable to us, and as a result, we may be precluded from offering our applications and services.

Risks Related to Ownership of Our Common Stock

protect our confidential proprietary information, in part, by entering into confidentiality agreements and invention assignment agreements

with all our employees, consultants, advisors and any third parties who access or contribute to our proprietary know-how, information,

or technology.

We also rely on trademark, copyright, patent, trade secret, and domain-name-protection laws to protect our proprietary

We have filed various applications to protect aspects of our intellectual property, and we currently hold eight patents.

future we may acquire additional patents or patent portfolios, which could require significant cash expenditures.

However, third parties

may knowingly or unknowingly infringe our proprietary rights, third parties may challenge proprietary rights held by us, and pending and

future trademark and patent applications may not be approved.

In addition, effective intellectual property protection may not be available

in every country in which we operate or intend to operate our business.

In any of these cases, we may be required to expend

significant time and expense to prevent infringement or to enforce our rights.

Although we have taken measures to protect our proprietary

rights, others may offer products or concepts that are substantially similar to ours and compete with our business.

If we are unable to

protect our proprietary rights or prevent unauthorized use or appropriation by third parties, the value of our brand and other intangible

assets may be diminished, and competitors may be able to more effectively mimic our service and methods of operations.

Any of these events

could seriously harm our business.

Intellectual property infringement claims

against us could cause us to incur significant expenses, pay substantial damages or royalties and prevent us from offering our products

and solutions.

Third parties have in the past, and may in the future, claim that our

products and solutions infringe or violate their intellectual property rights.

For instance, on March 7, 2025, Cisco Systems, Inc.

Cisco Technology, Inc.

filed a complaint against the Company in the U.S.

District Court for the District of Delaware, alleging that the

Company’s ManyCam software has infringed certain patents and seeking damages and injunctive relief.

Such claim, and any future claims

of infringement, could cause us to incur significant expenses and, if successfully asserted against us, could require that we pay substantial

damages and prevent us from using licensed technology that may be fundamental to our products and solutions.

Even if we were to prevail,

any litigation regarding intellectual property could be costly and time-consuming and divert the attention of our management and key personnel

from our business operations.

We maintain insurance to protect against intellectual property infringement claims and resulting litigation,

but such insurance may not cover or may not be sufficient to cover all potential claims, liability or expenses.

We may also be obligated

to indemnify our business partners in any such litigation, which could further exhaust our resources.

Furthermore, as a result of an intellectual

property challenge, we may be prevented from offering our products and solutions unless we enter into royalty, license or other agreements.

We may not be able to obtain such agreements at all or on terms acceptable to us, and as a result, we may be precluded from offering our

products and solutions.

Risks Related to Ownership of Our Common

Our common stock is historically thinly

traded, stockholders may be unable to sell at or near ask prices or at all and the price of our common stock may be volatile.

Historically, shares of our common stock were

thinly traded on the OTCQB and have typically been thinly traded following our uplist to The Nasdaq Capital Market (“Nasdaq”)

in 2021, meaning that the number of persons interested in purchasing our common stock at or near ask prices at any given time may be

relatively small or non-existent.

This situation is attributable to a number of factors, including the fact that we are a small company

that is relatively unknown to stock analysts, stockbrokers, institutional investors and others in the investment community that generate

or influence sales volume.

As a consequence, there may be periods of several days or more when trading activity in our shares is minimal

or non-existent, as compared to a seasoned issuer that has a large and steady volume of trading activity that will generally support

continuous sales without an adverse effect on stock price.

Historically, shares of our common stock have

been thinly traded The Nasdaq Capital Market (“Nasdaq”), meaning that the number of persons interested in purchasing our common

stock at or near ask prices at any given time may be relatively small or non-existent.

This situation is attributable to a number of factors,

including the fact that we are a small company that is relatively unknown to stock analysts, stockbrokers, institutional investors and

others in the investment community that generate or influence sales volume.

As a consequence, there may be periods of several days or

more when trading activity in our shares is minimal or non-existent, as compared to a seasoned issuer that has a large and steady volume

of trading activity that will generally support continuous sales without an adverse effect on stock price.

However, during certain periods, we have received,

and may continue to receive, a high degree of media coverage that is published or otherwise disseminated by third parties, including

blogs, articles, message boards and social and other media.

This may include coverage that is not attributable to statements made by

the Company or our Board of Directors.

