What changed in this filing

/stocks — the workspaceLOADING

Item 8. Financial Statements and Supplementary Data

2026-03-17 compared with 2025-03-24 · 1096 added, 682 removed, 363 unchanged (83% of the section changed)

FINANCIAL STATEMENTS AND SUPPLEMENTARY

FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

Report of Independent Registered Public Accounting Firms (Grassi & Co., CPAs, P.C.

Marcum LLP PCAOB No.

688 ) F-2 – F-4

Consolidated Balance Sheets as of December 31, 2025 and 2024 F-4

7 unchanged sentences

Opinion on the Financial Statements

We have audited the accompanying balance sheet

of Intelligent Protection Management Corp.

(the “Company”) as of December 31, 2024, and the related statements of operations,

stockholders’ equity, and cash flows for the year then ended, and the related notes (collectively referred to as the “consolidated

financial statements”).

In our opinion, the financial statements present fairly, in all material respects, the financial position

of the Company as of December 31, 2024, and the results of its operations and its cash flows for the year then ended, in conformity with

accounting principles generally accepted in the United States of America.

We also have audited the adjustments to the 2023 consolidated financial statements to retrospectively present

the discontinued operations and held for sale presentation, as described in Note 3.

In our opinion, such adjustments are appropriate and

have been properly applied.

We were not engaged to audit, review, or apply any procedures to the 2023 consolidated financial statements

of the Company other than with respect to the adjustments and, accordingly, we do not express an opinion or any other form of assurance

on the 2023 consolidated financial statements taken as a whole.

As discussed in Note 2 to the consolidated financial

statements, the Company adopted ASU 2023-07, Segment Reporting (Topic 280) as of December 31, 2024 on a retrospective basis.

have audited the Company’s implementation of ASU 2023-07 and the related disclosures.

In our opinion such adoption is appropriate

and has been properly applied.

We were not engaged to audit, review, or apply any procedures to the 2023 financial statements of the Company

other than with respect to the implementation of ASU 2023-07, and accordingly, we do not express an opinion or any other form of assurance

on the 2023 financial statements taken as a whole.

We have audited the accompanying consolidated

balance sheets of Intelligent Protection Management Corp.

(the Company) as of December 31, 2025 and 2024, and the related consolidated

statements of operations, changes in stockholders’ equity, and cash flows for each of the years in the two-year period ended December

31, 2025, and the related notes (collectively referred to as the financial statements).

In our opinion, the financial statements present

fairly, in all material respects, the financial position of the Company as of December 31, 2025 and 2024, and the results of its operations

and its cash flows for each of the years in the two-year period ended December 31, 2025, in conformity with accounting principles generally

accepted in the United States of America.

Basis for Opinion

These consolidated financial statements are the

responsibility of the Company’s management.

Our responsibility is to express an opinion on the Company’s financial statements

based on our audit.

We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB)

and are required to be independent with respect to the Company in accordance with the U.S.

federal securities laws and the applicable

rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the

These financial statements are the responsibility

of the Company’s management.

Our responsibility is to express an opinion on the Company’s financial statements based on our

We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are

required to be independent with respect to the Company in accordance with the U.S.

federal securities laws and the applicable rules and

regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the

standards of the PCAOB.

3 unchanged sentences

to perform, an audit of its internal control over financial reporting.

As part of our audit, we are required to obtain an understanding

As part of our audits, we are required to obtain an understanding

of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s

1 unchanged sentence

Accordingly, we express no such opinion.

Our audit included performing procedures to assess

Our audits included performing procedures to assess

the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond

1 unchanged sentence

Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.

Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating

Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating

the overall presentation of the financial statements.

We believe that our audit provide a reasonable basis for our opinion.

We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matters

7 unchanged sentences

on the critical audit matters or on the accounts or disclosures to which they relate.

Valuation of Goodwill

Description of the matter

As discussed in Note 2 to the consolidated

financial statements, the Company performs its impairment test of goodwill on an annual basis, or more frequently if events or circumstances

indicate that the carrying value of goodwill exceeds its fair value.

The principal consideration for our

determination that this was a critical audit matter is the complexity surrounding the held for sale classification of the reporting unit

and related goodwill in connection with the divestiture subsequent to year-end.

Auditing the valuation of goodwill involves complex judgements

due to subjective evaluation of indicators and significant estimation required in determining the recoverability and fair value of goodwill.

How we addressed the matter

Our audit procedures related to the

valuation of goodwill included the following, among others,

a) We evaluated the design of certain controls over the Company’s impairment assessment of goodwill.

We considered management’s internal controls in determining the nature, timing and extent of audit tests applied in our audit.

b) We evaluated management’s assessment of qualitative factors relating to the goodwill recoverability,

by accumulating our understanding of the reporting unit’s performance and divesture transaction subsequent to year-end.

c) As a result of impairment indicators identified:

We obtained management’s evaluation of impairment under

both ASC 350, Intangibles – Goodwill and Other and ASC 360,

Property, Plant and Equipment .

We obtained management’s calculation of goodwill impairment

and audited the inputs inclusive of the divestiture transaction subsequent to year end.

d) We assessed the Company’s disclosure of its impairment assessments and resultant impairment included

Business Combination

Critical Audit Matter Description

The Company completed the acquisition of Newtek

Technology Solutions, Inc.

(“NTS”) and the acquisition was accounted for as a business combination.

We identified the valuation

of the acquisition date fair value of intangible assets acquired and goodwill as a critical audit matter.

The principal consideration for our determination

that the valuation of the acquisition-date fair values of acquired intangible assets and goodwill was a critical audit matter was the

significant auditor judgment required to evaluate management’s fair value estimates.

The valuation involved complex models and significant

assumptions, and the fair value measurements were sensitive to changes in those assumptions.

JERICHO QUADRANGLE, STE.

200, JERICHO, NY 11753

516.256.3500 ● F:

516.256.3510 ● GRASSIADVISORS.COM

How the Critical Audit Matter Was Addressed

Our audit procedures related to the Company’s

acquisition of NTS included the following, among others:

a) We evaluated whether the acquisitions met the definition of a business combination under ASC 805, including

the identified accounting acquirer, acquiree, and acquisition date.

b) We read and reviewed the relevant agreements to assess the reasonableness and completeness of assets and

liabilities identified in the purchase price allocation.

c) We vouched the cash and stock tendered to source documentation to validate purchase price.

d) We evaluated the methodologies used to determine the fair value of the consideration provided in the form

of cash and Series A Preferred Stock to determine the consideration provided for the acquisition.

e) We obtained the purchase price allocation analysis from management and the third-party specialist engaged

by management.

f) We assessed the qualifications and competence of management and the qualifications, competence and objectivity

of the third-party specialist.

g) We evaluated the methodologies used to determine the fair values of the intangible assets and goodwill.

h) We tested the assumptions used within the discounted cash flow models to estimate the fair values of the

intangible assets, which included key assumptions such as the future revenue growth and the applied discount rate.

i) We involved an internal valuation specialist who assisted in the evaluation and testing performed of the

reasonableness of significant methods and assumptions to the models.

j) We assessed the sufficiency of Company’s disclosure of its accounting for this acquisition included

/s/ Grassi & Co., CPAs, P.C.

Grassi & Co., CPAs, P.C.

We have served as the Company’s auditor since 2024.

March 17, 2026

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING

To the Stockholders and Board of Directors of

Intelligent Protection Management Corp.

Paltalk, Inc.)

Opinion on the Financial Statements

We have audited, before the effects of the retrospective

adjustments for the adoption of ASU 2023-07, Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures (“ASU

2023-07”) discussed in Note 2 and discontinued operations and held for sale presentation discussed in Note 1 and Note 3 to the consolidated

financial statements, the accompanying consolidated balance sheet of Intelligent Protection Management Corp.

(f/k/a Paltalk, Inc.) (the

“Company”) as of December 31, 2023, the related consolidated statements of operations, changes in stockholders’ equity

and cash flows for the year ended December 31, 2023, and the related notes (collectively referred to as the “financial statements”).

In our opinion, the 2023 financial statements, before the effects of the retrospective adjustment for the adoption of ASU 2023-07 discussed

in Note 2 and discontinued operations and held for sale presentation discussed in Note 1 and Note 3, the financial statements present

fairly, in all material respects, the financial position of the Company as of December 31, 2023, and the results of its operations and

its cash flows for the year ended December 31, 2023, in conformity with accounting principles generally accepted in the United States

We were not engaged to audit, review, or apply

any procedures to the retrospective adjustments for the adoption of ASU 2023-07 discussed in Note 2 and discontinued operations and held

for sale presentation discussed in Note 1 and Note 3 to the consolidated financial statements, and accordingly, we do not express an opinion

or any other form of assurance about whether such retrospective adjustments are appropriate and have been properly applied.

Those retrospective

adjustments were audited by other auditors.

Basis for Opinion

These financial statements are the responsibility

of the Company's management.

Our responsibility is to express an opinion on the Company's financial statements based on our audit.

are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB") and are

required to be independent with respect to the Company in accordance with the U.S.

federal securities laws and the applicable rules and

regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the

standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial

statements are free of material misstatement, whether due to error or fraud.

The Company is not required to have, nor were we engaged

to perform, an audit of its internal control over financial reporting.

As part of our audit we are required to obtain an understanding

of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal

control over financial reporting.

Accordingly, we express no such opinion.

Our audit included performing procedures to assess

the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond

to those risks.

Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.

Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating

the overall presentation of the financial statements.

We believe that our audit provides a reasonable basis for our opinion.

/s/ Marcum llp

We have served as the Company’s auditor from 2016 through March

March 15, 2024

JERICHO QUADRANGLE, STE.

200, JERICHO, NY 11753

516.256.3500 ● F:

516.256.3510 ● GRASSIADVISORS.COM

INTELLIGENT PROTECTION MANAGEMENT CORP.

