Document And Entity Information
Document And Entity Information - shares | 9 Months Ended | |
Sep. 30, 2020 | Nov. 02, 2020 | |
Document Information Line Items | ||
Entity Registrant Name | PALTALK, INC. | |
Document Type | 10-Q | |
Current Fiscal Year End Date | --12-31 | |
Entity Common Stock, Shares Outstanding | 6,906,454 | |
Amendment Flag | false | |
Entity Central Index Key | 0001355839 | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Document Period End Date | Sep. 30, 2020 | |
Document Fiscal Year Focus | 2020 | |
Document Fiscal Period Focus | Q3 | |
Entity Small Business | true | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity File Number | 000-52176 | |
Entity Incorporation, State or Country Code | DE | |
Entity Interactive Data Current | Yes |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) | Sep. 30, 2020 | Dec. 31, 2019 |
Current assets: | ||
Cash and cash equivalents | $ 5,062,681 | $ 3,427,058 |
Accounts receivable, net of allowances and reserves of $4,640 and $23,832 as of September 30, 2020 and December 31, 2019, respectively | 40,208 | 130,686 |
Digital tokens receivable | 210,000 | |
Prepaid expense and other current assets | 231,670 | 167,441 |
Total current assets | 5,544,559 | 3,725,185 |
Operating lease right-of-use assets | 83,518 | 685,042 |
Property and equipment, net | 370,445 | 620,059 |
Goodwill | 6,326,250 | 6,326,250 |
Intangible assets, net | 435,641 | 627,891 |
Digital tokens | 700 | 148,229 |
Other assets | 13,937 | 86,876 |
Total assets | 12,775,050 | 12,219,532 |
Current liabilities: | ||
Accounts payable | 776,816 | 1,007,851 |
Accrued expenses and other current liabilities | 177,216 | 434,739 |
Operating lease liabilities, current portion | 68,632 | 178,479 |
Term debt, current portion | 281,009 | |
Deferred subscription revenue | 1,976,348 | 1,829,493 |
Total current liabilities | 3,280,021 | 3,450,562 |
Term debt, non-current portion | 225,491 | |
Operating lease liabilities, non-current portion | 14,886 | 583,075 |
Total liabilities | 3,520,398 | 4,033,637 |
Commitments and Contingencies | ||
Stockholders’ equity: | ||
Common stock, $0.001 par value, 25,000,000 shares authorized; and 6,916,404 shares issued and 6,906,454 and 6,877,004 shares outstanding as of September 30, 2020 and December 31, 2019, respectively | 6,917 | 6,879 |
Treasury stock, 9,950 and 1,900 shares, at par as of September 30, 2020 and December 31, 2019, respectively | (10,859) | (2,015) |
Additional paid-in capital | 21,518,940 | 21,281,382 |
Accumulated deficit | (12,260,346) | (13,100,351) |
Total stockholders’ equity | 9,254,652 | 8,185,895 |
Total liabilities and stockholders’ equity | $ 12,775,050 | $ 12,219,532 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Parentheticals) - USD ($) | Sep. 30, 2020 | Dec. 31, 2019 |
Statement of Financial Position [Abstract] | ||
Allowance for doubtful accounts (in Dollars) | $ 4,640 | $ 23,832 |
Common stock, par value (in Dollars per share) | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 25,000,000 | 25,000,000 |
Common stock, shares issued | 6,916,404 | 6,916,404 |
Common stock, shares outstanding | 6,906,454 | 6,877,004 |
Treasury stock, shares | 9,950 | 1,900 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations (Unaudited) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Revenues: | ||||
Subscription revenue | $ 3,124,999 | $ 2,847,055 | $ 8,985,741 | $ 8,901,310 |
Advertising revenue | 86,256 | 88,940 | 199,779 | 320,299 |
Technology service revenue | 98,000 | 22,444 | 224,952 | 3,482,879 |
Total revenues | 3,309,255 | 2,958,439 | 9,410,472 | 12,704,488 |
Costs and expenses: | ||||
Cost of revenue | 632,462 | 679,540 | 1,940,616 | 2,524,229 |
Sales and marketing expense | 204,371 | 248,332 | 617,457 | 856,479 |
Product development expense | 1,223,818 | 1,694,384 | 3,730,398 | 5,177,923 |
General and administrative expense | 704,812 | 1,423,430 | 2,411,149 | 4,915,289 |
Total costs and expenses | 2,765,463 | 4,045,686 | 8,699,620 | 13,473,920 |
Income (loss) from continuing operations | 543,792 | (1,087,247) | 710,852 | (769,432) |
Gain from sale of Secured Communications Assets | 250,000 | 250,000 | ||
Other expense, net | (48,285) | (128,165) | ||
Interest income (expense), net | (1,959) | 18,889 | 9,018 | 73,683 |
Impairment loss on digital tokens | (503,464) | (503,464) | ||
Income (loss) from continuing operations before provision for income taxes | 743,548 | (1,571,822) | 841,705 | (1,199,213) |
Income tax benefit (expense) | 3,300 | 157,180 | (1,700) | 152,680 |
Net income (loss) from continuing operations | 746,848 | (1,414,642) | 840,005 | (1,046,533) |
Discontinued Operations: | ||||
Gain on sale from discontinued operations | 826,770 | |||
Loss from discontinued operations | (104,880) | |||
Income tax benefit on discontinued operations | (159,278) | (159,278) | ||
Net income (loss) from discontinued operations | (159,278) | 562,612 | ||
Net income (loss) | $ 746,848 | $ (1,573,920) | $ 840,005 | $ (483,921) |
Basic net income (loss) per share of common stock: | ||||
Continuing operations (in Dollars per share) | $ 0.11 | $ (0.23) | $ 0.12 | $ (0.15) |
Discontinued operations (in Dollars per share) | 0.08 | |||
Basic net income (loss) per share of common stock (in Dollars per share) | 0.11 | (0.23) | 0.12 | (0.07) |
Diluted net income (loss) per share of common stock: | ||||
Continuing operations (in Dollars per share) | 0.11 | (0.23) | 0.12 | (0.15) |
Discontinued operations (in Dollars per share) | 0.08 | |||
Diluted net income (loss) per share of common stock (in Dollars per share) | $ 0.11 | $ (0.23) | $ 0.12 | $ (0.07) |
Weighted average number of shares of common stock used in calculating net income (loss) per share of common stock: | ||||
Basic (in Shares) | 6,889,334 | 6,874,679 | 6,877,355 | 6,874,437 |
Diluted (in Shares) | 6,895,588 | 6,874,679 | 6,879,440 | 6,893,886 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Changes in Stockholders’ Equity (Unaudited) - USD ($) | Common Stock | Additional Paid-in Capital | Retained Earnings (Accumulated Deficit) | Treasury Stock | Total |
Balance at Dec. 31, 2018 | $ 6,869 | $ 19,867,259 | $ (4,720,291) | $ 15,153,837 | |
Balance (in Shares) at Dec. 31, 2018 | 6,868,679 | ||||
Stock-based compensation expense for restricted stock awards and stock options | 452,525 | 452,525 | |||
Issuance of common stock for consulting services | $ 6 | 34,494 | 34,500 | ||
Issuance of common stock for consulting services (in Shares) | 6,000 | ||||
Net income | 646,615 | 646,615 | |||
Balance, at Mar. 31, 2019 | $ 6,875 | 20,354,278 | (4,073,676) | 16,287,477 | |
Balance, (in Shares) at Mar. 31, 2019 | 6,874,679 | ||||
Balance at Dec. 31, 2018 | $ 6,869 | 19,867,259 | (4,720,291) | 15,153,837 | |
Balance (in Shares) at Dec. 31, 2018 | 6,868,679 | ||||
Net income | (483,921) | ||||
Balance, at Sep. 30, 2019 | $ 6,875 | 21,135,715 | (5,204,212) | 15,938,378 | |
Balance, (in Shares) at Sep. 30, 2019 | 6,874,679 | ||||
Balance at Mar. 31, 2019 | $ 6,875 | 20,354,278 | (4,073,676) | 16,287,477 | |
Balance (in Shares) at Mar. 31, 2019 | 6,874,679 | ||||
Stock-based compensation expense for restricted stock awards and stock options | 443,661 | 443,661 | |||
Net income | 443,384 | 443,384 | |||
Balance, at Jun. 30, 2019 | $ 6,875 | 20,797,939 | (3,630,292) | 17,174,522 | |
Balance, (in Shares) at Jun. 30, 2019 | 6,874,679 | ||||
Stock-based compensation expense for restricted stock awards and stock options | 337,776 | 337,776 | |||
Net income | (1,573,920) | (1,573,920) | |||
Balance, at Sep. 30, 2019 | $ 6,875 | 21,135,715 | (5,204,212) | 15,938,378 | |
Balance, (in Shares) at Sep. 30, 2019 | 6,874,679 | ||||
Balance at Dec. 31, 2019 | $ 6,879 | $ 21,281,382 | (13,100,351) | $ (2,015) | $ 8,185,895 |
Balance (in Shares) at Dec. 31, 2019 | 6,878,904 | (1,900) | |||
Stock-based compensation expense (in Shares) | 89,206 | 89,206 | |||
Repurchases of common stock | $ (7,240) | $ (7,240) | |||
Repurchases of common stock (in Shares) | (6,600) | ||||
Net income | (438,384) | (438,384) | |||
Balance, at Mar. 31, 2020 | $ 6,879 | $ 21,370,588 | (13,538,735) | $ (9,255) | 7,829,477 |
Balance, (in Shares) at Mar. 31, 2020 | 6,878,904 | (8,500) | |||
