INTELLIGENT PROTECTION MANAGEMENT CORP.

Previous wording

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 months ended March 31, 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.

Current wording

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 six months ended June 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.

Previous wording

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 March 31, 2026, the terms of the license agreements for the Data Centers located in Arizona and New Jersey extend through 2032 and 2026, respectively. With respect to the Data Center in Edison, New Jersey, the lease automatically renewed on April 30, 2026 for a one year term. 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.

Current wording

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 June 30, 2026, the terms of the license agreements for the Data Centers located in Arizona and New Jersey extend through 2032 and 2027, respectively. Although we do not own or operate the Data Centers, we aim to use the high-level operations and standards provided by the Data Centers through our license agreements to provide our customers with secure and flexible cloud services. 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.

Previous wording

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 are planning to launch an AI Data Readiness solution in the second quarter of 2026 that we believe will improve the reliability, security, and outcome of adopting AI technologies by assessing, structuring, and securing business data in a safe and effective manner.

Current wording

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 are planning on launching an AI Data Readiness solution in 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.

Previous wording

Operational highlights during the three months ended March 31, 2026:

Current wording

Operational highlights during the three and six months ended June 30, 2026:

Previous wording

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 months ended March 31, 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.

Current wording

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 six months ended June 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.

Previous wording

Total revenue increased by 15.2% to $6,354,751 for the three months ended March 31, 2026 from $5,518,038 for the three months ended March 31, 2025. This increase was driven by increased managed information technology revenue, attributed to both new customers as well as the expansion of services sold to existing customers, and an increase in procurement revenue related to sale of AI-related equipment to customers, partially offset by decreases in professional services revenue and subscription revenue.

Current wording

Total revenue increased by 13% to $6,462,542 for the three months ended June 30, 2026 from $5,722,599 for the three months ended June 30, 2025. This increase was driven by increased managed information technology revenue, attributed to both new customers as well as the expansion of services sold to existing customers, and an increase in procurement revenue related to sale of AI-related equipment to customers, partially offset by decreases in professional services revenue and subscription revenue.

Previous wording

The increase in revenue is attributed to an increase in managed information technology revenue of 10.2% compared to the prior year period, as well as an increase in procurement revenue of 78.4% compared to the prior year period. With respect to our core managed information technology solutions, which consist of managed IT security services and managed backup and disaster recovery solutions, revenue increased 19% compared to the prior year period. The increase in revenue was partially offset by a decrease in professional services revenue compared to the prior year of $243,307, or 33.5%, and a decrease in subscription revenue compared to the prior year of $27,163, or 9.7%. Our subscription revenue relates to the sales from our ManyCam software. The decrease in subscription revenue was primarily driven byincreased competition in the virtual camera and streaming software space.

Current wording

The increase in revenue is attributed to an increase in managed information technology revenue of 8.4% compared to the prior year period, as well as an increase in procurement revenue of 64.0% compared to the prior year period. 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 8.4% compared to the prior year period. This increase was partially offset by a decrease of 5.5% in managed information technology revenue from Newtek in connection with its ongoing initiatives to reduce information technology spend. The increase in revenue was partially offset by a decrease in professional services revenue compared to the prior year of $325,760, or 47.3%, and a decrease in subscription revenue compared to the prior year of $29,139, or 10.5%. Our subscription revenue relates to the sales from our ManyCam software. The decrease in subscription revenue was primarily driven byincreased competition in the virtual camera and streaming software space.

Previous wording

Total costs and expenses for the three months ended March 31, 2026 increased by $270,968, or 4.0%, as compared to the three months ended March 31, 2025. The following table presents our costs and expenses for the three months ended March 31, 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:

Current wording

Total costs and expenses for the three months ended June 30, 2026 increased by $1,122,615, or 16.4%, as compared to the three months ended June 30, 2025. The following table presents our costs and expenses for the three months ended June 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:

Previous wording

Our general and administrative expense for the three months ended March 31, 2026 decreased by $430,266, or 14.6%, as compared to the three months ended March 31, 2025. The decrease in general and administrative expense for the three months ended March 31, 2026 was primarily due to a decrease in legal, professional and accounting expenses of $207,686, as the prior year included Transaction-related expenses and a decrease in insurance costs of $49,476, compared to prior year which included some initial start-up costs. Salary and salary related expenses increased by $87,404, primarily as a result of increased benefit costs compared to the three months ended March 31, 2026, but was offset by a decrease in $144,075 of non-cash share-based compensation. Overall headcount remained unchanged at 41 individuals.

Current wording

Our general and administrative expense for the three months ended June 30, 2026 increased by $73,284, or 3.0%, as compared to the three months ended June 30, 2025. The increase in general and administrative expense for the three months ended June 30, 2026 was primarily due to an increase in legal, professional and accounting expenses of $131,277. Additionally, there was an increase in rent expense of $14,996 due to the extension of the lease agreement in Arizona. These increased expenses were offset by a decrease in insurance costs of $82,981, compared to prior year, which included some initial start-up costs. Overall headcount remained unchanged at 41 individuals.

Previous wording

Our cost of revenue for the three months ended March 31, 2026 increased by $795,503, or 32.3%, as compared to the three months ended March 31, 2025. This increase was primarily due to an increase in costs associated with procurement equipment of $656,624, managed services expenses of $2,851, subscriptions and licensing expenses of $352,364, and rent related to our Data Centers of $11,898, offset by decreases in professional and consulting costs of $184,744 and web hosting expense of $8,147.

