What changed in this filing

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Item 7. Management’s Discussion and Analysis

2026-03-17 compared with 2025-03-24 · 684 added, 650 removed, 58 unchanged (96% of the section changed)

MANAGEMENT’S DISCUSSION AND

ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

This Management’s Discussion and Analysis

of Financial Condition and Results of Operations is intended to provide a reader of our financial statements with a narrative from the

perspective of our management on our financial condition, results of operations, liquidity, and certain other factors that may affect

our future results.

The following discussion and analysis should be read in conjunction with our audited consolidated financial statements

and the accompanying notes thereto included in “Item 8.

Financial Statements and Supplementary Data.” Except where expressly

provided, all information relates to the Company prior to the Transactions (defined below).

Forward-Looking Statements

In addition to historical financial information,

the following discussion and analysis contains forward-looking statements that involve risks, uncertainties and assumptions.

See “Forward-Looking

Statements.” Our results and the timing of selected events may differ materially from those anticipated in these forward-looking

statements as a result of many factors, including those discussed under “Item 1A.

Risk Factors” in this Annual Report on Form

10-K (the “Annual Report on Form 10-K”).

Prior to the completion of the Transactions, we

operated a network of consumer applications.

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

collection of video-based communities.

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

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

existing telephone number.

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

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

apps and distance learning tools.

As of January 2, 2025, we provide a comprehensive

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

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

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

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

Our IT and Cloud-Based Solutions

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Management’s Discussion and Analysis of Financial Condition and Results of Operations is intended to provide a reader of our financial

statements with a narrative from the perspective of our management on our financial condition, results of operations, liquidity, and

certain other factors that may affect our future results.

The following discussion and analysis should be read in conjunction with our

audited consolidated financial statements and the accompanying notes thereto included in “Item 8.

Financial Statements and Supplementary

Data.” Except where expressly provided, all information for the fiscal year ended December 31, 2024 relates to the Company prior

to the Transactions (defined below) and all information for the fiscal year ended December 31, 2025 relates to the Company following

the Transactions.

Forward-Looking

addition to historical financial information, the following discussion and analysis contains forward-looking statements that involve

risks, uncertainties and assumptions.

See “Forward-Looking Statements.” Our results and the timing of selected events may

differ materially from those anticipated in these forward-looking statements as a result of many factors, including those discussed under

Risk Factors” in this Annual Report on Form 10-K (the “Annual Report on Form 10-K”).

provide a comprehensive range of IT-related services, including managed IT security services, secure private cloud hosting, managed backup

and disaster recovery, professional services, procurement services, web hosting, and other related services including consulting and

implementing technology solutions for large enterprise and commercial clients across the United States as well as small-and-medium sized

We also offer and support our ManyCam software,

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

conferencing apps and distance learning tools.

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

to the completion of the Transactions, we operated a network of consumer applications.

Our product portfolio included Paltalk, Camfrog

and Tinychat, which together hosted a large collection of video-based communities.

Our other products included Vumber, a telecommunications

service provider.

Following the Divestiture, we are no longer engaged in the business of providing video-based, live streaming, virtual

camera and telecommunications software to consumers, as and to the extent such businesses were previously conducted by us pursuant to

the Vumber, Paltalk and Camfrog applications.

In addition, prior to the Closing Date (defined below), we ceased all operations of our

Tinychat service and application.

IT and Cloud-Based Solutions

We sell and provide a range of services across

five core areas, each as further described below:

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

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

Managed IT Security Services

Our managed IT security services provide clients

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

Our managed IT security

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

as well as help desk support for users.

Professional Services

Our professional services include the design and

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

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

systems and software and IT cost management.

Procurement Services

We offer two types of procurement services to

our customers.

We can either:

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

the products to our end customer, or (ii) obtain hardware or software on behalf of our customers and perform additional configuration

and/or add additional inputs to the products before the products are shipped to our customer.

In the instance where we sell hardware and

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

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

Secure Private Cloud Hosting

Our secure private cloud hosting offerings include

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

for the business-critical applications and client data.

We operate a secure private cloud from private suites in completely isolated areas

that are leased within two Tier 3 data center facilities located in Phoenix, Arizona, and Edison, New Jersey (the “Data Centers”),

pursuant to license agreements that extend until 2027 and 2026, respectively.

Although we do not own or operate the Data Centers, we aim

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

secure and flexible cloud services.

six core areas, each as further described below:

(i) managed IT security services, (ii) secure private cloud hosting, (iii) managed backup

and disaster recovery, (iv) professional services, (v) procurement services and (vi) web hosting.

IT Security Services

managed IT security services provide clients with ongoing management and support of their IT systems and services under a subscription

or contract-based model.

Our managed IT security services include proactive monitoring, regular system maintenance, comprehensive cybersecurity

management, data backup, and disaster recovery, as well as help desk support for users.

Managed IT security services are intended to

ensure that a client’s IT infrastructure and services remain operational, secure and optimized.

Private Cloud Hosting

secure private cloud hosting offerings include a digital infrastructure which consists of dedicated and fully isolated cloud environments

designed to deliver security, control and compliance for business-critical applications and client data.

We operate a secure private cloud from private

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

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

As of December 31, 2025, the terms of the license

agreements for the Data Centers located in Arizona and New Jersey extended through 2027 and 2026, respectively.

Subsequent to year end,

we amended our agreement with the Data Center in Phoenix, Arizona through August 31, 2032.

With respect to the Data Center in Edison,

New Jersey, we expect to either enter into a lease extension by the end of the lease term or lease private suites at another Tier 3 data

center facility.

Although we do not own or operate the Data Centers, we aim to use the high-level operations and standards provided by

the Data Centers through our license agreements to provide our customers with secure and flexible cloud services.

The Data Centers each

conform to The Uptime Institute’s Tier 3 Certification, which is a globally recognized standard for validating critical data center

infrastructure.

The Tier 3 classification provides us with a degree of confidence that the Data Centers provide the necessary power, cooling,

maintenance, and fault tolerance required for secure and reliable operations.

Our critical infrastructure, hosted within the Data Centers,

is designed to meet and exceed Tier 3 standards in all relevant categories.

This allows us to deliver secure and compliant services to

customers within heavily regulated industries, including financial services and healthcare, and other industries.

Additionally, we incorporate

a redundant, carrier-neutral network design for communications paths, along with multiple hosting locations for our services, which improve

the availability and resilience of our cloud services.

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

6 unchanged sentences

client’s unique business needs.

In the future, we plan to make arrangements with third parties to incorporate AI features into our

secure private cloud offerings.

Managed Backup and Disaster Recovery

Our managed backup and disaster recovery solutions

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

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

We utilize advanced backup technologies with automated,

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

Our web hosting services consist of several advanced

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

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

Our web hosting services include

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

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

environment for our customers’ online presence.

Our ManyCam Software Product

Following the Transactions, we continue to support

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

platforms, video conferencing apps and distance learning tools.

The ManyCam software provides multiple camera feeds, backgrounds and effects

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

We anticipate integrating ManyCam as an offering for our

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

As a result of the Transactions, we are no longer

engaged in the business of providing video-based, live streaming, virtual camera and telecommunications software to consumers, as and

to the extent such businesses were previously conducted by us and our subsidiaries.

Recent Developments

The Acquisition

On January 2, 2025 (the “Closing Date”),

we completed the acquisition of Newtek Technology Solutions, Inc., a New York corporation (“NTS”), pursuant to that certain

Agreement and Plan of Merger (the “Acquisition Agreement”), by and among us, PALT Merger Sub 1, Inc., a New York corporation

and our direct and wholly owned subsidiary (“First Merger Sub”), PALT Merger Sub 2, LLC, a Delaware limited liability company

and our direct and wholly owned subsidiary (“Second Merger Sub”), NTS and NewtekOne, Inc., a Maryland corporation and the

sole stockholder of NTS (“Newtek”).

Pursuant to the terms of the Acquisition Agreement, on the Closing Date:

(i) NTS merged

with and into First Merger Sub, with NTS continuing as the surviving entity (the “Interim Surviving Entity” and such merger,

the “First Step Merger”), and (ii) immediately following the consummation of the First Step Merger, the Interim Surviving

Entity merged with and into Second Merger Sub (the “Second Step Merger” and, together with the First Step Merger, the “Acquisition”),

with the Second Merger Sub surviving as our wholly owned subsidiary (in such capacity, the “Surviving Entity”).

the closing of the Acquisition (the “Acquisition Closing”), we changed our name from “Paltalk, Inc.” to “Intelligent

Protection Management Corp.”

The aggregate consideration we delivered to Newtek

at the Acquisition Closing consisted of (i) $4,000,000 in cash (as adjusted pursuant to the Acquisition Agreement, the “Acquisition

Closing Cash Consideration”) and (ii) 4,000,000 shares of our Series A Non-Voting Common Equivalent Stock (the “Series A Preferred

Stock” and such shares issued at the Acquisition Closing, the “Acquisition Closing Stock Consideration” and together

with the Acquisition Closing Cash Consideration, the “Acquisition Closing Consideration”).

The Series A Preferred Stock will

automatically convert into one share of our common stock, par value $0.001 per share (subject to certain customary anti-dilution adjustments),

upon the occurrence of certain qualifying transfers by Newtek to third parties.

In addition to the Acquisition Closing Consideration,

Newtek is entitled to earn-out payments under certain circumstances.

For more information, see the “ Liquidity and Capital Resources ”

section below.

The Divestiture

On the Closing Date and prior to the Acquisition

Closing, we completed the sale to Meteor Mobile Holdings, Inc., a Delaware corporation (“Meteor Mobile”), of our telecommunications

services provider, “Vumber”, as well as our “Paltalk” and “Camfrog” applications and certain assets

and liabilities related to such services provider and applications (the “Transferred Assets” and such sale, the “Divestiture”)

pursuant to that certain Asset Purchase Agreement (the “Divestiture Agreement”), by and among the us, our wholly owned subsidiaries

Paltalk Holdings, Inc.

(“Paltalk Holdings”), Paltalk Software, Inc., Camshare, Inc., A.V.M.

Software, Inc., and Vumber, LLC

(collectively, the “Sellers”), and Meteor Mobile.

As a result of the Divestiture, we are no longer engaged in the business

of providing video-based, live streaming, virtual camera and telecommunications software to consumers, as and to the extent such businesses

were previously conducted by us pursuant to the “Vumber,” “Paltalk” and “Camfrog” applications (the

In addition, prior to the Acquisition Closing, we ceased all operations of our “Tinychat” service

and application.