Balance at Dec. 31, 2019 | $ 6,879 | 21,281,382 | (13,100,351) | $ (2,015) | 8,185,895 |
Balance (in Shares) at Dec. 31, 2019 | 6,878,904 | (1,900) | |||
Net income | 840,005 | ||||
Balance, at Sep. 30, 2020 | $ 6,917 | 21,518,940 | (12,260,346) | $ (10,859) | 9,254,652 |
Balance, (in Shares) at Sep. 30, 2020 | 6,916,404 | (9,950) | |||
Balance at Mar. 31, 2020 | $ 6,879 | $ 21,370,588 | (13,538,735) | $ (9,255) | $ 7,829,477 |
Balance (in Shares) at Mar. 31, 2020 | 6,878,904 | (8,500) | |||
Stock-based compensation expense (in Shares) | 57,183 | 57,183 | |||
Repurchases of common stock | $ (1,604) | $ (1,604) | |||
Repurchases of common stock (in Shares) | (1,450) | ||||
Net income | 531,541 | 531,541 | |||
Balance, at Jun. 30, 2020 | $ 6,879 | $ 21,427,771 | (13,007,194) | $ (10,859) | $ 8,416,597 |
Balance, (in Shares) at Jun. 30, 2020 | 6,878,904 | (9,950) | |||
Stock-based compensation expense (in Shares) | 47,707 | 47,707 | |||
Issuance of common stock for consulting services | $ 38 | $ 43,462 | $ 43,500 | ||
Issuance of common stock for consulting services (in Shares) | 37,500 | ||||
Net income | 746,848 | 746,848 | |||
Balance, at Sep. 30, 2020 | $ 6,917 | $ 21,518,940 | $ (12,260,346) | $ (10,859) | $ 9,254,652 |
Balance, (in Shares) at Sep. 30, 2020 | 6,916,404 | (9,950) |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) | 9 Months Ended | |
Sep. 30, 2020 | Sep. 30, 2019 | |
Cash flows from operating activities: | ||
Net income (loss) | $ 840,005 | $ (483,921) |
Less: Income from discontinued operations | 562,612 | |
Income (loss) from continuing operations | 840,005 | (1,046,533) |
Adjustments to reconcile net income (loss) from continuing operations to net cash provided by (used in) operating activities of continuing operations: | ||
Depreciation of property and equipment | 249,614 | 262,022 |
Amortization of intangible assets | 192,250 | 192,249 |
Amortization of operating lease right-of-use assets | 89,532 | 147,385 |
Gain on lease termination | (141,001) | |
Realized loss from the sale of digital tokens | 72,123 | |
Write-off of note receivable | 56,042 | |
Bad debt expense | (28,461) | |
Stock-based compensation | 194,096 | 1,233,962 |
Common stock issued for consulting services | 43,500 | 34,500 |
Impairment loss on digital tokens | 503,464 | |
Changes in operating assets and liabilities: | ||
Credit card holdback receivable | 83,175 | |
Accounts receivable | 118,939 | 150,929 |
Digital tokens receivable | (210,000) | |
Operating lease liability | (93,123) | (147,385) |
Prepaid expenses and other current assets | (214,229) | (93,881) |
Other assets | 16,897 | 30,391 |
Accounts payable, accrued expenses and other current liabilities | (420,478) | (2,023,437) |
Deferred subscription revenue | 146,855 | (34,892) |
Deferred technology service revenue | (3,379,435) | |
Net cash provided by (used in) continuing operating activities | 912,561 | (4,087,486) |
Net cash used in discontinued operating activities | (199,245) | |
Net cash provided by (used in) operating activities | 912,561 | (4,286,731) |
Cash flows from investing activities: | ||
Payment for property and equipment, including website development, net | (299,386) | |
Proceeds from Secured Communications Assets | 150,000 | |
Proceeds from the sale of digital tokens | 75,406 | 55,978 |
Net cash provided by (used in) continuing investing activities | 225,406 | (243,408) |
Net cash provided by discontinued investing activities | 1,600,000 | |
Net cash provided by investing activities | 225,406 | 1,356,592 |
Cash flows from financing activities: | ||
Borrowings of term debt | 506,500 | |
Purchase of treasury stock | (8,844) | |
Net cash provided by financing activities | 497,656 | |
Net increase (decrease) in cash and cash equivalents | 1,635,623 | (2,930,139) |
Balance of cash and cash equivalents at beginning of period | 3,427,058 | 6,555,376 |
Balance of cash and cash equivalents at end of period | $ 5,062,681 | $ 3,625,237 |
Organization and Description of
Organization and Description of Business | 9 Months Ended |
Sep. 30, 2020 | |
Organization Consolidation And Presentation Of Financial Statements Abstract | |
Organization and Description of Business | 1. Organization and Description of Business The accompanying condensed consolidated financial statements include Paltalk, Inc. and its wholly owned subsidiaries, A.V.M. Software, Inc., Paltalk Software Inc., Paltalk Holdings, Inc., Tiny Acquisition Inc., Camshare, Inc., Fire Talk LLC and Vumber LLC (collectively, the “Company”). Effective May 15, 2020, the Company changed its name from “PeerStream, Inc.” to “Paltalk, Inc.” In connection with the name change, the Company changed its trading symbol on the OTCQB Marketplace from “PEER” to “PALT.” The Company is a communications software innovator that powers multimedia social applications. The Company’s product portfolio includes Paltalk and Camfrog, which together host one of the world’s largest collections of video-based communities. The Company’s other products include Tinychat and Vumber. The Company has an over 20-year history of technology innovation and holds 18 patents. 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, 2019, filed with the SEC on March 24, 2020 (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 sheet, results of operations, cash flows and changes in the 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 nine months ended September 30, 2020 are not necessarily indicative of results for the year ending December 31, 2020, or for any other period. COVID-19 In December 2019, a strain of coronavirus was reported to have surfaced in Wuhan, China, and has since reached multiple other countries, including the United States, resulting in government-imposed quarantines, travel restrictions and other public health safety measures in affected countries. The various precautionary measures taken by many governmental authorities around the world in order to limit the spread of the coronavirus has had and could continue to have an adverse effect on the global markets and its economy, including on the availability and pricing of employees and resources, and other aspects of the global economy. Although the Company cannot predict the impact that the recent outbreak of coronavirus will have on its business or results of operations in future periods, to date, the Company’s core multimedia social applications have been able to support the increased demand the Company has experienced. As more fully described in Note 13 below, to help ensure adequate liquidity in light of the uncertainties posed by the coronavirus pandemic, the Company entered into a promissory note with an aggregate principal amount of $506,500 (the “Note”) in favor of Citibank, N.A., as lender (the “Lender”) under the Small Business Administration (“SBA”) Paycheck Protection Program under the recently enacted Coronavirus Aid, Relief and Economic Security Act (“CARES Act”). There can be no assurance that the amounts payable under the Note will be forgiven until the SBA and Lender make their final determination. Paltalk continues to serve as a form of safe and entertaining communication during this global pandemic and in order to help those affected in hardest hit countries will continue to offer some of its group video conferencing services free of charge to select countries. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 9 Months Ended |
