INTELLIGENT PROTECTION MANAGEMENT CORP.
For the period ended Sep 30, 2026. Filed Nov 10, 2026.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Sep 30, 2026 · Filed Nov 10, 2026
IPM$1.64-3.0%Stored close · as of Nov 10, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2026-06-30; filed 2026-08-11.
0001213900-26-087787
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2026-09-30; filed 2026-11-10.
0001213900-26-118038
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 121 previous paragraphs and 135 current paragraphs.
80 unchanged; 39 reworded; 15 added; 2 removed; 0 previous and 1 current paragraphs rearranged.
Tables are not compared: 31 previous and 38 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (15)
Current report
Recent Developments
Current report
AdTech Purchase Agreement
Current report
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.
Current report
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.
Current report
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.
Current report
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.
Current report
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.
Current report
Third Quarter and YTD 2026 Operational Highlights
Current report
Business Objectives
Current report
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.
Current report
AdTech Acquisition
Current report
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.
Current report
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).
Current report
We expect to fund the cash consideration for the AdTech Acquisition with cash on hand.
Current report
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.
Removed paragraphs (2)
Previous report
Second Quarter and First Half 2026 Operational Highlights
Previous report
Second Half 2026 Business Objectives
Reworded paragraphs (39)
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 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.
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 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.
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 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.
Current wording
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 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.
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 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.
Previous wording
Operational highlights during the three and six months ended June 30, 2026:
Current wording
Operational highlights during the three and nine months ended September 30, 2026:
Previous wording
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 license agreements that extend until 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.
Current wording
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.
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 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.
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 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.
Previous wording
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 and litigation expenses relating to the Cisco ManyCam Litigation, as each are applicable to the periods presented.
Current wording
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.
Previous wording
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: cash capital expenditures for assets underlying depreciation and amortization expense that may need to be replaced or for new capital expenditures; interest income, net; other expense, net; the potentially dilutive impact of stock-based compensation; the provision for income taxes; litigation expenses incurred in connection with the Cisco ManyCam Litigation; and net loss from discontinued operations. Other companies, including companies in our industry, may calculate Adjusted EBITDA differently, which reduces its usefulness as a comparative measure.
Current wording
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.
Previous wording
Items Affecting Comparability of Results of the Second Quarter
Current wording
Items Affecting Comparability of Results
Previous wording
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 June 30, 2026 and 2025, revenue from Newtek and its affiliates represented approximately 28% and 33% of total revenue, respectively.
Current wording
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.
Previous wording
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 quarter remained unrecognized as revenue pending fulfillment and delivery, which we expect to recognize in future quarters as the underlying products and services are shipped and installed. Deferred revenue was $4,469,109 as of June 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.
Current wording
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.
Previous wording
In addition, during the 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.
Current wording
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.
Previous 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.
Current wording
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.
Previous 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.
Current wording
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.
Previous 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:
Current wording
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:
Previous wording
Our cost of revenue for the three months ended June 30, 2026 increased by $934,166, or 32.7%, as compared to the three months ended June 30, 2025. This increase was primarily due to an increase in costs associated with procurement equipment of $1,050,058, managed services expenses of $49,262, offset by decreases in professional services expense of $147,951 and a decrease in cost of subscription revenue of $17,203. Supply chain disruption caused difficulty sourcing product at normalized cost which negatively impacted one of our larger customer transactions by $101,964.
Current wording
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.
Previous wording
Our sales marketing and product development expense for the three months ended June 30, 2026 decreased by $71,729, or 8.5%, as compared to the three months ended June 30, 2025. The decrease in sales marketing and product development expense for the three months ended June 30, 2026 was primarily due to a decrease in headcount and salary costs of $52,208 and marketing expenses of $39,316, offset by an increase in consulting expenses of $13,032 and commissions of $6,583.
Current wording
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.
Previous 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.
Current wording
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.
Previous wording
Non-operating income for the three months ended June 30, 2026 was $57,848, a decrease of $93,830, or 61.9%, as compared to non-operating income of $151,678 for the three 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. In addition, the three months ended June 30, 2025 included other income of $63,750 related to the sale of a domain name that was not in use by the Company.