The consideration delivered by Meteor Mobile to

us at the closing of the Divestiture consisted of (i) $1,350,000 in cash and (ii) the assumption of all of the liabilities of the Sellers

arising out of, or relating to, the Business or the Transferred Assets, other than certain excluded liabilities (the “Divestiture

Closing Consideration”).

In connection with the Divestiture, we are entitled to earn-out payments under certain circumstances.

more information, see the “ Liquidity and Capital Resources ” section below.

Board Appointments

Pursuant to the Acquisition Agreement, we agreed

to cause one representative nominated by Newtek (the “Newtek Representative”) to be appointed to our Board of Directors (the

“Board”) promptly following the closing of the Acquisition.

Newtek designated Barry Sloane, who is currently Newtek’s

Chairman, Chief Executive Officer and President, as the Newtek Representative.

Effective as of January 7, 2025, the Board increased

the size of the Board from five (5) directors to seven (7) directors and appointed Mr.

Sloane to the Board, to serve in such capacity

until our 2025 annual meeting of stockholders (the “2025 Annual Meeting”) and until his successor is duly elected and qualified

or until his earlier death, disqualification, resignation or removal.

Sloane was not appointed to any committee of the Board.

In order for the majority of the Board to be comprised

of independent directors in accordance with Rule 5605(b) of the listing rules of The Nasdaq Stock Market, LLC and as a result of his expertise

in cloud infrastructure and applications and artificial intelligence, the Board also appointed Sidney Rabsatt to the Board, effective

as of January 7, 2025.

Rabsatt will serve in such capacity until the 2025 Annual Meeting and until his successor is duly elected and

qualified or until his earlier death, disqualification, resignation or removal.

Rabsatt was also appointed to serve on the Strategic

Transactions Committee of the Board.

Patent Litigation

On July 23, 2021, Paltalk

Holdings filed a patent infringement lawsuit (the “Lawsuit”) against WebEx Communications, Inc., Cisco WebEx LLC, and Cisco

Systems, Inc.

(collectively, “Cisco”), in the U.S.

District Court for the Western District of Texas (the “Court”).

We alleged that certain of Cisco’s products infringed U.S.

We actively engage with third parties to enhance our secure private cloud offerings with artificial

intelligence (“AI”) features and benefits.

Backup and Disaster Recovery

managed backup and disaster recovery solutions provide comprehensive protection for customers’ critical data and IT infrastructure,

which is intended to ensure business continuity and rapid recovery in the event of data loss, cyberattacks or system failures.

advanced backup technologies with automated, regular data backups, off-site replication and secure storage to prevent data corruption

Our disaster recovery solutions are designed to offer quick restoration of systems and data with minimal downtime, supported

by flexible recovery plans tailored to meet customers’ specific needs.

With continuous monitoring, end-to-end encryption, and expert

support available 24/7, we aim to ensure that our customers’ data is secure, accessible and compliant with industry standards.

Pricing for our managed backup and disaster recovery solutions is based upon the customer contract and depends on the amount of backup

storage needed.

Customers are typically charged set rates per the contract and are charged monthly based on usage.

Our professional services include the design and

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

and configuration, hybrid or cloud computing solutions, website development, developing or integrating systems and software, and IT cost

In addition, we are planning to launch an AI Data Readiness solution in the second quarter of 2026 that we believe will improve

the reliability, security, and outcome of adopting AI technologies by assessing, structuring, and securing business data in a safe and

effective manner.

offer two types of procurement services to our customers.

We can either:

(i) obtain software and hardware products on behalf of our customers,

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

and perform additional configuration and/or add additional inputs to the products before the products are shipped to our customers.

the instance where we sell hardware and software products as a solution bundled with services, we typically obtain the products or software

from our vendors, add the additional inputs/configuration as detailed in the customer contract, and then ship the products to the end

For each type of procurement service, our customers have their own negotiated contract and payment terms.

web hosting services consist of several advanced security measures, including Secure Sockets Layer and Transport Layer Security (“SSL/TLS”)

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

Our web hosting services include features such as regular data backups, web application firewalls, strict access control policies and

continuous monitoring and expert support, all of which are intended to ensure our customers’ compliance with industry standards

and provide a reliable and secure environment for our customers’ online presence.

Our web hosting services are designed to provide

customer websites with an additional layer of protection from cyber attacks and threats.

ManyCam Software Product

addition to our IT and cloud-based solutions, we offer and support our ManyCam software, which is a live streaming software and virtual

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

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

and documents.

We cross sell ManyCam as an offering for our customers and seek to optimize our cross-selling efforts of ManyCam with

our other technology solutions.

a result of the Transactions, we are no longer engaged in the business of providing video-based, live streaming, virtual camera and telecommunications

software to consumers, as and to the extent such businesses were previously conducted by us and our subsidiaries.

January 2, 2025 (the “Closing Date”), we completed the acquisition of Newtek Technology Solutions, Inc., a New York corporation

(“NTS”), pursuant to that certain Agreement and Plan of Merger (the “Acquisition Agreement”), by and among us,

PALT Merger Sub 1, Inc., a New York corporation and our direct and wholly owned subsidiary (“First Merger Sub”), PALT Merger

Sub 2, LLC, a Delaware limited liability company and our direct and wholly owned subsidiary (“Second Merger Sub”), NTS and

NewtekOne, Inc., a Maryland corporation and the sole stockholder of NTS (“Newtek”).

Pursuant to the terms of the Acquisition

Agreement, on the Closing Date:

(i) NTS merged with and into First Merger Sub, with NTS continuing as the surviving entity (the “Interim

Surviving Entity” and such merger, the “First Step Merger”), and (ii) immediately following the consummation of the

First Step Merger, the Interim Surviving Entity merged with and into Second Merger Sub (the “Second Step Merger” and, together

with the First Step Merger, the “Acquisition”), with the Second Merger Sub surviving as our wholly owned subsidiary (in such

capacity, the “Surviving Entity”).

Following the closing of the Acquisition (the “Acquisition Closing”), we changed

our name from “Paltalk, Inc.” to “Intelligent Protection Management Corp.”

aggregate consideration we delivered to Newtek at the Acquisition Closing consisted of (i) $4,000,000 in cash (as adjusted pursuant to

the Acquisition Agreement, the “Acquisition Closing Cash Consideration”) and (ii) 4,000,000 shares of our Series A Non-Voting

Common Equivalent Stock (the “Series A Preferred Stock” and such shares issued at the Acquisition Closing, the “Acquisition

Closing Stock Consideration” and together with the Acquisition Closing Cash Consideration, the “Acquisition Closing Consideration”).

The Series A Preferred Stock will automatically convert into one share of our common stock, par value $0.001 per share (subject to certain

customary anti-dilution adjustments), upon the occurrence of certain qualifying transfers by Newtek to third parties.

In addition to

the Acquisition Closing Consideration, Newtek is entitled to earn-out payments under certain circumstances.

For more information, see

the “ Liquidity and Capital Resources ” section below.

the Closing Date and prior to the Acquisition Closing, we completed the sale to Meteor Mobile Holdings, Inc., a Delaware corporation

(“Meteor Mobile”), of our telecommunications services provider, “Vumber”, as well as our “Paltalk”

and “Camfrog” applications and certain assets and liabilities related to such services provider and applications (the “Transferred

Assets” and such sale, the “Divestiture”) pursuant to that certain Asset Purchase Agreement (the “Divestiture

Agreement”), by and among the us, our wholly owned subsidiaries Paltalk Holdings, Inc.

(“Paltalk Holdings”), Paltalk

Software, Inc., Camshare, Inc., A.V.M.

Software, Inc., and Vumber, LLC (collectively, the “Sellers”), and Meteor Mobile.

As a result of the Divestiture, we are no longer engaged in the business of providing video-based, live streaming, virtual camera and

telecommunications software to consumers, as and to the extent such businesses were previously conducted by us pursuant to the “Vumber,”

“Paltalk” and “Camfrog” applications (the “Business”).

In addition, prior to the Acquisition Closing,

we ceased all operations of our “Tinychat” service and application.

consideration delivered by Meteor Mobile to us at the closing of the Divestiture consisted of (i) $1,350,000 in cash and (ii) the assumption

of all of the liabilities of the Sellers arising out of, or relating to, the Business or the Transferred Assets, other than certain excluded

liabilities (the “Divestiture Closing Consideration”).

In connection with the Divestiture, we are entitled to earn-out payments

under certain circumstances.

For more information, see the “ Liquidity and Capital Resources ” section below.

Loan Agreement and Credit Agreement and Revolving Promissory Note

April 10, 2025, we, Intelligent Protection LLC, our wholly owned subsidiary (“IPM LLC”), and Newtek Bank, National Association

(“Newtek Bank”), a subsidiary of Newtek, entered into that certain business loan agreement and that certain credit agreement

and revolving promissory note (together, the “Loan Agreements”), which provide for a secured revolving line of credit to

us and IPM LLC in the maximum amount of $1,000,000 on the terms and conditions set forth in the Loan Agreements (the “Facility”).

The Loan Agreements are secured by substantially all of our assets and the assets of IPM LLC.

The Facility will mature on April 10, 2026.

As of the date of this Annual Report on Form 10-K, no amounts were outstanding under the Facility.

For more information regarding the

Facility, see the “ Liquidity and Capital Resources ” section below.

Repurchase Plan

May 8, 2025, our Board of Directors (the “Board”) approved a stock repurchase plan for up to $400,000 of our outstanding

common stock (the “Stock Repurchase Plan”), which expires on the one-year anniversary of such date.

Shares may be repurchased

from time-to-time in open market transactions at prevailing market prices, in privately negotiated transactions or by other means in

accordance with federal securities laws, including Rule 10b5-1 programs, and the Stock Repurchase Plan may be suspended or discontinued

The actual timing, number and value of shares repurchased will be determined by a committee of the Board at its discretion

and will depend on a number of factors, including the market price of our common stock, general market and economic conditions, alternative

investment opportunities and other corporate considerations.

On July 23, 2021, Paltalk Holdings filed a patent

infringement lawsuit (the “Lawsuit”) against WebEx Communications, Inc., Cisco WebEx LLC, and Cisco Systems, Inc.

(collectively,

“Cisco”), in the U.S.

District Court for the Western District of Texas (the “Trial Court”).

