Intelligent Protection Management Corp 10-Q, filed Nov 10, 2026
Intelligent Protection Management Corp. (IPM)
About this 10-Q
Intelligent Protection Management Corp filed this 10-Q on November 10, 2026, covering the quarter ended September 30, 2026.
Headline figures
Quarter ended September 30, 2026, as reported in this filing, compared with the same period a year earlier where the filing states it.
- Revenue
- $10.95M
- up 75.5% from $6.24M a year earlier
- Net loss
- $779.38K
- compared with a net loss of $1.08M a year earlier
- Diluted EPS
- -$0.06
- compared with -$0.08 a year earlier
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form
For the quarterly period ended
OR
For the transition period from ________ to ________
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Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
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Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer | ☐ | Accelerated filer | ☐ |
| ☒ | Smaller reporting company | ||
| Emerging growth company |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.
| Class | Outstanding at November 10, 2026 | |
| Common Stock, par value $0.001 per share |
| * | Excludes 843,221 shares of common stock that are held as treasury stock by Intelligent Protection Management Corp. |
INTELLIGENT PROTECTION MANAGEMENT CORP.
QUARTERLY REPORT ON FORM 10-Q
FOR THE QUARTER ENDED SEPTEMBER 30, 2026
Table of Contents
Intelligent Protection Management Corp., our logo and other trademarks or service marks appearing in this report are the property of Intelligent Protection Management Corp. Trade names, trademarks and service marks of other companies appearing in this report are the property of their respective owners. Solely for convenience, the trademarks, service marks and trade names included in this report are without the ®, or other applicable symbols, but such references are not intended to indicate, in any way, that we will not assert, to the fullest extent under applicable law, our rights or the rights of the applicable licensors to these trademarks, service marks and trade names.
Unless the context otherwise indicates, references to “Intelligent Protection Management Corp.,” “IPM,” “we,” “our,” “us” and the “Company” refer to Intelligent Protection Management Corp. and its subsidiaries on a consolidated basis.
i
FORWARD-LOOKING STATEMENTS
Certain statements contained in this Quarterly Report on Form 10-Q constitute “forward-looking statements” as defined in Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), that are based on current expectations, estimates, forecasts and assumptions and are subject to risks and uncertainties. Words such as “anticipate,” “assume,” “began,” “believe,” “budget,” “continue,” “could,” “estimate,” “expect,” “forecast,” “goal,” “intend,” “may,” “plan,” “potential,” “predict,” “project,” “seek,” “should,” “target,” “would” and variations of such words and similar expressions are intended to identify such forward-looking statements. All forward-looking statements speak only as of the date on which they are made. Such forward-looking statements are subject to certain risks, uncertainties and assumptions relating to factors that could cause actual results to differ materially from those anticipated in such statements, including, without limitation, the following:
| ● | our ability to consummate the AdTech Acquisition (as defined herein) and realize the anticipated benefits and synergies expected from the AdTech Acquisition once consummated;
| |
| ● | the possibility of security vulnerabilities, cyber-attacks and network disruptions, including breaches of data security and privacy leaks, data loss and business interruptions; |
| ● | our ability to operate our secure private cloud through our data centers; |
| ● | the intense competition in the industry in which our business operates and our ability to effectively compete with existing competitors and new market entrants; |
| ● | our ability to consummate favorable acquisitions and effectively integrate any companies or businesses that we acquire; |
| ● | the impact of adverse economic and market conditions, including those related to fluctuations in inflation and geopolitical conflicts; |
| ● | the impact of supply constraints, including those related to components of our procurement service offering; |
| ● | our reliance on a limited number of customers for a material portion of our revenues and income; |
| ● | the impact of possible failures of our hardware systems and infrastructure at our data centers; |
| ● | our reliance on network infrastructure, including Internet, telecommunications and fiber optic network connectivity providers; |
| ● | the impact of real or perceived errors, failures or bugs in our customer solutions, software or technology; |
| ● | our ability to attract new customers, retain existing customers and sell additional services to customers; |
| ● | our reliance on Microsoft Corporation and others for software licenses and other intellectual property; |
| ● | our reliance on our executive officers and consultants; |
| ● | our ability to attract and retain qualified personnel; |
| ● | our ability to obtain additional capital or financing when and if necessary, to execute our business plan, including through offerings of debt or equity or the sale of any of our assets; |
| ● | the impact of any claim that we have infringed on intellectual property rights of others; |
| ● | our ability to protect our intellectual property rights; |
| ● | changes in laws, government regulations and policies and interpretations thereof; and |
| ● | other events outside of our control. |
For a more detailed discussion of these and other factors that may affect our business, see the discussion in “Item 1A. Risk Factors” in Part II of this report, “Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part I of this report and the risk factors set forth in our Annual Report on Form 10-K for the fiscal year ended December 31, 2025, which was filed with the Securities and Exchange Commission on March 17, 2026. We caution that the foregoing list of factors is not exclusive, and new factors may emerge, or changes to the foregoing factors may occur, that could impact our business. We do not undertake any obligation to update any forward-looking statement, whether written or oral, relating to the matters discussed in this report, except to the extent required by applicable securities laws.
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PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
INTELLIGENT PROTECTION MANAGEMENT CORP.
CONDENSED CONSOLIDATED BALANCE SHEETS
| September 30, 2026 |
December 31, 2025 |
|||||||
| Assets | (unaudited) | |||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | $ | ||||||
| Cash and cash equivalents (on deposit with a related party) | ||||||||
| Cash and cash equivalents – restricted cash (on deposit with related party) | ||||||||
| Accounts receivable, net of allowance of $ | ||||||||
| Due from related party | ||||||||
| Prepaid expense and other current assets | ||||||||
| Total current assets | ||||||||
| Property and equipment, net | ||||||||
| Intangible assets, net | ||||||||
| Goodwill | ||||||||
| Operating lease right of use assets, net | ||||||||
| Other assets | ||||||||
| Total assets | $ | $ | ||||||
| Liabilities and stockholders’ equity | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | $ | ||||||
| Accrued expenses and other current liabilities | ||||||||
| Operating lease liabilities, current portion | ||||||||
| Deferred revenue | ||||||||
| Due to related party | ||||||||
| Total current liabilities | ||||||||
| Operating lease liabilities, non-current portion | ||||||||
| Deferred tax liability | ||||||||
| Total liabilities | ||||||||
| Commitments and contingencies (Note 12) | ||||||||
| Stockholders’ equity: | ||||||||
| Series A Preferred Stock, $ | ||||||||
| Common stock, $ | ||||||||
| Treasury stock, | ( | ) | ( | ) | ||||
| Additional paid-in capital | ||||||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Total stockholders’ equity | ||||||||
| Total liabilities and stockholders’ equity | $ | $ | ||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
1
INTELLIGENT PROTECTION MANAGEMENT CORP.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
| Three Months Ended September 30, |
Nine Months Ended September 30, |
|||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| Revenue | ||||||||||||||||
| Managed information technology, includes $ | $ | $ | $ | $ | ||||||||||||
| Procurement revenue, includes $ | ||||||||||||||||
| Professional services revenue, includes $ | ||||||||||||||||
| Subscription revenue | ||||||||||||||||
| Total revenue | ||||||||||||||||
| Costs and expenses | ||||||||||||||||
| Costs of revenue | ||||||||||||||||
| Sales, marketing and product development expense | ||||||||||||||||
| General and administrative expense | ||||||||||||||||
| Depreciation and amortization | ||||||||||||||||
| Litigation expenses relating to the Cisco ManyCam Litigation | ||||||||||||||||
| Total costs and expenses | ||||||||||||||||
| Loss from operations | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Interest income, net | ||||||||||||||||
| Other income | ||||||||||||||||
| Loss from operations before income tax benefit | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Income tax benefit | ||||||||||||||||
| Net loss | $ | ( | ) | $ | ( | ) | ( | ) | $ | ( | ) | |||||
| Net loss per share of common stock: | ||||||||||||||||
| Basic | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| 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 | ||||||||||||||||
| Diluted | ||||||||||||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
2
INTELLIGENT PROTECTION MANAGEMENT CORP.
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2026 AND 2025
(Unaudited)
| Series A Preferred Stock |
Series A Preferred Stock Amount |
Common Shares |
Common Stock Amount |
Treasury Shares |
Treasury Stock Amount |
Additional Paid-in Capital |
Accumulated Deficit |
Total Stockholders’ Equity |
||||||||||||||||||||||||||||
| Balance at December 31, 2024 | $ | $ | ( | ) | $ | ( | ) | $ | $ | ( | ) | $ | ||||||||||||||||||||||||
| Stock-based compensation expense | - | - | - | |||||||||||||||||||||||||||||||||
| Issuance of Series A Preferred Stock | ||||||||||||||||||||||||||||||||||||
| Net income | - | - | - | |||||||||||||||||||||||||||||||||
| Balance at March 31, 2025 | $ | ( | ) | $ | ( | ) | $ | $ | ( | ) | $ | |||||||||||||||||||||||||
| Stock-based compensation expense | - | - | - | |||||||||||||||||||||||||||||||||
| Repurchases of common stock | - | - | - | - | ( | ) | ( | ) | - | - | ( | ) | ||||||||||||||||||||||||
| Net loss | - | - | - | ( | ) | ( | ) | |||||||||||||||||||||||||||||
| Balance at June 30, 2025 | $ | ( | ) | $ | ( | ) | $ | $ | ( | ) | $ | |||||||||||||||||||||||||
| Stock-based compensation expense | ||||||||||||||||||||||||||||||||||||
| Repurchases of common stock | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||||||
| Net loss | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||
| Balance at September 30, 2025 | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||||||
| Balance at December 31, 2025 | $ | $ | ( | ) | $ | ( | ) | $ | $ | ( | ) | $ | ||||||||||||||||||||||||
| Stock-based compensation expense | - | - | - | |||||||||||||||||||||||||||||||||
| Repurchases of common stock | - | - | - | - | ( | ) | ( | ) | - | - | ( | ) | ||||||||||||||||||||||||
| Net loss | - | - | - | ( | ) | ( | ) | |||||||||||||||||||||||||||||
| Balance at March 31, 2026 | $ | $ | ( | ) | $ | ( | ) | $ | $ | ( | ) | $ | ||||||||||||||||||||||||
| Stock-based compensation expense | ||||||||||||||||||||||||||||||||||||
| Net loss | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||
| Balance at June 30, 2026 | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||||||
| Stock-based compensation expense | ||||||||||||||||||||||||||||||||||||
| Net loss | - | - | - | ( | ) | ( | ) | |||||||||||||||||||||||||||||
| Balance at September 30, 2026 | $ | ( | ) | $ | ( | ) | $ | $ | ( | ) | $ | |||||||||||||||||||||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
3
INTELLIGENT PROTECTION MANAGEMENT CORP.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
| Nine Months Ended September 30, |
||||||||
| 2026 | 2025 | |||||||
| Cash flows from operating activities: | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Adjustments to reconcile net loss from continuing operations to net cash (used in) provided by operating activities: | ||||||||
| Amortization of intangible assets | ||||||||
| Amortization of operating lease right-of-use assets | ||||||||
| Depreciation on property and equipment | ||||||||
| Deferred taxes | ( | ) | ||||||
| Income tax liability | ( | ) | ||||||
| Stock-based compensation | ||||||||
| Change in allowance for credit losses | ( | ) | ||||||
| Changes in operating assets and liabilities, net of acquired assets and disposition: | ||||||||
| Accounts receivable | ||||||||
| Operating lease liability | ( | ) | ( | ) | ||||
| Prepaid expense and other current assets | ( | ) | ( | ) | ||||
| Employee retention tax credit receivable, net | ||||||||
| Accounts payable, accrued expenses and other current liabilities | ||||||||
| Deferred revenue | ( | ) | ||||||
| Net cash provided by operating activities | ||||||||
| Cash flows from investing activities: | ||||||||
| Purchase of fixed assets | ( | ) | ( | ) | ||||
| Cash paid for acquisition of NTS | ( | ) | ||||||
| Net cash used in investing activities | ( | ) | ( | ) | ||||
| Cash flows from financing activities: | ||||||||
| Purchase of treasury stock | ( | ) | ( | ) | ||||
| Proceeds from sale of Transferred Assets | ||||||||
| Net cash (used in) provided by financing activities | ( | ) | ||||||
| Net increase (decrease) in cash and cash equivalents | ( | ) | ||||||
| Balance of cash, cash equivalents and restricted cash at beginning of period | ||||||||
| Balance of cash, cash equivalents and restricted cash at end of period | ||||||||
| 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 period | $ | $ | ||||||
| Supplemental non-cash disclosure: | ||||||||
| Operating lease extension, right of use asset | $ | $ | ||||||
| Non-cash portion of consideration for acquisition of NTS (Series A Preferred Stock issuance) | $ | $ | ||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
4
INTELLIGENT PROTECTION MANAGEMENT CORP.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. Organization and Description of Business
The accompanying condensed consolidated financial statements include Intelligent Protection Management Corp. 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, ManyCam ULC and Intelligent Protection LLC (collectively, the “Company”).