2 unchanged sentences

Cash and cash equivalents

Employee retention tax credit receivable, net

Cash and cash equivalent (on deposit with related party)

Cash and cash equivalents – restricted cash (on deposit with related party)

Accounts receivable, net of allowance of $ 100,000

Due from related party

Prepaid expense and other current assets

Employee retention tax credit receivable, net

Assets held for sale - current

Total current assets

Operating lease right-of-use asset

Assets held for sale - noncurrent

Property and equipment, net

Intangible assets, net

Assets held for sale - noncurrent

Operating lease right-of-use assets, net

Liabilities and stockholders’ equity

2 unchanged sentences

Accrued expenses and other current liabilities

Due to related party

Operating lease liabilities, current portion

2 unchanged sentences

Total current liabilities

Operating lease liabilities, non-current portion

Deferred tax liability

2 unchanged sentences

Stockholders’ equity:

Series A Preferred Stock, $ 0.001 par value, 9,000,000 authorized, 4,000,000 and 0 shares outstanding as of December 31, 2025 and 2024, respectively

Common stock, $ 0.001 par value, 50,000,000 shares authorized, 9,878,950 shares issued and 9,085,729 and 9,236,987 shares outstanding as of December 31, 2025 and 2024, respectively

Treasury stock, 641,963 shares repurchased as of December 31, 2024 and 2023 respectively

Treasury stock, 793,221 and 641,963 shares repurchased as of December 31, 2025 and 2024, respectively

( 1,500,385 )

10 unchanged sentences

CONSOLIDATED STATEMENTS OF OPERATIONS

Managed information technology revenue, includes $ 7,309,250 and $ 0 of related party revenue for the year ended December 31, 2025 and 2024, respectively

Procurement revenue, includes $ 117,787 and $ 0 of related party revenue for the year ended December 31, 2025 and 2024, respectively

Professional services revenue, includes $ 182,513 and $ 0 of related party revenue for the year ended December 31, 2025 and 2024, respectively

Subscription revenue

Costs and expenses

Total revenue

Costs and expenses, exclusive of depreciation and amortization shown separately below

Costs of revenue

Sales and marketing expense

Product development expense

Sales, marketing and product development expense (includes $ 344,365 in 2025 of related party expense)

General and administrative expense

Depreciation and amortization

Litigation expenses relating to the Cisco ManyCam Litigation

Total costs and expenses

Loss from continuing operations

Operating loss from continuing operations

( 4,719,179 )

9 unchanged sentences

( 4,268,675 )

(Loss) income from discontinued operations, net of income tax expense of $ 24,357 and $ 7,695 , respectively

Loss from discontinued operations, net of income tax expense of $ 24,357

( 4,157,534 )

6 unchanged sentences

Diluted – discontinued operations

Basic and diluted

Weighted average number of shares of Series A Preferred Stock used in calculating net loss per share of Series A Preferred Stock, basic and diluted

Weighted average number of shares of Common Stock used in

calculating net loss per share of Common Stock, basic and diluted

Basic and diluted net loss per share of Series A Preferred Stock, basic and diluted

Basic and diluted net loss per share of Common Stock, basic and diluted

Weighted average number of shares of Common Stock used in calculating net loss per share of Common Stock:

Basic and diluted

The accompanying notes are an integral part of

2 unchanged sentences

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’

FOR THE YEARS ENDED DECEMBER 31, 2024 AND 2023

Additional Paid-in

Total Stockholders’

FOR THE YEARS ENDED

DECEMBER 31, 2025 AND 2024

Stockholders’

Balance at December 31, 2023

1 unchanged sentence

$ ( 14,884,568 )

$ ( 13,817,233 )

Stock-based compensation expense

Repurchases of common stock

Exercise of employee stock options

( 8,426,209 )

3 unchanged sentences

$ ( 1,199,337 )

$ ( 23,310,777 )

Issuance of Series A Preferred Stock

Stock-based compensation expense

Exercise of employee stock options

Repurchases of common stock

( 1,956,536 )

3 unchanged sentences

$ ( 25,267,313 )

$ ( 23,310,777 )

The accompanying notes are an integral part of

5 unchanged sentences

$ ( 8,426,209 )

Net loss (income) from discontinued operations

( 1,619,673 )

Net loss from discontinued operations

Net loss from continuing operations

1 unchanged sentence

$ ( 4,268,675 )

Adjustments to reconcile net loss from continuing operations to net cash used in operating activities:

Adjustments to reconcile net loss from continuing operations to net cash provided by (used in) operating activities:

Amortization of intangible assets

Amortization of operating lease right-of-use assets

Income tax benefit

Depreciation of property and equipment

Income tax liability

( 2,329,547 )

Deferred tax liability

Stock-based compensation

Changes in operating assets and liabilities:

Allowance for credit losses

Changes in operating assets and liabilities, net of acquisition:

Accounts receivable

Operating lease liability

1 unchanged sentence

Prepaid expense and other current assets

Accounts payable, accrued expenses and other current liabilities

Accounts payable, accrued expenses and other current liabilities, related party

Deferred subscription revenue

Net cash used in operating activities – continuing operations

( 2,661,653 )

( 2,980,199 )

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

Net cash used in operating activities

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

( 2,661,653 )

Net cash used in operating activities –discontinued operations

Net cash provided by (used in) operating activities

( 3,019,287 )

Cash flows from investing activities:

Payment of contingent consideration

Cash paid for acquisition of NTS

( 4,000,000 )

Purchases of fixed assets

Net cash used in investing activities

( 4,280,149 )

Cash flows from financing activities:

Proceeds from exercise of employee stock options

Proceeds from sale of Transferred Assets

Purchase of treasury stock

Net cash provided by (used in) financing activities

Proceeds from exercise of employee stock options

Net cash provided by financing activities

Net decrease in cash and cash equivalents

2 unchanged sentences

Balance of cash and cash equivalents at beginning of year

Balance of cash and cash equivalents and restricted cash and cash equivalents at end of year

Cash and cash equivalents

Cash and cash equivalents (on deposit with related party)

Cash and cash equivalents - restricted cash (on deposit with related party)

Balance of cash and cash equivalents at end of year

The accompanying notes are an integral part of these consolidated financial

Supplemental non-cash disclosure:

Non-cash portion of consideration for acquisition of NTS (Series A Preferred Stock issuance)

The accompanying notes are an integral part of

these consolidated financial statements.

INTELLIGENT PROTECTION MANAGEMENT CORP.

1 unchanged sentence

Organization and Description of Business

The accompanying condensed consolidated financial

statements include Intelligent Protection Management Corp.

The audited consolidated financial statements

include Intelligent Protection Management Corp.

(f/k/a Paltalk, Inc.) and its wholly owned subsidiaries, A.V.M.

Software, Inc.,

Paltalk Software Inc., Paltalk Holdings, Inc., Tiny Acquisition Inc., Camshare, Inc., Fire Talk LLC, Vumber LLC and ManyCam ULC (collectively,

Software, Inc., Paltalk

Software Inc., Paltalk Holdings, Inc., Tiny Acquisition Inc., Camshare, Inc., Fire Talk LLC, Vumber LLC and ManyCam ULC (collectively,

the “Company”).

Prior to the completion of the Transactions (as

defined below), the Company operated a network of consumer applications.

The Company’s product portfolio included Paltalk, Camfrog

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

The Company’s 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.

Following the Transactions, the Company continues

to support its ManyCam software, which is a live streaming software and virtual camera that allows users to deliver professional live

videos on streaming platforms, video conferencing apps and distance learning tools.

Following the Transactions, the Company provides

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.

The Company has an over 20-year history of technology

innovation and holds eight patents.

Recent Developments

provides 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 businesses.

The Company also offers and supports its 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 Company has an

over 20-year history of technology innovation and holds eight patents.

Prior to the completion of the Transactions (defined

below), the Company operated a network of consumer applications.

The Company’s product portfolio included “Paltalk”,

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

The Company’s

other products included “Vumber”.

Acquisition of NTS

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

3 unchanged sentences

Merger Sub 2, LLC, a Delaware limited liability company and a direct and wholly owned subsidiary of the Company (“Second Merger

Sub”), NTS and NewtekOne, Inc., a Maryland corporation and the sole stockholder of NTS.

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 a wholly owned subsidiary of the Company.

Following the closing of the Acquisition (the “Acquisition Closing”), the Company changed its name from “Paltalk, Inc.”

to “Intelligent Protection Management Corp.” The aggregate consideration delivered by the Company 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 the Company’s 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 Note 11, “ Subsequent Events ” below.

connection with the Acquisition, the Company incurred professional fees of $ 1.8 million for the year ended December 31, 2024.

These amounts

are included in general and administrative expenses.

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 a wholly

owned subsidiary of the Company.

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

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

The aggregate consideration delivered by the Company

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 the Company’s 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 the Company’s 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 Note 3, “ Acquisition ”

In connection with the Acquisition, the Company incurred professional fees of $ 0.3 million for year ended December 31, 2025 and

$ 1.8 million for the year ended December 31, 2024.

These amounts are included in general and administrative expenses.

On the Closing Date and prior to the Acquisition

17 unchanged sentences

For more information, see

the Note 11, “ Subsequent Events ” below.

INTELLIGENT PROTECTION MANAGEMENT CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

the Note 13, “ Discontinued Operations ” below.

Discontinued Operations

During the year ended December 31, 2024, the Transferred Assets met

the criteria for classification as assets held for sale and discontinued operations as the Company received stockholder approval of the

sale of its Transferred Assets at its special meeting of stockholders held on December 30, 2024.

As such, assets and liabilities related

to these divested assets are presented as held for sale/discontinued operations on the consolidated balance sheet as of December 31, 2024

and 2023 respectively, and the results of operations are presented as discontinued operations on the consolidated statement of operations

for the fiscal years ended December 31, 2024 and 2023, respectively.

Subsequent to year end, on January 2, 2025, the Company completed

the Divestiture as described above.

During the year ended December 31, 2024, the Transferred

Assets met the criteria for classification as assets held for sale and discontinued operations as the Company received stockholder approval

of the sale of its Transferred Assets at its special meeting of stockholders held on December 30, 2024.

As such, assets and liabilities

related to the Transferred Assets are presented as held for sale/discontinued operations on the consolidated balance sheets as of December

31, 2024 and the results of operations are presented as discontinued operations on the consolidated statement of operations for the year

ended December 31, 2024.

On January 2, 2025, the Company completed the Divestiture as described above.

Employee Retention

Under the provisions

of the extension of the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”), the Company was eligible for

a refundable employee retention tax credit (the “ERTC”) subject to certain criteria.

of the extension of the Coronavirus Aid, Relief, and Economic Security Act, the Company was eligible for a refundable employee retention

tax credit (the “ERTC”) subject to certain criteria.

During the year ended December 31, 2023, the Company applied for the

ERTC and recorded a receivable in the amount of $ 343,045 , net of related costs.

As December 31, 2024, the remaining balance due to the

Company was $ 114,212 , which was included on the consolidated balance sheets as a receivable.

During the year ended December 31, 2025,

the Company applied for the ERTC and recorded a receivable in the amount of $ 343,045 , net of related costs, which was recognized in the

Company’s condensed consolidated statement of operations as other income.

As of December 31, 2023, the Company had received an aggregate

of $ 294,833 , which was recorded as a reduction of the receivable on the Company’s consolidated balance sheet.

As of December 31,

2024, the balance due to the Company was $ 114,212 .

the balance of the ERTC was received in full.

Summary of Significant Accounting Policies

2 unchanged sentences

include the accounts of the Company and its wholly owned subsidiaries and were prepared in conformity with accounting principles generally

accepted in the United States of America (“GAAP”) and with the requirements of the Security and Exchange Commission (“SEC”).

accepted in the United States of America (“GAAP”) and with the requirements of the Securities and Exchange Commission (“SEC”).

All intercompany balances and transactions have been eliminated upon consolidation.

Recent Accounting Standards

2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-07, “ Segment

Reporting (Topic 280):

Improvements to Reportable Segment Disclosures” (“ASU 2023-07”).

ASU 2023-07 is effective

for public entities for fiscal years beginning after December 15, 2023, and interim periods in fiscal years beginning after December 15,

2024, and requires single reporting entities to comply with the expanded reportable segment disclosures outlined in the ASU.

reportable segment disclosures are intended to enhance certain disclosures surrounding significant segment expenses.