We alleged that certain

of Cisco’s products infringed U.S.

6,683,858, and that we were entitled to damages.

On August 29, 2024, the

jury awarded us $65.7 million (the “Award”) in a jury verdict in connection with the Lawsuit.

On October 8, 2024, an order

granting a motion for final judgment (the “Final Judgment”) was entered into in the Court in connection with the Lawsuit.

The Final Judgment was entered in our favor in the amount of the Award and started the time for filing any post-trial motions or appeal.

The exact amount of the

Award proceeds to be received by us will be determined based on a number of factors and will reflect the deduction of significant litigation-related

expenses, including legal fees.

Consequently, we estimate that we would receive no more than one third of the gross proceeds in connection

with the Award, subject to post-trial proceedings (including any potential appellate proceedings by Cisco).

We have not recorded any gain

contingency in connection with the Award.

Pre-Transaction Operational Highlights

Operational highlights during the year ended December

over 18 months, we identified a business in a complimentary industry, signed definitive documents to acquire a business approximately

three times our revenue size, divested from our video-based businesses and, subsequent to year end, closed on these transformative transactions;

● revenue from continuing operations increased by 14.2% to

approximately $1.1 million compared to $1.0 million for the year ended December 31, 2023, as sales from ManyCam increased;

net loss increased by 689.5% to $8.4 million for the year ended December 31, 2024, compared to net loss of $1.1 million for the year ended December 31, 2023, which increase included a one-time non-cash charge of $3.8 million of as a result of the impairment loss in connection with the Divestiture, as well as one time legal and accounting expenses of $1.8 million incurred in connection with the Acquisition;

● net loss from continuing operations increased by 58.9% to a net loss

of $4.3 million for the year ended December 31, 2024, compared to net loss of $2.7 million for the year ended December 31, 2023;

● compared to the prior year period, cash flows used in operations increased

by $1.9 million to $3.0 million for the year ended December 31, 2024, as decreases in cost of revenue and marketing expense were offset

by increased professional fees in connection with the Transactions.

On August 29, 2024, the jury awarded us $65.7

million (the “Award”) in a jury verdict in connection with the Lawsuit.

On October 8, 2024, an order granting a motion for

final judgment (the “Final Judgment”) was entered into in the Trial Court in connection with the Lawsuit in our favor of the

Company in the amount of the Award and started the time for filing any post-trial motions or appeal.

In response to the Final Judgment, Cisco filed

a motion for Judgment as a Matter of Law (“JMOL”) with the Trial Court.

On August 27, 2025, the Trial Court denied Cisco’s

JMOL as to validity and infringement.

However, the Trial Court granted Cisco’s motion for a new trial with respect to damages.

October 29, 2025, the Trial Court ordered a motions hearing set for November 12, 2025 to consider our motion for reconsideration;

however, on November

11, 2025, the Trial Court denied our motion for reconsideration.

Cisco also appealed the Trial Court judgment of

validity and infringement (the “Appeal”) to the U.S.

Court of Appeals for the Federal Circuit (the “Appeals Court”).

Each party is expected to complete and submit its briefs with respect to the Appeal by March 31, 2026.

Upon submission of such briefs,

the Appeals Court will then decide whether the parties will appear to argue the Appeal or to render a decision on the Appeal based on

the briefs submitted by each party.

The exact amount of the Award proceeds to be received

by us will be determined based on a number of factors and will reflect the deduction of significant litigation-related expenses, including

Consequently, we estimate that we would receive no more than one third of the gross proceeds in connection with the Award,

subject to post-trial proceedings (including any potential appellate proceedings by Cisco).

We have not recorded any gain contingency

in connection with the Award.

On March 7, 2025, Cisco Systems, Inc.

Technology, Inc.

filed a complaint against us in the U.S.

District Court for the District of Delaware, alleging that our ManyCam software

has infringed U.S.

8,830,293 and 8,941,708 and seeking damages and injunctive relief.

We intend to vigorously defend against

these claims.

In October 2025, we filed an inter partes review (“IPR”) with the Patent Review Board to invalidate Cisco Patents

8,830,293 and 8,941,708.

On February 24, 2026, the Patent Review Board denied the IPR related to Cisco Patent 8,941,708.

The Patent Review

Board has not yet rendered a decision on the validity of Cisco Patent 8,830,293.

We have not recorded any liability for this matter as we do not believe

a loss is probable, and we cannot estimate any reasonably possible loss or range of possible loss.

It is possible that an unfavorable

resolution to this matter could have an adverse effect on our results of operations, financial position or cash flows.

As of December

31, 2025, we had incurred approximately $0.7 million in expense for the year ended December 31, 2025 in defense of these claims.

Year 2025 Operational Highlights

highlights during the year ended December 31, 2025:

by Hewlett Packard Enterprise to be an accredited partner for its HPE Private Cloud AI solution;

announced the initiation of a collaboration with IT Ally, a trusted business and technology services provider focused on lower middle-market private equity firms and their portfolio companies;

began offering Aura to our customers, a leading AI-powered online safety solution for individuals and families, to help minimize the impact of data breaches, scams and other online threats on consumers;

entered into a reseller agreement with MindsDB, a leading open-source AI platform that delivers AI analytics capabilities for complex business questions, that can operate anywhere (on-prem, VPC, serverless);

rolled out our “Heroes Program” in October 2025 to provide a 10% discount for all of our products and services to all existing and future customers who qualify as Military, First Responder, Healthcare, Teachers or Veterinary business owners;

entered into a collaborative growth initiative to refer integrated communications, AI-driven analytics, and managed security and hosting solutions to our respective customers;

successfully achieved SOC 2 Type 1 compliance, a key milestone in our ongoing commitment to

safeguarding customer data and delivering trusted cybersecurity and cloud infrastructure solutions;

subsequent to year end, executed an extension of our existing Phoenix

data center colocation license agreement with an industry-leading data center provider through August 2032.

Financial highlights during the three months and year ended December

revenue for the year ended December 31, 2025 increased by 2050% to approximately $23.6 million compared to $1.1 million for the year ended December 31, 2024, as a result of the Acquisition;

revenue for the three months ended December 31, 2025 increased by 2092%

to approximately $6.1 million compared to $0.3 million for the three months ended December 31, 2024, as a result of the Acquisition;

sequential growth for the fourth quarter decreased by 1.7%, growth in managed information technology revenue increased by 4.3% compared

to the three months ended September 30, 2025;

operating loss from continuing operations for the three months ended December 31, 2025 was $0.8 million and included $0.7 million of non-cash expense, consisting of amortization and depreciation and share based compensation, compared to an operating loss from continuing operations of $1.6 million for the three months ended December 31, 2024, which included non-cash expenses of $0.2 million, subscriptions sales from ManyCam software as well as all of our general and administrative expenses, which included all professional fees and public company expenses;

operating loss from continuing operations for the year ended December 31, 2025 was $4.7 million and included $2.9 million of non-cash

expense, consisting of amortization and depreciation and share based compensation, compared to a operating loss from continuing operations

of $5.1 million for the year ended December 31, 2024;

which included non-cash expenses of $1.0 million, sales from ManyCam software as

well as all of our general and administrative expenses, which included all professional fees and public company expenses;

net loss from continuing operations for the three months ended December 31, 2025 totaled $0.6 million compared to a net loss from continuing operations of $1.4 million for the three months ended December 31, 2024;

this represents an improvement of over 55% over the prior year period and an improvement of over 41% compared to the previous quarter;

net loss from continuing operations for the year ended December 31, 2025 totaled $2.0 million compared to a net loss from continuing operations

of $4.3 million for the year ended December 31, 2024;

net loss for the year ended December 31, 2025 included approximately $0.7 million

of litigation expenses incurred in connection with the Cisco ManyCam Litigation (as described and defined below);

during the year ended

December 31, 2025, the increase in net loss was offset by us recording an income tax benefit during the first quarter of 2025 of approximately

$2.1 million in connection with the Transactions;

net loss decreased by 77% to $2.0 million for the year ended December 31, 2025, compared to net loss of $8.4 million for the year ended December 31, 2024;

the decrease in net loss compared to the prior year is related to a one-time non-cash charge of $3.8 million of as a result of the impairment loss in connection with the Divestiture, as well as one time legal and accounting expenses of $1.8 million incurred in connection with the Acquisition both recorded during the year ended December 31, 2024;

EBITDA for the three months ended December 31, 2025 was positive $5.0 thousand compared to negative $1.5 million for the three months ended

December 31, 2024, an improvement of 100% over the prior year period and an improvement of 102% compared to the previous quarter.

EBITDA for the year ended December 31, 2025 was negative $1.1 million compared to negative $4.4 million for the year ended December 31,

cash provided by operations was $0.1 million for the

three months ended December 31, 2025 compared to cash used in continuing operations of $1.5 million for the three months ended December

cash provided by operations was $1.1 million for the

year ended December 31, 2025 compared to cash used in operations of $3.0 million for the year ended December 31, 2024;

at December 31, 2025, we

had $8.4 million of cash and cash equivalents, including $1.0 million of restricted cash, on our balance sheet and no long-term debt.

Business Objectives

For the near term, our business objectives following

the Transactions include:

the near term, our business objectives following the Transactions include:

continuing the integration

of our comprehensive range of IT-related solutions;

● incorporating ManyCam as an

offering for our new customers and seek to optimize our cross-selling efforts with our other technology solutions;

incorporating ManyCam as

an offering for our new customers and seek to optimize our cross-selling efforts with our other technology solutions;

continuing to explore strategic

opportunities, including, but not limited to, potential mergers or acquisitions of other assets or entities that are synergistic to our

● continuing to defend our intellectual

Revenue Generation Following the Transactions

Following the Transactions, we now generate revenue

from our five core areas as described below:

Managed IT Security Services

Customers pay for our managed IT security services

on a subscription or contract-based model.

Customers typically pay a recurring fee, which is generally based on service level agreements

that define the specific services and performance metrics.

Professional Services

Customers are invoiced for our professional services

either based on a time and materials basis or on a straight-line basis for all fixed fee arrangements.

We are the principal in these transactions

as we control the specified good or service before it is transferred to the customer.

Additionally, we are primarily responsible for fulfillment

of the order and have pricing discretion.

As a result, we recognize revenue from our professional services revenue on a gross basis.