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.
Basis of Presentation
The condensed consolidated financial statements included in this report have been prepared on a going concern basis in accordance with generally accepted accounting principles in the United States (“GAAP”) and the rules and regulations of the Securities and Exchange Commission (the “SEC”) for interim financial information. The Company has not included certain information and notes required by GAAP for complete financial statements pursuant to those rules and regulations, although it believes that the disclosure included herein is adequate to make the information presented not misleading. The condensed consolidated financial statements contained herein should be read in conjunction with the Company’s audited consolidated financial statements and the related notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025, filed with the SEC on March 17, 2026 (the “Form 10-K”).
In the opinion of management, the accompanying unaudited condensed consolidated financial information contains all normal and recurring adjustments necessary to fairly present the condensed consolidated balance sheets and statements of operations, cash flows and changes in stockholders’ equity of the Company for the interim periods presented. The Company’s historical results are not necessarily indicative of future operating results, and the results for the three and nine months ended September 30, 2026 are not necessarily indicative of results for the year ending December 31, 2026, or for any other period.
2. Summary of Significant Accounting Policies
During the nine months ended September 30, 2026, there were no significant changes made to the Company’s significant accounting policies.
For a detailed discussion about the Company’s significant accounting policies, see the Form 10-K.
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 maintained a certificate of deposit to satisfy the depository requirement in the Loan Agreements (as defined and discussed in Note 13). Although the Facility matured on April 10, 2026 in accordance with the terms of the Loan Agreements, the Company continues to maintain the certificate of deposit. 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 banks. 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 condensed consolidated balance sheets for any potentially uncollectible accounts under the current expected credit loss model.
5
Segment Reporting
The Company reports its segment information to reflect the manner in which the chief operating decision maker (the “CODM”) reviews and assesses performance. The Company’s , President and Chief Operating Officer have joint responsibility as the CODM and review and assess the performance of the Company as a whole.
The primary financial measures used by the CODM to evaluate performance and allocate resources are net income (loss) and operating income (loss).
The CODM does not evaluate performance or allocate resources based on segment assets, and therefore such information is not presented in the notes to the financial statements. The Company is a -segment business.
Use of Estimates
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions about future events that affect the amounts reported in the financial statements and accompanying notes. Future events and their effects cannot be determined with absolute certainty. Therefore, the determination of estimates requires the exercise of judgment. Actual results inevitably will differ from those estimates, and such differences may be material to the financial statements. 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 fair values and estimates related to the NTS Acquisition (as defined and discussed in Note 3) 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 condensed 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 condensed consolidated statements of operations.
Business Combinations
The Company accounts for business combinations in accordance with the provisions of Accounting Standards Codification (“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
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.
6
The Company recognizes revenue from the sale of services as it performs 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 the customer takes control of the 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 condensed consolidated balance sheets. The Company 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 “prepaid expenses and other current assets” in the Company’s condensed 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 in a net position on a contract-by-contract basis at the end of each reporting period. The difference between the opening and closing balances of the contract assets and deferred revenue primarily results from the timing difference between performance obligations and the customer’s payment. The Company receives payments from customers based on the terms established in their contracts, which may vary generally by contract type.
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 customer. The Company estimates the price based on observable inputs, including direct labor hours and allocable 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 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 nine months ended September 30, 2026 and 2025, 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 condensed consolidated balance sheets.
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 (e.g., trade names, trademarks and URLs) and subscriber relationships/customer lists.
7
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:
| Patents | ||
| 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. Factors 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 amount. 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 condensed 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
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.
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.
Leases
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 condensed 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.
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Property and equipment
Property and equipment are stated at cost, less accumulated depreciation and amortization.
| Computers and equipment | ||
| Website development | ||
| Furniture and fixtures |
Repairs and maintenance costs are expensed as incurred.
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 condensed consolidated financial statements.
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:
| Level 1: | Observable inputs, such as quoted prices in active markets. |
| Level 2: | 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. |
| Level 3: | Unobservable inputs in which there is little or no market data. |
In connection with the NTS Acquisition, the Company initially recognized a non-current liability of $
Concentration of Credit
As of September 30, 2026, three of the Company’s customers represented receivable balances more than 10% of the total accounts receivable balance. These three customers represented
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3. The NTS Acquisition
On January 2, 2025 (the “NTS Acquisition Closing Date”), the Company completed the acquisition of Newtek Technology Solutions, Inc., a New York corporation (“NTS”), pursuant to that certain Agreement and Plan of Merger (the “NTS Acquisition Agreement”), dated August 11, 2024, by and among the Company, PALT Merger Sub 1, Inc., a New York corporation and a direct and wholly owned subsidiary of the Company (“First Merger Sub”), PALT 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 (“Newtek”). Pursuant to the terms of the NTS Acquisition Agreement, on the NTS Acquisition 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 “NTS Acquisition”), with the Second Merger Sub surviving as a wholly owned subsidiary of the Company. Following the closing of the NTS Acquisition (the “NTS 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 NTS Acquisition Closing consisted of (i) $
The aggregate purchase price delivered by the Company to Newtek was $
The Earn-Out may be paid, in the Company’s sole discretion, in cash, in shares of Series A Preferred Stock (the “NTS Acquisition Earn-Out Stock Consideration”) or in a combination thereof. Pursuant to the NTS Acquisition Agreement, to the extent that all or a portion of the NTS 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 NTS Acquisition Agreement, if the issuance of the NTS 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 NTS 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 NTS Acquisition Earn-Out Amount paid in cash.
The NTS Acquisition was accounted for as a business combination using the acquisition method of accounting in accordance with ASC Topic 805, Business Combinations. Under the acquisition method of accounting, the assets acquired and liabilities assumed were recorded at their fair values as of the NTS Acquisition 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.
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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.
| At Closing Date | Change | At December 31, 2025 | ||||||||||
| Assets acquired: | ||||||||||||
| Accounts receivable | $ | $ | (1) | $ | ||||||||
| Prepaid expenses and other current assets | ||||||||||||
| Property and equipment, net | ||||||||||||
| Operating lease right-of-use asset | ||||||||||||
| Intangible assets | ||||||||||||
| Other assets | ||||||||||||
| Total assets acquired | (1) | |||||||||||
| 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 | (1) | |||||||||||
| 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) | ( | )(2) | ||||||||||
| Goodwill | $ | $ | ( | ) | $ | |||||||
| (1) |
| (2) |
The preliminary purchase price allocation resulted in goodwill of $
After the NTS Acquisition Closing, and in the normal course of business, certain amounts were due to the Company by Newtek and its affiliates. For the three months ended September 30, 2026 and 2025, sales to Newtek and its affiliates totaled $
In connection with the NTS Acquisition, the Company entered into a referral arrangement with Newtek pursuant to which Newtek agreed to refer potential clients to the Company for a fee. The referral arrangement with Newtek is terminable by either the Company or Newtek at any time. For the three and nine months ended September 30, 2026, the Company incurred $
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4. Property and Equipment, net
Property and equipment consisted of the following for the periods presented:
| As of September 30, 2026 (unaudited) | As of December 31, 2025 | |||||||
| Computer equipment | $ | $ | ||||||
| Software | ||||||||
| Datacenter software | ||||||||
| Servers | ||||||||
| Total property and equipment | ||||||||
| Less: Accumulated depreciation | ( | ) | ( | ) | ||||
| Total property and equipment, net | $ | $ | ||||||
Depreciation expense for the three and nine months ended September 30, 2026 was $
The Company only holds property and equipment in the United States.
5. Intangible Assets, Net
Intangible assets, net consisted of the following at September 30, 2026 and December 31, 2025:
| September 30, 2026 (unaudited) | December 31, 2025 | |||||||||||||||||||||||
| Gross | Net | Gross | Net | |||||||||||||||||||||
| Carrying | Accumulated | Carrying | Carrying | Accumulated | Carrying | |||||||||||||||||||
| Amount | Amortization | Amount | Amount | Amortization | Amount | |||||||||||||||||||
| Patents | $ | $ | ( | ) | $ | $ | $ | ( | ) | $ | ||||||||||||||
| Trade names, trademarks product names, URLs | ( | ) | ( | ) | ||||||||||||||||||||
| Internally developed software | ( | ) | ( | ) | ||||||||||||||||||||
| Subscriber/customer relationships | ( | ) | ( | ) | ||||||||||||||||||||
| Order Backlog | ( | ) | ( | ) | ||||||||||||||||||||
| Total intangible assets | $ | $ | ( | ) | $ | $ | $ | ( | ) | $ | ||||||||||||||
Amortization expense for the three and nine months ended September 30, 2026 was $
6. The Divestiture
On the NTS Acquisition Closing Date and prior to the NTS Acquisition Closing, the Company completed the sale to Meteor Mobile Holdings, Inc., a Delaware corporation (“Meteor Mobile”), of its telecommunications services provider, “Vumber”, as well as its “Paltalk” and “Camfrog” applications and certain assets and liabilities related to such services provider and applications (the “Transferred Assets,” and such sale, the “Divestiture”) pursuant to that certain Asset Purchase Agreement, dated November 7, 2024 (the “Divestiture Agreement”), by and among the Company, its wholly owned subsidiaries Paltalk Holdings, Inc., Paltalk Software, Inc., Camshare, Inc., A.V.M. Software, Inc. and Vumber, LLC (collectively, the “Sellers”), and Meteor Mobile. As a result of the Divestiture, the Company is no longer engaged in the business of providing video-based, live streaming, virtual camera and telecommunications software to consumers, as and to the extent such businesses were previously conducted by the Company pursuant to the “Vumber,” “Paltalk” and “Camfrog” applications (the “Business”). In addition, prior to the NTS Acquisition Closing, the Company ceased all operations of its “Tinychat” service and application. The consideration delivered by Meteor Mobile to the Company at the closing of the Divestiture consisted of (i) $
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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:
| ● | from the six-month period beginning on July 1, 2025 and ending on December 31, 2025 (“Earn-Out Period 1”), an amount equal to |
| ● | 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 |
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)
The amount earned in Earn-Out Period 1 was $
7. Accrued Expenses and Other Current Liabilities
Accrued expenses and other current liabilities consisted of the following for the periods presented:
| September 30, 2026 | December 31, 2025 | |||||||
| (unaudited) | ||||||||
| Compensation, benefits and payroll taxes | $ | $ | ||||||
| Other accrued expenses | ||||||||
| Sales tax | ||||||||
| Amounts due to Meteor Mobile | ||||||||
| Total accrued expenses and other current liabilities | $ | $ | ||||||
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8. Income Taxes
The Company’s provision for income taxes consists of federal, foreign, and state taxes, as applicable, in amounts necessary to align the Company’s year-to-date tax provision with the effective rate that it expects to achieve for the full year. Each quarter the Company updates its estimate of the annual effective tax rate and records cumulative adjustments as necessary.
