Item 3. Legal Proceedings
ITEM
3. LEGAL PROCEEDINGS
Cisco
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 “Trial Court”). The Company alleged that certain of Cisco’s products have infringed U.S. Patent No. 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 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.
The 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).
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. Patent Nos. 8,830,293 and 8,941,708 and seeking damages and injunctive relief. 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
with respect 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.
To our knowledge, other than as described above,
there are no material pending legal proceedings to which we are a party or of which any of our property is the subject.
ITEM
4. MINE SAFETY DISCLOSURES
Not
applicable.
17
PART
II