2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-09, Improvements

to Income Tax Disclosures (“ASU 2023-09”), which requires more detailed income tax disclosures.

The guidance requires

entities to disclose disaggregated information about their effective tax rate reconciliation as well as expanded information on income

taxes paid by jurisdiction.

The disclosure requirements will be applied on a prospective basis, with the option to apply them retrospectively.

The standard is effective for annual periods beginning after December 15, 2024, with early adoption permitted.

We have elected to adopt

ASU 2023-09 prospectively on our annual income tax disclosures for the annual period ended December 31, 2025.

The standard expanded the

disclosures provided in our annual financial statements, particularly in the rate reconciliation and cash taxes paid sections, but the

adoption did not have a material effect on our consolidated results of operations, financial position or cash flows.

2025, the FASB issued ASU 2025-05, Financial Instruments – Credit Losses (Topic 326):

Measurement of Credit Losses

for Accounts Receivable and Contract Assets (“ASU 2025-05”), which allows an

entity to elect a practical expedient for measuring expected credit losses on current accounts receivable and current contract assets

arising from transactions accounted for as revenues from contracts customers.

This expedient allows an entity to assume that current economic

conditions as of the balance sheet date do not change for the remaining life of the asset.

ASU 2025-05 is effective for fiscal years beginning

after December 15, 2025 and interim periods within fiscal years beginning after December 15, 2026.

As permitted, we have elected to early

adopt the practical expedient as of December 31, 2025 and applied its provisions prospectively to the provision for uncollectable accounts.

The adoption of ASU 2025-05 did not have a material impact on our consolidated results of operations, cash flows or financial condition.

See “Accounts receivable – net of allowance” herein for additional information and disclosures impacted by ASU 2025-05.

In November 2024, the FASB issued ASU 2024-03,

Disaggregation of Income Statement Expenses .

The new standard requires entities to disclose additional information about certain

expenses, such as purchases of inventory, employee compensation, depreciation, intangible asset amortization, as well as selling expenses

included in commonly presented expense captions on the income statement.

The FASB further clarified the effective date in January 2025

with the issuance of ASU 2025-01, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic

Clarifying the Effective Date.

The ASU is effective for fiscal years beginning after December 15, 2026, and interim periods

beginning after December 15, 2027.

Companies have the option to apply this guidance either on a retrospective or prospective basis, and

early adoption is permitted.

The Company is currently evaluating this guidance to determine the impact it may have on its consolidated

financial statements and related disclosures.

Cash, Cash Equivalents and Restricted Cash

The Company considers all highly liquid investments

with an original maturity of three months or less at the date of purchase to be cash equivalents.

Cash and cash equivalents consist of

cash on deposit with banks and money market funds.

The Company maintains a certificate of deposit to satisfy the depository requirement

in the Loan Agreements (as defined and discussed in Note 11).

The Company maintains cash in bank accounts which, at times, may exceed

federally insured limits.

As part of its cash management process, the Company periodically reviews the relative credit standing of these

The Company has not experienced any losses in such accounts and periodically evaluates the credit worthiness of the financial institutions

and has determined the credit exposure to be negligible.

Accounts Receivable, net of allowance

Accounts receivable represents amounts owed to

the Company by third parties for technology services and related residuals.

The Company generally records a receivable when revenue is

recognized, as the timing of revenue recognition may differ from the timing of payment from customers.

Payment terms and conditions vary

by contract, although terms generally include a requirement of payment within 30 to 60 days.

The Company’s accounts receivable

do not bear interest and are recorded at the invoiced amount for those with unconditional rights to consideration.

Accounts receivable

are presented net of an allowance for credit loss on the consolidated balance sheets for any potentially uncollectible accounts under

the current expected credit loss model.

As of December 31, 2025, the assets and the related Current Expected Credit Losses reserve were not material.

See “Recent Accounting Standards” herein

for additional information on the adoption of ASU 2025-05 and the practical expedient related to credit losses.

The managed IT and subscription revenue is billed

For the majority of receivables, a provision for uncollectible accounts is established based on historical collection experience

and other factors.

For the remaining receivables, if the Company is aware of a specific customer’s inability to pay, a provision

for uncollectible accounts is recorded to reduce the receivable balance to the amount reasonably expected to be collected.

If circumstances

change, the estimate of the recoverability of accounts receivable could change as well.

Circumstances that could affect this estimate

include, but are not limited to, customer credit issues, customer deposits, and general economic conditions.

Customers’ accounts

are written off once they are deemed to be uncollectible.

The Company has elected the practical expedient to assume that current conditions

as of the balance sheet date will remain unchanged for the remaining life of the asset when estimating expected credit losses.

periods presented, uncollectible accounts were not material.

Segment Reporting

The Company reports its segment information to

14 unchanged sentences

resources based on segment assets, and therefore such information is not presented in the notes to the financial statements.

As the Company

is a single-segment business, the adoption of this new standard did not have a material effect on the Company’s financial statements.

In November 2024, the FASB issued ASU 2024-03, Disaggregation of Income Statement Expenses.

The new standard requires entities to disclose

additional information about certain expenses, such as purchases of inventory, employee compensation, depreciation, intangible asset amortization,

as well as selling expenses included in commonly presented expense captions on the income statement.

The FASB further clarified the effective

date in January 2025 with the issuance of ASU 2025-01, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures

(Subtopic 220-40):

Clarifying the Effective Date.

The ASU is effective for fiscal years beginning after December 15, 2026, and interim

periods beginning after December 15, 2027.

Companies have the option to apply this guidance either on a retrospective or prospective basis,

and early adoption is permitted.

The company is currently evaluating this guidance to determine the impact it may have on its consolidated

financial statements and related disclosures.

INTELLIGENT PROTECTION MANAGEMENT CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

is a single-segment business.

Use of Estimates

7 unchanged sentences

material to the financial statements.

During the year ended December 31, 2024, the most

significant accounting estimate inherent in the preparation of the Company’s financial statements

was the evaluation of goodwill for impairment.

The most significant accounting estimates inherent in the preparation of the Company’s financial

statements include impairments and fair value estimates for assets acquired in business combinations and assessment of useful lives of

acquired intangible assets.

The Acquisition-related fair values and estimates were based on a number of factors, including a valuation

by an independent third party.

The Company also uses a Black Scholes model for estimates in calculating share-based compensation.

Revisions to the Company’s estimates may

result in increases or decreases to revenues and income and are reflected in the consolidated financial statements in the periods in which

they are first identified.

If the Company’s estimates indicate that a contract loss will be incurred, a loss provision is recorded

in the period in which the loss first becomes probable and can be reasonably estimated.

Contract losses are the amount by which the estimated

costs of the contract exceed the estimated total revenue that will be generated by the contract and are included in cost of revenues in

the Company’s consolidated statements of operations.

There were no contract losses for the periods presented herein.

Business Combinations

The Company accounts for business combinations

in accordance with the provisions of Accounting Standards and Codifications (“ASC”) Topic 805, Business Combinations .

Business combinations are accounted for using the acquisition method, whereby the consideration transferred is allocated to the net assets

acquired based on their respective fair values measured on the acquisition date.

The difference between the fair value of these assets

and the purchase price is recorded as goodwill.

Transaction costs other than those associated with the issue of debt or equity securities,

and other direct costs of a business combination are not considered part of the business acquisition transaction and are expensed as incurred.

Revenue Recognition

In accordance with Accounting Standards and Codifications

(“ASC”) 606, Revenue from Contracts with Customers , revenue from contracts with customers was historically recognized

when control of the promised services was transferred to the customers in an amount that reflected the consideration the Company expected

to receive in exchange for those services.

Sales tax was excluded from reported revenue.

The Company elected the practical expedient allowable

by the guidance to not disclose information about remaining performance obligations pertaining to contracts that had an original expected

duration of one year or less.

Following the Transactions, the Company’s

revenue is measured based on the consideration specified in a contract with a customer.

The Company’s contracts with its 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.

The Company otherwise recognizes 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.

The Company recognizes 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 the Company has the right to consideration.

The Company recognizes 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.

In most cases, the Company

serves as principal;

therefore it recognizes revenue on a gross basis for each of the Company’s services and product offerings principally

because the Company is primarily responsible for fulfilling the promise to provide specified goods or service, and the Company has discretion

in establishing the price of specified good or service.

When the Company serves as an agent, it recognizes revenue on a net basis.

The Company classifies its 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 ( i.e.

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

For example, the Company recognizes a

receivable for revenue related to the Company’s transaction or volume-based contracts when earned regardless of whether amounts

have been billed.

Such receivables are presented in accounts receivable, net in the Company’s consolidated balance sheets.

maintains 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 are presented in “current and other assets” in

the Company’s consolidated balance sheets and primarily relate to unbilled amounts on fixed-price contracts utilizing the output

method of revenue recognition.

The Company’s contract assets and liabilities are reported at the end of each reporting period.

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.

The Company receives payments from customers based on the terms established

in their contracts, which may vary generally by contract type.

The Company’s contract assets and liabilities

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

At the beginning of 2025, the opening

balance in deferred revenue was $ 4,005,039 , which included $ 3,450,000 of deferred revenue (contractual) related to the acquired assets,

and the deferred balance at December 31, 2025 was $ 3,878,114 , a change of $ 126,925 during the year.

The opening balance of the contract

assets was $ 1,009,877 , also related to the acquired assets and the balance at December 31, 2025 was $ 44,743 , a change of $ 965,134 during

Of the $ 3,450,000 of deferred revenue related to the acquiree’s contractual deferred revenue as of the acquisition date,

$ 2,886,318 was recognized during the year ended December 31, 2025, there was no fair value adjustment

to this amount.

The Company sells hardware and software products

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

When the Company provides a combination of hardware

and software products with the provision of services, the Company separately identifies its 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 the Company would sell a promised good or service separately to a

The Company estimates the price based on observable inputs, including direct labor hours and allocatable costs, or uses observable

stand-alone prices when they are available.

The Company’s 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.

Subscription Revenue

The Company historically generated subscription revenue primarily from

monthly premium subscription services.

Subscription revenues are presented net of refunds, credits, and known and estimated credit card

During the years ended December 31, 2024 and 2023, subscriptions were offered in durations of one-, six- twelve- and twenty

four-month terms.

All subscription fees, however, were paid by credit card at the origination of the subscription regardless of the term

of the subscription.

Revenues from multi-month subscriptions were recognized on a straight-line basis over the period where the service

was 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.

Deferred revenue attributed to continuing operations at December

31, 2023 was $ 544,442 , and deferred revenue attributed to discontinued operation at December 31, 2023 was $ 1,498,920 , the total of $ 2,043,362

which was subsequently recognized as subscription revenue during the year ended December 31, 2024.

The ending balance of deferred revenue

at December 31, 2024 related to subscription revenue from continuing operations was $ 555,039 and deferred revenue related to discontinued

operations was $ 1,596,199 for a total of $ 2,151,238 .

In addition, the Company offered virtual gifts

to its users during the years ended December 31, 2024 and 2023.