For the three and nine months ended September 30, 2026, the Company recorded an income tax benefit of $
For the three and nine months ended September 30, 2025, the Company recorded an income tax benefit of $
9. Stockholders’ Equity
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 LTIP 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 LTIP is
The Intelligent Protection Management Corp. Amended and Restated 2011 Long-Term Incentive Plan (the “2011 Plan”) was terminated as to future awards on May 16, 2016. As of September 30, 2026, there were shares of the Company’s common stock issuable 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 September 30, 2026, a total of
As of September 30, 2026, a total of
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 nine months ended September 30, 2026:
| Expected volatility | % | |||
| Expected life of option (in years) | ||||
| Risk free interest rate | % | |||
| Expected dividend yield | % |
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The expected life of the options is the period of time over which employees and non-employees are expected to hold their options prior to exercise. The expected life of options has been determined using the “simplified” method as prescribed by Staff Accounting Bulletin 110, which uses the midpoint between the vesting date and the end of the contractual term. The volatility of the Company’s common stock is calculated using the Company’s historical volatilities beginning at the grant date and going back for a period of time equal to the expected life of the award. The Company estimates potential forfeitures of stock awards and adjusts recorded stock-based compensation expense accordingly. 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 table summarizes stock option activity during the nine months ended September 30, 2026:
| Weighted | ||||||||
| Average | ||||||||
| Number of | Exercise | |||||||
| Options | Price | |||||||
| Stock Options: | ||||||||
| Outstanding at January 1, 2026 | $ | |||||||
| Granted during the period | ||||||||
| Cancelled/Forfeited, during the period | ( | ) | ||||||
| Expired, during the period | ( | ) | ||||||
| Outstanding at September 30, 2026 | $ | |||||||
| Exercisable at September 30, 2026 | $ | |||||||
At September 30, 2026, there was $
On September 30, 2026, the aggregate intrinsic value of stock options that were outstanding and exercisable was $
During the nine months ended September 30, 2026, the Company granted stock options to members of the Board of Directors (the “Board”) to purchase an aggregate of
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. The total number of authorized shares of Series A Preferred Stock is
Stock Repurchase Plan
On May 8, 2025, the Board approved a stock repurchase plan for up to $
15
Treasury Shares
As of September 30, 2026 and December 31, 2025, the Company had
10. Net Income (Loss) Per Share
Basic earnings and net (loss) income per share are computed by dividing the net (loss) income available to common stockholders by the weighted average number of common shares outstanding during the period as defined by ASC Topic 260, Earnings Per Share. The Company applies the multiple-class method in calculating earnings per share. Earnings and losses are shared pro-rata between the multiple classes of shares. The Company has two classes of stock, Series A Preferred Stock and common stock, that the calculations for weighted-average number of shares and earnings per share by class are based on. Diluted earnings per share is computed using the weighted average number of common shares and, if dilutive, potential common shares outstanding during the period. Potential common shares consist of the incremental common shares issuable upon the exercise of stock options (using the treasury stock method). To the extent stock options are antidilutive, they are excluded from the calculation of diluted loss per share. For the three and nine months ended September 30, 2026 and 2025,
The following table summarizes the net loss per share calculation for the periods presented:
| Three Months Ended September 30, (unaudited) | Nine Months Ended September 30, (unaudited) | |||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| Net loss– basic and diluted | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Weighted average shares outstanding – basic and diluted | ||||||||||||||||
| Per share data: | ||||||||||||||||
| Basic from operations | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Diluted from operations | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Three Months Ended September 30, 2026 | Nine Months Ended September 30, 2026 | |||||||||||||||
| Series A Preferred Stock | Common Stock | Series A Preferred Stock | Common Stock | |||||||||||||
| Allocation of net loss | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Weighted average shares outstanding – basic and diluted | ||||||||||||||||
| Net loss per share – basic and diluted | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Three Months Ended September 30, 2025 | Nine Months Ended September 30, 2025 | |||||||||||||||
| Series A Preferred Stock | Common Stock | Series A Preferred Stock | Common Stock | |||||||||||||
| Allocation of net loss | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Weighted average shares outstanding – basic and diluted | ||||||||||||||||
| Net loss per share – basic and diluted | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
11. Leases
The Company leases office space at 30 Jericho Executive Plaza in Jericho, New York from Jericho Executive Center LLC (“JEC”) under a lease that, as extended, expires on November 30, 2026. The Company’s monthly office rent payments under the lease are currently approximately $
In connection with the NTS Acquisition, 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 automatically renewed on April 30, 2026 for a one-year term (see Note 14 below for additional information regarding this lease). The Company’s monthly rent payments under the lease are currently $
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In connection with the NTS 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. During the first quarter of 2026, the Company amended its agreement with ADC to extend the lease through August 31, 2032. 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 February 2, 2026 of $
As of September 30, 2026, 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 September 30, 2026, the Company had operating lease liabilities of approximately $
Total rent expense for the three and nine months ended September 30, 2026 was $
The following table summarizes the Company’s operating leases for the periods presented:
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| Cash paid for amounts included in the measurement of operating lease liabilities: | $ | $ | $ | $ | ||||||||||||
| Weighted average assumptions: | ||||||||||||||||
| Remaining lease term | ||||||||||||||||
| Discount rate | % | % | % | % | ||||||||||||
As of September 30, 2026, future minimum payments under non-cancellable operating leases were as follows:
| Amount | ||||
| For the year ended December 31: | ||||
| 2026 | $ | |||
| 2027 | ||||
| 2028 | ||||
| 2029 | ||||
| 2030 | ||||
| Thereafter | ||||
| Less: present value adjustment | ( | ) | ||
| Present value of minimum lease payments | $ | |||
| Current liability | $ | |||
| Long term liability | $ | |||
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12. 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. (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 $
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 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.
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 during the fourth quarter of 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.
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. The Company incurred approximately $
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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. No reserve was deemed necessary as of September 30, 2026.
13. Related Party Transactions
Relationship
As of September 30, 2026 and December 31, 2025, Newtek beneficially owned approximately
Deposit Accounts at Newtek Bank
The Company has a commercial banking relationship with Newtek Bank. At September 30, 2026 the Company had $
Revenue and Accounts Receivable
Revenue from Newtek and its subsidiaries and affiliates are presented below:
| Three Months ended September 30, (unaudited) | Nine Months ended September 30, (unaudited) | |||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| Revenue from Newtek and subsidiaries and affiliates | $ | $ | $ | $ | ||||||||||||
| % of total revenue | % | % | % | % | ||||||||||||
Accounts receivable from Newtek and its subsidiaries and affiliates are presented below:
| September 30, 2026 | December 31, 2025 | |||||||
| (unaudited) | ||||||||
| Accounts receivable from Newtek and subsidiaries and affiliates | $ | $ | ||||||
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 any of the periods presented.
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Accounts Payable, Accrued Expenses and other General and Administrative Expenses
The Company has a referral arrangement with Newtek whereby it pays commissions for referrals of customers services. Included in accounts payable and accrued expenses at September 30, 2026 and December 31, 2025 was $
In addition, the Company subleased space to an affiliate of Newtek for the three and nine months ended September 30, 2026 and received $
Concentration
Because Newtek is both a significant stockholder and a significant 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.
Business Loan Agreement and Credit Agreement and Revolving Promissory Note
On April 10, 2025, the Company, Intelligent Protection LLC, a wholly owned subsidiary of the Company (“IPM LLC” and, together with the Company, the “Borrowers”), 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 provided for a secured revolving line of credit to the Borrowers in the maximum amount of $
The Facility matured on April 10, 2026. No amounts were drawn on the revolving line of credit during its term.
14. Subsequent Events
AdTech Purchase Agreement
On October 22, 2026, the Company entered into a unit purchase agreement (the “AdTech Purchase Agreement”) with Advanced Technology Distributors Inc. (“AdTech”), AdTech IT LLC, a wholly owned subsidiary of AdTech (“JVCo”), and the stockholders of AdTech signatory thereto, pursuant to which the Company agreed to acquire all of the issued and outstanding membership interests of JVCo through a two-step closing process (the “AdTech Acquisition”).
At the first closing under the AdTech Purchase Agreement (the “First Closing”), AdTech will contribute to JVCo all of its assets related to its information technology, telecommunications, connectivity, managed services and related infrastructure solutions business, and the Company will acquire
Between the First Closing and the Final Closing, AdTech will retain the power and authority to direct and control the operations of JVCo in accordance with the amended and restated limited liability company agreement of JVCo (the “JVCo LLC Agreement”) to be entered into at the First Closing, and the Company’s rights with respect to JVCo will be limited to those set forth therein.
The First Closing and the Final Closing are subject to various conditions, including, among others, approval by the California Public Utilities Commission (the “CPUC”) of a Tier 2 Advice Letter relating to the transfer of AdTech’s competitive local exchange carrier license to JVCo and approval by the CPUC of a change-of-control filing relating to such license, respectively. The AdTech Purchase Agreement may be terminated by either party, among other things, if the First Closing has not occurred by March 31, 2027 or if the Final Closing has not occurred within 12 months after the First Closing (as the parties may extend by mutual written agreement). If the AdTech Purchase Agreement is terminated after the First Closing, the parties will follow the repurchase, unwind, exit or similar process set forth in the JVCo LLC Agreement.
In connection with the AdTech Acquisition, the Company incurred acquisition-related costs, consisting primarily of legal, accounting and other due diligence expenses, of $
Management has evaluated subsequent events or transactions occurring through the date the condensed consolidated financial statements were issued (November 10, 2026) and determined that, except as set forth above, no events or transactions are required to be disclosed herein.
Leases
On October 21, 2026, the Company provided written notice to Iron Mountain of its intent not to renew the lease. Therefore, the lease is set to expire on April 30, 2027.
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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
This Management’s Discussion and Analysis of Financial Condition and Results of Operations is intended to provide a reader of our financial statements with a narrative from the perspective of our management on our financial condition, results of operations, liquidity and certain other factors that may affect our future results. The following discussion and analysis should be read in conjunction with: (i) the accompanying unaudited condensed consolidated financial statements and notes thereto for the three and nine months ended September 30, 2026 and 2025, (ii) the consolidated financial statements and notes thereto for the year ended December 31, 2025 included in our Annual Report on Form 10-K (the “Form 10-K”) filed with the Securities and Exchange Commission (the “SEC”) on March 17, 2026 and (iii) the discussion under the caption “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of the Form 10-K. Aside from certain information as of December 31, 2025, all amounts herein are unaudited.
Forward-Looking Statements
In addition to historical financial information, the following discussion and analysis contains forward-looking statements that involve risks, uncertainties and assumptions. See “Forward-Looking Statements.” Our results and the timing of selected events may differ materially from those anticipated in these forward-looking statements as a result of many factors, including those discussed under “Item 1A. Risk Factors” in Part II of this report and “Item 1A. Risk Factors” in the Form 10-K.
Overview
We provide a comprehensive range of IT-related services, including managed IT security services, secure private cloud hosting, managed backup and disaster recovery, professional services, procurement services, web hosting, and other related services including consulting and implementing technology solutions for large enterprise and commercial clients across the United States as well as small-and-medium sized businesses. We also offer and support our ManyCam software, which is a live streaming software and virtual camera that allows users to deliver professional live videos on streaming platforms, video conferencing apps and distance learning tools.
We have an over 20-year history of technology innovation and hold eight patents.
Our IT and Cloud-Based Solutions
We sell and provide a range of services across six core areas, each as further described below: (i) managed IT security services, (ii) secure private cloud hosting, (iii) managed backup and disaster recovery, (iv) professional services, (v) procurement services and (vi) web hosting.
| 1. | Managed IT Security Services |
Our managed IT security services provide clients with ongoing management and support of their IT systems and services under a subscription or contract-based model. Our managed IT security services include proactive monitoring, regular system maintenance, comprehensive cybersecurity management, data backup, and disaster recovery, as well as help desk support for users. Managed IT security services are intended to ensure that a client’s IT infrastructure and services remain operational, secure and optimized.
| 2. | Secure Private Cloud Hosting |
Our secure private cloud hosting offerings include a digital infrastructure which consists of dedicated and fully isolated cloud environments designed to deliver security, control and compliance for business-critical applications and client data.
We operate a secure private cloud from private suites in completely isolated areas that are leased within two Tier 3 data center facilities located in Phoenix, Arizona, and Edison, New Jersey (the “Data Centers”), pursuant to certain license agreements. As of September 30, 2026, the terms of the license agreements for the Data Centers located in Arizona and New Jersey extend through 2032 and 2027, respectively. On October 21, 2026, we provided written notice to the facility located in Edison New Jersey, of our intent not to renew the lease. Therefore, the lease is set to expire on April 30, 2027. In light of the capacity of the private suites available for use at the Data Center in Arizona, we determined to consolidate our secure private cloud operations into one single Data Center.
Although we do not own or operate the Data Centers, we aim to use the high-level operations and standards provided by the Data Centers through our license agreements to provide our customers with secure and flexible cloud services. The Data Centers each conform to The Uptime Institute’s Tier 3 Certification, which is a globally recognized standard for validating critical data center infrastructure. The Tier 3 classification provides us with a degree of confidence that the Data Centers provide the necessary power, cooling, maintenance, and fault tolerance required for secure and reliable operations. Our critical infrastructure, hosted within the Data Centers, is designed to meet and exceed Tier 3 standards in all relevant categories. This allows us to deliver secure and compliant services to customers within heavily regulated industries, including financial services and healthcare, and other industries. Additionally, we incorporate a redundant, carrier-neutral network design for communications paths, along with multiple hosting locations for our services, which improve the availability and resilience of our cloud services.