Procurement Services

Our procurement services include either (i) obtaining

software and hardware products on behalf of our customers, in which case our vendors drop ship the products to our end customer, or (ii)

obtaining hardware or software on behalf of our customers and performing additional configuration and/or add additional inputs to the

products before the products are shipped to our customer.

For both types of procurement services each customer has their own negotiated

contract and payment terms.

If a customer orders both hardware and additional configurations to those laptops, typically these will both

be covered under separate contracts.

The services provided are considered distinct as the additional configurations are not required for

the hardware purchased to operate effectively.

Customers are invoiced, and revenue is recognized, when the hardware purchased is shipped,

as control transfers to the customer free on board (“FOB”) shipping point.

We are an agent in these transactions because we

(i) do not obtain control over the product as products are drop shipped from their vendors directly to the customer;

(ii) have no inventory

risk and (iii) have general pricing discretion in our transactions with customers.

Our pricing discretion is limited by the going market

rate of our services offered by other providers.

Based on this assessment, we recognize revenue from procurement services on a net basis.

Additionally, certain procurement contracts with

customers include promises to transfer multiple products and services to a customer.

Determining whether products and services are considered

distinct performance obligations that should be accounted for separately versus together may require significant judgment.

Secure Private Cloud Hosting

When a cloud-based service includes both on-premises

software licenses and cloud services, judgment is required to determine whether the software license is considered distinct and accounted

for separately, or not distinct and accounted for together with the cloud service and recognized over time.

Certain cloud services depend

on a significant level of integration, interdependency, and interrelation between the desktop applications and cloud services, and are

accounted for together as one performance obligation.

Revenue from such cloud services is recognized ratably over the period in which

the cloud services are provided.

Our secure private cloud offerings include a digital

infrastructure which consists of servers which are dedicated to a single customer.

We offer secure private cloud offerings through our

Data Centers as well as off premise.

Our secure private cloud offerings typically are one performance obligation where we are providing

the cloud storage to the customer and customers pay a monthly fixed fee for the service.

Managed Backup and Disaster Recovery

Pricing for our managed backup and disaster recovery

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

Customers are typically charged set

rates per the contract and are charged monthly based on usage.

There are typically no upfront fees for these contracts.

Customers are

invoiced and revenue is recognized on a monthly basis.

Each customer of our web hosting solutions has

their own contract and payment terms.

Contract duration is typically between 1-4 years, although the term may vary based on the customer’s

Web hosting services customers pay a monthly fee and there are typically no upfront costs associated with web hosting services.

Customers are invoiced and revenue is recognized on a monthly basis.

Revenue Recognition

Following the Transactions, our revenue is measured

based on the consideration specified in a contract with a customer.

We contract with customers often include promises to transfer multiple

products and services.

Determining whether products and services are considered distinct performance obligations that should be accounted

for separately versus together may require significant judgment.

When a cloud-based service includes both on-premises software licenses

and cloud services, judgment is required to determine whether the software license is considered distinct and accounted for separately,

or not distinct and accounted for together with the cloud service and recognized over time.

Certain cloud services depend on a significant

level of integration, interdependency, and interrelation between the desktop applications and cloud services, and are accounted for together

as one performance obligation.

Revenue from cloud services is recognized ratably over the period in which the cloud services are provided.

We otherwise recognize revenue when it satisfies a performance obligation by transferring control of a product or service or by arranging

for the sale of a vendor’s products or service to a customer.

We recognize revenue from sale of services as

they perform the underlying services, typically based on time and materials basis based upon hours incurred for the performance completed

to date for which we have the right to consideration.

We recognize revenue on sales of goods at a point in time when customer takes control

of goods, which typically occurs when title and risk of loss have passed to the customer.

We recognize revenue on a gross basis for each

of its services and product offerings principally because it is primarily responsible for fulfilling the promise to provide specified

goods or service and it has discretion in establishing the price of specified good or service.

We classify our right to consideration in exchange

for deliverables as either a receivable or a contract asset (unbilled receivable).

A receivable is a right to consideration that is unconditional

, only the passage of time is required before payment is due).

For example, we recognize a receivable for revenue related

to our transaction or volume-based contracts when earned regardless of whether amounts have been billed.

Such receivables will be presented

in accounts receivable, net in our consolidated balance sheets.

We maintain an allowance for credit losses to provide for the estimated

amount of receivables that may not be collected.

The allowance is based upon an assessment of customer creditworthiness, historical payment

experience, the age of outstanding receivables, judgment, and other applicable factors.

A contract asset is a right to consideration that

is conditional upon factors other than the passage of time.

Contract assets will be presented in “current and other assets”

in our consolidated balance sheets and primarily relate to unbilled amounts on fixed-price contracts utilizing the output method of revenue

Our contract assets and liabilities are reported at the end of each reporting period.

The difference between the opening

and closing balances of the contract assets and deferred revenue primarily results from the timing difference between performance obligations

and the customer’s payment.

We receive payments from customers based on the terms established in their contracts, which may vary

generally by contract type.

Our contract assets and liabilities are reported

in a net position on a contract-by-contract basis at the end of each reporting period.

The difference between the opening and closing

balances of the contract assets and deferred revenue primarily results from the timing difference between performance obligations and

the customer’s payment.

We receive payments from customers based on the terms established in their contracts, which may vary generally

by contract type.

We sell hardware and software products on both

a stand-alone basis without any services and as a solution bundled with services.

When we provide a combination of hardware and software

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

software products or services that will be provided.

The total transaction price for an arrangement with multiple performance obligations

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

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

We estimate the price based

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

Our professional services include the design and implementation of a wide range of IT products and services.

Such services are typically

provided by us or third-party subcontractor vendors on a stand-alone basis.

Revenue Generation Prior to the Transactions

Prior to the completion of the Transactions, our

main sources of revenue were subscription revenue, which includes virtual gift revenue, and advertising revenue generated from users of

our former core video chat products, Paltalk and Camfrog, most of which is presented as discontinued operations.

Because we are no longer

engaged in the business of providing access to video-based live streaming, virtual camera and telecommunications software to consumers

following the Transactions, we will not generate subscription revenue or advertising revenue related to the Transferred Assets in the

We also generated revenue from subscriptions for our ManyCam software product, which is presented as continuing operations.

Subscription Revenue

Our video chat platforms generated revenue primarily

through subscription fees.

Our tiers of subscriptions provided users with unlimited video windows and levels of status within the community.

Multiple subscription tiers were offered in different durations depending on the product from one-, three-, six-, twelve-, and twenty-four-month

Longer-term plans (those with durations longer than one month) were generally available at discounted monthly rates.

membership benefits were offered in tiers, with the least membership benefits in the lowest paid tier and the most membership benefits

in the highest paid tier.

Our membership tiers were “Plus,” “Extreme,” “VIP” and “Prime”

for Paltalk and “Pro,” “Extreme” and “Gold” for Camfrog.

We also held occasional promotions that offer

discounted subscriptions and virtual gifts.

Subscriptions for ManyCam were generally offered in annual and two-year terms, with exceptions

made for enterprise sales.

We recognized revenue from monthly premium subscription

services beginning in the month in which the subscriptions are originated.

Revenues from multi-month (or annual) subscriptions were recognized

on a gross and straight-line basis over the length of the subscription period.

The unearned portion of subscription revenue was presented

as deferred revenue in the accompanying consolidated balance sheets.

We also offered virtual gifts to our users through

our Paltalk, Camfrog and TinyChat applications.

Users were able to purchase credits that could be redeemed for a host of virtual gifts

such as a rose, a beer, or a car, among other items.

Virtual gift revenue was recognized upon the users’ utilization of the virtual

gift and included in subscription revenue.

The unearned portion of virtual gifts revenue is presented as deferred revenue in the accompanying

consolidated balance sheets.

Advertising Revenue

We generated a portion of our revenue through

advertisements on our video platforms.

Advertising revenue was dependent upon the volume of advertising impressions viewed by active users

as well as the advertising inventory we place on our products.

We recognized advertising revenue as earned on a click-through, impression,

registration or subscription basis.

Measurements of impressions included when a user clicks on an advertisement (CPC basis), views an

advertisement impression (CPM basis), or registers for an external website via an advertisement by clicking on or through our application

Costs and Expenses

Cost of revenue

Cost of revenue consists primarily of compensation

(including stock-based compensation) and other employee-related costs, which prior to the Transactions, consisted of costs for personnel

engaged in data center and customer care functions, credit card processing fees, hosting fees, and data center rent and bandwidth costs.

Prior to the Transactions, cost of revenue also included compensation and other employee-related costs for technical personnel, consultants

and subcontracting costs relating to technology service revenue.

Sales and marketing expense

Prior to the Transactions, sales and marketing

expense consisted primarily of advertising expenditures and compensation (including stock-based compensation) and other employee-related

costs for personnel and consultants engaged in sales and sales support functions.

Advertising and promotional spend included online marketing,

including fees paid to search engines, and offline marketing, which primarily consists of partner-related payments to those who direct

traffic to our brands.

Product development expense

Prior to the Transactions, product development

expense, which related to the development of technology of our applications, consisted primarily of compensation (including stock-based

compensation) and other employee-related and consultant-related costs that are not capitalized for personnel engaged in the design, testing

and enhancement of service offerings as well as amortization of capitalized website development costs.

General and administrative expense

General and administrative expense consists primarily

of compensation (including non-cash stock-based compensation) and other employee-related costs for personnel engaged in executive management,

finance, legal, tax and human resources and facilities costs and fees for other professional services and cost of insurance.

administrative expense also includes amortization of intangible assets.

Our management relies on certain non-GAAP and/or

unaudited performance indicators to manage and evaluate our business.

The key performance indicators set forth below helped us evaluate

growth trends, establish budgets, measure the effectiveness of our advertising and marketing efforts and assess operational efficiencies.

We also discuss net cash provided by operating activities under the “Liquidity and Capital Resources” section below.

EBITDA is discussed below.

Net cash used in operating activities

opportunities, including, but not limited to, potential mergers or acquisitions of other assets or entities that are synergistic

to our businesses;

continuing to defend our

intellectual property.

main sources of revenue are described below.

As a result of the variability of contract and service type, some of the revenue we report

in each period is deferred revenue from contracts we entered into during previous periods.

This may make it difficult for us to quickly

increase revenue through the entry into new contracts in any period, and a decline in new or renewed contracts in any one quarter will

negatively affect our revenue in future quarters.

As a result, revenue generated in prior quarters may not provide a reliable indication

of future results.