Sep. 30, 2020 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | 2. Summary of Significant Accounting Policies For a detailed discussion about the Company’s significant accounting policies, see the Form 10-K. During the nine months ended September 30, 2020, there were no significant changes made to the Company’s significant accounting policies. Significant Estimates and Assumptions The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenue and expenses during the reporting period. Significant estimates relied upon in preparing these financial statements include the estimates used to determine the fair value of the stock options issued in share-based payment arrangements, collectability of the Company’s accounts receivable, measurements of proportional performance under certain service contracts, subscription revenues net of refunds, credits, and known and estimated credit card chargebacks, the valuation allowance on deferred tax assets, fair value of digital tokens and impairment assessment of goodwill. Management evaluates these estimates on an ongoing basis. Changes in estimates are recorded in the period in which they become known. The Company bases estimates on historical experience and various other assumptions that it believes to be reasonable under the circumstances. Actual results may differ from the Company’s estimates. Recent Accounting Pronouncements In December 2019, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes Revenue In accordance with Accounting Standards Codification (“ASC”) 606, Revenue from Contracts with Customers Subscription Revenue The Company generates subscription revenue primarily from monthly premium subscription services. Subscription revenues are presented net of refunds, credits, and known and estimated credit card chargebacks. During the nine months ended September 30, 2020 and 2019, subscriptions were offered in durations of one-, three-, six- and twelve- 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. Deferred revenue at December 31, 2019 was $1,829,493, of which $1,363,241 was subsequently recognized as subscription revenue during the nine months ended September 30, 2020. The ending balance of deferred revenue at September 30, 2020 was $1,976,348. In addition, the Company offers virtual gifts to its users. Users may purchase credits in $5, $10 or $20 increments that can be redeemed for a host of virtual gifts such as a rose, a beer or a car, among other items. These gifts are given among users to enhance communication and are typically redeemed within 30 days of purchase. Upon purchase, the virtual gifts are credited to the users’ account and are under the users’ control. Virtual gift revenue is recognized upon the users’ redemption of virtual gifts at the fixed transaction price and included in subscription revenue in the accompanying condensed consolidated statements of operations. Virtual gift revenue is presented as deferred revenue in the consolidated balance sheets until virtual gifts are redeemed. Virtual gift revenue was $1,288,717 and $3,931,151 for the three and nine months ended September 30, 2020, respectively. Virtual gift revenue was approximately $1,245,041 and $4,144,114 for the three and nine months ended September 30, 2019, respectively. The ending balance of deferred revenue from virtual gifts at September 30, 2020 and 2019 was $276,661 and $0, respectively. Advertising Revenue The Company generates advertising revenue from the display of advertisements on its products through contractual agreements with third parties that are based on the number of advertising impressions delivered. Measurements of impressions include when a customer clicks an advertisement (CPC basis), views an advertisement impression (CPM basis), or registers for an external website via an advertisement by clicking on or through the application (CPA basis). Advertising revenue is dependent upon traffic as well as the advertising inventory placed on the Company’s products. Technology Services Revenue ProximaX Agreement During 2019 and the first quarter of 2020, technology service revenue consisted of revenue that was recognized under the Company’s technology services agreement (the “ProximaX Agreement”) with ProximaX Limited (“ProximaX”) and was recognized based upon proportional performance using labor hours as the unit of measurement. Pursuant to the terms of the ProximaX Agreement, ProximaX agreed to pay the Company, among other things, up to an aggregate of $10.0 million of cash or certain highly liquid cryptocurrencies in exchange for the Company’s services, $5.0 million of which was paid in May 2018, $2.5 million of which was due upon completion the second development milestone set forth in the ProximaX Agreement and $2.5 million of which was due upon completion of the third development milestone set forth in the ProximaX Agreement. Effective June 24, 2019, the Company and ProximaX entered into an agreement to terminate the ProximaX Agreement (the “Termination Agreement”) and provide for payment terms for the remaining $2.5 million due under the ProximaX Agreement. The portion of the upfront fee that remained unrecognized as of the termination of the ProximaX Agreement was $1.6 million and was recognized as revenue upon such termination, in addition to the $1.7 million of revenue recognized in the first quarter of 2019. Since there is no assurance of collectability on the remaining payments, revenue is being recognized as the payments under the Termination Agreement are received. For the nine months ended September 30, 2020, the Company recognized approximately $15.0 thousand in revenue in connection with payments received under the Termination Agreement. YouNow Agreement During the second and third quarters of 2020, the Company recorded technology service revenue in connection with its agreement to serve as a launch partner with YouNow, Inc. (“YouNow”) and to integrate YouNow’s props infrastructure (the “Props platform”) into its Camfrog and Paltalk applications (as amended, the “YouNow Agreement”). Pursuant to the terms of the YouNow Agreement, YouNow agreed to pay the Company, in exchange for the Company’s services, an aggregate of 10.5 million cryptographic props tokens (“Props tokens”) upon the achievement of certain milestones as follows: (i) 3.0 million Props tokens upon execution of the YouNow Agreement, (ii) 4.0 million Props tokens upon the integration of the Props platform in the Company’s Camfrog application and (iii) 3.5 million Props tokens due upon the integration of the Props platform in the Paltalk application. In the determining the value of the contract, the Company converted the Props tokens into U.S. dollars using an independent third-party valuation. As of September 30, 2020, the Props tokens were estimated to have a price equal to $0.02 per token (see Note 7 for additional information on the fair value of the Props tokens). The total contract value to be recognized was estimated to be $210,000, which is recognized on the completion dates of the integration services performed. The upfront fee is recognized as revenue under the output method based on the direct measurements of the value of services transferred to date to the customer, relative to the remaining services under the contract. During the three and nine months ended September 30, 2020, the Company recognized $28,000 and $60,000, respectively of the upfront fee and $70,000 and $150,000, respectively from the completion of the first and second integration milestones as “technology service revenue” under the condensed consolidated statements of operations and “digital tokens receivable” under the condensed consolidated balance sheets. 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 revenues that will be generated by the contract and are included in cost of revenues in the Company’s condensed consolidated statements of operations. There were no contract losses for the periods presented. |
Discontinued Operations
Discontinued Operations | 9 Months Ended |
Sep. 30, 2020 | |
Discontinued Operations and Disposal Groups [Abstract] | |
Discontinued Operations | 3. Discontinued Operations On January 31, 2019, the Company entered into an Asset Purchase Agreement with The Dating Company, LLC, pursuant to which the Company sold substantially all of the assets related to its online dating services business under the domain names FirstMet, 50more, and The Grade (collectively, the “Dating Services Business”) for a cash purchase price of $1.6 million. The closing of the asset sale was effective as of January 31, 2019. In the first quarter of 2019, management determined that the disposal of the Dating Services Business met the criteria for presentation as discontinued operations. Accordingly, the results of the Dating Services Business are presented as discontinued operations in the Company’s condensed consolidated statements of operations through January 31, 2019, the date of sale, and are excluded from continuing operations for all periods presented. In addition, the assets and liabilities of the Dating Services Business are classified as “held for sale” in the Company’s condensed consolidated balance sheets for all periods presented. The following tables summarize the major line items included in loss from discontinued operations for the Dating Services Business for the periods presented: Nine Months Ended September 30, 2020 2019 Revenues $ - $ 440,225 Costs of revenue - (115,338 ) Sales and marketing expense - (270,200 ) Product development expense - (76,845 ) General and administrative expense - (82,722 ) Loss from discontinued operations $ - $ (104,880 ) There were no major line items included in loss from discontinued operations for the Dating Services Business for the three months ended September 30, 2020 and 2019. |