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We leverage state-of-the-art security measures, including data encryption, network segmentation, advanced firewalls, multi-factor authentication and continuous monitoring to safeguard against unauthorized access and cyber threats. We believe our secure private cloud hosting provides our clients with strong availability, data integrity and reliable performance, while meeting stringent compliance requirements. Our secure private cloud hosting solutions are backed by 24/7 support from our expert team, with the goal of delivering secure, flexible and resilient infrastructure tailored to each client’s unique business needs. We actively engage with third parties to enhance our secure private cloud offerings with artificial intelligence (“AI”) features and benefits.
| 3. | Managed Backup and Disaster Recovery |
Our managed backup and disaster recovery solutions provide comprehensive protection for customers’ critical data and IT infrastructure, which is intended to ensure business continuity and rapid recovery in the event of data loss, cyberattacks or system failures. We utilize advanced backup technologies with automated, regular data backups, off-site replication and secure storage to prevent data corruption or loss. Our disaster recovery solutions are designed to offer quick restoration of systems and data with minimal downtime, supported by flexible recovery plans tailored to meet customers’ specific needs. With continuous monitoring, end-to-end encryption, and expert support available 24/7, we aim to ensure that our customers’ data is secure, accessible and compliant with industry standards. Pricing for our managed backup and disaster recovery solutions is based upon the customer contract and depends on the amount of backup storage needed. Customers are typically charged set rates per the contract and are charged monthly based on usage.
| 4. | Professional Services |
Our professional services include the design and implementation of a wide range of IT products and services, such as cybersecurity, software planning, IT infrastructure, data center design and configuration, hybrid or cloud computing solutions, website development, developing or integrating systems and software, and IT cost management. In addition, we launched an AI Data Readiness solution in the third quarter of 2026 that we believe will improve the reliability, security, and outcome of adopting AI technologies by assessing, structuring, and securing business data in a safe and effective manner.
| 5. | Procurement Services |
We offer two types of procurement services to our customers. We can either: (i) obtain software and hardware products on behalf of our customers, in which case our vendors drop ship the products to our end customers, or (ii) obtain hardware or software on behalf of our customers and perform additional configuration and/or add additional inputs to the products before the products are shipped to our customers. In the instance where we sell hardware and software products as a solution bundled with services, we typically obtain the products or software from our vendors, add the additional inputs/configuration as detailed in the customer contract, and then ship the products to the end customer. For each type of procurement service, our customers have their own negotiated contract and payment terms. Procurement revenue can be uneven throughout the year as it is the result of our customers both replacing existing hardware as well as purchasing new hardware in connection with new projects, which projects are traditionally tied to customer budgets that are often higher early in the calendar year.
| 6. | Web Hosting |
Our web hosting services consist of several advanced security measures, including Secure Sockets Layer and Transport Layer Security (“SSL/TLS”) encryption, firewalls, distributed denial-of-service (“DDoS”) protection, malware scanning, and secure server configurations. Our web hosting services include features such as regular data backups, web application firewalls, strict access control policies and continuous monitoring and expert support, all of which are intended to ensure our customers’ compliance with industry standards and provide a reliable and secure environment for our customers’ online presence. Our web hosting services are designed to provide customer websites with an additional layer of protection from cyber attacks and threats.
Our ManyCam Software Product
In addition to our IT and cloud-based solutions, we offer and support our ManyCam software, which is a live streaming software and virtual camera that allows users to deliver professional live videos on streaming platforms, video conferencing apps and distance learning tools. The ManyCam software provides multiple camera feeds, backgrounds and effects while also enabling users to share presentations, spreadsheets and documents. We cross sell ManyCam as an offering for our new customers and seek to optimize our cross-selling efforts of ManyCam with our other technology solutions.
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Recent Developments
AdTech Purchase Agreement
On October 22, 2026, we entered into a unit purchase agreement (the “AdTech Purchase Agreement”) with Advanced Technology Distributors Inc. (“AdTech”), AdTech IT LLC, a wholly owned subsidiary of AdTech (“JVCo”), and the stockholders of AdTech signatory thereto, pursuant to which we agreed to acquire all of the issued and outstanding membership interests of JVCo through a two-step closing process (the “AdTech Acquisition”). AdTech provides information technology, telecommunications, connectivity, managed services and related infrastructure solutions to small and medium-sized businesses throughout central and northern California.
At the first closing under the AdTech Purchase Agreement (the “First Closing”), AdTech will contribute to JVCo all of its assets related to its business of providing information technology, telecommunications, connectivity, managed services and related infrastructure solutions, and we will acquire 49% of the issued and outstanding membership interests of JVCo for $750,000 in cash, subject to customary purchase price adjustments. At the final closing under the AdTech Purchase Agreement (the “Final Closing”), we will acquire the remaining 51% of the issued and outstanding membership interests of JVCo for (i) $1,250,000 in cash, subject to customary purchase price adjustments, up to $500,000 of which may be paid in shares of our common stock at our election and (ii) a $600,000 secured promissory note.
In addition to the consideration above and pursuant to the AdTech Purchase Agreement, AdTech is entitled to a cash earnout payment of up to $100,000 based on JVCo’s 2027 revenue attributable to existing AdTech customers (subject to adjustment if the Final Closing has not occurred on or before March 31, 2027, as provided in the AdTech Purchase Agreement). Following the Final Closing, JVCo will become our wholly owned subsidiary.
Between the First Closing and the Final Closing, AdTech will retain the power and authority to direct and control the operations of JVCo in accordance with the amended and restated limited liability company agreement of JVCo (the “JVCo LLC Agreement”) to be entered into at the First Closing, and our rights with respect to JVCo will be limited to those set forth therein.
The First Closing and the Final Closing are subject to various conditions, including, among others, approval by the California Public Utilities Commission (the “CPUC”) of a Tier 2 Advice Letter relating to the transfer of AdTech’s competitive local exchange carrier license to JVCo and approval by the CPUC of a change-of-control filing relating to such license, respectively. The AdTech Purchase Agreement may be terminated by us or AdTech if, among other things, the First Closing has not occurred by March 31, 2027 or the Final Closing has not occurred within 12 months after the First Closing (as the parties may extend by mutual written agreement). If the AdTech Purchase Agreement is terminated after the First Closing, the parties will follow the repurchase, unwind, exit or similar process set forth in the JVCo LLC Agreement.
Third Quarter and YTD 2026 Operational Highlights
Operational highlights during the three and nine months ended September 30, 2026:
| ● | launched an AI Data Readiness solution during the third quarter of 2026, which we believe will improve the reliability, security and outcome of adopting AI technologies by assessing, structuring and securing business data in a safe and effective manner; |
| ● | expanded our sales organization by adding a dedicated territory focused on the Phoenix metropolitan area and broader West Coast market, which includes an established customer base and industry expertise, and which management believes positions the Company to pursue additional revenue opportunities and support future growth; |
| ● | executed an extension of our existing Phoenix data center colocation license agreement with an industry-leading data center provider through August 2032; |
| ● | entered into a strategic collaboration with MASORI Therapeutics (“MASORI”), an advanced AI platform designed to accelerate results by reducing cost, complexity, and time for small and medium AI models, allowing organizations to save significantly by decreasing necessary code development and providing AI-related benefits; |
| ● | successfully achieved SOC 2 Type 1 compliance, a key milestone in our ongoing commitment to safeguarding customer data and delivering trusted cybersecurity and cloud infrastructure solutions; |
| ● | during the first quarter of 2026, 50,000 shares of common stock were repurchased under the Stock Repurchase Plan (defined below) for an aggregate of $83,491. As of September 30, 2026, all shares of common stock available for repurchase under the Stock Repurchase Plan had been repurchased and the Stock Repurchase Plan had expired; |
| ● | for the three and nine months ended September 30, 2026 revenue totaled $11.0 million and $23.8 million, respectively, compared to $6.2 million and $17.5 million, respectively, for the three and nine months ended September 30, 2025, respectively. The revenue increase of 76% and 36%, respectively, was primarily attributed to an increase in our procurement revenue of 271% and 158%, respectively, compared to the prior year periods, as well as an increase in managed IT services of 2% and 7%, respectively, compared to the prior year periods; |
| ● | net loss for the three and nine months ended September 30, 2026 totaled $0.8 million and $2.8 million, respectively, compared to net loss of $1.1 million and $1.3 million, respectively, for the three and nine months ended September 30, 2025; |
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| ● | Adjusted EBITDA for the three and nine months ended September 30, 2026 totaled $0.2 million and $(0.5) million, respectively, compared to $(0.3) million and $(1.1) million, respectively for the three and nine months ended September 30, 2025; |
| ● | we had cash provided by operations of $4.9 million for the nine months ended September 30, 2026 compared to cash provided by operations of $1.0 million for the nine months ended September 30, 2025; |
| ● | deferred revenue was $4.9 million as of September 30, 2026, which will be recognized as revenue in future quarters as products and/or services are installed; and |
| ● | at September 30, 2026, we had $12.5 million of cash and cash equivalents on our balance sheet and no long-term debt. |
Business Objectives
For the near term, our business objectives include:
| ● | continuing the integration of our comprehensive portfolio of IT-related solutions and expanding functionality through strategic partnerships. We are collaborating with strategic third parties to integrate AI and predictive analytics capabilities into our platform, enabling customers to leverage AI-driven insights within existing data environments. These partnerships are intended to strengthen our technology offerings and enhance customer value; |
| ● | undertaking an initiative to consolidate our accounting-based systems through the implementation of a third-party e-commerce integration system. This implementation is intended to support improved system integration, increased automation of financial processes, and enhanced consistency of financial data across our operations. We believe this initiative will contribute to more efficient financial management and support future growth initiatives; |
| ● | incorporating ManyCam as an offering for our new customers and seeking to optimize our cross-selling efforts with our other technology solutions; |
| ● | closing the AdTech Acquisition and integrating the business of AdTech into ours; |
| ● | continuing to explore strategic opportunities, including, but not limited to, potential mergers or acquisitions of other assets or entities that are synergistic to our businesses; and |
| ● | continuing to defend our intellectual property. |
Sources of Revenue
Our main sources of revenue are described below. As a result of the variability of contract and service type, some of the revenue we report in each period is deferred revenue from contracts we entered into during previous periods. This may make it difficult for us to quickly increase revenue through the entry into new contracts in any period, and a decline in new or renewed contracts in any one quarter will negatively affect our revenue in future quarters. As a result, revenue generated in prior quarters may not provide a reliable indication of future results.
Managed IT Security Services
Customers of our managed IT security services typically pay a recurring fee, often based on service-level agreements that define the specific services and performance metrics.
Secure Private Cloud Hosting
Our secure private cloud hosting offerings include a digital infrastructure which consists of dedicated and fully isolated cloud environments designed to deliver security, control and compliance for business-critical applications and client data. We operate a secure private cloud from private suites in completely isolated areas that are leased within two Tier 3 data center facilities located in Phoenix, Arizona and Edison, New Jersey (the “Data Centers”). Although we do not own or operate the Data Centers, we aim to use the high-level operations and standards provided by the Data Centers through our license agreements to provide our customers with secure and flexible cloud services.
We leverage state-of-the-art security measures, including data encryption, network segmentation, advanced firewalls, multi-factor authentication and continuous monitoring to safeguard against unauthorized access and cyber threats. We believe our secure private cloud hosting provides our clients with strong availability, data integrity and reliable performance, while meeting stringent compliance requirements. Our secure private cloud hosting solutions are backed by 24/7 support from our expert team, with the goal of delivering secure, flexible and resilient infrastructure tailored to each client’s unique business needs. We actively engage with third parties to enhance our secure private cloud offerings with AI features and benefits. Revenue from such cloud services is recognized ratably over the period in which the cloud services are provided.
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Managed Backup and Disaster Recovery
Pricing for our managed backup and disaster recovery solutions is based upon the customer contract and depends on the amount of backup storage needed. Customers are typically charged set rates per the contract and are charged monthly based on usage.
Professional Services
Revenue in connection with professional services is generally recognized upon achievement of milestones or on a straight line basis for all fixed fee arrangements.