Users could purchase credits in $5, $10 or $20 increments that can be

redeemed for a host of virtual gifts such as a rose, a beer or a car, among other items.

These gifts were given among users to enhance

communication and were typically redeemed within 30 days of purchase.

Upon purchase, the virtual gifts were credited to the users’

account and were under the users’ control.

Virtual gift revenue was recognized upon the users’ redemption of virtual gifts

at the fixed transaction price and included in subscription revenue in the accompanying consolidated statements of operations.

gift revenue is presented as deferred revenue in the consolidated balance sheets until virtual gifts are redeemed.

Virtual gift revenue

was $ 3,017,047 and $ 4,522,461 for the years ended December 31, 2024 and 2023, respectively.

The ending balance of deferred revenue from

virtual gifts at December 31, 2024 and 2023 was $ 673,874 and $ 374,696 , respectively.

These amounts are included in discontinued operations

for all periods presented as they relate to revenue from the Transferred Assets.

The accounts receivable amount is related to amounts due in connection with advertising revenue.

At December 31, 2024, approximately 50 %

of the Company’s accounts receivable was from four customers.

At December 31, 2023, approximately 31 % of the Company’s accounts

receivable was from three customers.

The Company also generates subscription revenue

from monthly premium subscription services from sales of its 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.

Property and equipment

Property and equipment are stated at cost, less

accumulated depreciation and amortization.

Depreciation and amortization is calculated using the straight-line method over the estimated

useful lives of those assets, as follows:

Computers and equipment 5 years

Website development 3 years

Furniture and fixtures 7 years

Repairs and maintenance costs are expensed as

Property and equipment is evaluated for recoverability

whenever events or changes in circumstances indicate that the carrying amounts of the assets might not be recoverable.

In evaluating an

asset for recoverability, the Company estimates the future cash flow expected to result from the use and eventual disposition of the asset.

If the expected future undiscounted cash flow is less than the carrying amount of the asset, an impairment loss, equal to the excess of

the carrying amount over the fair value of the asset, is recognized.

No impairment losses were recorded on property and equipment for

the periods presented in these consolidated financial statements.

Intangible Assets

Intangible assets include intellectual property

either owned by the Company or to which the Company has a license.

Intangible assets acquired in a business combination are recognized

at fair value using generally accepted valuation methods deemed appropriate for the type of intangible asset acquired.

The Company’s

intangible assets include patents, internally developed software, intellectual property ( i.e.

, trade names, trademarks and URLs)

and subscriber relationships/customer lists.

The Company’s intangible assets represent

definite lived intangible assets, which are being amortized on a straight-line basis over their estimated useful lives as follows:

Trade names, trademarks, product names, URLs

Internally developed software

Non-compete agreements

Subscriber/customer relationships

Order Backlog

The Company reviews intangible assets for impairment

whenever events or changes in business circumstances indicate that the carrying amount of the assets might not be recoverable.

that the Company considers in deciding when to perform an impairment review include significant underperformance of the business in relation

to expectations, significant negative industry or economic trends, and significant changes or planned changes in the use of the assets.

If an impairment review is performed to evaluate a long-lived asset for recoverability, the Company compares forecasts of undiscounted

cash flows expected to result from the use and eventual disposition of the long-lived asset to its carrying value.

An impairment loss

would be recognized when estimated undiscounted future cash flows expected to result from the use of an asset are less than its carrying

The impairment loss would be based on the excess of the carrying value of the impaired asset over its fair value, determined based

on discounted cash flows.

No impairments were recorded on intangible assets, as no impairment indicators were noted for the periods presented

in these consolidated financial statements.

The fair values of acquired

intangible assets are determined based on estimates and assumptions that are deemed reasonable by the Company.

Significant assumptions

include the discount rates and certain assumptions that form the basis of the forecasted results of the acquired business, including EBITDA,

revenue, revenue growth rates, royalty rates and technology obsolescence rates.

These assumptions are forward looking and could be affected

by future economic and market conditions.

The Company engages third-party valuation specialists who review the Company’s critical

assumptions and calculations of the fair value of acquired intangible assets in connection with significant acquisitions.

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.

The Company evaluates

its goodwill for impairment in accordance with ASC Topic 350, Intangibles - Goodwill and Other , 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 goodwill.

The Company performs 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), the Company determines 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.

During the year ended December 31, 2025, the Company recorded $ 704,000 of re-measurement adjustment in connection

with the fair value of the contingent liability.

The Company tests the recorded amount of goodwill

for impairment on an annual basis on December 31 of each fiscal year or more frequently if there are indicators that the fair value of

the goodwill exceeds its carrying amount.

The Company has one reporting unit.

The Company determines if an arrangement is, or

contains, a lease at inception.

Operating leases are included in operating lease right-of-use (“ROU”) assets, operating lease

liabilities, current and operating lease liabilities, noncurrent in the Company’s consolidated balance sheets.

ROU assets represent

the Company’s right to use an underlying asset for the lease term and lease liabilities represent its obligation to make lease payments

arising from the lease.

Operating lease ROU assets and liabilities are recognized at commencement date (or acquisition date) based on

the present value of lease payments over the lease term.

As the Company’s leases do not provide an implicit rate, the Company uses

an incremental borrowing rate based on the information available at the transition date and subsequent lease commencement dates in determining

the present value of lease payments.

This is the rate the Company would have to pay if borrowing on a collateralized basis over a similar

term to each lease.

The Company’s lease terms may include options to extend or terminate the lease when it is reasonably certain

that the Company will exercise that option.

Lease expense for lease payments made under operating leases is recognized on a straight-line

basis over the lease term.

Fair Value Measurements

Fair value measurements affect the Company’s

accounting for certain of its financial assets.

Fair value is defined as the price that would be received to sell an asset or paid to

transfer a liability in an orderly transaction between market participants at the measurement date and is measured according to a hierarchy

that includes:

Observable inputs, such as quoted prices in active markets.

Inputs, other than quoted prices in active markets, that are observable either directly or indirectly.

Level 2 assets and liabilities include debt securities with quoted market prices that are traded less frequently than exchange-traded instruments.

This category includes U.S.

government agency-backed debt securities and corporate-debt securities.

Unobservable inputs in which there is little or no market data.

In connection with the Acquisition, the Company

recognized a non-current liability of $ 704,000 for the Earn-Out (as defined below).

The Earn-Out Liability (as defined below) is classified

as a Level 3 measurement for which fair value is derived from inputs that are unobservable and significant to the overall fair value measurement.

The fair value of the Earn-Out Liability is estimated using a Monte Carlo simulation model that utilizes key assumptions including forecasted

revenues and volatilities of the underlying financial metrics during the Earn-Out period.

The Company assesses the fair value of the Earn-Out

Liability at each reporting period.

Any subsequent changes in the estimated fair value of the liability are reflected in selling, general

and administrative expenses until the liability is settled.

Concentration of Credit

As of December 31, 2025, two of the Company’s

customers had accounts receivable balances more than 10% of the total accounts receivable balance.

The two customers represented 15 % and

24 %, respectively, of the December 31, 2025 total accounts receivable balance.

For the year ended December 31, 2025, Newtek, a related

party, and its affiliates represented 32 % of total revenue.

Net (Loss) Income Per Share

8 unchanged sentences

antidilutive, they were excluded from the calculation of diluted income per share.

INTELLIGENT PROTECTION MANAGEMENT CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Cash and Cash Equivalents

The Company considers all highly liquid investments

with an original maturity of three months or less at the date of purchase, as well as certain other short term treasury bills, to be cash equivalents.

Cash and cash equivalents consist of

cash on deposit with banks and money market funds.

The Company maintains cash in bank accounts which, at times, may exceed federally insured

As part of its cash management process, the Company periodically reviews the relative credit standing of these banks.

has not experienced any losses in such accounts and periodically evaluates the credit worthiness of the financial institutions and has

determined the credit exposure to be negligible.

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.

The Company evaluates

its goodwill for impairment in accordance with ASC 350, Intangibles – Goodwill and Other (as amended by ASU 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 goodwill.

The Company performs 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),

the Company determines 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.

The Company tests the recorded amount of goodwill for impairment on

an annual basis on December 31 of each fiscal year or more frequently if there are indicators that the fair value of the goodwill exceeds

its carrying amount.

The Company has one reporting unit.

The Company received stockholder approval for the sale of the Transferred Assets

at its special meeting of stockholders held on December 30, 2024.

On December 31, 2024, following its special meeting of stockholders,

the Company performed a qualitative assessment and concluded that $ 3.7 million was impaired as of December 31, 2024 and is included in

the loss from discontinued operations.

The Company accounts for income taxes under the

26 unchanged sentences

low-taxed income is to treat, as a period cost, when incurred.

INTELLIGENT PROTECTION MANAGEMENT CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

On the Closing Date, the Company acquired NTS

through a two-step merger process to enter a new line of business.

As a result of the Acquisition, the Company acquired all of the issued

and outstanding equity interests of NTS.

The Acquisition was accounted for as a business combination using the acquisition method of accounting

in accordance with ASC Topic 805, Business Combinations .

Substantially all of the Company’s revenue and operating results

from continuing operations for the year ended December 31, 2025 were attributed to the operations of NTS.

The aggregate purchase price delivered by the

Company to Newtek was $ 12,904,000 , which consisted of (i) $ 4,000,000 in cash and (ii) 4,000,000 shares of Series A Preferred

Stock, which had a fair value of $ 8,200,000 on the Closing Date.

Newtek is also entitled to earnout payments under certain circumstances

of up to $ 5,000,000 (the “Earn-Out” or “Earn-Out Liability”) based on the Company’s achievement of

certain cumulative average adjusted EBITDA thresholds for the 2025 and 2026 fiscal years, which had a fair value of $ 704,000 on the

Closing Date.

The Company financed the cash portion of the purchase price using existing cash on-hand.

The Series A Preferred Stock will automatically

convert into one share of the Company’s 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.

The Earn-Out may be paid, in the Company’s

sole discretion, in cash, in shares of Series A Preferred Stock (the “Acquisition Earn-Out Stock Consideration”) or in a combination

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 the Company’s 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.

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 (the “BHCA”), and as implemented and interpreted by the Board of Governors of

the Federal Reserve System) in the Company to exceed one-third of the Company’s 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 the

Company 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 Amount paid in cash.

The Company recorded a non-current liability of

$ 704,000 for the fair value of the contingent consideration related to the expected Earn-Out.

The Earn-Out Liability is classified

as a Level 3 measurement for which fair value is derived from inputs that are unobservable and significant to the overall fair value measurement.

The fair value of such Earn-Out Liability was estimated using a Monte Carlo simulation model that utilizes key assumptions including forecasted

average EBITDA and volatilities of the underlying financial metrics during the Earn-Out periods.

The Company determined its initial allocation

of the purchase price at the date of acquisition based upon its understanding of the fair value of the acquired assets and assumed liabilities.

The Company obtained the information used for the purchase price allocation during due diligence and through other sources.

In the months

after the Closing Date, as the Company obtained additional information about the acquired assets and liabilities, including results of

operations, and as it learned more about the newly acquired business, it was able to refine the estimates of fair value and more accurately

allocate the purchase price.