Property and Equipment, Net
Property and Equipment, Net | 9 Months Ended |
Sep. 30, 2020 | |
Property, Plant and Equipment [Abstract] | |
Property and Equipment, Net | 4. Property and Equipment, Net Property and equipment, net consisted of the following at September 30, 2020 and December 31, 2019: September 30, December 31, (unaudited) Computer equipment $ 3,706,017 $ 3,706,017 Website development 3,076,323 3,076,323 Furniture and fixtures 89,027 89,027 Leasehold improvements 32,726 32,726 Total property and equipment 6,904,093 6,904,093 Less: Accumulated depreciation (6,533,648 ) (6,284,034 ) Total property and equipment, net $ 370,445 $ 620,059 Depreciation expense for the three and nine months ended September 30, 2020 was $77,888 and $249,614, respectively, as compared to $84,587 and $262,022 for the three and nine months ended September 30, 2019, respectively. |
Goodwill
Goodwill | 9 Months Ended |
Sep. 30, 2020 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill | 5. Goodwill The Company tests goodwill and indefinite-lived intangible assets for impairment annually and whenever events or circumstances arise that indicate an impairment may exist. The Company recorded $6,760,222 of goodwill impairment for the year ended December 31, 2019 due to a sustained decrease in market price per share of the Company’s common stock. At December 31, 2019, the market price per share of the Company’s common stock declined to $1.29, and as such, the Company tested for an impairment and concluded that its goodwill should be reduced as result of the decline in the market price per share and fair value of the reporting unit. The Company determined there were no indicators that would lead to a test for impairment during the nine months ended September 30, 2020. Goodwill was $6,326,250 at September 30, 2020 and December 31, 2019. |
Intangible Assets, Net
Intangible Assets, Net | 9 Months Ended |
Sep. 30, 2020 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Intangible Assets, Net | 6. Intangible Assets, Net Intangible assets, net consisted of the following at September 30, 2020 and December 31, 2019: September 30, 2020 December 31, 2019 (unaudited) Gross Accumulated Net Gross Accumulated Net Patents $ 50,000 $ (28,125 ) $ 21,875 $ 50,000 $ (26,250 ) $ 23,750 Trade names, trademarks product names, URLs 555,000 (488,104 ) 66,896 555,000 (446,479 ) 108,521 Internally developed software 1,990,000 (1,983,405 ) 6,595 1,990,000 (1,959,655 ) 30,345 Subscriber/customer relationships 2,279,000 (1,938,725 ) 340,275 2,279,000 (1,813,725 ) 465,275 Total intangible assets $ 4,874,000 $ (4,438,359 ) $ 435,641 $ 4,874,000 $ (4,246,109 ) $ 627,891 Amortization expense for the three and nine months ended September 30, 2020 was $64,083 and $192,250, respectively, as compared to $64,084 and $192,249 for the three and nine months ended September 30, 2019, respectively. The aggregate amortization expense for each of the next five years and thereafter is estimated to be $54,431 in 2020, $184,667 in 2021, $149,944 in 2022, $18,000 in 2023, $17,354 in 2024 and $11,245 thereafter. |
Digital Tokens
Digital Tokens | 9 Months Ended |
Sep. 30, 2020 | |
Digital Tokens [Abstract] | |
Digital Tokens | 7. Digital Tokens Digital tokens consist of XPX tokens received in connection with the ProximaX Agreement and the Props tokens received in connection with the YouNow Agreement. Given that there is limited precedent regarding the classification and measurement of cryptocurrencies and other digital tokens under current GAAP, the Company has determined to account for these tokens as indefinite-lived intangible assets in accordance with ASC 350, Intangibles-Goodwill and Other XPX Tokens Indefinite-lived intangible assets are recorded at cost and are not subject to amortization but are tested for impairment annually and more frequently if events or changes in circumstances indicate that it is more likely than not that the asset is impaired. If, at the time of an impairment test, the carrying amount of an intangible asset exceeds its fair value, an impairment loss in an amount equal to the excess is recognized. The fair value of the digital tokens had been based on the quoted market prices for the XPX tokens. During the nine months ended September 30, 2020, the Company sold 124,752,914 digital tokens for proceeds of $75,406. The recorded loss of approximately $72,100 is included under “other expense, net” in the condensed consolidated statements of operations. Props Tokens Receivable To calculate the fair value of the Props tokens received and receivable pursuant to the YouNow Agreement, the Company used the backsolve method, which utilizes the option pricing method to calculate the implied value of the Props tokens based on the most recent transaction price publicly available. For purposes of the backsolve method, the Company used a precedent transaction in which Props tokens were purchased at a price of $0.07 per Props token. The precedent transaction also included the issuance of warrants to purchase additional Props tokens at a strike price of $0.07 per Props token. Using the backsolve method, the Company took into account the strike price of the warrants issued in the precedent transaction and then determined the allocated value of the Props tokens as though it were a basket purchase. The implied fair value of the Props tokens represents a marketable basis of value. As the Props tokens do not currently have access to a liquid marketplace, a discount for lack of marketability was applied to the implied fair value using a protective put calculation. A summary of the key inputs used in the backsolve model at September 30, 2020 are summarized as follows: Maturity (time until an exit or liquidity) 1 year Volatility 197.0 % Risk free rate of return 0.16 % The basic logic of the protective put approach is supported by the notion that the holder of a non-marketable security can effectively purchase liquidity by purchasing a put option on the security. Therefore, the non-marketable value of a security is its value on a marketable basis, less the value of the hypothetical put option. The put option calculation relies on the Black-Scholes option pricing model, which utilizes volatility from comparable utility tokens, an estimated time to maturity (or liquidity), and the risk-free rate commensurate with that maturity. The Props tokens received and receivable from YouNow are intangible assets that are accounted for at cost, less impairment charges. According to the guidance, a holder of utility tokens cannot only compare the carrying value to fair value at the reporting period, but instead must assess impairment daily. As a result, the Company uses the amount equal the lowest price during the period in which the Props tokens are held as the carrying amount for purposes of testing for impairment. |
Accrued Expenses and Other Curr
Accrued Expenses and Other Current Liabilities | 9 Months Ended |
Sep. 30, 2020 | |
Payables and Accruals [Abstract] | |
Accrued Expenses and Other Current Liabilities | 8. Accrued Expenses and Other Current Liabilities Accrued expenses and other current liabilities consisted of the following at September 30, 2020 and December 31, 2019: September 30, December 31, 2020 2019 (unaudited) Compensation, benefits and payroll taxes $ 110,250 $ 347,601 Income tax payable 19,372 17,672 Other accrued expenses 47,594 69,466 Total accrued expenses and other current liabilities $ 177,216 $ 434,739 |