Procurement Services
For each type of procurement service, our customers have their own negotiated contract and payment terms. When we provide a combination of hardware and software products with the provision of services, we will separately identify our performance obligations under the contract and the hardware and/or software products or services that will be provided. The total transaction price for an arrangement with multiple performance obligations is typically allocated at contract inception to each performance obligation in proportion to the stand-alone selling price of the hardware or software. The selling price is the price at which we would sell a promised good or service separately to a customer. We estimate the price based on observable inputs, including direct labor hours and allocable costs, or use observable stand-alone prices when they are available.
Web Hosting
Each of our customers has their own contract and payment terms with respect to our web hosting services. The duration of such contracts is typically between one and four years, although the term may vary based on the needs of each particular customer. Customers of our web hosting services are invoiced on a monthly basis and pay a monthly fee, with revenue recognized on a monthly basis.
Subscription Revenue
We also generate subscription revenue from monthly premium subscription services for our ManyCam software. Subscription revenues are presented net of refunds, credits and known and estimated credit card chargebacks. During the three and nine months ended September 30, 2026 and 2025, 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 condensed consolidated balance sheets.
Costs and Expenses
Cost of revenue
Cost of revenue consists primarily of compensation and other employee-related costs for personnel engaged in data center and customer care functions, credit card processing fees, hosting fees, data center rent, bandwidth costs and, in the case of procurement revenue, the cost of the hardware and/or subscriptions. Cost of revenue also includes compensation and other employee-related costs for technical personnel, consultants and subcontracting costs.
Sales marketing and product development expense
Sales marketing and product development expense consists primarily of (i) advertising expenditures and compensation (including stock-based compensation) and other employee-related costs for personnel and consultants engaged in sales and sales support marketing and development functions and (ii) development of the technology of our applications, and consultant-related costs that are not capitalized for personnel engaged in the design, testing and enhancement of service offerings. Advertising and promotional spend includes online marketing, including fees paid to search engines and offline marketing, which primarily consists of partner-related payments to those who direct traffic to our brands.
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General and administrative expense
General and administrative expense consists primarily of compensation (including non-cash stock-based compensation) and other employee-related costs for personnel engaged in executive management, finance, legal, tax and human resources and facilities costs and fees for other professional services and cost of insurance.
Depreciation and amortization expense
Depreciation and amortization expenses consist primarily of amortization of intangible assets as well as depreciation on property and equipment.
Litigation expenses
Litigation expenses relate to expenses incurred in our patent defense against Cisco Systems, Inc. and Cisco Technology, Inc. (the “Cisco ManyCam Litigation”).
Key Metrics
Our management relies on certain non-GAAP financial measures to manage and evaluate our business. The non-GAAP financial measures set forth below help us evaluate growth trends, establish budgets, measure the effectiveness of our advertising and marketing efforts and assess operational efficiencies. We also discuss net cash provided by operating activities under the “Liquidity and Capital Resources” section below. Adjusted EBITDA is discussed below.
| Three Months Ended | Nine Months Ended | |||||||||||||||
| September 30, (unaudited) | September 30, (unaudited) | |||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| Net cash provided by operating activities | $ | 5,644,041 | $ | 133,037 | $ | 4,857,311 | $ | 989,142 | ||||||||
| Loss from operations | $ | (886,077 | ) | $ | (1,435,762 | ) | $ | (3,166,630 | ) | $ | (3,899,388 | ) | ||||
| Loss from operations as a percentage of total revenues | (8.1 | )% | (22.9 | )% | (13.3 | )% | (22.3 | )% | ||||||||
| Net loss | $ | (779,378 | ) | $ | (1,083,070 | ) | $ | (2,791,090 | ) | $ | (1,324,568 | ) | ||||
| Net loss as a percentage of total revenues | (7.1 | )% | (17.4 | )% | (11.7 | )% | (7.6 | )% | ||||||||
| Adjusted EBITDA | $ | 159,201 | $ | (260,121 | ) | $ | (535,753 | ) | $ | (1,120,667 | ) | |||||
| Adjusted EBITDA as percentage of total revenues | 1.5 | % | (4.2 | )% | (2.3 | )% | (6.4 | )% | ||||||||
Adjusted EBITDA
Adjusted EBITDA is a non-GAAP financial measure. Adjusted EBITDA is defined as net income (loss) adjusted to exclude interest (income) expense, net, other (income) expense, net, income tax (benefit) expense, depreciation and amortization expense, stock-based compensation expense, net loss from discontinued operations, impairment loss in connection with the Divestiture, litigation expenses relating to the Cisco ManyCam Litigation and acquisition-related expenses associated with the AdTech Acquisition, as each are applicable to the periods presented. Prior to the fiscal quarter ended September 30, 2026, we did not exclude acquisition-related expenses associated with the AdTech Acquisition in calculating Adjusted EBITDA. For the nine months ended September 30, 2026, the acquisition-related expenses of $277,844 include $82,819 incurred in the three months ended June 30, 2026, which amount was not adjusted in the prior quarter as it was not material. However, after reevaluation, we have determined that presenting Adjusted EBITDA without excluding such costs provides less valuable information about our core operations. As a result, beginning with the fiscal quarter ended September 30, 2026, acquisition-related expenses associated with the AdTech Acquisition are excluded from the calculation of Adjusted EBITDA.
We present Adjusted EBITDA because it is a key measure used by our management and Board of Directors (the “Board”) to understand and evaluate our core operating performance and trends, to develop short- and long-term operational plans and to allocate resources to expand our business. In particular, the exclusion of certain expenses in calculating Adjusted EBITDA can provide a useful measure for period-to-period comparisons of the cash operating income generated by our business. We believe that Adjusted EBITDA is useful to investors and others to understand and evaluate our operating results, and it allows for a more meaningful comparison between our performance and that of competitors.
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Limitations of Adjusted EBITDA
Our use of Adjusted EBITDA has limitations as an analytical tool, and you should not consider this performance measure in isolation from or as a substitute for analysis of our results as reported under GAAP. Some of these limitations are that Adjusted EBITDA does not reflect, among other things, interest income, net; the benefit or provision for income taxes; other income, net; litigation expenses incurred in connection with the Cisco ManyCam Litigation; acquisition-related expenses associated with the AdTech Acquisition; cash capital expenditures for assets underlying depreciation and amortization expense that may need to be replaced or for new capital expenditures; and the potentially dilutive impact of stock-based compensation. Other companies, including companies in our industry, may calculate Adjusted EBITDA differently, which reduces its usefulness as a comparative measure.
Because of these limitations, you should consider Adjusted EBITDA alongside other financial performance measures, including various cash flow metrics, net income (loss) and our other GAAP results. The following table presents a reconciliation of net income (loss), the most directly comparable financial measure calculated and presented in accordance with GAAP, to Adjusted EBITDA for each of the periods indicated:
| Three Months Ended | ||||||||
| September 30 (unaudited) | ||||||||
| 2026 | 2025 | |||||||
| Reconciliation of net loss to Adjusted EBITDA: | ||||||||
| Net loss | $ | (779,378 | ) | $ | (1,083,070 | ) | ||
| Interest income, net | (61,869 | ) | (102,856 | ) | ||||
| Income tax expense (benefit) | (44,830 | ) | (249,836 | ) | ||||
| Litigation expenses relating to the Cisco ManyCam Litigation | 317,818 | 507,181 | ||||||
| Acquisition-related expenses in connection with AdTech Acquisition(1) | 195,025 | -- | ||||||
| Depreciation and amortization expense | 490,389 | 624,544 | ||||||
| Stock-based compensation expense | 42,046 | 43,916 | ||||||
| Adjusted EBITDA | $ | 159,201 | $ | (260,121 | ) | |||
| Nine Months Ended | ||||||||
| September 30, (unaudited) | ||||||||
| 2026 | 2025 | |||||||
| Reconciliation of net loss to Adjusted EBITDA: | ||||||||
| Net loss | $ | (2,791,090 | ) | $ | (1,324,568 | ) | ||
| Interest income, net | (181,095 | ) | (273,176 | ) | ||||
| Income tax expense (benefit) | (172,445 | ) | (2,237,894 | ) | ||||
| Other income, net | (22,000 | ) | (63,750 | ) | ||||
| Litigation expenses relating to the Cisco ManyCam Litigation | 802,288 | 507,181 | ||||||
| Acquisition-related expenses in connection with AdTech Acquisition(1) | 277,844 | -- | ||||||
| Depreciation and amortization expense | 1,443,571 | 1,982,235 | ||||||
| Stock-based compensation expense | 107,174 | 289,305 | ||||||
| Adjusted EBITDA | $ | (535,753 | ) | $ | (1,120,667 | ) | ||
| (1) | Acquisition-related expenses include legal, accounting and other due diligence costs incurred in connection with the AdTech Acquisition. |
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Results of Operations
The following table sets forth condensed consolidated statements of operations data for each of the periods indicated as a percentage of total revenues:
| Three Months Ended | Nine Months Ended | |||||||||||||||
| September 30, (unaudited) | September 30, (unaudited) | |||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| Total revenue | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | ||||||||
| Costs and expenses: | ||||||||||||||||
| Cost of revenue | 70.9 | % | 49.3 | % | 62.3 | % | 48.1 | % | ||||||||
| Sales marketing and product development expense | 6.9 | % | 13.5 | % | 9.7 | % | 14.0 | % | ||||||||
| General and administrative expense | 22.9 | % | 42.0 | % | 31.8 | % | 46.0 | % | ||||||||
| Depreciation and amortization | 4.5 | % | 10.0 | % | 6.1 | % | 11.3 | % | ||||||||
| Litigation expenses related to Cisco ManyCam Litigation | 2.9 | % | 8.1 | % | 3.4 | % | 2.9 | % | ||||||||
| Total costs and expenses | 108.1 | % | 123.0 | % | 113.3 | % | 122.3 | % | ||||||||
| Loss from continuing operations | (8.1 | )% | (23.0 | )% | (13.3 | )% | (22.3 | )% | ||||||||
| Other income, net | 0.6 | % | 1.6 | % | 0.8 | % | 1.9 | % | ||||||||
| Loss from continuing operations before income tax benefit | (7.5 | )% | (21.4 | )% | (12.5 | )% | (20.4 | )% | ||||||||
| Income tax (expense) benefit | 0.4 | % | 4.0 | % | 0.7 | % | 12.8 | % | ||||||||
| Net loss | (7.1 | )% | (17.4 | )% | (11.8 | )% | (7.6 | )% | ||||||||
Items Affecting Comparability of Results
Revenue from Newtek and its affiliates was impacted by Newtek’s ongoing initiatives to reduce information technology spend. We partially offset this decline in revenue through growth in recurring revenue from customers who are not related parties, including the addition of new customer relationships and service contracts during the period. For the three months ended September 30, 2026 and 2025, revenue from Newtek and its affiliates represented approximately 16% and 32% of total revenue, respectively.
During the three months ended June 30, 2026, we experienced supply chain constraints affecting the availability of memory, CPU and GPU components. These constraints extended product lead times compared to historical levels, resulting in delays between customer bookings and product shipments. As a result, a portion of booked orders during the second quarter remained unrecognized as revenue pending fulfillment and delivery, a portion of which began being recognized in the third quarter of 2026, and the remainder will be recognized in future quarters as the underlying products and services are shipped and installed. Deferred revenue was $4,928,490 as of September 30, 2026, which reflects amounts invoiced or collected for orders that had not yet been fulfilled. We are unable to predict with certainty when these supply chain conditions will normalize, and continued constraints affecting memory, CPU or GPU component availability could result in further delays in revenue recognition in future periods.
In addition, during the second quarter, a significant customer order was delayed and fulfilled across two reporting periods due to supply chain constraints affecting both our vendor and distribution channel. These constraints altered the cost structure associated with fulfilling the order. The initial shipment, completed in the first quarter of 2026, was recognized at expected margins, while the subsequent shipment, completed during the second quarter, incurred higher component and freight costs, resulting in a loss on that portion of the order. As a consequence, the combined order resulted in a loss, which contributed to the increase in cost of revenue described below and negatively impacted our results of operations for the three months ended June 30, 2026.
During the three months ended September 30, 2026, procurement revenue increased approximately 271% compared to the prior year period, and represented a larger portion of our overall revenue mix compared to prior periods. While this growth contributed substantially to top-line performance, procurement revenue generally carries lower gross margins than our managed services, cybersecurity and cloud infrastructure offerings. As a result, profitability did not increase at the same rate as revenue. We view this mix shift as a positive indicator of customer demand and long-term opportunity to increase our recurring revenue.