Information provided by third parties may not be reliable or accurate and could materially impact

the trading price of our common stock, which could cause stockholders to lose their investments.

and may continue to receive, a high degree of media coverage that is published or otherwise disseminated by third parties, including blogs,

articles, message boards and social and other media.

This may include coverage that is not attributable to statements made by the Company

or our Board.

Information provided by third parties may not be reliable or accurate and could materially impact the trading price of our

common stock, which could cause stockholders to lose their investments.

The market prices and trading volume of our common

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our common stock to incur substantial losses.

We believe that the historical volatility and our historical market prices during such

periods reflected market and trading dynamics unrelated to our underlying business, or macro or industry fundamentals, and we do not

know if these dynamics will continue in the future.

We believe that the historical volatility and our historical market prices during such periods

reflected market and trading dynamics unrelated to our underlying business, or macro or industry fundamentals, and we do not know if these

dynamics will continue in the future.

Although our common stock is listed for trading

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level of our common stock may not be sustained.

Due to these conditions, stockholders may be unable to sell their common stock at or

near ask prices or at all if they desire to sell shares of common stock.

Due to these conditions, stockholders may be unable to sell their common stock at or near

ask prices or at all if they desire to sell shares of common stock.

The stock markets in general have experienced

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illiquidity and because the price for our common stock may suffer greater declines because of its price volatility.

The ownership of our common stock is significantly concentrated in a small number of investors, some of whom are affiliated with our

Board of Directors and management, which could prevent stockholders from having input on the course of our operations or otherwise lead

to actual or potential conflicts of interest.

As of March 11, 2024,

Jason Katz, our Chairman of the Board of Directors, Chief Executive Officer, Chief Operating Officer and President, and our largest stockholder,

Crew Delaware Trust B, beneficially owned an aggregate of approximately 26.0% of

our outstanding common stock.

The ownership of

our common stock is significantly concentrated in a small number of investors, some of whom are affiliated with our Board and management,

which could prevent stockholders from having input on the course of our operations or otherwise lead to actual or potential conflicts

As of March 14, 2025, Jason Katz, our Chairman of the Board, and our

Chief Executive Officer, and our largest stockholder, The J.

Crew Delaware Trust B, beneficially owned an aggregate of approximately 25.9%

of our outstanding common stock.

Crew Delaware Trust B is a trust formed by Mr.

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submitted for stockholder approval, including proposals regarding:

any merger, consolidation

or sale of all or substantially all of our assets;

the election of

members of our Board of Directors;

any amendment to

our Certificate of Incorporation, as amended (the “Certificate of Incorporation”).

● any merger, consolidation or

sale of all or substantially all of our assets;

● the election of members of

● any amendment to our Certificate

of Incorporation, as amended (the “Certificate of Incorporation”).

The current or increased

ownership position of any of these stockholders and/or their respective affiliates could delay, deter or prevent a change of control

or adversely affect the price that investors might be willing to pay in the future for our common stock.

In addition, the interests of

these stockholders and/or their respective affiliates may significantly differ from the interests of our other stockholders and they

may vote the common stock they beneficially own in ways with which our other stockholders disagree.

If we fail to maintain an effective system

of internal controls over financial reporting, we may not be able to accurately report our financial results or prevent fraud and our

business may be harmed and our stock price may be adversely impacted.

Effective internal controls over financial reporting

are necessary for us to provide reliable financial reports and to effectively prevent fraud.

Any inability to provide reliable financial

reports or to prevent fraud could harm our business.

The Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”) requires management

to evaluate and assess the effectiveness of our internal control over financial reporting.

In order to continue to comply with the requirements

of the Sarbanes-Oxley Act, we are required to continuously evaluate and, where appropriate, enhance our policies, procedures and internal

We have in the past failed, and may in the future fail, to maintain the adequacy of our internal controls over financial reporting.

Such failure could subject us to litigation or regulatory scrutiny and investors could lose confidence in the accuracy and completeness

of our financial reports.

We cannot provide any assurance that in the future we will be able to fully comply with the requirements of

the Sarbanes-Oxley Act or that management will conclude that our internal control over financial reporting is effective.

If we fail to

fully comply with the requirements of the Sarbanes-Oxley Act, our business may be harmed, and our stock price may decline.

Our results of operations are volatile

and difficult to predict, and our stock price may decline if we fail to meet the expectations of stockholders.

ownership position of any of these stockholders and/or their respective affiliates could delay, deter or prevent a change of control or

adversely affect the price that investors might be willing to pay in the future for our common stock.