Income Taxes
Income Taxes | 9 Months Ended |
Sep. 30, 2020 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | 9. Income Taxes The Company’s provision for income taxes consists of federal 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. As of September 30, 2020, our conclusion regarding the realizability of our US deferred tax assets did not change and we have recorded a full valuation allowance against them. On March 27, 2020, the CARES Act was enacted in response to COVID-19 pandemic. Under ASC 740, the effects of changes in tax rates and laws are recognized in the period which the new legislation is enacted. The CARES Act made various tax law changes including among other things (i) increasing the limitation under Section 163(j) of the Internal Revenue Code of 1986, as amended (the “IRC”) for 2019 and 2020 to permit additional expensing of interest (ii) enacting a technical correction so that qualified improvement property can be immediately expensed under IRC Section 168(k), (iii) making modifications to the federal net operating loss rules including permitting federal net operating losses incurred in 2018, 2019, and 2020 to be carried back to the five preceding taxable years in order to generate a refund of previously paid income taxes and (iv) enhancing the recoverability of alternative minimum tax credits. Given the Company’s full valuation allowance position, the CARES Act did not have a material impact on the financial statements. For the three months ended September 30, 2020, the Company recorded an income tax benefit from continuing operations of $3,300 consisting primarily of state and local taxes. For the nine months ended September 30, 2020, the Company recorded an income tax provision from continuing operations of $1,700, consisting primarily of state and local taxes. The effective tax rate for the three and nine months ended September 30, 2020 was (0.44)% and 0.20%, respectively. The effective tax rate differs from the statutory rate of 21% as the Company has concluded that its deferred tax assets are not realizable on a more-likely-than-not basis. For the three months ended September 30, 2019, the Company recorded an income tax benefit from continuing operations of $157,180 on a pre-tax loss of $1,571,822. For the nine months ended September 30, 2019, the Company recorded an income tax benefit from continuing operations of $152,680 on a pre-tax loss of $1,199,213. The Company recorded an income tax provision for state and local taxes and as a result of the gain recorded in discontinued operations in connection with the sale of the Dating Services Business, the Company was able to record an income tax benefit in continuing operations under the intra-period allocation guidance. The effective tax rate for the three and nine months ended September 30, 2019 was 10.0% and 12.73%, respectively. |
Stockholders' Equity
Stockholders' Equity | 9 Months Ended |
Sep. 30, 2020 | |
Stockholders' Equity Note [Abstract] | |
Stockholders' Equity | 10. Stockholders’ Equity The Paltalk, Inc. Amended and Restated 2011 Long-Term Incentive Plan (the “2011 Plan”) was terminated as to future awards on May 16, 2016. A total of 121,930 shares of the Company’s common stock may be issued pursuant to outstanding options awarded under the 2011 Plan; however, no additional awards may be granted under such plan. The Paltalk, Inc. 2016 Long-Term Incentive Plan (the “2016 Plan”) was adopted by the Company’s stockholders on May 16, 2016 and permits the Company to award stock options (both incentive stock options and non-qualified stock options), stock appreciation rights, restricted stock, restricted stock units, performance awards, dividend equivalent rights, and other stock-based awards and cash-based incentive awards to its employees (including an employee who is also a director or officer under certain circumstances), non-employee directors and consultants. The maximum number of shares of common stock that may be issued pursuant to awards under the 2016 Plan is 1,300,000 shares, 100% of which may be issued pursuant to incentive stock options. In addition, the maximum number of shares of common stock that may be issued under the 2016 Plan may be increased by an indeterminate number of shares of common stock underlying outstanding awards issued under the 2011 Plan that are forfeited, expired, cancelled or settled in cash. As of September 30, 2020, there were 844,279 shares available for future issuance under the 2016 Plan. Treasury Shares On April 29, 2019, the Company implemented a stock repurchase plan to repurchase up to $500,000 of its common stock for cash. The repurchase plan expired on April 29, 2020. The Company had purchased 9,950 shares of its common stock under the repurchase plan as of April 29, 2020 and has classified them as treasury shares on the Company’s condensed consolidated balance sheets. Shares Issued for Consulting Services On August 11, 2020, the Company issued 37,500 shares of its common stock to a consultant as consideration for investor relations services. The total expense for these grants was $43,500 and is included in general and administrative expense in the condensed consolidated statements of operations. 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, 2020: Expected volatility 188.0 % Expected life of option (in years) 5.3 Risk free interest rate 0.59 % Expected dividend yield 0.0 % 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, 2020: Weighted Number of Average Options Price Stock Options: Outstanding at January 1, 2020 1,021,243 $ 4.82 Granted 24,000 0.80 Forfeited or canceled, during the period (343,476 ) 3.44 Expired, during the period (70,011 ) 3.57 Outstanding at September 30, 2020 631,756 $ 5.55 Exercisable at September 30, 2020 456,492 $ 6.60 At September 30, 2020, there was $177,145 of total unrecognized compensation expense related to stock options, which is expected to be recognized over a weighted average period of 1.3 years. On September 30, 2020, the aggregate intrinsic value of stock options that were outstanding and exercisable was $7,200 and $5,400, respectively. On September 30, 2019, the aggregate intrinsic value of stock options that were outstanding and exercisable was $22,173 and $9,363, respectively. The intrinsic value for stock options is calculated based on the exercise price of the underlying awards and the fair value of such awards as of the period-end date. During the nine months ended September 30, 2020, the Company granted stock options to members of the Board of Directors to purchase an aggregate of 24,000 shares of common stock at an exercise price of $0.80 per share. The stock options vest in four equal quarterly installments on the last day of each calendar quarter in 2020 and have a term of 10 years. The aggregate fair value for the stock options granted during the nine months ended September 30, 2020 and 2019 was $18,664 and $337,598, respectively. Stock-based compensation expense for the Company’s stock options included in the condensed consolidated statements of operations is as follows: Three Months Ended Nine Months Ended September 30, September 30, 2020 2019 2020 2019 Cost of revenue $ 386 $ 375 $ 1,137 $ 1,099 Sales and marketing expense 21 20 61 110 Product development expense 4,118 8,824 15,338 108,633 General and administrative expense 43,182 143,183 177,560 567,998 Total stock compensation expense $ 47,707 $ 152,402 $ 194,096 $ 677,840 |
Net Income (Loss) Per Share
Net Income (Loss) Per Share | 9 Months Ended |
Sep. 30, 2020 | |
Earnings Per Share [Abstract] | |
Net Income (Loss) Per Share | 11. Net Income (Loss) Per Share Basic net income (loss) per share of common stock is computed based upon the number of weighted average shares of common stock outstanding as defined by ASC Topic 260, Earnings Per Share The following table summarizes the net income (loss) per share calculation for the periods presented: Three Months Ended Nine Months Ended September 30, September 30, 2020 2019 2020 2019 Net income (loss) from continuing operations – basic and diluted $ 746,848 $ (1,573,920 ) $ 840,005 $ (1,046,533 ) Weighted average shares outstanding – basic 6,889,334 6,874,679 6,877,335 6,874,437 Weighted average shares outstanding – diluted 6,895,588 6,874,679 6,879,440 6,893,886 Per share data: Basic from continuing operations $ 0.11 $ (0.23 ) $ 0.12 $ (0.15 ) Diluted from continuing operations $ 0.11 $ (0.23 ) $ 0.12 $ (0.15 ) |