Only facts and circumstances that existed as of the acquisition date are considered for subsequent adjustment.

For the year ended December 31, 2025, the Company determined that it should revise the Earn-Out liability by lowering it to $ 0 , based

on facts and circumstances that existed at the Acquisition date, but were discovered within the remeasurement period.

The Company adjusted

this Earn-Out Liability with a corresponding decrease to goodwill.

In addition, the Company revised the accounts receivable opening balance

by $ 257,293 as amounts originally estimated to be uncollectible, were collected.

The measurement period for this acquisition closed on

January 2, 2026.

The Company made appropriate adjustments to the

purchase price allocation prior to completion of the measurement period, as required.

The Company has included tables for the respective

acquired identifiable assets and assumed liabilities as of the Closing Date and December 31, 2025 below.

Under the acquisition method of accounting, the

assets acquired and liabilities assumed were recorded at their fair values as of the Closing Date.

The fair values of intangible assets

were based on valuations using various income approaches and methods, such as the multi-period excess earnings method, relief from royalty

method, etc., which require the use of significant estimates and assumptions, including estimating future cash flows and developing appropriate

discount rates.

The excess of the purchase price over the tangible assets, identifiable intangible assets and assumed liabilities was

recorded as goodwill.

The results of NTS have been included in the Company’s single-segment business.

The fair value of all the acquired identifiable

assets and liabilities summarized below were based on preliminary valuations and were updated as the Company obtained additional information

during the acquisition measurement period, which ended on January 2, 2026.

The purchase price allocation as of the Closing Date and

then re-forecasted as of December 31, 2025 was as follows:

Assets acquired:

Accounts receivable

$ 257,293 (1)

Prepaid expenses and other current assets

Property and equipment, net

Operating lease right-of-use asset

Intangible assets

The Company’s acquired amortizable intangible

assets as of December 31, 2024 primarily consisted of the ManyCam assets acquired in June 2022, which consist of internally developed

software, intellectual property (trade names, trademarks and URLs) and subscriber relationships/customer lists.

The Company’s intangible assets represent

definite lived intangible assets, which are being amortized on a straight-line basis over their estimated useful lives as follows:

Trade names, trademarks, product names, URLs

Internally developed software

Non-compete agreements

Subscriber/customer relationships

The Company reviews intangible assets for impairment

whenever events or changes in business circumstances indicate that the carrying amount of the assets might not be recoverable.

that the Company considers in deciding when to perform an impairment review include significant underperformance of the business in relation

to expectations, significant negative industry or economic trends, and significant changes or planned changes in the use of the assets.

If an impairment review is performed to evaluate a long-lived asset for recoverability, the Company compares forecasts of undiscounted

cash flows expected to result from the use and eventual disposition of the long-lived asset to its carrying value.

An impairment loss

would be recognized when estimated undiscounted future cash flows expected to result from the use of an asset are less than its carrying

The impairment loss would be based on the excess of the carrying value of the impaired asset over its fair value, determined based

on discounted cash flows.

No impairments were recorded on intangible assets, as no impairment indicators were noted, for the periods presented

in these consolidated financial statements.

Discontinued Operations

During the year ended December 31, 2024, the Transferred Assets met

the criteria for classification as assets held for sale and discontinued operations as the Company received stockholder approval of the

sale of its Transferred Assets at its special meeting of stockholders held on December 30, 2024.

Accordingly, the assets and liabilities

related to the Transferred Assets are presented as discontinued operations for all periods presented.

Subsequent to year end, on January

2, 2025, the Company completed the Divestiture as described above and received cash proceeds of $ 1.35 million.

The following table summarizes the operating results of the Transferred

Assets for the periods indicated:

For the Year Ended

Subscription revenue

Advertising revenue

Total assets acquired

Liabilities assumed:

Accounts payable

Accrued expenses and other current liabilities

Operating lease liabilities

Deferred revenue

Deferred tax liability

Total liabilities assumed

Total identifiable net assets acquired

Total purchase price:

(includes $4,000,000 of cash, 4,000,000 shares of Series A Preferred Stock, which had a fair value of $8,200,000 and $704,000 of contingent consideration at the closing and $4,000,000 of cash, 4,000,000 shares of Series A Preferred Stock, which had a fair value of $8,200,000 and $0 of contingent consideration at December 31, 2025, respectively)

(1) Reflects an adjustment of $ 257,293 related to valuation of accounts

receivable on the Closing Date.

(2) Reflects an adjustment of $ 704,000 related to the re-measurement of the fair value of the related contingent

consideration (earnout) liability

The preliminary purchase price allocation resulted

in goodwill of $ 5,516,501 ($ 4,555,208 as of December 31, 2025) and will be deductible for income tax purposes.

The resulting

amount of goodwill is attributed to expected synergies from cross-sale opportunities and future growth.

Intangible assets of $ 7,910,000 include

customer relationships of $ 5,275,000 , order backlog of $ 438,000 , and trademarks and trade names of $ 2,197,000 , which are being amortized

on a straight-line basis, over weighted-average useful lives of 8 years , 1 year , and 8 years , respectively.

After the closing of the Acquisition, and in the

normal course of business, certain amounts were due to the Company by Newtek and its affiliates.

For the year ended December 31, 2025,

sales to Newtek and its affiliates totaled $ 7,609,550 .

In connection with the Acquisition, the Company

entered into a referral arrangement with Newtek pursuant to which Newtek will refer potential clients to the Company for a fee.

arrangement with Newtek is terminable by either the Company or Newtek at any time.

The Company paid Newtek and its affiliates $ 344,365 for

the year ended December 31, 2025 in connection with the referral arrangement.

Supplemental Pro Forma Information

The following unaudited pro forma consolidated

financial information reflects the results of operations of the Company for the year ended December 31, 2024 as if the Acquisition had

occurred as of January 1, 2024 and gives effect to transactions that are directly attributable to the Acquisition.

These amounts are based

on financial information of NTS and are not necessarily indicative of what the Company’s operating results would have been had the

Acquisition taken place on the date presented, nor is it indicative of the Company’s future operating results.

As the Acquisition

occurred on January 2, 2025, the Company’s results of operations for the year ended December 31, 2024 include those results attributable

to the acquired operations of NTS.

2024 (unaudited)

Total Revenue

Costs and expenses

Cost of revenue

Sales and marketing expense

Product development expense

General and administrative expense

Impairment loss in connection with Divestiture

Total Costs and Expenses

(Loss) Income from discontinued operations

( 4,133,177 )

Income tax liability

Net (loss) income from discontinued operations

$ ( 4,157,534 )

INTELLIGENT PROTECTION MANAGEMENT CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Furthermore, in connection with the Divestiture,

the Company evaluated the held for sale disposal group for impairment as follows:

Estimated proceeds from sale of Transferred Assets, net of $283K of expenses

Net carrying value of the disposal group

( 4,916,796 )

Impairment loss on held for sale assets

Net Income from Continuing Operations

$ ( 328,570 )

The Company allocated the impairment loss in connection

with the assets held for sale to goodwill.

The following table summarizes the assets and

liabilities of the Transferred Assets included in the consolidated balance sheets for the periods indicated, after recognition of the

impairments described above and are included as assets and liabilities attributed to discontinued operations:

The pro forma adjustments for the periods presented

include additional amortization expense related to the fair value of the acquired intangible assets as if such assets were acquired on

January 1, 2024.

Property and Equipment, net

Property and equipment consisted of the following

for the periods presented:

As of December 31,

Accounts receivable, net

Prepaids and other current assets

Total current assets

Total Assets - discontinued operations

Accounts payable

Accrued expenses

Deferred revenue

Total Liabilities - discontinued operations

Intangible Assets, Net, Continuing Operations

Computer equipment

Datacenter software

Total property and equipment

Accumulated depreciation

Total property and equipment, net

Depreciation expense for the year ended December

31, 2025 was $ 467,567 .

The Company only holds property and equipment in the United States.

Intangible Assets, Net

Intangible assets, net consisted of the following for the periods presented:

6 unchanged sentences

( 3,366,707 )

Order Backlog

Total intangible assets

1 unchanged sentence

$ ( 6,922,751 )

During the year ended December 31, 2023, in connection

with the previously acquired ManyCam assets and pursuant to the securities purchase agreement related to such asset acquisition, the Company

made an earn-out payment of $ 85,000 because the sales of the ManyCam software, less chargebacks and refunds, in the six-month period following

the closing of the acquisition exceeded $ 600,000 but were less than $ 700,000 .

No intangible assets were sold in the Divestiture.

3 unchanged sentences

is estimated to be $ 1,449,562 in 2026, $ 1,449,562 in 2027, $ 1,449,562 in 2028, $ 1,235,295 in 2029 and $ 2,134,855 thereafter.

INTELLIGENT PROTECTION MANAGEMENT CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The Organization for Economic Co-operation and

Development Pillar Two Model Rules are intended to apply for tax years beginning in 2024.

The Pillar Two Model Rules establishes a global

minimum tax of 15 % for multinational companies with consolidated revenue above € 750 million.

Many foreign jurisdictions have adopted

the Pillar Two Model Rules and other foreign jurisdictions are in the process of enacting legislation to adopt it.

The Company does not

expect to be impacted by the Pillar Two Model Rules as it will not meet the consolidated revenue threshold in the near term.

In December 2023, the FASB issued ASU 2023-09,

“ Income Taxes (Topic 740) :

Improvements to Income Tax Disclosures.” ASU 2023-09 is intended to enhance the transparency

and decision usefulness of income tax disclosures for publicly traded companies.

The amendments in ASU 2023-09 address investor requests

for enhanced income tax information primarily through changes to the rate reconciliation and income taxes paid information.

will be effective for the Company in the annual period beginning January 1, 2025, though early adoption is permitted.

The Company is still

evaluating the presentational effect that ASU 2023-09 will have on its financial statements, but the Company expects considerable changes

to its income tax footnote.

Both adjustments were non-cash and had no

effect on the Company’s cash flows.

Accrued Expenses and Other Current Liabilities

Accrued expenses and other current liabilities consisted of the following

for the periods presented:

Compensation, benefits and payroll taxes

Other accrued expenses

Amounts due to Meteor Mobile

Total accrued expenses and other current liabilities

On April 9, 2021, the

Company entered into a lease extension agreement with Jericho Executive Center LLC (“JEC”) for its office space at 30 Jericho

Executive Plaza in Jericho, New York, which commenced on December 1, 2021.

On May 28, 2024, the Company entered into an additional lease

extension agreement with JEC, which extends the lease period by two years to November 30, 2026 .

Beginning on December 1, 2024, the

monthly rent totaled $ 6,850 per month.

The new extension gave the Company an option to terminate the second year in July 2025, which

the Company did not elect to exercise.

The Company’s monthly office rent payments under the lease are currently approximately $ 7,055 per

As of December 31, 2025 and 2024 the Company had no long-term leases that were classified as financing leases and did not have

additional operating or financing leases that had not yet commenced.

In connection with the

Acquisition, as described in Note 1, the Company assumed an operating lease with IO New Jersey One, LLC (“Iron Mountain”)

for a data center that includes office space and equipment located in Edison, New Jersey.