In addition, the interests of these

stockholders and/or their respective affiliates may significantly differ from the interests of our other stockholders and they may vote

the common stock they beneficially own in ways with which our other stockholders disagree.

Our results of operations are volatile and

difficult to predict, and our stock price may decline if we fail to meet the expectations of stockholders.

Our revenue and results of operations could vary

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Any of these events could cause the market price of our common stock to fluctuate.

may contribute to the variability of our results of operations include:

changes in expectations

as to our future financial performance;

announcements by

us or our competitors of significant contracts, acquisitions, strategic partnerships or capital commitments;

market acceptance

of our new applications and enhancements to our existing applications;

the amount of advertising

and marketing that is available and spent on user acquisition campaigns;

disruptions in the

availability of our applications on third party platforms;

actual or perceived

violations of privacy obligations and compromises of subscriber data;

the entrance of

new competitors in our market whether by established companies or the entrance of new companies;

additions or departures

of key personnel and the cost of attracting and retaining application developers and other software engineers;

Factors that may

contribute to the variability of our results of operations include:

● changes in expectations as

to our future financial performance;

● announcements by us or our

competitors of significant contracts, acquisitions, strategic partnerships or capital commitments;

● market acceptance of our new

products and solutions;

● the amount of advertising and

marketing that is available and spent on customer campaigns;

● disruptions in the availability

of our applications on third party platforms;

● actual or perceived violations

of privacy obligations and compromises of customer data;

● the entrance of new competitors

in our market whether by established companies or the entrance of new companies;

● additions or departures of

key personnel and the cost of attracting and retaining application developers and other software engineers;

● general market conditions,

including market volatility and the impact of inflation;

developments in

connection with our current patent litigation or future patent litigation.

Given the rapidly evolving industry in which

we operate, our historical results of operations may not be useful in predicting our future results of operations.

In addition, metrics

available from third parties regarding our industry and the performance of our applications may not be indicative of our future financial

The issuance of shares upon the exercise

of stock options and unvested shares of restricted common stock may cause immediate and substantial dilution to our existing stockholders.

As of December 31, 2023, we had

approximately 550,164 shares of common stock that were issuable upon the exercise of vested outstanding stock options.

of shares upon the exercise of these options may result in substantial dilution to the equity interest and voting power of holders

of our common stock.

In the future, we may also issue additional shares

of common stock or other securities convertible into or exchangeable for shares of common stock.

Our Certificate of Incorporation currently

authorizes us to issue up to 25,000,000 shares of common stock, of which 9,222,157 shares (excluding treasury shares) were outstanding

as of December 31, 2023, and 10,000,000 shares of preferred stock with such designations, preferences and rights as determined by our

Board of Directors, of which none were outstanding as of December 31, 2023.

The issuance of additional shares of our common stock may

substantially dilute the ownership interests of our existing stockholders.

Furthermore, sales of a substantial amount of our common stock

in the public market, or the perception that these sales may occur, could reduce the market price of our common stock.

This could also

impair our ability to raise additional capital through the sale of our securities.

Because we have no current plans to pay

cash dividends on our common stock for the foreseeable future, a stockholder might not receive any return on investment unless the stockholder

sold its shares of common stock for a price greater than that for which the shares were purchased.

We do not anticipate that we will declare or

pay any dividends on our common stock in the foreseeable future.

Consequently, stockholders will only realize an economic gain on their

investment in our common stock if the price appreciates.

Stockholders should not purchase our common stock expecting to receive cash

Because we currently do not pay dividends, and there may be limited trading in our common stock, stockholders may not have

any manner to liquidate or receive any payment on their common stock.

Therefore, our failure to pay dividends may cause stockholders

to not see any return on their common stock even if we are successful in our business operations.

In addition, because we do not pay

dividends, we may have trouble raising additional funds which could affect our ability to expand our business operations.

Our Certificate of Incorporation designates

the Court of Chancery of the State of Delaware as the sole and exclusive forum for certain types of actions and proceedings that may

be initiated by our stockholders, which could limit our stockholders’ ability to obtain a favorable judicial forum for disputes

with us or our directors, officers, employees, or stockholders.