Leases
Leases | 9 Months Ended |
Sep. 30, 2020 | |
Disclosure Text Block [Abstract] | |
Leases | 12. Leases On June 7, 2016, the Company entered into a lease agreement with Jericho Executive Center LLC for office space at 30 Jericho Executive Plaza in Jericho, New York, which commenced on September 1, 2016 and runs through November 30, 2021. The Company’s monthly office rent payments under the lease are currently approximately $5,900 per month. On May 1, 2019, the Company entered into a sublease agreement with Telecom Infrastructure Corp. (“Telecom”) for office space located at 122 East 42nd Street in New York, NY, pursuant to which Telecom was required to pay the Company $11,164 per month. The term of the sublease ran until April 26, 2023. On June 18, 2020, the Company entered into an agreement to terminate the sublease for this office space. Pursuant to the terms of the agreement, Telecom vacated the offices on June 30, 2020. Lease Cancellation On May 1, 2019, the Company entered into a lease agreement for office space located at 122 East 42nd Street in New York, NY and paid a $133,968 security deposit in the form of a letter of credit. The term of the lease ran until April 26, 2023. The Company’s monthly office rent payments under the lease were approximately $33,492 per month. On June 22, 2020, the Company entered into an agreement to terminate the lease for this office space. Pursuant to the terms of the agreement, the Company vacated the offices on June 30, 2020 and the Company agreed to forfeit its security deposit of $133,968. In accordance with ASC 842-20-40-1, the Company accounted for the cancellation of the lease by removing the right-of-use asset and the lease liability, with a profit recognized for the difference. The Company recorded a net gain on the office lease cancellation of $141,001, which is reflected in the condensed consolidated statements of operations for the nine months ended September 30, 2020. As of September 30, 2020, the Company had no long-term leases that were classified as a financing lease. As of September 30, 2020, the Company did not have additional operating and financing leases that have not yet commenced. At September 30, 2020, the Company had operating lease liabilities of approximately $0.1 million and right-of-use assets of approximately $0.1 million, which are included in the condensed consolidated balance sheet. Total rent expense for the nine months ended September 30, 2020 was $183,523, of which $36,095 was sublease income, and $242,809 for the nine months ended September 30, 2019. Rent expense is recorded in “general and administrative expense” on the condensed consolidated statements of operations. The following table summarizes the Company’s operating leases: Nine Months Ended September 30, 2020 2019 Cash paid for amounts included in the measurement of operating lease liabilities $ 93,123 $ 564,914 Weighted average assumptions: Remaining lease term 1.2 3.4 Discount rate 3.5 % 2.5 % As of September 30, 2020, future minimum payments under non-cancelable operating leases were as follows: For the years ending December 31, Amount 2020 $ 22,823 2021 84,370 Total $ 107,193 Less: present value adjustment (23,675 ) Present value of minimum lease payments $ 83,518 |
Term Debt
Term Debt | 9 Months Ended |
Sep. 30, 2020 | |
Debt Disclosure [Abstract] | |
Term debt | 13. Term debt On April 13, 2020, to help ensure adequate liquidity in light of the uncertainties posed by the coronavirus pandemic, the Company applied for a loan under the SBA Paycheck Protection Program under the recently enacted CARES Act. On May 3, 2020, the Company entered into the Note in favor of the Lender. The Note has a two-year term, matures on May 3, 2022, and bears interest at a stated rate of 1.0% per annum. Monthly principal and interest payments will commence in December 2020. The Company did not provide any collateral or guarantees for the Note, nor did the Company pay any facility charge to obtain the Note. The Note provides for customary events of default, including, among others, those relating to failure to make payment, bankruptcy, breaches of representations and material adverse effects. The Company may prepay the principal of the Note at any time without incurring any prepayment charges. The Note may be partially or fully forgiven if the Company complies with the provisions of the CARES Act, including the use of Note proceeds for payroll costs, rent, utilities and certain other expenses as defined in the CARES Act. Any forgiveness of the Note will be subject to approval by the SBA and the Lender. On September 30, 2020, future principal payments under the Note were as follows: For the years ending December 31, Amount 2020 $ 28,139 2021 337,667 2022 140,694 Total term debt $ 506,500 Less: current portion of term debt (281,009 ) Non-current portion of term debt $ 225,491 |
Commitments and Contingencies
Commitments and Contingencies | 9 Months Ended |
Sep. 30, 2020 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | 14. Commitments and Contingencies Legal Proceedings On December 16, 2016, a wholly owned subsidiary of the Company, Paltalk Holdings, Inc., filed a patent infringement lawsuit in Delaware against Riot Games, Inc. and Valve Corporation for infringement of U.S. Patent Nos. 5,822,523 and 6,226,686 with respect to their online games League of Legends and Defense of the Ancients 2. These two patents were previously asserted against, and then licensed to, Microsoft, Sony, and Activision. In 2018, Valve Corporation moved to transfer the litigation from Delaware to the Western District of Washington. Such motion was granted by the court. Riot Games, Inc. has filed a total of four inter partes 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, 2020. |
Sale of Secured Communications
Sale of Secured Communications Assets | 9 Months Ended |
Sep. 30, 2020 | |
Pending Sale Of Secured Communications Assets [Abstract] | |
Sale of Secured Communications Assets | 15. Sale of Secured Communications Assets As previously announced, on February 24, 2020, the Company entered into an Asset Purchase Agreement, which was subsequently amended and restated on May 29, 2020 (the “Amended and Restated Agreement”) with SecureCo, LLC (the “Buyer”), pursuant to which the Company agreed to sell substantially all of the assets related to its secure communications business (the “Secured Communications Assets”) to the Buyer (the “Asset Sale”). The Secured Communications Assets include communication solutions and operations capabilities for secure messaging and data applications, and software and middleware for enterprise and government client targets. On July 23, 2020, the Company completed the Asset Sale for a cash purchase price of $250,000, $150,000 of which was paid at closing and $100,000 of which is payable in four equal installments over the next fifteen months. The Amended and Restated Agreement also provides for a revenue sharing arrangement, pursuant to which the Company is entitled to receive quarterly royalty payments ranging from 5% to 10% of certain revenues received by the Buyer, with the aggregate amount of such royalty payments not to exceed $500,000. The gain on the Asset Sale was recorded under “other expense, net” in the statements of operations for the three and nine months ended September 30, 2020. The sale of the Secured Communications Assets did not meet the requisite criteria to constitute discontinued operations or held for sale, as the historical results of Company’s secured communications business were not material to its results of operations. |
Subsequent Events
Subsequent Events | 9 Months Ended |
Sep. 30, 2020 | |
Subsequent Events [Abstract] | |
Subsequent Events | 16. Subsequent Events Management has evaluated subsequent events or transactions occurring through the date the condensed consolidated financial statements were issued and determined that no events or transactions are required to be disclosed herein. |
Accounting Policies, by Policy