Current wording

Our cost of revenue for the six months ended June 30, 2026 increased by $1,729,669, or 32.5%, as compared to the six months ended June 30, 2025. This increase was primarily due to an increase in the expenses associated with procurement equipment and related costs of $1,706,681, managed services expenses of $398,576, offset by decreases in professional services expenses of $332,695 and subscription expenses of $42,894.

Previous wording

Our sales marketing and product development expense for the three months ended March 31, 2026 increased by $12,665, or 1.7%, as compared to the three months ended March 31, 2025. The increase in sales marketing and product development expense for the three months ended March 31, 2026 was primarily due to an increase in consulting expense of $26,150 and commissions of $31,014, partially offset by a decrease in salary and salary-related expenses of approximately $81,080. Headcount on our sales team decreased from 15 in the prior year period to approximately 13 people in the three months ended March 31, 2026, and the associated salary and salary-related costs are included in “sales marketing and product development expense” for the three months ended March 31, 2026.

Current wording

Our sales marketing and product development expense for the six months ended June 30, 2026 decreased by $59,064, or 3.7%, as compared to the six months ended June 30, 2025. The decrease in sales marketing and product development expense for the six months ended June 30, 2026 was primarily due to a decrease in salary-related expenses of approximately $133,805, offset by increases in consulting costs of $43,387 and commissions of $37,597.

Previous wording

Non-operating income for the three months ended March 31, 2026 was $83,378, an increase of $986, or 1.2%, as compared to non-operating income of $82,392 for the three months ended March 31, 2025. The increase was primarily a result of a decrease in the amount of principal we invested and at varying interest rates.

Current wording

Non-operating income for the six months ended June 30, 2026 was $141,226, a decrease of $92,844, or 39.7%, as compared to non-operating income of $234,070 for the six months ended June 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 six months ended June 30, 2025 related to the sale of a domain name that we are not using.

Previous wording

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 March 31, 2026, we recorded an income tax benefit of $24,590 consisting primarily of foreign taxes. For the three months ended March 31, 2025, we recorded a non-recurring income tax benefit of $2,060,065, primarily related to a partial reversal of our U.S. valuation allowance as the Acquisition (defined below) created a source of future U.S. taxable income allowing for the recognition of certain deferred tax assets.

Current wording

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 six months ended June 30, 2026, we recorded an income tax benefit of $127,615, consisting primarily of foreign taxes. For the six months ended June 30, 2025, we recorded an income tax benefit of $1,988,058, which included a discrete tax benefit of $1,665,189, primarily related to a partial reversal of our valuation allowance, as the Acquisition created a source of future taxable income allowing for the recognition of certain deferred tax assets.

Previous wording

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 March 31, 2026, we had $8,084,650 of cash and cash equivalents, which included $1,046,021 of restricted cash.

Current wording

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 June 30, 2026, we had $7,485,151 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.

Previous wording

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 three months ended March 31, 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.

Current wording

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 six months ended June 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 which occurred during the three months ended March 31, 2026.

Previous wording

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 Acquisition together, the “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:

Current wording

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 Acquisition together, the “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”).

Previous wording

Net cash used in operating activities was $195,712 for the three months ended March 31, 2026, as compared to net cash provided by operating activities of $1,744,783 for the three months ended March 31, 2025. The amount of cash provided by operations for the three months ended March 31, 2025 was primarily attributed to the change in the business activities of the Company following the Transactions compared to the three months ended March 31, 2026, specifically, the collection of accounts receivable (favorable by $0.2 million), the timing of payment of payables (favorable by $0.7 million), as well as amounts collected by the Company during the first quarter following the Divestiture due to Meteor Mobile and paid subsequent to quarter end of $0.4 million.

Current wording

Net cash used in operating activities was $786,730 for the six months ended June 30, 2026, as compared to net cash provided by operating activities of $856,105 for the six months ended June 30, 2025. Cash used in operations for the six months ended June 30, 2026 was primarily used in conjunction with the procurement of product in connection with the increase in procurement revenue. The amount of cash provided by operations for the six months ended June 30, 2025 was primarily attributed to the change in the business activities of the Company following the Transactions compared to the six months ended June 30, 2026, specifically, the collection of accounts receivable (favorable by $0.2 million), the timing of payment of payables (favorable by $0.7 million), as well as amounts collected by the Company during the first quarter following the Divestiture due to Meteor Mobile and paid subsequent to quarter end of $0.4 million.

Previous wording

Net cash used in investing activities for the three months ended March 31, 2026 was $70,208 and was used to purchase fixed assets for use in the business. Net cash used in investing activities for the three months ended March 31, 2025 was $4,000,000 and related to the cash consideration paid by the Company to Newtek in connection with the Acquisition.

Current wording

Net cash used in investing activities for the six months ended June 30, 2026 was $78,689 and was used to purchase fixed assets for use in the business. Net cash used in investing activities for the six months ended June 30, 2025 was $4,280,149 and related to the cash consideration paid by the Company to Newtek in connection with the Acquisition, as well as used to purchase fixed assets for use in the business.

Previous wording

Net cash used in financing activities was $83,491 for the three months ended March 31, 2026, and was used to repurchase shares of our common stock pursuant to our Stock Repurchase Plan. Net cash provided by financing activities was $1,350,000 for the three months ended March 31, 2025 and was attributed to the consideration received in connection with the Divestiture.

Current wording

Net cash used in financing activities was $83,491 for the six months ended June 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 $1,137,202 for the six months ended June 30, 2025, and was attributed to the $1,350,000 consideration received in connection with the Divestiture netted against the $212,798 used in connection with the Stock Repurchase Plan.