Three Months Ended September 30, 2026 Compared to Three Months Ended September 30, 2025
Revenue
Total revenue increased by 76% to $10,950,145 for the three months ended September 30, 2026 from $6,238,019 for the three months ended September 30, 2025. This increase was driven by an increase in procurement revenue related to sales of equipment to customers, as well as increased professional services and managed information technology revenue, attributed to both new customers as well as the expansion of services sold to existing customers, which was partially offset by a decrease in subscription revenue.
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The following table sets forth our total revenue for the three months ended September 30, 2026 and 2025, the increase or decrease between those periods, the percentage increase or decrease between those periods, and the percentage of total revenue that each represented for those periods:
| % Revenue | ||||||||||||||||||||||||
| Three Months Ended | Three Months Ended | |||||||||||||||||||||||
| September 30, (unaudited) | $ | % | September 30, (unaudited) | |||||||||||||||||||||
| 2026 | 2025 | Increase (Decrease) | Increase (Decrease) | 2026 | 2025 | |||||||||||||||||||
| Managed information technology | $ | 3,859,198 | 3,791,746 | 67,452 | 1.8 | % | 35.2 | % | 60.8 | % | ||||||||||||||
| Procurement revenue | 6,301,744 | 1,697,854 | 4,603,889 | 271.2 | % | 57.6 | % | 27.2 | % | |||||||||||||||
| Professional services revenue | 545,317 | 476,198 | 69,119 | 14.5 | % | 5.0 | % | 7.6 | % | |||||||||||||||
| Subscription revenue | 243,886 | 272,221 | (28,335 | ) | (10.4 | )% | 2.2 | % | 4.4 | % | ||||||||||||||
| Total revenues | $ | 10,950,145 | $ | 6,238,019 | $ | 4,712,125 | 75.5 | % | 100.0 | % | 100.0 | % | ||||||||||||
The increase in revenue was primarily attributed to an increase in procurement revenue of 271.2% compared to the prior year period, as well as an increase in managed information technology revenue of 1.8% compared to the prior year period and an increase in professional services revenue of 14.5%. With respect to our managed information technology solutions, which consist of managed IT security services, managed backup and disaster recovery solutions and web hosting, revenue increased 1.8% compared to the prior year period. This increase was partially offset by a decrease of 11.5% in managed information technology revenue from Newtek in connection with its ongoing initiatives to reduce information technology spending. The increase in revenue was partially offset by a decrease in subscription revenue compared to the prior year period of $28,335, or 10.4%. Our subscription revenue relates to the sales from our ManyCam software. The decrease in subscription revenue was primarily driven by increased competition in the virtual camera and streaming software space.
Costs and Expenses
Total costs and expenses for the three months ended September 30, 2026 increased by $4,162,441, or 54.2%, as compared to the three months ended September 30, 2025. The following table presents our costs and expenses for the three months ended September 30, 2026 and 2025, the increase or decrease between those periods and the percentage increase or decrease between those periods and the percentage of total revenue that each represented for those periods:
| % Revenue | ||||||||||||||||||||||||
| Three Months Ended | Three Months Ended | |||||||||||||||||||||||
| September 30, (unaudited) | $ | % | September 30, (unaudited) | |||||||||||||||||||||
| 2026 | 2025 | Increase (Decrease) | Increase (Decrease) | 2026 | 2025 | |||||||||||||||||||
| Cost of revenue | $ | 7,768,277 | $ | 3,076,333 | $ | 4,691,944 | 152.5 | % | 70.9 | % | 49.3 | % | ||||||||||||
| Sales marketing and product development expense | 757,107 | 844,463 | (87,356 | ) | (10.3 | )% | 6.9 | % | 13.5 | % | ||||||||||||||
| General and administrative expense | 2,502,631 | 2,621,260 | (118,629 | ) | (4.5 | )% | 22.9 | % | 42.0 | % | ||||||||||||||
| Depreciation and amortization | 490,389 | 624,544 | (134,155 | ) | (21.5 | )% | 4.5 | % | 10.0 | % | ||||||||||||||
| Litigation expenses relating to the Cisco ManyCam Litigation | 317,818 | 507,181 | (189,363 | ) | (37.3 | )% | 2.9 | % | 8.1 | % | ||||||||||||||
| Total costs and expenses | $ | 11,836,222 | $ | 7,673,781 | $ | 4,162,441 | 54.2 | % | 108.1 | % | 122.9 | % | ||||||||||||
Cost of revenue
Our cost of revenue for the three months ended September 30, 2026 increased by $4,691,944, or 152.5%, as compared to the three months ended September 30, 2025. This increase was primarily due to an increase in costs associated with procurement equipment of $4,583,962 and managed services expenses of $200,916, partially offset by decreases in professional services expense of $54,955 and a decrease in cost of subscription revenue of $37,978. The increase in the cost of the procurement equipment was directly related to a large procurement order placed by a customer.
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Sales marketing and product development expense
Our sales marketing and product development expense for the three months ended September 30, 2026 decreased by $87,356, or 10.3%, as compared to the three months ended September 30, 2025. The decrease in sales marketing and product development expense was primarily due to a decrease in headcount and salary costs of $50,333, marketing expenses of $47,433 and consulting expenses of $17,503, partially offset by an increase in commissions of $28,228.
General and administrative expense
Our general and administrative expense for the three months ended September 30, 2026 decreased by $118,629, or 4.5%, as compared to the three months ended September 30, 2025. The decrease in general and administrative expense was primarily due to a decrease in legal, professional and accounting expenses of $282,633 and insurance costs of $85,261. This decrease was partially offset by an increase in due diligence costs of $195,025 and rent expense of $21,298. Overall headcount was 38 individuals at September 30, 2026.
Non-Operating Income
The following table presents the components of non-operating income for the three months ended September 30, 2026 and the three months ended September 30, 2025, the increase or decrease between those periods and the percentage increase or decrease between those periods and the percentage of total revenue that each represented for those periods:
| % Revenue | ||||||||||||||||||||||||
| Three Months Ended | Three Months Ended | |||||||||||||||||||||||
| September 30, (unaudited) | $ | % | September 30, (unaudited) | |||||||||||||||||||||
| 2026 | 2025 | Increase (Decrease) | Increase (Decrease) | 2026 | 2025 | |||||||||||||||||||
| Interest income, net | $ | 61,869 | $ | 102,856 | $ | (40,987 | ) | (39.8 | )% | 0.7 | % | 1.6 | % | |||||||||||
| Total non-operating income | $ | 61,869 | $ | 102,856 | $ | (40,987 | ) | (39.8 | )% | 0.7 | % | 1.6 | % | |||||||||||
Non-operating income for the three months ended September 30, 2026 was $61,869, a decrease of $40,987 or (39.8)%, as compared to non-operating income of $102,856 for the three months ended September 30, 2025. The decrease was primarily a result of a decrease in the amount of principal we invested and at varying interest rates.
Income Taxes
Our provision for income taxes consists of federal, foreign and state taxes, as applicable, in amounts necessary to align our year-to-date tax provision with the effective rate that we expect to achieve for the full year. For the three months ended September 30, 2026, we recorded an income tax benefit of $44,830 consisting primarily of foreign taxes. For the three months ended September 30, 2025, we recorded an income tax benefit of $249,836.
Nine Months Ended September 30, 2026 Compared to Nine Months Ended September 30, 2025
Revenue
Total revenue increased by 36% to $23,767,438 for the nine months ended September 30, 2026 from $17,478,656 for the nine months ended September 30, 2025. The increase was driven by increased procurement revenue related to sale of new equipment to customers, as well as increased managed information technology revenue, attributed to both new customers as well as the expansion of services sold to existing customers, partially offset by decreases in professional services revenue and subscription revenue.
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The following table sets forth our total revenue for the nine months ended September 30, 2026 and the nine months ended September 30, 2025, the increase or decrease between those periods, the percentage increase or decrease between those periods, and the percentage of total revenue that each represented for those periods:
| % Revenue | ||||||||||||||||||||||||
| Nine Months Ended | Nine Months Ended | |||||||||||||||||||||||
| September 30, (unaudited) | $ | % | September 30, (unaudited) | |||||||||||||||||||||
| 2026 | 2025 | Increase (decrease) | Increase (decrease) | 2026 | 2025 | |||||||||||||||||||
| Managed information technology | $ | 11,582,012 | 10,857,333 | 724,679 | 6.7 | % | 48.7 | % | 62.1 | % | ||||||||||||||
| Procurement revenue | 10,046,322 | 3,897,634 | 6,148,688 | 157.8 | % | 42.3 | % | 22.3 | % | |||||||||||||||
| Professional services revenue | 1,391,672 | 1,891,620 | (499,948 | ) | (26.4 | )% | 5.9 | % | 10.8 | % | ||||||||||||||
| Subscription revenue | 747,432 | 832,069 | (84,637 | ) | (10.2 | )% | 3.1 | % | 4.8 | % | ||||||||||||||
| Total revenues | $ | 23,767,438 | $ | 17,478,656 | $ | 6,288,782 | 36.0 | % | 100.0 | % | 100.0 | % | ||||||||||||
The increase in revenue was partially offset by a decrease in professional services revenue compared to the prior year period of $499,948, or 26.4%. Our subscription revenue for the nine months ended September 30, 2026 relates to the sales from our ManyCam software, which decreased by $84,637, or 10.2%, as compared to the nine months ended September 30, 2025. The decrease in subscription revenue was primarily driven by a decrease in new subscribers to our ManyCam software.
Costs and Expenses
Total costs and expenses for the nine months ended September 30, 2026 increased by $5,556,024, or 26%, as compared to the nine months ended September 30, 2025. The following table presents our costs and expenses for the nine months ended September 30, 2026 and 2025, the increase or decrease between those periods, the percentage increase or decrease between those periods and the percentage of total revenue that each represented for those periods:
| % Revenue | ||||||||||||||||||||||||
| Nine Months Ended | Nine Months Ended | |||||||||||||||||||||||
| September 30, (unaudited) | $ | % | September 30, (unaudited) | |||||||||||||||||||||
| 2026 | 2025 | Increase (decrease) | Increase (decrease) | 2026 | 2025 | |||||||||||||||||||
| Cost of revenue | $ | 14,820,058 | $ | 8,398,445 | $ | 6,421,613 | 76.5 | % | 62.3 | % | 48.1 | % | ||||||||||||
| Sales marketing and product development expense | 2,302,804 | 2,449,224 | (146,420 | ) | (6.0 | )% | 9.7 | % | 14.0 | % | ||||||||||||||
| General and administrative expense | 7,565,347 | 8,040,958 | (475,611 | ) | (5.9 | )% | 31.8 | % | 46.0 | % | ||||||||||||||
| Depreciation and amortization | 1,443,571 | 1,982,236 | (538,665 | ) | (27.2 | )% | 6.1 | % | 11.3 | % | ||||||||||||||
| Litigation expenses relating to the Cisco ManyCam Litigation | 802,288 | 507,181 | 295,107 | 58.2 | % | 3.4 | % | 2.9 | % | |||||||||||||||
| Total costs and expenses | $ | 26,934,068 | $ | 21,378,044 | $ | 5,556,024 | 26.0 | % | 113.3 | % | 122.2 | % | ||||||||||||
Cost of revenue
Our cost of revenue for the nine months ended September 30, 2026 increased by $6,421,613, or 76.5%, as compared to the nine months ended September 30, 2025. This increase was primarily due to an increase in the expenses associated with procurement equipment and related costs of $6,290,643, managed services expenses of $634,972, partially offset by decreases in professional services expenses of $387,650, subscription expenses of $82,908, and a decrease in web hosting expenses of $33,444. The increase in the cost of the procurement equipment was directly related to a large procurement order placed by a customer.
Sales marketing and product development expense
Our sales marketing and product development expense for the nine months ended September 30, 2026 decreased by $146,420, or 6.0%, as compared to the nine months ended September 30, 2025. The decrease in sales marketing and product development expense for the nine months ended September 30, 2026 was primarily due to a decrease in salary-related expenses of approximately $184,086, partially offset by increases in consulting costs of $25,884 and commissions of $65,824.
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General and administrative expense
Our general and administrative expense for the nine months ended September 30, 2026 decreased by $475,611, or 5.9%, as compared to the nine months ended September 30, 2025. The decrease in general and administrative expenses for the nine months ended September 30, 2026 was primarily due to insurance expense decreases of $217,718, a decrease in non-cash stock-based compensation expense of $182,134 and a decrease in legal and accounting fees of $446,598. These were offset slightly by increases in salary-related costs of $143,925 and due diligence expenses of $277,844.