Accounting Policies, by Policy (Policies) | 9 Months Ended |
Sep. 30, 2020 | |
Accounting Policies [Abstract] | |
Significant Estimates and Assumptions | Significant Estimates and Assumptions The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenue and expenses during the reporting period. Significant estimates relied upon in preparing these financial statements include the estimates used to determine the fair value of the stock options issued in share-based payment arrangements, collectability of the Company’s accounts receivable, measurements of proportional performance under certain service contracts, subscription revenues net of refunds, credits, and known and estimated credit card chargebacks, the valuation allowance on deferred tax assets, fair value of digital tokens and impairment assessment of goodwill. Management evaluates these estimates on an ongoing basis. Changes in estimates are recorded in the period in which they become known. The Company bases estimates on historical experience and various other assumptions that it believes to be reasonable under the circumstances. Actual results may differ from the Company’s estimates. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements In December 2019, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes |
Revenue | Revenue In accordance with Accounting Standards Codification (“ASC”) 606, Revenue from Contracts with Customers Subscription Revenue The Company generates subscription revenue primarily from monthly premium subscription services. Subscription revenues are presented net of refunds, credits, and known and estimated credit card chargebacks. During the nine months ended September 30, 2020 and 2019, subscriptions were offered in durations of one-, three-, six- and twelve- 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. Deferred revenue at December 31, 2019 was $1,829,493, of which $1,363,241 was subsequently recognized as subscription revenue during the nine months ended September 30, 2020. The ending balance of deferred revenue at September 30, 2020 was $1,976,348. In addition, the Company offers virtual gifts to its users. Users may purchase credits in $5, $10 or $20 increments that can be redeemed for a host of virtual gifts such as a rose, a beer or a car, among other items. These gifts are given among users to enhance communication and are typically redeemed within 30 days of purchase. Upon purchase, the virtual gifts are credited to the users’ account and are under the users’ control. Virtual gift revenue is recognized upon the users’ redemption of virtual gifts at the fixed transaction price and included in subscription revenue in the accompanying condensed consolidated statements of operations. Virtual gift revenue is presented as deferred revenue in the consolidated balance sheets until virtual gifts are redeemed. Virtual gift revenue was $1,288,717 and $3,931,151 for the three and nine months ended September 30, 2020, respectively. Virtual gift revenue was approximately $1,245,041 and $4,144,114 for the three and nine months ended September 30, 2019, respectively. The ending balance of deferred revenue from virtual gifts at September 30, 2020 and 2019 was $276,661 and $0, respectively. Advertising Revenue The Company generates advertising revenue from the display of advertisements on its products through contractual agreements with third parties that are based on the number of advertising impressions delivered. Measurements of impressions include when a customer clicks an advertisement (CPC basis), views an advertisement impression (CPM basis), or registers for an external website via an advertisement by clicking on or through the application (CPA basis). Advertising revenue is dependent upon traffic as well as the advertising inventory placed on the Company’s products. Technology Services Revenue ProximaX Agreement During 2019 and the first quarter of 2020, technology service revenue consisted of revenue that was recognized under the Company’s technology services agreement (the “ProximaX Agreement”) with ProximaX Limited (“ProximaX”) and was recognized based upon proportional performance using labor hours as the unit of measurement. Pursuant to the terms of the ProximaX Agreement, ProximaX agreed to pay the Company, among other things, up to an aggregate of $10.0 million of cash or certain highly liquid cryptocurrencies in exchange for the Company’s services, $5.0 million of which was paid in May 2018, $2.5 million of which was due upon completion the second development milestone set forth in the ProximaX Agreement and $2.5 million of which was due upon completion of the third development milestone set forth in the ProximaX Agreement. Effective June 24, 2019, the Company and ProximaX entered into an agreement to terminate the ProximaX Agreement (the “Termination Agreement”) and provide for payment terms for the remaining $2.5 million due under the ProximaX Agreement. The portion of the upfront fee that remained unrecognized as of the termination of the ProximaX Agreement was $1.6 million and was recognized as revenue upon such termination, in addition to the $1.7 million of revenue recognized in the first quarter of 2019. Since there is no assurance of collectability on the remaining payments, revenue is being recognized as the payments under the Termination Agreement are received. For the nine months ended September 30, 2020, the Company recognized approximately $15.0 thousand in revenue in connection with payments received under the Termination Agreement. YouNow Agreement During the second and third quarters of 2020, the Company recorded technology service revenue in connection with its agreement to serve as a launch partner with YouNow, Inc. (“YouNow”) and to integrate YouNow’s props infrastructure (the “Props platform”) into its Camfrog and Paltalk applications (as amended, the “YouNow Agreement”). Pursuant to the terms of the YouNow Agreement, YouNow agreed to pay the Company, in exchange for the Company’s services, an aggregate of 10.5 million cryptographic props tokens (“Props tokens”) upon the achievement of certain milestones as follows: (i) 3.0 million Props tokens upon execution of the YouNow Agreement, (ii) 4.0 million Props tokens upon the integration of the Props platform in the Company’s Camfrog application and (iii) 3.5 million Props tokens due upon the integration of the Props platform in the Paltalk application. In the determining the value of the contract, the Company converted the Props tokens into U.S. dollars using an independent third-party valuation. As of September 30, 2020, the Props tokens were estimated to have a price equal to $0.02 per token (see Note 7 for additional information on the fair value of the Props tokens). The total contract value to be recognized was estimated to be $210,000, which is recognized on the completion dates of the integration services performed. The upfront fee is recognized as revenue under the output method based on the direct measurements of the value of services transferred to date to the customer, relative to the remaining services under the contract. During the three and nine months ended September 30, 2020, the Company recognized $28,000 and $60,000, respectively of the upfront fee and $70,000 and $150,000, respectively from the completion of the first and second integration milestones as “technology service revenue” under the condensed consolidated statements of operations and “digital tokens receivable” under the condensed consolidated balance sheets. 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 revenues that will be generated by the contract and are included in cost of revenues in the Company’s condensed consolidated statements of operations. There were no contract losses for the periods presented. |
Discontinued Operations (Tables
Discontinued Operations (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Discontinued Operations and Disposal Groups [Abstract] | |
Schedule of loss from discontinued operations | Nine Months Ended September 30, 2020 2019 Revenues $ - $ 440,225 Costs of revenue - (115,338 ) Sales and marketing expense - (270,200 ) Product development expense - (76,845 ) General and administrative expense - (82,722 ) Loss from discontinued operations $ - $ (104,880 ) |