IT Security Services

of our managed IT security services typically pay a recurring fee, often based on service-level agreements that define the specific services

and performance metrics.

Private Cloud Hosting

Our secure private cloud hosting offerings

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

control and compliance for business-critical applications and client data.

Customers of our secure private cloud hosting services

are generally invoiced on a monthly basis and pay a monthly fee, with revenue recognized on a monthly basis.

We operate a secure private cloud from private

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

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

As of December 31, 2025, the terms of the license

agreements for the Data Centers located in Arizona and New Jersey extended through 2027 and 2026, respectively.

Subsequent to year end,

we amended our agreement with the Data Center in Phoenix, Arizona through August 31, 2032.

With respect to the Data Center in Edison,

New Jersey, we expect to either enter into a lease extension by the end of the lease term or lease private suites at another Tier 3 data

center facility.

Although we do not own or operate the Data Centers, we aim to use the high-level operations and standards provided by

the Data Centers through our license agreements to provide our customers with secure and flexible cloud services.

The Data Centers each

conform to The Uptime Institute’s Tier 3 Certification, which is a globally recognized standard for validating critical data center

infrastructure.

The Tier 3 classification provides us with a degree of confidence that the Data Centers provide the necessary power, cooling,

maintenance, and fault tolerance required for secure and reliable operations.

Our critical infrastructure, hosted within the Data Centers,

is designed to meet and exceed Tier 3 standards in all relevant categories.

This allows us to deliver secure and compliant services to

customers within heavily regulated industries, including financial services and healthcare, and other industries.

Additionally, we incorporate

a redundant, carrier-neutral network design for communications paths, along with multiple hosting locations for our services, which improve

the availability and resilience of our cloud services.

leverage state-of-the-art security measures, including data encryption, network segmentation, advanced firewalls, multi-factor authentication

and continuous monitoring to safeguard against unauthorized access and cyber threats.

We believe our secure private cloud hosting provides

our clients with strong availability, data integrity and reliable performance, while meeting stringent compliance requirements.

private cloud hosting solutions are backed by 24/7 support from our expert team, with the goal of delivering secure, flexible and resilient

infrastructure tailored to each client’s unique business needs.

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

to incorporate artificial intelligence (“AI”) features into our secure private cloud offerings.

Revenue from such cloud services

is recognized ratably over the period in which the cloud services are provided.

Backup and Disaster Recovery

for our managed backup and disaster recovery solutions is based upon the customer contract and depends on the amount of backup storage

Customers are typically charged set rates per the contract and are charged monthly based on usage.

Revenue in connection with professional services

is generally recognized upon achievement of milestones or on a straight line basis for all fixed fee arrangements.

each type of procurement service, our customers have their own negotiated contract and payment terms.

When we provide a combination of

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

and the hardware and/or software products or services that will be provided.

The total transaction price for an arrangement with multiple

performance obligations is typically allocated at contract inception to each performance obligation in proportion to the stand-alone

selling price of the hardware or software.

The selling price is the price at which we would sell a promised good or service separately

to a customer.

We estimate the price based on observable inputs, including direct labor hours and allocable costs, or use observable

stand-alone prices when they are available.

of our customers has their own contract and payment terms with respect to our web hosting services.

The duration of such contracts is

typically between one and four years, although the term may vary based on the needs of each particular customer.

Customers of our web

hosting services are invoiced on a monthly basis and pay a monthly fee, with revenue recognized on a monthly basis.

also generate subscription revenue from monthly premium subscription services for our ManyCam software.

Subscription revenues are presented

net of refunds, credits and known and estimated credit card chargebacks.

During the year ended December 31, 2025 and 2024, subscriptions

were offered in durations of twelve-month and twenty-four-month terms.

All subscription fees, however, are paid by credit card at the

origination of the subscription regardless of the term of the subscription.

Revenues from multi-month subscriptions are recognized on

a straight-line basis over the period where the service is offered to the customer, indicated by length of the subscription term purchased.

The unearned portion of subscription revenue is presented as deferred revenue in the accompanying consolidated balance sheets.

of revenue consists primarily of compensation and other employee-related costs for personnel engaged in data center and customer care

functions, credit card processing fees, hosting fees, data center rent, bandwidth costs and, in the case of procurement, revenue the

cost of the hardware and/or subscriptions.

Cost of revenue also includes compensation and other employee-related costs for technical

personnel, consultants and subcontracting costs.

marketing and product development expense

marketing and product development expense consists primarily of (i) advertising expenditures and compensation (including stock-based

compensation) and other employee-related costs for personnel and consultants engaged in sales and sales support marketing and development

functions and (ii) development of the technology of our applications, and consultant-related costs that are not capitalized for personnel

engaged in the design, testing and enhancement of service offerings.

Advertising and promotional spend includes online marketing, including

fees paid to search engines and offline marketing, which primarily consists of partner-related payments to those who direct traffic to

and administrative expense

and administrative expense consists primarily of compensation (including non-cash stock-based compensation) and other employee-related

costs for personnel engaged in executive management, finance, legal, tax and human resources and facilities costs and fees for other

professional services and cost of insurance.

and amortization expense

and amortization expenses consists primarily of amortization of intangible assets as well as depreciation on property and equipment.

expenses relate to expenses incurred in our patent defense against Cisco Systems, Inc.

and Cisco Technology, Inc.

(the “Cisco ManyCam

Litigation”).

Affecting the Comparability of Our Financial Condition and Results of Operations

As described above, we completed the Transactions

in January 2025.

As a result, our historical financial condition and results of operations for the periods presented may not be comparable,

either from period to period or going forward.

For more information on the Transactions, see Note 1, Organization and Description of

Business and Note 13, Discontinued Operations , in Part II, Item 8, Financial Statements and Supplementary Data, of this Annual

Report on Form 10-K.

management relies on certain non-GAAP financial measures to manage and evaluate our business.

The non-GAAP financial measures set forth

below help us evaluate growth trends, establish budgets, measure the effectiveness of our advertising and marketing efforts and assess

operational efficiencies.

Adjusted EBITDA is discussed below.

We also discuss “Devices under Management ” and net cash

provided by operating activities under the “ Liquidity and Capital Resources ” section below.

Year Ended December 31,

Net cash provided by (used in) operating activities – continuing operations

$ (2,661,653 )

Operating loss from continuing operations

$ (4,719,179 )

$ (5,121,549 )

Loss from continuing operations as a percentage of total revenues

Net loss from continuing operations

$ (1,956,536 )

Adjusted EBITDA

$ (4,268,675 )

Net loss from continuing operations as a percentage of total revenues

$ (1,956,536 )

Adjusted EBITDA as percentage of total revenue

$ (8,426,209 )

Adjusted EBITDA

Adjusted EBITDA is a non-GAAP financial measure, and includes results

from continuing and discontinued operations.

Adjusted EBITDA is defined as net (loss) income adjusted to exclude stock-based compensation

expense, depreciation and amortization expenses, impairment loss in connection with the Divestiture, interest income, net, other (income)

expense, net, and income tax (benefit) expense.

The impairment loss in connection with the Divestiture relates to a one-time impairment

charge recorded in connection with the Company’s divestiture of the Transferred Assets.

We present Adjusted EBITDA because it is a key

measure used by our management and Board to understand and evaluate our core operating performance and trends, to develop short- and long-term

operational plans and to allocate resources to expand our business.

In particular, the exclusion of certain expenses in calculating Adjusted

EBITDA can provide a useful measure for period-to-period comparisons of the cash operating income generated by our business.

that Adjusted EBITDA is useful to investors and others to understand and evaluate our operating results, and it allows for a more meaningful

comparison between our performance and that of competitors.

Limitations of Adjusted EBITDA

Our use of Adjusted EBITDA has limitations as

an analytical tool, and you should not consider this performance measure in isolation from or as a substitute for analysis of our results

as reported under GAAP.

$ (1,116,037 )

$ (4,431,852 )

EBITDA is a non-GAAP financial measure.

Adjusted EBITDA is defined as net income (loss) adjusted to exclude interest (income) expense,

net, other (income) expense, net, income tax (benefit) expense, depreciation and amortization expense, stock-based compensation expense,

net loss from discontinued operations, impairment loss in connection with the Divestiture and litigation expenses relating to the Cisco

ManyCam Litigation.

Prior to the fiscal quarter ended September 30, 2025, the Company did not exclude litigation expenses related to

the Cisco ManyCam Litigation in calculating Adjusted EBTIDA as they were not material.

However, after reevaluation, the Company has determined

that presenting Adjusted EBITDA without excluding such costs provides less valuable information about the Company’s core operations.

As a result, beginning with the fiscal quarter ended September 30, 2025, litigation expenses related to the Cisco ManyCam Litigation

are now excluded from the calculation of Adjusted EBITDA.

present Adjusted EBITDA because it is a key measure used by our management and Board to understand and evaluate our core operating performance

and trends, to develop short- and long-term operational plans and to allocate resources to expand our business.

In particular, the exclusion

of certain expenses in calculating Adjusted EBITDA can provide a useful measure for period-to-period comparisons of the cash operating

income generated by our business.

We believe that Adjusted EBITDA is useful to investors and others to understand and evaluate our operating

results, and it allows for a more meaningful comparison between our performance and that of competitors.

of Adjusted EBITDA

use of Adjusted EBITDA has limitations as an analytical tool, and you should not consider this performance measure in isolation from

or as a substitute for analysis of our results as reported under GAAP.

Some of these limitations are that Adjusted EBITDA does not reflect,

cash capital expenditures for assets underlying

depreciation and amortization expense that may need to be replaced or for new capital expenditures;

net loss from discontinued operations;

among other things:

cash capital expenditures for assets underlying depreciation and amortization expense that may need to be replaced

or for new capital expenditures;

interest income, net;

other expense, net;

income tax expense from continuing operations;

our working capital requirements;

the impairment

loss on digital tokens;

the potentially dilutive impact of stock-based compensation;

and the provision for income taxes.

Other companies,

including companies in our industry, may calculate Adjusted EBITDA differently, which reduces its usefulness as a comparative measure.

Because of these limitations, you should consider Adjusted EBITDA alongside

other financial performance measures, including various cash flow metrics, net income and our other GAAP results.

The following table

presents a reconciliation of net income, the most directly comparable financial measure calculated and presented in accordance with GAAP,

to Adjusted EBITDA for each of the periods indicated.

