Intelligent Protection Management (IPM) M&A Announcement summary

Deal rationale and strategic fit

• Divestiture of Newtek Technology Solutions (NTS) to Paltalk (now Intelligent Protection Management Corp., IPM) aligns with regulatory commitments following NewtekOne's transition to a financial holding company and acquisition of a bank.

• Paltalk expands its portfolio by acquiring NTS, which manages IT hardware and software for about 17,000 customers, and leverages IPM's expertise in IT, cloud hosting, and cybersecurity.

• NTS's 17,000-customer base and experienced management team transition to IPM, ensuring continuity and growth potential.

• The deal allows NewtekOne to maintain a significant non-voting equity stake in a public company, supporting ongoing value creation.

Financial terms and conditions

• Paltalk paid $4 million in cash and issued 4 million non-voting preferred shares to NewtekOne, with a potential earn-out of up to $5 million based on NTS's adjusted EBITDA for 2025 and 2026.

• NewtekOne's equity interest in Paltalk is approximately 30.3% on a fully diluted basis, non-voting, subject to a one-year lock-up, and capped at one third with cash adjustments as needed.

• Paltalk had $12 million in cash and no long-term debt as of September 30, 2024.

Synergies and expected cost savings

• The transaction creates a pure-play IT and cybersecurity company, enhancing focus and operational efficiency.

• IPM will leverage its public company experience and marketing capabilities to drive organic and acquisition-led growth.