INTELLIGENT PROTECTION MANAGEMENT CORP. Q3 FY2024 earnings call

• Signed a merger agreement to acquire Newtek Technology Solutions, paying $4 million cash and issuing 4 million preferred shares, with up to $5 million earn-out based on EBITDA thresholds.
• Entered an Asset Purchase Agreement to sell Vumber, Paltalk, and Camfrog apps to Meteor Mobile for $1.35 million, retaining patents and other assets not related to the apps.
• Acquisition of NTS expected to impact revenue positively as NTS 2023 revenue was 3 times Paltalk's 2023 revenue, entering cloud infrastructure and cybersecurity sectors.
• On August 29, 2024, jury awarded $65.7 million against Cisco, with final judgment entered on October 8, 2024, but subject to post-trial motions/appeals.

For the 3 months ended September 30, 2024, revenue decreased by 23.4% to $2.1 million compared to $2.8 million in the same period of 2023, due to a 23.9% decrease in subscription revenue. Loss from operations for the 3 months increased by 333% to $1.7 million from $0.4 million in 2023. Net loss for the 3 months rose by 731.2% to $1.5 million from $0.2 million. Adjusted EBITDA loss for the 3 months jumped by approximately 1046.2% to $1.4 million from $0.1 million. For the 9 months ended September 30, 2024, revenue decreased by 16.2% to $6.9 million compared to $8.3 million in 2023, primarily due to a 17.5% decrease in subscription revenue. Loss from operations for the 9 months increased by 129.9% to $3.6 million from $1.6 million. Net loss for the 9 months rose by 274.3% to $2.9 million from $0.8 million. Adjusted EBITDA loss for the 9 months increased by approximately 265.1% to $2.9 million from $0.8 million.

• Expectation to close the acquisition of Newtek Technology Solutions by the end of the first quarter of 2025.

• Uncertainty regarding the amount of proceeds from the Cisco judgment due to potential post-trial motions and appellate proceedings.
• Risks associated with the integration of NTS and completion of the divestiture process.

Q: Congratulations on winning the trial against Cisco WebEx. Can you provide any color on when you would expect to see any money from that judgment and a date range of when that might be?

A: On October 8, 2024, an order granting a motion for final judgment was entered, starting the time for filing post-trial motions or appeal.

Q: In regards to the Newtek Technology Solutions acquisition, can you please explain and give some detail as to what the business specifically does and perhaps give an example of a client and what it does for them?

A: NTS provides IT-related services like managed IT, security, backup, cloud hosting, consulting, product procurement, web hosting, e-commerce solutions for enterprise/commercial clients in regulated industries like financial services and healthcare.

Q: As a follow-up to Newtek Technology Solutions, it appears to generate significantly more revenue than your prior Paltalk business. But what gives you the confidence it’s a business with growth prospects? And are there additional likewise businesses you feel you can also acquire?

A: Managed cybersecurity and managed cloud hosting are growing rapidly; NTS acquisition allows entry into these sectors, with potential for organic growth and accretive acquisitions in the future.