Current wording
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.
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 June 30, 2026, we recorded an income tax benefit of $103,025 consisting primarily of foreign taxes. For the three months ended June 30, 2025, we recorded an income tax provision of $72,007.
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 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.
Previous wording
Six Months Ended June 30, 2026 Compared to Six Months Ended June 30, 2025
Current wording
Nine Months Ended September 30, 2026 Compared to Nine Months Ended September 30, 2025
Previous wording
Total revenue increased by 14% to $12,817,293 for the six months ended June 30, 2026 from $11,240,637 for the six months ended June 30, 2025. The 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 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.
Previous wording
The following table sets forth our total revenue for the six months ended June 30, 2026 and the six months ended June 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:
Current wording
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:
Previous wording
The increase in revenue was partially offset by a decrease in professional services revenue compared to the prior year period of $569,067, or 40.2%. Our subscription revenue for the six months ended June 30, 2026 relates to the sales from our ManyCam software, which decreased by $56,302, or 10.1%, as compared to the six months ended June 30, 2025. The decrease in subscription revenue was primarily driven by a decrease in new subscribers to our ManyCam software.
Current wording
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.
Previous wording
Total costs and expenses for the six months ended June 30, 2026 increased by $1,393,583, or 10.2%, as compared to the six months ended June 30, 2025. The following table presents our costs and expenses for the six months ended June 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:
Current wording
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:
Previous 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.
Current wording
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.
Previous 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.
Current wording
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.
Previous wording
Our general and administrative expense for the six months ended June 30, 2026 decreased by $356,982, or 6.6%, as compared to the six months ended June 30, 2025. The decrease in general and administrative expenses for the six months ended June 30, 2026 was primarily due to insurance expense decreases of $132,457, a decrease in non-cash stock-based compensation expense of $180,263 and a decrease in legal and accounting fees of $76,935.
Current wording
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.
Previous wording
The following table presents the components of non-operating income for the six months ended June 30, 2026 and the six months ended June 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:
Current wording
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:
Previous 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.
Current wording
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.
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 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.
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 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.
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 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.
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 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.
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 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.
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 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.
Previous wording
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 “Acquisition”) pursuant to an agreement and plan of merger (the “Acquisition Agreement”). The aggregate consideration we delivered to Newtek at the closing of the 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 Acquisition Agreement provides that Newtek is entitled to receive an amount up to $5,000,000 (the “Acquisition Earn-Out Amount”) based on our achievement of certain cumulative average adjusted EBITDA thresholds for the 2025 and 2026 fiscal years. The Acquisition Earn-Out Amount may be paid, in our sole discretion, in cash (the “Acquisition Earn-Out Cash Consideration”), in shares of Series A Preferred Stock (the “Acquisition Earn-Out Stock Consideration”) or in a combination thereof. Pursuant to the Acquisition Agreement, to the extent that all or a portion of the Acquisition Earn-Out Amount is paid in shares of Series A Preferred Stock, the number of shares of Series A Preferred Stock to be issued to Newtek will be calculated based on the average of the daily volume weighted average prices of our common stock during each trading day during a 60 calendar-day period ending on December 31, 2026; provided, that in no event shall such price be less than $1.00.
Current wording
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.
Previous wording
Pursuant to the Acquisition Agreement, if the issuance of the Acquisition Earn-Out Stock Consideration would cause Newtek’s “total equity” (as calculated under the Bank Holding Company Act of 1956, as amended, and as implemented and interpreted by the Board of Governors of the Federal Reserve System) in us to exceed one-third of our total equity (the “Total Equity Cap”), then the number of shares of Series A Preferred Stock issuable as Acquisition Earn-Out Stock Consideration will be adjusted so that we will issue to Newtek the maximum number of shares of Series A Preferred Stock that would not cause Newtek’s total equity to exceed the Total Equity Cap, with a corresponding increase to the Acquisition Earn-Out Cash Consideration.
Current wording
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.
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”).
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 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”).
Previous 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.
Current wording
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.
Previous 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.
Current wording
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.
Previous 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.
Current wording
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.
Rearranged current paragraphs (1)
Current report — wording carried from elsewhere
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.