Adjusted EBITDA and net loss related to discontinued operations have not been segregated.

Accordingly, the data below includes the results from continuing and discontinued operations:

the provision for income taxes;

litigation expenses incurred in connection with our patent defense against Cisco Systems, Inc.

Technology, Inc.

(the “Cisco ManyCam Litigation”);

and net loss from discontinued operations.

Other companies, including

companies in our industry, may calculate Adjusted EBITDA differently, which reduces its usefulness as a comparative measure.

Because of these limitations, you should consider

Adjusted EBITDA alongside other financial performance measures, including various cash flow metrics, net income (loss) and our other GAAP

The following table presents a reconciliation of net income (loss), the most directly comparable financial measure calculated

and presented in accordance with GAAP, to Adjusted EBITDA for each of the periods indicated:

Three Months Ended

Reconciliation of net loss to Adjusted EBITDA:

1 unchanged sentence

$ (1,956,536 )

Stock-based compensation expense

Depreciation and amortization expense

Impairment loss in connection with Divestiture

$ (4,268,675 )

Net loss from discontinued operations

Interest income, net

Other income, net

Income tax expense, discontinued operations

Income tax benefit

Other income, net

Litigation expenses relating to the Cisco ManyCam Litigation

Depreciation and amortization expense

Impairment loss in connection with Divestiture

Stock-based compensation expense

Adjusted EBITDA

1 unchanged sentence

$ (1,116,037 )

Results of Operations

Year Ended December 31, 2024 Compared to Year

Ended December 31, 2023

Revenue from continuing operations increased by

14.2% to approximately $1.1 million compared to $1.0 million for the year ended 2023, as sales from ManyCam increased.

The following table sets forth our subscription revenue for the years

ended December 31, 2024 and 2023, the increase between those periods, the percentage increase between those periods, and the percentage

of total revenue that subscription revenue represented for those periods:

% of Revenue Years Ended

Subscription revenue

$ (4,431,852 )

Under Management

Devices under management represent the number

of endpoints, servers and network devices that are outsourced to us under managed services agreements.

It is derived directly from our

contract management system and adjusted monthly for additions and retirements (if any).

Management uses this metric to measure growth

and a measure of customer confidence in our ability to manage devices on their behalf.

As of December 31, 2025, we had over 11,000 devices

under management.

of Operations

Ended December 31, 2025 Compared to Year Ended December 31, 2024

Total revenue increased by 2,049.9% to $23,612,459

for the year ended December 31, 2025 from $1,098,280 for the year ended December 31, 2024.

This increase was driven by new revenue streams

acquired in connection with the Acquisition and the fact that revenue for the prior year period did not include revenue from discontinued

following table sets forth our total revenue for the year ended December 31, 2025 and the year ended December 31, 2024, the increase

between those periods, the percentage increase between those periods and the percentage of total revenue that each represented for those

Managed information technology revenue

Procurement revenue

Professional services revenue

Subscription revenue

Our subscription revenue for the year ended December

31, 2024 increased by $136,248, or 14.2%, as compared to the year ended December 31, 2023.

The increase in subscription revenue was driven

by increased revenue from ManyCam for the year ended December 31, 2024 compared to the year ended December 31, 2023.

Costs and Expenses

Total revenue

Information technology revenue includes revenue from our managed IT security services, web hosting, secure private cloud hosting and

managed backup and disaster recovery.

subscription revenue for the year ended December 31, 2025 relates to the sales from our ManyCam software, which increased by $5,075,

or 0.5%, as compared to the year ended December 31, 2024.

The increase in subscription revenue was primarily driven by an increase in

new subscribers to our ManyCam software.

Total costs and expenses for the year ended December

31, 2024 increased by $1,560,186, or 33.5%, as compared to the year ended December 31, 2023.

The following table presents our costs and

expenses for the years ended December 31, 2024 and 2023, the increase or decrease between those periods, the percentage increase or decrease

between those periods, and the percentage of total revenue that each represented for those periods:

% of Revenue Years Ended

31, 2025 increased by $22,111,809, to $28,331,638, or 355.5%, as compared to the year ended December 31, 2024.

The following table presents

our costs and expenses for the year ended December 31, 2025 and 2024, the increase between those periods, the percentage increase between

those periods and the percentage of total revenue that each represented for those periods:

Cost of revenue

Sales and marketing expense

Product development expense

Sales marketing and product development expense

General and administrative expense

Depreciation and amortization

Litigation expenses relating to the Cisco ManyCam Litigation

Total costs and expenses

Cost of revenue

Our cost of revenue for the year ended December

31, 2024 decreased by $22,004, or 7.7%, as compared to the year ended December 31, 2023.

The decrease in cost of revenue for the year

ended December 31, 2024, was primarily driven by a decrease in hosting expenses of $24,956 compared to

the prior year ended December 31, 2023.

Sales and marketing expense

Our sales and marketing expense for the year ended

December 31, 2024 decreased by $30,233, or 32.9%, as compared to the year ended December 31, 2023.

The decrease in sales and marketing

expense for the year ended December 31, 2024 was primarily due to a decrease of approximately $32,982 in marketing user acquisition expenses

compared to the prior year.

Product development expense

Our product development expense for the year ended December 31, 2024

31, 2025 increased by $11,010,041, or 4,188.1%, as compared to the year ended December 31, 2024.

The increase was primarily due to a increase of approximately

$3,549 related to consulting/software expenses.

General and administrative expense

The increase in our cost of revenue was

primarily due to an increase in expenses related to the new revenue streams acquired in connection with the Acquisition, including but

not limited to, costs associated with procurement equipment and related costs of $4,253,932, managed services expenses of $1,993,691,

subscriptions and licensing expenses of $2,448,102, professional and consulting costs of $987,982, web hosting expense of $458,600 and

rent related to our Data Centers of $334,218.

marketing and product development expense

Our sales marketing and product development expense

for the year ended December 31, 2025 increased by 2,976,646, or 1,073.7%, as compared to the year ended December 31, 2024.

in sales marketing and product development expense for the year ended December 31, 2025 was primarily due to an increase in salary-related

expenses of approximately $1,967,167 and commissions of $562,284 earned by our sales team to service and grow our customer base.

consulting expenses totaled $195,390 related to marketing activities.

As a result of the Transactions, headcount on our sales team increased

from zero in the prior year period to approximately 15 people in the current period, and their associated salary costs are included in

sales marketing and product development expense for the year ended December 31, 2025.

and administrative expense

Our general and administrative expense for the

1 unchanged sentence

The increase in general

and administrative expense for the year ended December 31, 2023, was mainly due to an increase in professional expenses of $1,798,992,

attributed to the Transactions, which closed subsequent to year end, on January 2, 2025.

In addition, there was an increase of $54,456

in connection with bonus expense (primary retention bonuses to IPM employees).

These increases were partially offset by a decrease of

$34,121 related to insurance expense, a decrease of $25,041 related to bad debt expense and a decrease of $161,625 related to taxes compared

to the year ended December 31, 2023.

Non-Operating Income

The following table presents the components of

non-operating income for the years ended December 31, 2024 and 2023, the decrease between those periods, the percentage decrease between

those periods, and the percentage of total revenue that each represented for those periods:

% of Revenue Years Ended

and administrative expenses for the year ended December 31, 2025 was primarily due to legal and accounting expenses of $1,254,936.

addition, the Company incurred public company expenses of $630,602, rent expense of $334,218 in connection with our Data Centers and insurance

costs of $813,282.

Salary and salary related expenses totaled $6,267,902 for the year ended December 31, 2025, plus $343,852 of non-cash

share-based compensation.

As a result of the Transactions, employee headcount increased from four individuals in the prior year period

to approximately 40 individuals in the current period, and their associated salary and salary related costs are included in general and

administrative expenses for the year ended December 31, 2025.

Of the total expenses described above, approximately $334,970 were one-time

expenses related to the Transactions.

and amortization expenses

and amortization expenses increased by $1,719,815 to $2,541,511 for the year ended December 31, 2025.

The increase relates to increased

amortization and depreciation in connection with the intangible and fixed assets acquired in the Acquisition.

expense totaled $717,780 for the year ended December 31, 2025 and related to the costs incurred in connection with the Cisco ManyCam

Non-Operating

following table presents the components of non-operating income for the year ended December 31, 2025 and the year ended December 31,

2024, the decrease between those periods, the percentage decrease between those periods and the percentage of total revenue that each

represented for those periods:

Interest income, net

2 unchanged sentences

Non-operating income for the year ended December

31, 2024 was $715,285, a decrease of $267,371, or 27.2%, compared to non-operating income of $982,656 for the year ended December 31,

The decrease in interest income was the result of interest earned in a high-yield bank account during 2023, and a lower cash balance

and interest rate compared to the year ended December 31, 2024.

Other income during 2023 was the result of recording the refundable employee

retention tax credit received under the Coronavirus Aid, Relief, and Economic Security Act.

(Loss) Income from Discontinued Operations

Loss from discontinued operations for the year

ended December 31, 2024 was $4,157,534, an increase of $5,777,207, or 356.7%, compared to income from discontinued operations of $1,619,673

for the year ended December 31, 2023.

The increase in loss from discontinued operations was primarily the result of a decrease in subscription

revenue and virtual gift revenue from the Paltalk and Camfrog applications included in discontinued operations of $2.0 million as well

as a non-cash impairment loss in connection with Divestiture of $3.8 million.

Liquidity and Capital Resources

Currently, our primary source of liquidity is

cash on hand and cash flows from continuing operations, and we believe that our cash and cash equivalents balance and our expected cash

flow from operations will be sufficient to meet all of our financial obligations for the next 12 months.

As of December 31, 2024, we had

approximately $10.6 million of cash and cash equivalents.

Historically, our use

of working capital was related to product development resources and an investment in marketing activities in order to maintain and create

new services and features in applications for our users.

In particular, a significant portion of our working capital had been allocated

to the improvement of our products.

During the year ended December 31, 2024, stock options representing the right to purchase 14,830 shares

of our common stock were exercised for net proceeds to the Company of $39,772.

During the year ended December 31, 2023, we purchased a

total of 5,192 shares of common stock under the stock repurchase plan for an aggregate purchase price of $7,213, at an average share price

of $1.39 per share.

The stock repurchase plan expired on March 29, 2023 pursuant to its terms and has not been renewed.

In the future,

we may continue to seek to grow our business by expending our capital resources to fund strategic acquisitions, investments and partnership

opportunities.