The lease with Iron Mountain expires on April

30, 2026, and will automatically renew thereafter for additional terms of one year each, unless either party provides the other party

with written notice that it will not renew the lease within ninety days of the current term.

The renewal options have not been included

in the Company’s operating lease right-of-use asset and liability, as the Company is not reasonably certain to exercise such options

as of December 31, 2025.

The Company’s monthly rent payments under the lease are currently $ 12,255 per month.

In connection with the

Acquisition, the Company also assumed an operating lease with Aligned Data Centers (Phoenix) PropCo, LLC (“ADC”) for a data

center that includes office and storage space located in Phoenix Arizona.

As of the Closing Date, the lease with ADC was set to expire

on August 30, 2025, subject to automatically one-year renewals thereafter, unless either party provided a notice of non-renewal within

six months of the current term.

Since the Company was not reasonably certain to exercise such options, and the remaining lease term did

not extend beyond twelve months of the Closing Date, the Company applied the short-term measurement and recognition exemption in ASC Topic

842, Leases , as of January 2, 2025.

On January 24, 2025, the Company entered into a lease extension agreement with ADC, which extends

the lease period by two years to August 30, 2027.

Since the lease extension agreement resulted in a lease term greater than twelve months,

the Company recorded an operating lease right-of-use asset and liability on January 24, 2025, which includes the remaining lease term

of approximately seven months and two-year extension term.

The lease extension agreement modified the automatic renewal term from one

year to two years, which has not been included in the Company’s operating lease right-of-use asset and liability, as the Company

is not reasonably certain exercise such options as of December 31, 2025.

The Company’s monthly rent payments under the lease are

currently $ 53,853 per month.

As of December 31, 2025,

the Company had no long-term leases that were classified as financing leases and did not have additional operating or financing leases

that had not yet commenced.

As of December 31, 2025,

the Company had operating lease liabilities of approximately $ 1,144,496 (of which $ 756,590 is classified as short-term liabilities and

$ 387,906 is classified as long-term liabilities) and operating lease right-of-use assets of approximately $ 1,140,196 , all of which

are included in the accompanying consolidated balance sheets.

Total rent expense for the year ended December

31, 2025 and 2024 was $ 907,332 and $ 85,259 respectively, of which $ 33,400 and $ 6,000 , respectively, was sublease income.

is recorded under general and administrative expense in the consolidated statements of operations.

The following table summarizes the Company’s

operating leases for the periods presented:

Cash paid for amounts included in the measurement of operating lease liabilities:

$ 909,846 $ 82,176

Weighted average assumptions:

Remaining lease term 1.49 0.9

Discount rate 4.6 % 2.3 %

As of December 31, 2025, future minimum payments under non-cancellable

operating leases were as follows:

For the year ended December 31:

present value adjustment

Present value of minimum lease payments

Current liability

Long term liability

The Company is subject to evolving global minimum

tax rules developed by the Organization for Economic Co-operation and Development (“OECD”), commonly referred to as Pillar

Two, which generally impose a 15 % minimum effective tax rate on large multinational enterprises.

Although the Pillar Two model rules provide

a framework for applying the minimum tax, countries may enact Pillar Two slightly differently than the model rules and on different timelines

and may adjust domestic tax incentives in response to Pillar Two.

In January 2025, the United States issued an executive order announcing

opposition to aspects of these rules.

In January 2026, the OECD/G20 announced the Side-by-Side (SbS) package, implemented as administrative

guidance and modifying the operation of Pillar Two rules.

The package introduces simplifications and new safe harbors for U.S.

multinational companies where domestic and international tax systems meet robust requirements to coexist with Pillar Two, which would

fully exempt U.S.-parented groups from the application of two of the three Pillar Two top-up taxes.

The SbS package also extends the current

Transitional Country-by-Country Reporting (CbCR) Safe Harbor by one year, through the end of fiscal year 2027.

Based on legislation enacted

to date and preliminary testing, Pillar Two had no impact on our 2025 effective tax rate.

We currently do not expect Pillar Two to significantly

impact our effective tax rate going forward.

The components of loss before income tax benefit

are presented as follows:

Domestic Operations

United States

$ ( 3,065,304 )

$ ( 3,756,366 )

Foreign Operations

Loss from continuing operations before income tax benefit

( 1,218,031 )

Loss before Income Taxes

$ ( 4,283,335 )

The Company’s benefit for income taxes is

comprised of the following:

$ ( 4,406,264 )

The Company’s (benefit) provision for income

taxes is comprised of the following:

State and local

Total Current

Total Current Tax Expense

( 1,661,100 )

State and local

Change in Valuation Allowance

Total Deferred

Total Benefit

Total Deferred Tax Benefit

( 2,336,748 )

The Company’s effective tax rate differs

from the U.S.

federal statutory income tax rate of 21 % for 2024 and 2023 as follows:

Total Tax Benefit

$ ( 2,326,799 )

$ ( 137,589 )

A reconciliation of the provision for income taxes

to the amount computed by applying the 21 % statutory U.S.

federal income tax rate to income before income taxes after the adoption of

ASU 2023-09 is as follows:

December 31, 2025

Income tax at statutory federal tax rate

$ ( 899,652 )

State and local income tax, net of federal income tax effect 1

Foreign tax effects

Change in valuation allowances

( 1,753,177 )

Nontaxable or nondeductible items:

Other nontaxable of nondeductible items

Gain on Non-Deductible Goodwill

Effective tax rate

$ ( 2,326,799 )

1 State taxes in California, New Jersey, New York, and New

York City made up the majority (greater than 50%) of the tax effect in this category.

A reconciliation of the provision for income taxes

to the amount computed by applying the 21 % statutory U.S.

federal income tax rate to income before income taxes for years prior to

the adoption of ASU 2023-09 is as follows:

Income tax benefit at federal statutory rate

7 unchanged sentences

Effective tax rate

INTELLIGENT PROTECTION MANAGEMENT CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Deferred income taxes reflect the net tax effects of temporary differences

between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes.

Significant components of the Company’s deferred tax assets and liabilities are as follows and relate to continuing operations:

Deferred income taxes reflect the net tax effects

of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used

for income tax purposes.

Significant components of the Company’s deferred tax assets and liabilities are as follows:

Deferred Tax Assets:

3 unchanged sentences

Amortization of intangible assets

Lease Liability

Capitalized IRC §174 costs

5 unchanged sentences

Amortization of intangible assets

( 1,922,537 )

Property and equipment

Total Deferred Tax Liabilities

( 2,322,689 )

Net Deferred Tax Liability

1 unchanged sentence

$ ( 429,045 )

In assessing the Company’s ability to recover its deferred tax

assets, the Company evaluated whether it is more likely than not that some portion or the entire deferred tax asset will be realized.

The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income in those periods in which temporary

differences become deductible and/or net operating losses can be utilized.

The Company considered all positive and negative evidence when

determining the amount of the net deferred tax assets that are more likely than not to be realized.

This evidence includes, but is not

limited to, historical earnings, scheduled reversal of taxable temporary differences, tax planning strategies and projected future taxable

A significant piece of objective negative evidence evaluated was cumulative loss incurred over the three-year period ended December

Such objective evidence limits the ability to consider other subjective evidence, such as the Company’s projections for

future growth.

In assessing the Company’s ability to recover

its deferred tax assets, the Company evaluated whether it is more likely than not that some portion or the entire deferred tax asset will

The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income in those periods

in which temporary differences become deductible and/or net operating losses can be utilized.

The Company considered all positive and

negative evidence when determining the amount of the net deferred tax assets that are more likely than not to be realized.

This evidence

includes, but is not limited to, historical earnings, scheduled reversal of taxable temporary differences, tax planning strategies and

projected future taxable income.

A significant piece of objective negative evidence evaluated was cumulative loss incurred over the three-year

period ended December 31, 2025.

Such objective evidence limits the ability to consider other subjective evidence, such as the Company’s

projections for future growth.

Based on the weight of available evidence, the Company determined that its U.S.

deferred tax assets are not realizable

on a more-likely-than-not basis and has recorded a valuation allowance against its net U.S.

deferred tax assets are

not realizable on a more-likely-than-not basis and has recorded a valuation allowance against its net U.S.

deferred tax assets.

The Company’s valuation

allowance increased by $ 468,900 during 2024.

The Company will continue to evaluate its deferred tax assets to determine whether any changes

in circumstances could affect the realization of their future benefit.

If it is determined in future periods that portions of the Company’s

deferred income tax assets satisfy the realization standards, the valuation allowance will be reduced accordingly.

The Company’s

valuation allowance decreased by $ 1,454,892 during 2025 largely due to a partial valuation allowance reversal resulting from the NTS business

combination which created a source of future taxable income.

The Company will continue to evaluate its deferred tax assets to determine

whether any changes in circumstances could affect the realization of their future benefit.

If it is determined in future periods that

portions of the Company’s deferred income tax assets satisfy the realization standards, the valuation allowance will be reduced

As of December 31, 2025, the Company had U.S.

3 unchanged sentences

not subject to limitation under Section 382 may be used to offset 80 % of future taxable income and can be carried forward indefinitely.

The Company applies the applicable

authoritative guidance which prescribes a comprehensive model for the manner in which a company should recognize, measure, present

and disclose in its financial statements all material uncertain tax positions that the Company has taken or expects to take on a tax

As of December 31, 2024, the Company had no uncertain tax positions.

As such, there are no uncertain tax positions for

which it is reasonably possible that the total amounts of unrecognized tax benefits will significantly increase or decrease within

12 months from December 31, 2024.

The tax years 2021-2024 generally remain open to examination by major taxing jurisdictions to which the Company is subject.

INTELLIGENT PROTECTION MANAGEMENT CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Accrued Expenses and Other Current Liabilities, Continuing Operations

Accrued expenses and other current liabilities consisted of the following

for the periods presented:

Compensation, benefits and payroll taxes

Other accrued expenses

Total accrued expenses and other current liabilities

The Company had total state net operating loss carryforward of $ 11.3 million, which will begin to expire in varying amounts starting in

The Company applies the applicable authoritative

guidance which prescribes a comprehensive model for the manner in which a company should recognize, measure, present and disclose in its

financial statements all material uncertain tax positions that the Company has taken or expects to take on a tax return.

As of December 31,

2025, the Company had no uncertain tax positions.

As such, there are no uncertain tax positions for which it is reasonably possible that

the total amounts of unrecognized tax benefits will significantly increase or decrease within 12 months from December 31, 2025.

tax years 2022-2025 generally remain open to examination by major taxing jurisdictions to which the Company is subject.

Income Taxes Paid

Income taxes paid, net of refunds received, consisted of the following:

State and local

Income taxes paid, net of refunds received

Stockholders’ Equity

The Paltalk, Inc.

Amended and Restated 2011 Long-Term

Incentive Plan (the “2011 Plan”) was terminated as to future awards on May 16, 2016.

A total of 121,930 shares of the Company’s

common stock may be issued pursuant to outstanding options awarded under the 2011 Plan;

however, no additional awards may be granted under

The Paltalk, Inc.