Non-Operating Income
The following table presents the components of non-operating income for the nine months ended September 30, 2026 and the nine months ended September 30, 2025, the decrease between those periods, the percentage decrease between those periods and the percentage of total revenue that each represented for those periods:
| % Revenue | ||||||||||||||||||||||||
| Nine Months Ended | Nine Months Ended | |||||||||||||||||||||||
| September 30, (unaudited) | $ | % | September 30, (unaudited) | |||||||||||||||||||||
| 2026 | 2025 | (Decrease) | (Decrease) | 2026 | 2025 | |||||||||||||||||||
| Interest income, net | $ | 181,095 | $ | 273,176 | $ | (92,081 | ) | (33.7 | )% | 0.7 | % | 1.6 | % | |||||||||||
| Other income, net | 22,000 | $ | 63,750 | (41,750 | ) | (65.5 | )% | 0.1 | % | 0.3 | % | |||||||||||||
| Total non-operating income | $ | 203,095 | $ | 336,926 | $ | (133,831 | ) | (39.7 | )% | 0.8 | % | 1.9 | % | |||||||||||
Non-operating income for the nine months ended September 30, 2026 was $203,095, a decrease of $133,831, or 39.7%, as compared to non-operating income of $336,926 for the nine months ended September 30, 2025. The decrease was primarily a result of a decrease in the amount of principal we invested and at varying interest rates. Other income for the nine months ended September 30, 2025 related to the sale of a domain name that was no longer in use.
Income Taxes
Our provision for income taxes consists of federal, foreign and state taxes, as applicable, in amounts necessary to align our year-to-date tax provision with the effective rate that we expect to achieve for the full year. For the nine months ended September 30, 2026, we recorded an income tax benefit of $172,445, consisting primarily of foreign taxes. For the nine months ended September 30, 2025, we recorded an income tax benefit of $2,237,894, which included a discrete tax benefit of $1,665,189, primarily related to a partial reversal of our valuation allowance, as the NTS Acquisition created a source of future taxable income allowing for the recognition of certain deferred tax assets.
Liquidity and Capital Resources
| Nine Months Ended September 30, (unaudited) | ||||||||
| 2026 | 2025 | |||||||
| Condensed Consolidated Statements of Cash Flows Data: | ||||||||
| Net cash provided by operating activities | $ | 4,857,311 | $ | 989,142 | ||||
| Net cash used in investing activities | (662,829 | ) | (4,280,149 | ) | ||||
| Net cash (used in) provided by financing activities | (83,491 | ) | 1,048,952 | |||||
| Net increase (decrease) in cash, cash equivalents and restricted cash | $ | 4,110,991 | $ | (2,242,055 | ) | |||
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Currently, our primary source of liquidity is cash on hand. We believe that our cash and cash equivalents balance, and our expected cash flows from operations will be sufficient to meet all of our financial obligations for at least one year from the date these financial statements are issued. As of September 30, 2026, we had $12,545,052 of cash and cash equivalents. In addition, on June 18, 2026, our shelf registration statement on Form S-3 was declared effective by the SEC, pursuant to which we may offer up to $50,000,000 of common stock, preferred stock, warrants and/or units, from time to time, providing us with additional flexibility to access the capital markets if needed.
Additionally, we expect our long-term liquidity position will be sufficient to meet our long-term liquidity needs with cash flows from operations. However, in the event of changes in business conditions or other developments, including a sustained market deterioration, unanticipated regulatory developments, significant acquisitions, competitive pressures, or to the extent our liquidity needs prove to be greater than expected or cash generated from operations is less than anticipated, we may need additional liquidity. To the extent we elect to finance our long-term liquidity needs, we believe that the potential financing capital available to us in the future will be sufficient.
Our primary use of working capital is related to product development resources and investment in marketing initiatives to grow the business in order to maintain and create new services and features in applications for our clients and users. In the future, we may seek to grow our business by expending our capital resources to fund strategic acquisitions, investments and partnership opportunities.
AdTech Acquisition
On October 22, 2026, we entered into the AdTech Purchase Agreement to acquire JVCo through a two-step closing process. Pursuant to the AdTech Purchase Agreement, as consideration for the AdTech Acquisition, we agreed to pay AdTech an amount in cash equal to $750,000 at the First Closing, which is subject to customary purchase price adjustments as set forth in the AdTech Purchase Agreement.
At the Final Closing, we agreed to (i) pay AdTech an amount in cash equal to $1,250,000, which is subject to customary purchase price adjustments as set forth in the AdTech Purchase Agreement, up to $500,000 of which may be paid in shares of our common stock at our election, and (ii) issue AdTech a $600,000 secured promissory note. In addition to the consideration payable at the First Closing and the Final Closing, the AdTech Purchase Agreement provides that AdTech is entitled to receive a cash payment of up to $100,000 based on JVCo’s 2027 revenue attributable to existing AdTech customers (subject to adjustment if the Final Closing has not occurred on or before March 31, 2027, as provided in the AdTech Purchase Agreement).
We expect to fund the cash consideration for the AdTech Acquisition with cash on hand.
In connection with the AdTech Acquisition, we incurred acquisition-related costs, consisting primarily of legal, accounting and other due diligence fees, of $195,025 and $277,844 for the three and nine months ended September 30, 2026, respectively, which were expensed as incurred and are included in general and administrative expenses.
Stock Repurchase Plan
On May 8, 2025, the Board approved a stock repurchase plan for up to $400,000 of our outstanding common stock (the “Stock Repurchase Plan”), which expired on the one-year anniversary of such date. For the nine months ended September 30, 2026, we purchased 50,000 shares of common stock pursuant to the Stock Repurchase Plan at an average price of $1.67 per share, or an aggregate of $83,491. All of such repurchases occurred during the three months ended March 31, 2026.
NTS Acquisition
On January 2, 2025, we acquired Newtek Technology Solutions, Inc. (“NTS”) from NewtekOne, Inc., the sole stockholder of NTS (“Newtek”), through a two-step merger process (the “NTS Acquisition”) pursuant to an agreement and plan of merger (the “NTS Acquisition Agreement”). The aggregate consideration we delivered to Newtek at the closing of the NTS Acquisition consisted of (i) $4,000,000 in cash and (ii) 4,000,000 shares of our Series A Non-Voting Common Equivalent Stock (“Series A Preferred Stock”). In addition to the foregoing closing consideration, the NTS Acquisition Agreement provides that Newtek is entitled to receive an amount up to $5,000,000 (the “NTS Acquisition Earn-Out Amount”) based on our achievement of certain cumulative average adjusted EBITDA thresholds for the 2025 and 2026 fiscal years. The NTS Acquisition Earn-Out Amount may be paid, in our sole discretion, in cash (the “NTS Acquisition Earn-Out Cash Consideration”), in shares of Series A Preferred Stock (the “NTS Acquisition Earn-Out Stock Consideration”) or in a combination thereof. Pursuant to the NTS Acquisition Agreement, to the extent that all or a portion of the NTS Acquisition Earn-Out Amount is paid in shares of Series A Preferred Stock, the number of shares of Series A Preferred Stock to be issued to Newtek will be calculated based on the average of the daily volume weighted average prices of our common stock during each trading day during a 60 calendar-day period ending on December 31, 2026; provided, that in no event shall such price be less than $1.00.
Pursuant to the NTS Acquisition Agreement, if the issuance of the NTS Acquisition Earn-Out Stock Consideration would cause Newtek’s “total equity” (as calculated under the Bank Holding Company Act of 1956, as amended, and as implemented and interpreted by the Board of Governors of the Federal Reserve System) in us to exceed one-third of our total equity (the “Total Equity Cap”), then the number of shares of Series A Preferred Stock issuable as NTS Acquisition Earn-Out Stock Consideration will be adjusted so that we will issue to Newtek the maximum number of shares of Series A Preferred Stock that would not cause Newtek’s total equity to exceed the Total Equity Cap, with a corresponding increase to the NTS Acquisition Earn-Out Cash Consideration.
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The Divestiture
On January 2, 2025, we completed the sale to Meteor Mobile Holdings, Inc., a Delaware corporation (“Meteor Mobile”) of our telecommunications services provider, “Vumber”, as well as our “Paltalk” and “Camfrog” applications and certain assets and liabilities related to such services provider and applications (the “Transferred Assets” and such sale, the “Divestiture” and the Divestiture and the NTS Acquisition together, the “NTS Transactions”) pursuant to that certain Asset Purchase Agreement (the “Divestiture Agreement”), by and among us, our wholly owned subsidiaries Paltalk Holdings, Inc., Paltalk Software, Inc., Camshare, Inc., A.V.M. Software, Inc., and Vumber, LLC (collectively, the “Sellers”), and Meteor Mobile. The consideration delivered by Meteor Mobile to us at the closing of the Divestiture consisted of (i) $1,350,000 in cash and (ii) the assumption of all of the liabilities of the Sellers arising out of, or relating to, the business of providing video-based, live streaming, virtual camera and telecommunications software to consumers, as and to the extent such businesses were previously conducted by us pursuant to the “Vumber,” “Paltalk” and “Camfrog” applications (the “Business”) or the Transferred Assets, other than certain excluded liabilities (the “Divestiture Closing Consideration”).
In addition to the Divestiture Closing Consideration, we are entitled to receive, with respect to each Earn-Out Period, as defined and described below, certain payments in cash based on the cash revenue, net of any refunds, received by Meteor Mobile that is attributable to the Business (such cash revenue, the “Legacy Business Revenue”), as follows:
| ● | from the six-month period beginning on July 1, 2025 and ending on December 31, 2025 (“Earn-Out Period 1”), an amount equal to (i) for any Legacy Business Revenue greater than or equal to $3,500,000 and less than $4,250,000, the amount of such Legacy Business Revenue multiplied by 0.30 plus (ii) for any Legacy Business Revenue greater than or equal to $4,250,000, the amount of such Legacy Business Revenue in excess of $4,250,000 multiplied by 0.40; and |
| ● | 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, we are entitled to receive an acceleration payment in cash, net of any Divestiture Earn-Out Amounts previously paid to us (the “Acceleration Payment”). If any of the Transferred Assets are sold independently from the other assets of Meteor Mobile, we will be entitled to (i) 50% of the aggregate consideration paid to Meteor Mobile for the Transferred Assets minus (ii) the aggregate amount of any Divestiture Earn-Out Amounts received by the Sellers by the date of the change of control, minus (iii) the aggregate amount of any Acceleration Payments previously paid through such date. If any of the Transferred Assets are sold contemporaneously with other assets of Meteor Mobile, we are entitled to (x) the aggregate consideration paid to Meteor Mobile for the Transferred Assets multiplied by the ratio of the trailing 12-month EBITDA of the Transferred Assets sold and the EBITDA of all assets sold minus (y) the aggregate amount of any Divestiture Earn-Out Amounts received by the Sellers by the date of the change of control, minus (z) the aggregate amount of any Acceleration Payments previously paid through such date. The minimum Acceleration Payment for the sale of “Paltalk,” “Camfrog” and “Vumber” is $1,650,000, $450,000 and $300,000, respectively, and the Acceleration Payments payable to us are capped at $5,000,000 in the aggregate.
The amount earned in Earn Out Period 1 was $31,263 and was included in other income in the consolidated statement of operations for the year ended December 31, 2025.
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Business Loan Agreement and Credit Agreement and Revolving Promissory Note
On April 10, 2025, we, Intelligent Protection LLC, our wholly owned subsidiary (“IPM LLC” and, together with the Company, the “Borrowers”), 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 provided for a secured revolving line of credit to the Borrowers in the maximum amount of $1,000,000 on the terms and conditions set forth in the Loan Agreements (the “Facility”). The obligations of the Borrowers under the Loan Agreements were secured by substantially all of the assets of the Borrowers.
The Facility matured on April 10, 2026. No amounts were drawn on the revolving line of credit during its term.
Operating Activities
Net cash provided by operating activities was $4,857,311 for the nine months ended September 30, 2026, as compared to net cash provided by operating activities of $989,142 for the nine months ended September 30, 2025. Cash provided by operations for the nine months ended September 30, 2026 was primarily provided in conjunction with the sale of product in connection with the increase in procurement revenue. The amount of cash provided by operations for the nine months ended September 30, 2025 was primarily attributed to the change in the business activities of the Company following the NTS Transactions.