NTS Acquisition

On January 2, 2025, we closed the Acquisition,

pursuant to which we acquired NTS through a two-step merger process.

The aggregate consideration we delivered to Newtek at the Acquisition

Closing consisted of (i) $4,000,000 in cash and (ii) 4,000,000 shares of our Series A Preferred Stock.

In addition to the Acquisition

Closing Consideration, the Acquisition Agreement provides that Newtek is entitled to receive an amount up to $5,000,000 (the “Acquisition

Earn-Out Amount”) based on our achievement of certain cumulative average adjusted EBITDA thresholds for the 2025 and 2026 fiscal

The Acquisition Earn-Out Amount may be paid, in our sole discretion, in cash (the “Acquisition Earn-Out Cash Consideration”),

in shares of Series A Preferred Stock (the “Acquisition Earn-Out Stock Consideration”) or in a combination thereof.

to the Acquisition Agreement, to the extent that all or a portion of the Acquisition Earn-Out Amount is paid in shares of Series A Preferred

Stock, the number of shares of Series A Preferred Stock to be issued to Newtek will be calculated based on the average of the daily volume

weighted average prices of our common stock during each trading day during a 60 calendar-day period ending on December 31, 2026;

that in no event shall such price be less than $1.00.

Pursuant to the Acquisition Agreement, if the

issuance of the Acquisition Earn-Out Stock Consideration would cause Newtek’s “total equity” (as calculated under the

Bank Holding Company Act of 1956, as amended, and as implemented and interpreted by the Board of Governors of the Federal Reserve System)

in us to exceed one-third of our total equity (the “Total Equity Cap”), then the number of shares of Series A Preferred Stock

issuable as Acquisition Earn-Out Stock Consideration will be adjusted so that we will issue to Newtek the maximum number of shares of

Series A Preferred Stock that would not cause Newtek’s total equity to exceed the Total Equity Cap, with a corresponding increase

to the Acquisition Earn-Out Cash Consideration.

The Divestiture

On January 2, 2025, we completed the sale to Meteor

Mobile of the Transferred Assets.

The consideration delivered by Meteor Mobile to us at the closing of the Divestiture consisted of (i)

$1,350,000 in cash and (ii) the assumption of all of the liabilities of the Sellers arising out of, or relating to, the Business or the

Transferred Assets, other than certain excluded liabilities.

In addition to the Divestiture Closing Consideration, we are entitled to

receive, with respect to each Earn-Out Period, as defined and described below, certain payments in cash based on the cash revenue, net

of any refunds, received by Meteor Mobile that is attributable to the Business (such cash revenue, the “Legacy Business Revenue”),

the six-month period beginning on July 1, 2025 and ending on December 31, 2025 (“Earn-Out

Period 1”), an amount equal to (i) for any Legacy Business Revenue greater than or

equal to $3,500,000 and less than $4,250,000, the amount of such Legacy Business Revenue

multiplied by 0.30 plus (ii) for any Legacy Business Revenue greater than or equal to $4,250,000,

the amount of such Legacy Business Revenue in excess of $4,250,000 multiplied by 0.40;

each of the twelve-month period beginning on January 1, 2026 and ending on December 31, 2026

(“Earn-Out Period 2”), the twelve-month period beginning on January 1, 2027 and

ending on December 31, 2027 (“Earn-Out Period 3”), and the twelve-month period

beginning on January 1, 2028 and ending on December 31, 2028 (“Earn-Out Period 4”

and collectively with Earn-Out Period 1, Earn-Out Period 2 and Earn-Out Period 3, the “Earn-Out

Periods”), an amount equal to (i) for any Legacy Business Revenue greater than or equal

to $7,000,000 and less than $8,500,000, the amount of such Legacy Business Revenue multiplied

by 0.30 plus (ii) for any Legacy Business Revenue greater than or equal to $8,500,000, the

amount of such Legacy Business Revenue in excess of $8,500,000 multiplied by 0.40 (the aggregate

amount, if any, earned during the Earn-Out Periods, the “Divestiture Earn-Out Amount”).

In the event of a change of control (as defined

in the Divestiture Agreement) of Meteor Mobile during any of the Earn-Out Periods, we are entitled to receive an acceleration payment

in cash, net of any Divestiture Earn-Out Amounts previously paid to us (the “Acceleration Payment”).

If any of the Transferred

Assets are sold independently from the other assets of Meteor Mobile, we will be entitled to (i) 50% of the aggregate consideration paid

to Meteor Mobile for the Transferred Assets minus (ii) the aggregate amount of any Divestiture Earn-Out Amounts received by the Sellers

by the date of the change of control, minus (iii) the aggregate amount of any Acceleration Payments previously paid through such date.

If any of the Transferred Assets are sold contemporaneously with other assets of Meteor Mobile, we are entitled to (x) the aggregate consideration

paid to Meteor Mobile for the Transferred Assets multiplied by the ratio of the trailing 12-month EBITDA of the Transferred Assets sold

and the EBITDA of all assets sold minus (y) the aggregate amount of any Divestiture Earn-Out Amounts received by the Sellers by the date

of the change of control, minus (z) the aggregate amount of any Acceleration Payments previously paid through such date.

The minimum Acceleration

Payment for the sale of “Paltalk,” “Camfrog” and “Vumber” is $1,650,000, $450,000 and $300,000, respectively,

and the Acceleration Payments payable to us are capped at $5,000,000 in the aggregate.

Cash Flow Analysis

The components of cash flows information related to discontinued operations

have not been segregated in the table below.

Accordingly, the net cash used in operating, investing and the cash provided by and used

in financing activities include the results from continuing and discontinued operations:

31, 2025 was $435,844, a decrease of $279,441, or 39.1%, as compared to non-operating income of $715,285 for the year ended December 31,

The decrease in non-operating income was primarily a result of a decrease in the amount of interest that we earned on our cash balances

which were invested in liquid instruments like certificates of deposit and money markets.

Other income for the year ended December 31,

2025, related to the sale of a domain name that we are not using as well as proceeds of $31,263 from the initial receipt of the earnout

payment from the Divestiture.

During the year ended December 31, 2024 other income included proceeds from a class action lawsuit against

a service provider.

and Capital Resources

Consolidated Statements of Cash Flows Data:

Net cash used in operating activities

$ (3,019,287 )

Net cash provided by (used in) operating activities – continuing operations

$ (3,019,287 )

Net cash used in operating activities – discontinued operations

Net cash used in investing activities

Net cash provided by (used in) financing activities

Net change in cash and cash equivalents

Net cash provided by financing activities

Net decrease in cash, cash equivalents and restricted cash

$ (2,154,473 )

$ (2,979,515 )

Operating Activities

Net cash used in operating activities was $3,019,287

for the year ended December 31, 2024, as compared to net cash used in operating activities of $1,079,671 for the year ended December 31,

The increase in cash used in operating activities during the year ended December 31, 2024 was primarily the result of an increase

in net loss, which was attributed to increases in professional fees as a result of the Transactions.

our primary source of liquidity is cash on hand and cash available through the Facility.

As of the date of this report, no amounts were

outstanding under the Facility.

believe that our cash and cash equivalents balance, our cash available through the Facility and our expected cash flows from operations

will be sufficient to meet all of our financial obligations for one year from the date these financial statements are issued.

As of December

31, 2025, we had $8,434,061 of cash and cash equivalents, which included $1,035,747 of restricted cash.

Additionally,

we expect our long-term liquidity position will be sufficient to meet our long-term liquidity needs with cash flows from operations and

financing arrangements.

However, in the event of changes in business conditions or other developments, including a sustained market deterioration,

unanticipated regulatory developments, significant acquisitions, competitive pressures, or to the extent our liquidity needs prove to

be greater than expected or cash generated from operations is less than anticipated, we may need additional liquidity.

To the extent

we elect to finance our long-term liquidity needs, we believe that the potential financing capital available to us in the future will

be sufficient.

primary use of working capital is related to investment in marketing initiatives to grow the business in order to maintain and create

new services and features in applications for our clients and users.

In the future, we may seek to grow our business by expending our

capital resources to fund strategic acquisitions, investments and partnership opportunities.

Repurchase Plan

On May 8, 2025, the Board approved the Stock Repurchase

Plan for up to $400,000 of our outstanding common stock, which expires on the one-year anniversary of such date.

We intend to utilize

the Stock Repurchase Plan to minimize the dilutive impact of awards granted under our equity incentive plans and to repurchase shares

opportunistically.

Shares of common stock may be repurchased from time to time in open market transactions at prevailing market prices,

in privately negotiated transactions or by other means in accordance with federal securities laws, including Rule 10b5-1 plans.

Repurchase Plan does not obligate us to repurchase any shares of common stock, and the Stock Repurchase Plan may be modified, suspended,

extended or terminated at any time by our Board.

The actual timing, number and value of shares repurchased will be determined by a committee

of the Board at its discretion and will depend on a number of factors, including the market price of our common stock, general market

and economic conditions, alternative investment opportunities and other corporate considerations.

As of December 31, 2025, 151,258 shares

of common stock had been repurchased pursuant to the Stock Repurchase Plan for an aggregate purchase price of approximately $304,887,

January 2, 2025, we closed the Acquisition, pursuant to which we acquired NTS through a two-step merger process.

The aggregate consideration

we delivered to Newtek at the Acquisition Closing consisted of (i) $4,000,000 in cash and (ii) 4,000,000 shares of our Series A Preferred

In addition to the Acquisition Closing Consideration, the Acquisition Agreement provides that Newtek is entitled to receive an

amount up to $5,000,000 (the “Acquisition Earn-Out Amount”) based on our achievement of certain cumulative average Adjusted

EBITDA thresholds for the 2025 and 2026 fiscal years.

The Acquisition Earn-Out Amount may be paid, in our sole discretion, in cash (the

“Acquisition Earn-Out Cash Consideration”), in shares of Series A Preferred Stock (the “Acquisition Earn-Out Stock

Consideration”) or in a combination thereof.