2016 Long-Term Incentive Plan (the “2016 Plan”) was adopted by the Company’s stockholders

on May 16, 2016 and permits the Company to award stock options (both incentive stock options and non-qualified stock options), stock appreciation

rights, restricted stock, restricted stock units, performance awards, dividend equivalent rights, and other stock-based awards and cash-based

incentive awards to its employees (including an employee who is also a director or officer under certain circumstances), non-employee

directors and consultants.

The maximum number of shares of common stock that may be issued pursuant to awards under the 2016 Plan is 1,300,000

shares, 100 % of which may be issued pursuant to incentive stock options.

In addition, the maximum number of shares of common stock that

may be issued under the 2016 Plan may be increased by an indeterminate number of shares of common stock underlying outstanding awards

issued under the 2011 Plan that are forfeited, expired, cancelled, or settled in cash.

As of December 31, 2024, there were 727,419 shares

available for future issuance under the 2016 Plan.

Intelligent Protection Management Corp.

2025 Long-Term Incentive Plan

On May 8, 2025, at the Company’s 2025 annual

meeting of stockholders (the “2025 Annual Meeting”), the Company’s stockholders approved the Intelligent Protection

Management Corp.

2025 Long-Term Incentive Plan (the “2025 LTIP”).

As a result, the 2025 LTIP became effective on May 8, 2025.

Concurrently with the adoption of the 2025 LTIP, the 2016 Plan (defined below) was terminated as to future awards.

The 2025 Plan provides

for the granting of incentive stock options, nonqualified stock options, stock appreciation rights, restricted stock, restricted stock

units, performance awards, dividend equivalent rights and other awards that may be granted singly, in combination, or in tandem, and which

may be paid in cash, shares of common stock, other consideration, or any combination thereof.

Subject to certain adjustments, the maximum

aggregate number of shares of common stock that may be delivered pursuant to awards under the 2025 Plan is 1,200,000 shares, plus any

Prior Plan Awards (as defined in the 2025 LTIP).

The Intelligent Protection Management Corp.

and Restated 2011 Long-Term Incentive Plan (the “2011 Plan”) was terminated as to future awards on May 16, 2016.

As of December

31, 2025, a total of 5,345 shares of the Company’s common stock may be issued pursuant to outstanding options awarded under

the 2011 Plan.

The Intelligent Protection Management Corp.

2016 Long-Term Incentive Plan (the “2016 Plan”) was terminated

as to future awards on May 8, 2025.

As of December 31, 2025, a total of 635,692 shares of the Company’s common stock may

be issued pursuant to outstanding options awarded under the 2016 Plan.

Stock Options

The following table summarizes the assumptions

used in the Black-Scholes pricing model to estimate the fair value of the options granted during the years ended:

used in the Black-Scholes pricing model to estimate the fair value of the options granted during the year ended December 31, 2025:

Expected volatility

Expected life of option

Expected life of option in years

Risk free interest rate

9 unchanged sentences

The Company estimates

pre-vesting forfeitures primarily based on the Company’s historical experience and is adjusted to reflect actual forfeitures as

the stock-based awards vest.

The following tables summarize stock option activity during the year ended December 31, 2024:

pre-vesting forfeitures primarily based on the Company’s historical experience and adjusts such estimates to reflect actual forfeitures

as the stock-based awards vest.

The following table summarizes stock option activity

during the year ended December 31, 2025:

Stock Options:

Outstanding at January 1, 2025

Exercised during period

Forfeited or canceled, during the period

Granted during the period

Cancelled/Forfeited, during the period

Expired, during the period

1 unchanged sentence

Exercisable at December 31, 2025

INTELLIGENT PROTECTION MANAGEMENT CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

At December 31, 2024, there was $ 92,257 of total unrecognized compensation

expense related to stock options, which is expected to be recognized over a weighted average period of 1.65 years.

At December 31, 2025, there was $ 356,195

of total unrecognized compensation expense related to stock options, which is expected to be recognized over a weighted average period

of 3.0 years.

On December 31, 2025, the aggregate intrinsic

2 unchanged sentences

intrinsic value of stock options that were outstanding and exercisable was $ 42,783 and $ 41,883 , respectively.

The intrinsic value for

stock options is calculated based on the exercise price of the underlying awards and the fair value of such awards as of the period-end

During the year ended December 31, 2024, the Company granted stock options to members of the Company’s Board of Directors (the

“Board”) to purchase an aggregate of 24,000 shares of common stock at an exercise price of $ 2.78 per share.

The stock options vest in four equal quarterly installments on the last day of each calendar quarter in 2024 and have a term of 10 years.

During the year ended December 31, 2024, the Company also granted options to employees to purchase an aggregate of 4,000 shares

of common stock.

These options vest in four equal annual installments over four years, have a term of 10 years and have an exercise price

The aggregate fair value for the options granted during the year ended December 31, 2024 and 2023 was $ 72,240 and $ 268,200 ,

respectively.

During the year ended

December 31, 2024, stock options representing the right to purchase 14,830 shares of common stock were exercised.

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.

Net proceeds to the Company in connection with the exercise of these stock options were approximately $ 39,772 , and the aggregate intrinsic

value of the stock options exercised was $ 21,341 .

No stock options were exercised during the year ended December 31, 2023.

Stock-based compensation expense for the Company’s

stock options included in the consolidated statements of operations was as follows:

Cost of revenue

Sales and marketing expense

Product development expense

General and administrative expense

Total stock-based compensation expense

The intrinsic

value of stock options is calculated based on the exercise price of the underlying awards and the fair value of such awards as of the

period-end date.

During the year ended December 31, 2025, the Company

granted stock options to members of the Board of Directors (the “Board”) to purchase an aggregate of 100,000 shares of common

stock at a weighted average exercise price of $ 1.94 per share.

The stock options vest in four equal quarterly installments on the last

day of each calendar quarter in 2025 and have a term of ten years.

During the year ended December 31, 2025, the Company also granted options

to employees to purchase an aggregate of 175,000 shares of common stock.

These options vest in various tranches, ranging from equally

over four years to fifty percent at grant date with the remaining balance vesting during the third quarter of fiscal 2025.

have a term of ten years and have an exercise price of $ 2.01 .

The aggregate fair value for the options granted during the year ended December

31, 2025 and 2024 was $ 492,250 and $ 72,240 , respectively.

The stock-based compensation

expense totaled $ 343,850 and $ 151,412 for the years ended December 31, 2025 and 2024, respectively.

For fiscal 2025 the total expense

is included in general and administrative expenses in the consolidated statements of operations and for fiscal 2024 $ 13,141 is included

in cost of revenue, $ 31,702 is included sales, marketing and product development expense and $ 106,569 is included in general and administrative

Series A Preferred Stock

On December 30, 2024, the Company filed with the

Secretary of State of the State of Delaware the Certificate of Designations designating the Series A Preferred Stock (the “Certificate

of Designations”), and establishing the preferences, conversion or other rights, voting powers, restrictions, limitations as to

dividends and other distributions, qualifications, or terms or conditions of redemption of the shares of Series A Preferred Stock.

total number of authorized shares of Series A Preferred Stock is 9,000,000 shares.

On January 2, 2025, as partial consideration for

the Acquisition, the Company issued 4,000,000 shares of Series A Preferred Stock.

Stock Repurchase Plan

On May 8, 2025, the Board approved a stock repurchase

plan for up to $ 400,000 of the Company’s 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 at any time.

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 the

Company’s common stock, general market and economic conditions, alternative investment opportunities and other corporate considerations.

For the year ended December 31, 2025, 151,258 shares of common stock were repurchased by the Company pursuant to the Stock Repurchase

Plan at an average price of $ 1.99 per share, or an aggregate of $ 301,048 .

Charter Amendment

On May 8, 2025, at the 2025 Annual Meeting, the

Company’s stockholders approved an amendment to the Company’s Certificate of Incorporation, as amended, to increase the Company’s

shares of authorized common stock from 25,000,000 to 50,000,000 .

The amendment was filed with the Secretary of State of the State of Delaware

on May 8, 2025.

Treasury Shares

The Board approved a stock repurchase plan for

up to $ 1,750,000 of the Company’s outstanding common stock, effective as of March 29, 2022 and expiring on the one-year anniversary

of such date.

During the year ended December 31, 2023, the Company 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 price of $ 1.39 per share.

The stock repurchase plan expired on March 29,

2023 pursuant to its terms and has not been renewed.

As of December 31, 2024, the Company had 641,963

shares of its common stock classified as treasury shares on the Company’s consolidated balance sheets.

As of December 31, 2025 and 2024, the Company

had 793,221 and 641,963 shares of its common stock, respectively, classified as treasury shares on the Company’s consolidated

balance sheets.

Net (Loss) Income Per Share

13 unchanged sentences

stock options were included in the computation of diluted net income per share from operations because their inclusion would be dilutive.

INTELLIGENT PROTECTION MANAGEMENT CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The following table summarizes the net loss per

3 unchanged sentences

$ ( 4,268,675 )

Net (loss) income from discontinued operations

Net loss from discontinued operations

$ ( 4,157,534 )

2 unchanged sentences

$ ( 8,426,209 )

Weighted average shares outstanding – basic

Weighted average shares outstanding – diluted

Weighted average shares outstanding – basic and diluted

Per share data:

Basic from continuing operations

Diluted from continuing operations

Basic from discontinued operations

Diluted from discontinued operations

Basic from operations

Diluted from operations

Leases, Continuing Operations

Operating Leases

On April 9, 2021, the

Company entered into a lease extension agreement with Jericho Executive Center LLC (“JEC”) for its office space at 30 Jericho

Executive Plaza in Jericho, New York, which commenced on December 1, 2021.

On May 28, 2024, the Company entered into an additional lease

extension agreement with JEC, which extends the lease period by two years to November 30, 2026 .

Beginning on December 1, 2024, the

monthly rent totaled $ 6,850 per month.

The new extension gives the Company an option to terminate the second year in July 2025.

Company’s monthly office rent payments under the lease are currently approximately $ 7,081 per month.

As of December 31, 2024,

the Company had no long-term leases that were classified as financing leases and did not have additional operating or financing leases

that had not yet commenced.

As of December 31, 2024,

the Company had operating lease liabilities of approximately $ 74,490 and operating lease right-of-use assets of approximately $ 74,490 ,

which are included in the accompanying condensed consolidated balance sheets.

Total rent expense for the year ended December

31, 2024 was $ 85,259 , of which $ 6,000 was sublease income.

Total rent expense for the year ended December 31, 2023 was $ 82,447 , of which

$ 6,000 was sublease income.

Rent expense is recorded under general and administrative expense in the consolidated statements of operations.