Investing Activities
Net cash used in investing activities for the nine months ended September 30, 2026 was $662,829 and was used to purchase fixed assets for use in the business. Net cash used in investing activities for the nine months ended September 30, 2025 was $4,280,149 and related to the cash consideration paid by the Company to Newtek in connection with the NTS Acquisition, as well as used to purchase fixed assets for use in the business.
Financing Activities
Net cash used in financing activities was $83,491 for the nine months ended September 30, 2026, and was used to repurchase shares of our common stock pursuant to our Stock Repurchase Plan. Net cash provided by financing activities was $1,048,952 for the nine months ended September 30, 2025, and was attributed to the $1,350,000 consideration received in connection with the Divestiture netted against the $301,048 used in connection with the Stock Repurchase Plan.
Contractual Obligations and Commitments
There have been no other material changes to our contractual obligations and commitments disclosed in the contractual obligations and commitments section of Management’s Discussion and Analysis of Financial Condition and Results of Operations in the Form 10-K.
Off-Balance Sheet Arrangements
As of September 30, 2026, we did not have any off-balance sheet arrangements.
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Critical Accounting Estimates
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions about future events that affect the amounts reported in the financial statements and accompanying notes. Future events and their effects cannot be determined with absolute certainty. Therefore, the determination of estimates requires the exercise of judgment. Actual results inevitably will differ from those estimates, and such differences may be material to the financial statements. Our critical accounting estimates have not significantly changed since December 31, 2025 and are disclosed in our Annual Report on Form 10-K for the year ended December 31, 2025.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not applicable.
ITEM 4. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
Our management, including our principal executive officer and principal financial officer, evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) or 15d-15(e) under the Exchange Act) as of the end of the period covered by this report. There are inherent limitations to the effectiveness of any system of disclosure controls and procedures. In designing and evaluating the disclosure controls and procedures, our management recognized that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives.
Based on the evaluation as of September 30, 2026, our management, including our principal executive officer and principal financial officer, concluded that our disclosure controls and procedures were effective to provide reasonable assurance that information we are required to disclose in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our chief executive officer and chief financial officer, as appropriate, to allow timely decisions regarding required disclosure.
Changes in Internal Control over Financial Reporting
There have been no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) or 15d-15(f) under the Exchange Act) during the quarterly period covered by this report that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
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PART II: OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
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. (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 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 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.
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 during the fourth quarter of 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 related to Cisco Patent 8,941,708 and on April 1, 2026, the Patent Review Board also denied the IPR related to 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. The Company incurred approximately $1.5 million in aggregate expense in defense of these claims ($0.7 million for the year ended December 31, 2025 and $0.8 million for the nine months ended September 30, 2026).
Legal Proceedings
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.
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ITEM 1A. RISK FACTORS
Except as set forth below, there were no material changes to the Risk Factors disclosed in “Item 1A. Risk Factors” in the Form 10-K. The risk factors below supplement the risk factors disclosed in the Form 10-K. For more information concerning our other risk factors, please see “Item 1A. Risk Factors” in the Form 10-K.
Supply chain constraints in connection with our procurement services have in the past and may in the future delay revenue recognition, increase our costs and adversely affect our business, financial condition and results of operations.
As part of our procurement services offering, we obtain hardware and software products, including servers and other equipment incorporating memory, CPU and GPU components, on behalf of our customers. Depending on the terms of the applicable customer arrangement, we may act as an agent, pursuant to which our vendors drop ship products directly to our customers. Under this type of arrangement, we do not take control of the underlying products, and we recognize procurement revenue on a net basis when the products are shipped. With respect to larger or project-based arrangements, including sales of AI-related equipment, we may act as principal, pursuant to which we obtain the underlying components. Under this type of arrangement, we are primarily responsible for fulfilling the customer’s order and bear inventory and fulfillment risk until control of the product transfers to the customer, at which point we recognize revenue on a gross basis.
We rely on third-party suppliers and distribution channels for the memory, CPU and GPU components incorporated into the hardware we procure and, in certain cases, configure for our customers, and we do not control the availability, pricing or timing of delivery of these components. We have experienced, and may in the future experience, supply shortages, price increases and longer lead times affecting these components. Supply chain constraints may be driven by factors such as industry-wide allocation constraints, manufacturing capacity limitations, logistics and freight constraints, inflation, geopolitical tensions, trade disputes, tariffs, natural disasters, or changes in our suppliers’ financial or business condition.
During the first and second quarters of 2026, supply chain constraints extended our product lead times compared to historical levels, resulting in delays between customer bookings and product shipments. As a result of these delays, a portion of our booked orders remained unrecognized as revenue pending fulfillment and delivery as of June 30, 2026. While these conditions improved in the third quarter of 2026, we cannot predict with certainty when these conditions will normalize, and continued constraints could result in further delays in revenue recognition, causing our reported revenue and results of operations to fluctuate and not accurately reflect underlying customer demand. These disruptions have also altered, and may in the future alter, the cost structure associated with fulfilling customer orders, which has resulted, and may in the future result, in losses on orders originally booked at expected margins. We cannot assure you that similar cost increases will not recur, particularly if constraints persist, worsen, or are replaced by new sources of disruption. If we are unable to effectively manage these constraints and related cost pressures, our customers may cancel orders and seek products from our competitors, and our gross margins, results of operations and financial condition could be materially and adversely affected.
The AdTech Acquisition may not be completed or we may fail to integrate AdTech’s business or realize the anticipated benefits of the AdTech Acquisition, any of which could adversely affect our business, financial condition and results of operations.
On October 22, 2026, we entered into the AdTech Purchase Agreement to acquire all of the issued and outstanding membership interests of JVCo through a two-step closing process, under which we will acquire 49% of such interests at the First Closing and the remaining 51% at the Final Closing. The First Closing is subject to various conditions, including approval by the CPUC of a Tier 2 Advice Letter relating to the transfer of AdTech’s competitive local exchange carrier license to JVCo, and the Final Closing is subject to various conditions, including approval by the CPUC of a change-of-control filing relating to such license (the “CLEC Approval”), which may not be satisfied in a timely manner or at all. Either we or AdTech may terminate the AdTech Purchase Agreement in certain circumstances, including if the First Closing has not occurred by March 31, 2027 or if the Final Closing has not occurred within 12 months after the First Closing, subject to extension. If the AdTech Acquisition is not completed, the trading price of our common stock may be negatively impacted, our relationships with customers, employees and other third parties may be harmed, and we will have incurred substantial expenses without realizing the anticipated benefits of the AdTech Acquisition.
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In addition, between the First Closing and the Final Closing, we will hold a minority interest in JVCo and AdTech will retain sole power and authority to direct and control JVCo’s day-to-day operations, management, policies and business affairs in accordance with the JVCo LLC Agreement until the CLEC Approval is received and the Final Closing occurs. Our rights will be limited to minority investment protections under the JVCo LLC Agreement, which we may not exercise in a manner reasonably expected to cause any governmental authority to view us as controlling JVCo before the CLEC Approval. If the AdTech Purchase Agreement is terminated after the First Closing but before the Final Closing, the parties will follow the repurchase, unwind, exit or similar process set forth in the JVCo LLC Agreement, but that process may not allow us to fully recover our investment. AdTech or JVCo may lack sufficient resources to complete that process in full or when due, and any required governmental approvals could delay it, during which time we would continue to hold a minority interest in a business controlled by AdTech.
Even if the AdTech Acquisition is consummated, its success will depend, in part, on our ability to integrate JVCo and realize the anticipated benefits, synergies and growth of the AdTech Acquisition, which may not be realized fully or at all or may take longer to realize than expected. Integration is complex, costly and time consuming, will require significant management attention, and may involve difficulties combining systems, technology, networks and operations, assuming contractual obligations with less favorable terms and addressing unknown liabilities or unforeseen expenses. Because AdTech will operate JVCo until the Final Closing, JVCo may not operate as efficiently or effectively following the transition, and integration could disrupt our ongoing businesses or result in inconsistencies in standards, controls, procedures and policies. Any of the foregoing could adversely affect our relationships with customers, suppliers and employees and our business, financial condition and operating results.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
Unregistered Sale of Equity Securities
There were no sales of unregistered securities during the quarter ended September 30, 2026 that were not previously reported on a Current Report on Form 8-K.
Issuer Purchases of Common Stock
The Company did not repurchase any shares of common stock during the three months ended September 30, 2026.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. MINE SAFETY DISCLOSURES
None.
ITEM 5. OTHER INFORMATION
During the three months ended September 30, 2026, none of the Company’s directors or executive officers
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ITEM 6. EXHIBITS
(a) Exhibits required to be filed by Item 601 of Regulation S-K.
The following exhibits are included herein or incorporated herein by reference:
| # | Schedules and exhibits have been omitted pursuant to Item 601(a)(5) of Regulation S-K. Intelligent Protection Management Corp. hereby undertakes to furnish supplemental copies of any of the omitted schedules and exhibits upon request by the Securities and Exchange Commission. If indicated on the first page of such agreement, certain confidential information has been excluded pursuant to Item 601(b)(2)(ii) of Regulation S-K. Such excluded information is not material and is the type that the Company treats as private or confidential. |
| * | Filed herewith. |
| ** | The certification attached as Exhibit 32.1 is not deemed “filed” with the Securities and Exchange Commission and is not to be incorporated by reference into any filing of Intelligent Protection Management Corp. under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, whether made before or after the date of the Quarterly Report on Form 10-Q, irrespective of any general incorporation language contained in such filing. |
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| Intelligent Protection Management Corp. | ||
| Date: November 10, 2026 | By: | /s/ Jason Katz |
| Jason Katz | ||
| Chief Executive Officer | ||
| (Principal Executive Officer and duly authorized officer) | ||
| Intelligent Protection Management Corp. | ||
| Date: November 10, 2026 | By: | /s/ Kara Jenny |
| Kara Jenny | ||
| Chief Financial Officer | ||
| (Principal Financial and Accounting Officer and duly authorized officer) | ||
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Exhibit 31.1
CERTIFICATION PURSUANT TO EXCHANGE ACT RULE 13a-14(a)/15d-14(a)
AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Jason Katz, certify that:
| 1. | I have reviewed this Quarterly Report on Form 10-Q of Intelligent Protection Management Corp.; |
| 2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
| 3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
| 4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
| (a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
| (b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
| (c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
| (d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
| 5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
| (a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
| (b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
| Date: November 10, 2026 | By: | /s/ Jason Katz |
Jason Katz Chief Executive Officer (Principal Executive Officer) |
Exhibit 31.2
CERTIFICATION PURSUANT TO EXCHANGE ACT RULE 13a-14(a)/15d-14(a)
AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Kara Jenny, certify that:
| 1. | I have reviewed this Quarterly Report on Form 10-Q of Intelligent Protection Management Corp.; |
| 2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
| 3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
| 4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
| (a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
| (b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
| (c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
| (d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
| 5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
| (a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
| (b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
| Date: November 10, 2026 | By: | /s/ Kara Jenny |
Kara Jenny Chief Financial Officer (Principal Financial and Accounting Officer) |
Exhibit 32.1
CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO SECTION 906
OF THE SARBANES-OXLEY ACT OF 2002
Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (subsections (a) and (b) of Section 1350, Chapter 63 of Title 18, United States Code), each of the undersigned officers of Intelligent Protection Management Corp. (the “Company”) does hereby certify, to such officer’s knowledge, that:
The Quarterly Report on Form 10-Q for the quarter ended September 30, 2026 (the “Form 10-Q”) of the Company fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934 and the information contained in the Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of the Company as of, and for, the periods presented in the Form 10-Q.
| Date: November 10, 2026 | By: | /s/ Jason Katz |
Jason Katz Chief Executive Officer (Principal Executive Officer) |
| Date: November 10, 2026 | By: | /s/ Kara Jenny |
Kara Jenny Chief Financial Officer (Principal Financial and Accounting Officer) |
The foregoing certification is being furnished as an exhibit to the Form 10-Q pursuant to Item 601(b)(32) of Regulation S-K and Section 906 of the Sarbanes-Oxley Act of 2002 (subsections (a) and (b) of Section 1350, Chapter 63 of Title 18, United States Code) and, accordingly, is not being filed as part of the Form 10-Q for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and is not incorporated by reference into any filing of the Company, whether made before or after the date hereof, regardless of any general incorporation language in such filing.