Our Certificate of Incorporation provides that,

subject to limited exceptions, the Court of Chancery of the State of Delaware will be the sole and exclusive forum for any (i) derivative

action or proceeding brought on behalf of our Company, (ii) action asserting a claim of breach of a fiduciary duty owed by any director,

officer, employee, agent, or stockholder of our Company to the Company or the Company’s stockholders, (iii) action asserting a

claim against the Company or any director, officer, employee, agent, or stockholder of the Company arising pursuant to any provision

of the Delaware General Corporation Law or our Certificate of Incorporation or our Amended and Restated By-Laws, as amended, or (iv)

action asserting a claim against the Company or any director, officer, employee, agent, or stockholder of the Company governed by the

internal affairs doctrine.

This exclusive forum provision applies to state and federal law claims, although our stockholders will not

be deemed to have waived our compliance with the federal securities laws and the rules and regulations thereunder.

In addition, our Amended and Restated Bylaws

provide that, unless the Company consents in writing to the selection of an alternative forum, the federal district courts of the United

States are, to the fullest extent permitted by law, the exclusive forum for the resolution of any complaint asserting a cause of action

arising under the Securities Act.

Any person or entity purchasing or otherwise acquiring any interest in shares of our capital stock

shall be deemed to have notice of and to have consented to these provisions in our Certificate of Incorporation and Amended and Restated

These choice of forum provisions may limit a stockholder’s ability to bring a claim in a judicial forum that it finds favorable

for disputes with us or our directors, officers, or other employees, which may discourage such lawsuits against us and our directors,

officers and employees.

Investor relations activities, nominal

“float” and supply and demand factors may affect the price of our common stock.

● developments in connection

with our current patent litigation or future patent litigation.

Given the rapidly evolving industry in which we

operate, our historical results of operations may not be useful in predicting our future results of operations.

In addition, metrics available

from third parties regarding our industry and the performance of our products and solutions may not be indicative of our future financial

Investor relations activities, nominal “float”

and supply and demand factors may affect the price of our common stock.

We have engaged an investor relations firm to

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and demand factors that would normally determine trading prices.

Securities regulators have often cited thinly-traded markets, small

numbers of holders and awareness campaigns as components of their claims of price manipulation and other violations of law when combined

with manipulative trading, such as wash sales, matched orders or other manipulative trading timed to coincide with false or touting press

Our activities or the activities of third parties, or the small number of potential sellers or small percentage of stock in

our public float, or determinations by purchasers or holders as to when or under what circumstances or at what prices they may be willing

to buy or sell stock, could artificially impact (or could be claimed by regulators to have affected) the normal supply and demand factors

that determine the price of our common stock.

Securities regulators have often cited thinly-traded markets, small numbers

of holders and awareness campaigns as components of their claims of price manipulation and other violations of law when combined with

manipulative trading, such as wash sales, matched orders or other manipulative trading timed to coincide with false or touting press releases.

Our activities or the activities of third parties, or the small number of potential sellers or small percentage of stock in our public

float, or determinations by purchasers or holders as to when or under what circumstances or at what prices they may be willing to buy

or sell stock, could artificially impact (or could be claimed by regulators to have affected) the normal supply and demand factors that

determine the price of our common stock.

If we are not able to comply with the applicable

continued listing requirements or standards of Nasdaq, Nasdaq could delist our securities.

Our common stock was approved for listing on

Nasdaq under the symbol “PALT” and began trading on Nasdaq on August 3, 2021.

However, our common stock may not continue

to be listed on Nasdaq in the future.

In order to maintain our listing on Nasdaq, we must satisfy minimum financial and other continued

listing requirements and standards, including those regarding director independence and independent committee requirements, minimum stockholders’

equity, minimum share price, and certain corporate governance requirements.

We may not be able to comply with the applicable listing

standards, and Nasdaq could delist our common stock as a result.

If our common stock is delisted from Nasdaq,

we may be unable to list our common stock on another national securities exchange.

Our common stock began trading on Nasdaq on August

However, our common stock may not continue to be listed on Nasdaq in the future.

In order to maintain our listing on Nasdaq,

we must satisfy minimum financial and other continued listing requirements and standards, including those regarding director independence

and independent committee requirements, minimum stockholders’ equity, minimum share price, and certain corporate governance requirements.

We may not be able to comply with the applicable listing standards, and Nasdaq could delist our common stock as a result.

If our common stock is delisted from Nasdaq, we

may be unable to list our common stock on another national securities exchange.

If our common stock is delisted by Nasdaq, our common

2 unchanged sentences

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 1A. Risk Factors