The following table summarizes the Company’s

operating leases for the periods presented:

Cash paid for amounts included in the measurement of operating lease liabilities:

Basic and diluted from continuing operations

Basic and diluted from discontinued operations

Basic and diluted from operations

For the Year Ended

December 31, 2025

Allocation of net loss

$ ( 593,658 )

Weighted average assumptions:

Remaining lease term 0.9 0.9

Discount rate 2.3 % 2.3 %

As of December 31, 2024, future minimum payments under non-cancelable

operating leases were as follows:

For the years ending December 31,

present value adjustment

Present value of minimum lease payments

INTELLIGENT PROTECTION MANAGEMENT CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

$ ( 1,362,877 )

Weighted average shares outstanding – basic and diluted

Net loss per share – basic and diluted

Business Loan Agreement and Credit Agreement and Revolving Promissory Note

On April 10, 2025, the Company, Intelligent Protection

LLC, its 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

Commitments and Contingencies

Cisco WebEx Patent Litigation

On July 23, 2021, a wholly owned subsidiary of

the Company, Paltalk Holdings, Inc., filed a patent infringement lawsuit (the “Lawsuit”) against WebEx Communications, Inc.,

Cisco WebEx LLC, and Cisco Systems, Inc.

WebEx Litigation

On July 23, 2021, a wholly

owned subsidiary of the Company, Paltalk Holdings, Inc., 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”).

District Court for the

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

The Company alleged that certain of Cisco’s products have infringed U.S.

6,683,858, and that

the Company was entitled to damages.

On August 29, 2024, the jury awarded the Company

$ 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 was entered into in the Court in connection with Lawsuit in favor of the Company 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 the Company (including any interest related thereto) will be determined based on a number of factors and will reflect the deduction

of significant litigation-related expenses, including legal fees.

Consequently, the Company estimates that it 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

Cisco ManyCam Litigation

On March 7, 2025, Cisco Systems, Inc.

Technology, Inc.

6,683,858, and that the Company was entitled to damages.

On August 29, 2024, the

jury awarded the Company $ 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 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.

On October 29, 2025, the Trial

Court ordered a motions hearing set for November 12, 2025 to consider on the Company’s motion for reconsideration;

however, on November 11, 2025, the Trial Court denied the Company’s 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.

exact amount of the Award proceeds to be received by the Company will be determined based on a number of factors and will reflect the

deduction of significant litigation-related expenses, including legal fees.

Consequently, the Company estimates that it would receive

no more than one third of the gross proceeds in connection with the Award, which Award is subject to post-trial proceedings (including

any potential appellate proceedings by Cisco).

ManyCam Litigation

On March 7, 2025, Cisco

Systems, Inc.

and Cisco Technology, Inc.

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

District Court for the District of Delaware, alleging that the Company’s

ManyCam software has infringed U.S.

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

The Company intends

to vigorously defend itself against these claims.

The Company has not recorded any liability for this matter as it does not believe a

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

Legal Proceedings

The Company may be included in legal proceedings,

claims and assessments arising in the ordinary course of business.

The Company evaluates the need for a reserve for specific legal matters

based on the probability of an unfavorable outcome and the reasonability of an estimable loss.

District Court for the District of Delaware,

alleging that the Company’s ManyCam software has infringed U.S.

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

The Company intends to vigorously defend itself against these claims.

In October 2025, the Company 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 .

The Company has not recorded

any liability for this matter as it does not believe a loss is probable, and it 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 the Company’s results

of operations, financial position or cash flows.

As of December 31, 2025, the Company had incurred approximately $ 0.7 million in expense

for the year ended December 31, 2025 in defense of these claims.

the Company’s knowledge, other than as described above, there are no material pending legal proceedings to which it is a party

or of which any of its property is the subject.

Company may be included in legal proceedings, claims and assessments arising in the ordinary course of business.

The Company evaluates

the need for a reserve for specific legal matters based on the probability of an unfavorable outcome and the reasonability of an estimable

No reserve was deemed necessary as of December 31, 2025.

Subsequent Events

NTS Acquisition

On January 2, 2025, the Company closed the Acquisition

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

The aggregate consideration delivered by the Company to

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

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 the Company’s achievement of certain cumulative average adjusted EBITDA

thresholds for the 2025 and 2026 fiscal years.

The Acquisition Earn-Out Amount may be paid, in the Company’s 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 the Company’s 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 .

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 the Company to exceed one-third of the Company’s 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 the Company 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.

INTELLIGENT PROTECTION MANAGEMENT CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The Divestiture

On January 2, 2025, the Company completed the

sale to Meteor Mobile of the Transferred Assets.

The consideration delivered by Meteor Mobile to the Company 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, the

Company is 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:

Discontinued Operations

During the year ended December 31, 2024, the Transferred

Assets met the criteria for classification as assets held for sale and discontinued operations as the Company received stockholder approval

of the sale of its Transferred Assets at its special meeting of stockholders held on December 30, 2024.

Accordingly, the assets and liabilities

related to the Transferred Assets are presented as discontinued operations for all periods presented.

Subsequent to year end, on January

2, 2025, the Company completed the Divestiture as described above and received cash proceeds of $ 1.35 million.

No gain or loss was recognized

for the year ended December 31, 2025.

following table summarizes the operating results of the Transferred Assets for the periods indicated:

For the Year Ended

December 31, 2024

Subscription revenue

Advertising revenue

Total Revenue

Costs and expenses

Cost of revenue

Sales and marketing expense

Product development expense

General and administrative expense

Impairment loss in connection with Divestiture

Total Costs and Expenses

Loss from discontinued operations

( 4,133,177 )

Income tax expense

Net Loss from discontinued operations

$ ( 4,157,534 )

in connection with the Divestiture, the Company evaluated the held for sale disposal group for impairment as follows:

Proceeds from sale of Transferred Assets, net of $283K of expenses

Net carrying value of the disposal group

( 4,916,796 )

Impairment loss on held for sale assets

$ ( 3,849,765 )

Company allocated the impairment loss in connection with the assets held for sale to goodwill.

following table summarizes the assets and liabilities of the Transferred Assets included in the consolidated balance sheets for the periods

indicated, after recognition of the impairments described above and are included as assets and liabilities attributed to discontinued

As of December 31, 2024

Accounts receivable, net

Prepaids and other current assets

Total current assets

Total Assets - discontinued operations

Accounts payable

Accrued expenses

Deferred revenue

Total Liabilities - discontinued operations

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

aggregate consideration delivered by the Company to Newtek at the Acquisition Closing consisted of (i) $ 4,000,000 in cash and (ii) 4,000,000

shares of 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 the Company’s achievement

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

The Acquisition Earn-Out Amount may be paid,

in the Company’s sole discretion, in cash, in shares of Series A Preferred Stock 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 the Company’s 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 the Company to exceed one-third of 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 the Company 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, the Company completed the sale to Meteor Mobile of the Transferred Assets.

The consideration delivered by Meteor Mobile

to the Company 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.

to the Divestiture Closing Consideration, the Company is 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”).

In the event of a change of control (as defined

in the Divestiture Agreement) of Meteor Mobile during any of the Earn-Out Periods, the Company is 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, the Company 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

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

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 the Company are capped at $ 5,000,000 in the aggregate.

Management has evaluated subsequent events or

transactions occurring through the date the consolidated financial statements were issued and determined that no other events or transactions

are required to be disclosed herein.

CHANGES IN AND DISAGREEMENTS WITH

ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

As previously disclosed, on March 18, 2024, the

audit committee of the Board approved the dismissal of Marcum LLP (“Marcum”), as the Company’s independent registered

public accounting firm, effective as of March 18, 2024, and informed Marcum of such dismissal on the date thereof.

The reports of Marcum on the Company’s consolidated

financial statements for the two most recent fiscal years ended December 31, 2023 and 2022, did not contain an adverse opinion or a disclaimer

of opinion and were not qualified or modified as to uncertainty, audit scope, or accounting principles.

During the fiscal years ended December 31, 2023

and 2022, and the subsequent interim period through March 18, 2024, (i) there were no disagreements, as defined in Item 304(a)(1)(iv)

of Regulation S-K, with Marcum on any matter of accounting principles or practices, financial statement disclosure, or auditing scope

or procedure, which disagreements, if not resolved to the satisfaction of Marcum, would have caused Marcum to make reference to the subject

matter of the disagreements in connection with its reports on the Company’s consolidated financial statements for such period, and

(ii) there were no “reportable events,” as defined in Item 304(a)(1)(v) of Regulation S-K.

On March 18, 2024, the audit committee of the

Board approved the engagement of Grassi & Co., CPAs, P.C.

(“Grassi”) as the Company’s independent registered public

accounting firm for the fiscal year ending December 31, 2024, effective as of such date.

During the fiscal years ended December 31, 2023

and 2022, and the subsequent interim period through March 18, 2024, neither the Company nor anyone acting on its behalf has consulted

with Grassi regarding (i) the application of accounting principles to any specified transaction, either completed or proposed, or the

type of audit opinion that might be rendered on the Company’s consolidated financial statements, and neither a written report nor

oral advice was provided to the Company that Grassi concluded was an important factor considered by the Company in reaching a decision

as to any accounting, auditing, or financial reporting issue, or (ii) any matter that was either the subject of a “disagreement,”

as defined in Item 304(a)(1)(iv) of Regulation S-K, or a “reportable event,” as defined in Item 304(a)(1)(v) of Regulation

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

is 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, the Company 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, the Company is 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 the Company 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.

Related Party Transactions

As of December 31, 2025, Newtek beneficially owned

approximately 30.6 % of the Company’s issued and outstanding common stock or common-equivalent equity (on an as-converted and fully-diluted

Newtek is also a significant customer of the Company.

Deposit Accounts at Newtek Bank

The Company has a commercial banking relationship

with Newtek Bank.

At December 31, 2025 the Company had $ 1,801,300 on deposit in commercial accounts with Newtek Bank, as well as

a certificate of deposit in the amount of $ 1,035,747 .

The certificate of deposit is classified as restricted cash as it is used to secure

the Credit Agreement described in Note 11 above.

There were no amounts outstanding under the Credit Agreement at December 31, 2025.

Revenue and Accounts Receivable

Revenue from Newtek and its subsidiaries and affiliates

totaled approximately $ 7,669,549 for the year ended December 31, 2025, representing approximately 32 % of the Company’s total revenue

for those periods.

Accounts receivable from Newtek and its subsidiaries

and affiliates totaled approximately $ 75,601 as of December 31, 2025.

These amounts are unsecured, non-interest bearing and due under

normal trade terms.

Management did not record an allowance for credit losses related to these balances as of December 31, 2025.

Accrued Expenses and other General and Administrative

The Company has a referral arrangement with Newtek

whereby it pays commissions for referrals of customers services.

Included in accrued expenses at December 31, 2025 was $ 46,450 in connection

with these payments.

For the year ended December 31, 2025 the Company paid Newtek $ 297,915 in connection with these agreements.

amounts are unsecured, non-interest bearing, and due under normal trade terms.

In addition, the Company subleased space to an

affiliate of Newtek and received $ 33,400 , which was offset against rent expense.

Concentration

Because Newtek is both a significant shareholder and a major customer,

the Company has a concentration of revenue with this related party.

The loss of this customer could have a material adverse effect on

the Company’s operations.

Subsequent Events

has evaluated subsequent events or transactions occurring through the date the consolidated financial statements were issued and determined

that no other events or transactions are required to be disclosed herein.

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

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 8. Financial Statements and Supplementary Data