Pursuant to the Acquisition Agreement, to the extent that all or a portion of the

Acquisition Earn-Out Amount is paid in shares of Series A Preferred Stock, the number of shares of Series A Preferred Stock to be issued

to Newtek will be calculated based on the average of the daily volume weighted average prices of our common stock during each trading

day during a 60 calendar-day period ending on December 31, 2026;

provided, that in no event shall such price be less than $1.00.

to the Acquisition Agreement, if the issuance of the Acquisition Earn-Out Stock Consideration would cause Newtek’s “total

equity” (as calculated under the Bank Holding Company Act of 1956, as amended, and as implemented and interpreted by the Board

of Governors of the Federal Reserve System) in us to exceed one-third of our total equity (the “Total Equity Cap”), then

the number of shares of Series A Preferred Stock issuable as Acquisition Earn-Out Stock Consideration will be adjusted so that we will

issue to Newtek the maximum number of shares of Series A Preferred Stock that would not cause Newtek’s total equity to exceed the

Total Equity Cap, with a corresponding increase to the Acquisition Earn-Out Cash Consideration.

January 2, 2025, we completed the sale to Meteor Mobile of the Transferred Assets.

The consideration delivered by Meteor Mobile to us

at the closing of the Divestiture consisted of (i) $1,350,000 in cash and (ii) the assumption of all of the liabilities of the Sellers

arising out of, or relating to, the Business or the Transferred Assets, other than certain excluded liabilities.

In addition to the Divestiture

Closing Consideration, we are entitled to receive, with respect to each Earn-Out Period, as defined and described below, certain payments

in cash based on the cash revenue, net of any refunds, received by Meteor Mobile that is attributable to the Business (such cash revenue,

the “Legacy Business Revenue”), as follows:

from the six-month period

beginning on July 1, 2025 and ending on December 31, 2025 (“Earn-Out Period 1”), an amount equal to (i) for any Legacy

Business Revenue greater than or equal to $3,500,000 and less than $4,250,000, the amount of such Legacy Business Revenue multiplied

by 0.30 plus (ii) for any Legacy Business Revenue greater than or equal to $4,250,000, the amount of such Legacy Business Revenue

in excess of $4,250,000 multiplied by 0.40;

from each of the twelve-month

period beginning on January 1, 2026 and ending on December 31, 2026 (“Earn-Out Period 2”), the twelve-month period beginning

on January 1, 2027 and ending on December 31, 2027 (“Earn-Out Period 3”) and the twelve-month period beginning on January

1, 2028 and ending on December 31, 2028 (“Earn-Out Period 4” and collectively with Earn-Out Period 1, Earn-Out Period

2 and Earn-Out Period 3, the “Earn-Out Periods”), an amount equal to (i) for any Legacy Business Revenue greater than

or equal to $7,000,000 and less than $8,500,000, the amount of such Legacy Business Revenue multiplied by 0.30 plus (ii) for any

Legacy Business Revenue greater than or equal to $8,500,000, the amount of such Legacy Business Revenue in excess of $8,500,000 multiplied

by 0.40 (the aggregate amount, if any, earned during the Earn-Out Periods, the “Divestiture Earn-Out Amount”).

the event of a change of control (as defined in the Divestiture Agreement) of Meteor Mobile during any of the Earn-Out Periods, we are

entitled to receive an acceleration payment in cash, net of any Divestiture Earn-Out Amounts previously paid to us (the “Acceleration

If any of the Transferred Assets are sold independently from the other assets of Meteor Mobile, we will be entitled

to (i) 50% of the aggregate consideration paid to Meteor Mobile for the Transferred Assets minus (ii) the aggregate amount of any Divestiture

Earn-Out Amounts received by the Sellers by the date of the change of control, minus (iii) the aggregate amount of any Acceleration Payments

previously paid through such date.

If any of the Transferred Assets are sold contemporaneously with other assets of Meteor Mobile, we

are entitled to (x) the aggregate consideration paid to Meteor Mobile for the Transferred Assets multiplied by the ratio of the trailing

12-month EBITDA of the Transferred Assets sold and the EBITDA of all assets sold minus (y) the aggregate amount of any Divestiture Earn-Out

Amounts received by the Sellers by the date of the change of control, minus (z) the aggregate amount of any Acceleration Payments previously

paid through such date.

The minimum Acceleration Payment for the sale of “Paltalk,” “Camfrog” and “Vumber”

is $1,650,000, $450,000 and $300,000, respectively, and the Acceleration Payments payable to us are capped at $5,000,000 in the aggregate.

amount earned in Earn Out Period 1 was $31,263 and is included in other income in the consolidated statement of operations.

Business Loan Agreement and Credit Agreement

and Revolving Promissory Note

On April 10, 2025, we, IPM LLC, and Newtek Bank,

a subsidiary of Newtek, entered into the Loan Agreements that set forth the terms and conditions for the Facility, which consists of a

secured revolving line of credit to us and IPM LLC in the maximum amount of $1,000,000.

The Loan Agreements are secured by substantially

all of our assets and the assets of IPM LLC.

The Facility will mature on April 10, 2026.

As of the date of this Annual Report on Form

10-K, no amounts were outstanding under the Facility.

cash provided by operating activities was $1,076,724 for the year ended December 31, 2025, as compared to net cash used in operating

activities from continuing operations of $2,661,653 for the year ended December 31, 2024.

The increase in the amount of cash provided

by operations for the year ended December 31, 2025 was primarily attributed to the change in the business activities of the Company following

the Transactions compared to the year ended December 31, 2024.

Investing Activities

Net cash used in investing activities was $85,000

for the year ended December 31, 2023 compared to no cash used in investing activities for the year ended December 31, 2024.

Net cash used

in investing activities for the year ended December 31, 2023 was related to payment of contingent consideration in connection with our

acquisition of ManyCam in 2022.

Net cash used in investing activities for the

year ended December 31, 2025 was $4,280,149 and related to the cash consideration paid by the Company to Newtek in connection with the

Acquisition as well as the acquisition of fixed assets.

Financing Activities

Net cash provided by financing activities was

$39,772 for the year ended December 31, 2024, compared to net cash used in financing activities of $7,213 for the year ended December

During the year ended December 31, 2024, stock options representing the right of purchase 14,830 shares of common stock

were exercised for net proceeds to the Company of $39,772.

These stock options had an average exercise price of $2.68 per share and

a weighted average share price of $4.12 per share on the date of exercise.

$1,048,952 for the year ended December 31, 2025, which was attributed to the $1,350,000 received in connection with the Divestiture netted

against the $301,048 (net of fees) used in connection with the Stock Repurchase Plan.

Cash provided by financing activities for the year

ended December 31, 2024 related to the exercise of employee stock options was $39,772.

Contractual Obligations and Commitments

As of December 31, 2024,

there were no material changes to our contractual obligations and commitments.

Following fiscal year end, we completed the Acquisition

as described above.

In connection with the Acquisition, Newtek is entitled to receive an amount up to $5,000,000 based on our achievement

of certain cumulative average adjusted EBITDA thresholds for the 2025 and 2026 fiscal years.

The Acquisition Earn-Out Amount may be paid,

in our sole discretion, in cash, in shares of Series A Preferred Stock or in a combination thereof.

Off-Balance Sheet

As of December 31, 2024,

we did not have any off-balance sheet arrangements.

Critical Accounting

The preparation of financial

statements in conformity with GAAP requires management to make estimates and assumptions about future events that affect the amounts reported

in the financial statements and accompanying notes.

As of December 31, 2025, we leased space in the

Data Centers as well as office space under non-cancellable operating lease agreements with remaining lease terms ranging from one to two

Our lease obligations consist primarily of fixed monthly rental payments, subject in some cases to escalation clauses and common

area maintenance charges.

As of December 31, 2025 we had aggregate undiscounted future minimum lease payments of approximately $1,181,617,

of which $789,270 is payable within the next twelve months.

We believe our existing cash balances and cash flows from operations will

be sufficient to satisfy our lease payment obligations as they become due.

There have been no other material changes to our

contractual obligations and commitments disclosed in the contractual obligations and commitments section of Management’s Discussion

and Analysis of Financial Condition and Results of Operations in the Form 10-K.

Off-Balance Sheet Arrangements

As of December 31, 2025, we did not have any off-balance

sheet arrangements.

Critical Accounting Estimates

The preparation of financial statements in conformity

with GAAP requires management to make estimates and assumptions about future events that affect the amounts reported in the financial

statements and accompanying notes.

Future events and their effects cannot be determined with absolute certainty.

the determination of estimates requires the exercise of judgment.

Actual results inevitably will differ from those estimates, and such

differences may be material to the financial statements.

During the year ended

December 31, 2024, the most significant accounting estimate inherent in the preparation of our financial

statements was the evaluation of goodwill for impairment.

Goodwill is recorded when the purchase price paid

for an acquisition exceeds the estimated fair value of the net identified tangible and intangible assets acquired.

We evaluate our goodwill

for impairment in accordance with Accounting Standards and Codifications (“ASC”) 350, Intangibles – Goodwill and

Other (as amended by Accounting Standards Update 2017-04) , by assessing qualitative factors to determine whether it is more likely

than not (that is, a likelihood of more than 50 percent) that the fair value of a reporting unit is less than its carrying amount, including

We perform the quantitative goodwill impairment test, if, after assessing the totality of events or circumstances such as those

described in paragraph ASC 350-20-35-3C(a) through (g), we determine that it was more likely than not that the fair value of a reporting

unit is less than its carrying amount.

An impairment charge is recognized for the amount by which the carrying amount exceeded the reporting

unit’s fair value, limited to the total amount of goodwill related to the reporting unit.

QUANTITATIVE AND QUALITATIVE DISCLOSURES

ABOUT MARKET RISK

Therefore, the determination

of estimates requires the exercise of judgment.

The Company makes significant estimates and uses judgement related to assessing the goodwill

valuation and recoverability of intangible assets.

Actual results inevitably will differ from those estimates, and such differences may

be material to the financial statements.

We believe the following critical accounting policy

affects our more significant judgments and estimates used in the preparation of our consolidated financial statements:

Business Combinations

We apply the acquisition method of accounting

for business combinations.

Under the acquisition method, the acquiring entity recognizes all of the identifiable assets acquired and liabilities

assumed at their acquisition date fair values.

We use our best estimates and assumptions to estimate the fair values of these tangible

and intangible assets.

Any excess of the purchase price over amounts allocated to the assets acquired is recorded as goodwill.

intangible assets are amortized using the straight-line method over the estimated useful lives of the respective assets.

Goodwill is reviewed

for impairment on an annual basis, or more frequently if events or changes in circumstances indicate that the carrying amount of goodwill

may be impaired.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not applicable.

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 7. Management’s Discussion and Analysis