Property and Equipment, Net (Ta
Property and Equipment, Net (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Property, Plant and Equipment [Abstract] | |
Schedule of property and equipment, net | September 30, December 31, (unaudited) Computer equipment $ 3,706,017 $ 3,706,017 Website development 3,076,323 3,076,323 Furniture and fixtures 89,027 89,027 Leasehold improvements 32,726 32,726 Total property and equipment 6,904,093 6,904,093 Less: Accumulated depreciation (6,533,648 ) (6,284,034 ) Total property and equipment, net $ 370,445 $ 620,059 |
Intangible Assets, Net (Tables)
Intangible Assets, Net (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of intangible assets, net | September 30, 2020 December 31, 2019 (unaudited) Gross Accumulated Net Gross Accumulated Net Patents $ 50,000 $ (28,125 ) $ 21,875 $ 50,000 $ (26,250 ) $ 23,750 Trade names, trademarks product names, URLs 555,000 (488,104 ) 66,896 555,000 (446,479 ) 108,521 Internally developed software 1,990,000 (1,983,405 ) 6,595 1,990,000 (1,959,655 ) 30,345 Subscriber/customer relationships 2,279,000 (1,938,725 ) 340,275 2,279,000 (1,813,725 ) 465,275 Total intangible assets $ 4,874,000 $ (4,438,359 ) $ 435,641 $ 4,874,000 $ (4,246,109 ) $ 627,891 |
Digital Tokens (Tables)
Digital Tokens (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Digital Tokens [Abstract] | |
Schedule of marketable basis of value | Maturity (time until an exit or liquidity) 1 year Volatility 197.0 % Risk free rate of return 0.16 % |
Accrued Expenses and Other Cu_2
Accrued Expenses and Other Current Liabilities (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Payables and Accruals [Abstract] | |
Schedule of accrued expenses and other current liabilities | September 30, December 31, 2020 2019 (unaudited) Compensation, benefits and payroll taxes $ 110,250 $ 347,601 Income tax payable 19,372 17,672 Other accrued expenses 47,594 69,466 Total accrued expenses and other current liabilities $ 177,216 $ 434,739 |
Stockholders' Equity (Tables)
Stockholders' Equity (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Stockholders' Equity Note [Abstract] | |
Schedule of assumptions used in Black-Scholes pricing model to estimate the fair value of the options granted | Expected volatility 188.0 % Expected life of option (in years) 5.3 Risk free interest rate 0.59 % Expected dividend yield 0.0 % |
Schedule of stock option activity | Weighted Number of Average Options Price Stock Options: Outstanding at January 1, 2020 1,021,243 $ 4.82 Granted 24,000 0.80 Forfeited or canceled, during the period (343,476 ) 3.44 Expired, during the period (70,011 ) 3.57 Outstanding at September 30, 2020 631,756 $ 5.55 Exercisable at September 30, 2020 456,492 $ 6.60 |
Schedule of stock-based compensation expense | Three Months Ended Nine Months Ended September 30, September 30, 2020 2019 2020 2019 Cost of revenue $ 386 $ 375 $ 1,137 $ 1,099 Sales and marketing expense 21 20 61 110 Product development expense 4,118 8,824 15,338 108,633 General and administrative expense 43,182 143,183 177,560 567,998 Total stock compensation expense $ 47,707 $ 152,402 $ 194,096 $ 677,840 |
Net Income (Loss) Per Share (Ta
Net Income (Loss) Per Share (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Earnings Per Share [Abstract] | |
Schedule of net income (loss) per share | Three Months Ended Nine Months Ended September 30, September 30, 2020 2019 2020 2019 Net income (loss) from continuing operations – basic and diluted $ 746,848 $ (1,573,920 ) $ 840,005 $ (1,046,533 ) Weighted average shares outstanding – basic 6,889,334 6,874,679 6,877,335 6,874,437 Weighted average shares outstanding – diluted 6,895,588 6,874,679 6,879,440 6,893,886 Per share data: Basic from continuing operations $ 0.11 $ (0.23 ) $ 0.12 $ (0.15 ) Diluted from continuing operations $ 0.11 $ (0.23 ) $ 0.12 $ (0.15 ) |
Leases (Tables)
Leases (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Disclosure Text Block [Abstract] | |
Schedule of operating leases | Nine Months Ended September 30, 2020 2019 Cash paid for amounts included in the measurement of operating lease liabilities $ 93,123 $ 564,914 Weighted average assumptions: Remaining lease term 1.2 3.4 Discount rate 3.5 % 2.5 % |
Schedule of minimum operating lease payments | For the years ending December 31, Amount 2020 $ 22,823 2021 84,370 Total $ 107,193 Less: present value adjustment (23,675 ) Present value of minimum lease payments $ 83,518 |
Term Debt (Tables)
Term Debt (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Debt Disclosure [Abstract] | |
Schedule of future principal payments | For the years ending December 31, Amount 2020 $ 28,139 2021 337,667 2022 140,694 Total term debt $ 506,500 Less: current portion of term debt (281,009 ) Non-current portion of term debt $ 225,491 |
Organization and Description _2
Organization and Description of Business (Details) | Dec. 31, 2019USD ($) |
Accounting Policies [Abstract] | |
Amount received under the SBA Paycheck Protection | $ 506,500 |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Details) - USD ($) | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | Dec. 31, 2019 | |
Summary of Significant Accounting Policies (Details) [Line Items] | |||||
Deferred revenue | $ 1,976,348 | $ 1,976,348 | $ 1,829,493 | ||
Subscription revenue recognized | $ 1,363,241 | ||||
Description of payments milestone | Effective June 24, 2019, the Company and ProximaX entered into an agreement to terminate the ProximaX Agreement (the “Termination Agreement”) and provide for payment terms for the remaining $2.5 million due under the ProximaX Agreement. The portion of the upfront fee that remained unrecognized as of the termination of the ProximaX Agreement was $1.6 million and was recognized as revenue upon such termination, in addition to the $1.7 million of revenue recognized in the first quarter of 2019. Since there is no assurance of collectability on the remaining payments, revenue is being recognized as the payments under the Termination Agreement are received. For the nine months ended September 30, 2020, the Company recognized approximately $15.0 thousand in revenue in connection with payments received under the Termination Agreement. | ||||
Description of purchase credits | Users may purchase credits in $5, $10 or $20 increments that can be redeemed for a host of virtual gifts such as a rose, a beer or a car, among other items. | ||||
Subscription Revenue [Member] | |||||
Summary of Significant Accounting Policies (Details) [Line Items] | |||||
Virtual gift and micro-transaction revenue | $ 1,288,717 | $ 1,245,041 | $ 3,931,151 | $ 4,144,114 | |
Deferred revenue from virtual gifts | $ 276,661 | $ 0 | |||
YouNow Agreement [Member] | |||||
Summary of Significant Accounting Policies (Details) [Line Items] | |||||
Description of payments milestone | The upfront fee is recognized as revenue under the output method based on the direct measurements of the value of services transferred to date to the customer, relative to the remaining services under the contract. During the three and nine months ended September 30, 2020, the Company recognized $28,000 and $60,000, respectively of the upfront fee and $70,000 and $150,000, respectively from the completion of the first and second integration milestones as “technology service revenue” under the condensed consolidated statements of operations and “digital tokens receivable” under the condensed consolidated balance sheets. | ||||
Description of service revenue | Pursuant to the terms of the YouNow Agreement, YouNow agreed to pay the Company, in exchange for the Company’s services, an aggregate of 10.5 million cryptographic props tokens (“Props tokens”) upon the achievement of certain milestones as follows: (i) 3.0 million Props tokens upon execution of the YouNow Agreement, (ii) 4.0 million Props tokens upon the integration of the Props platform in the Company’s Camfrog application and (iii) 3.5 million Props tokens due upon the integration of the Props platform in the Paltalk application. In the determining the value of the contract, the Company converted the Props tokens into U.S. dollars using an independent third-party valuation. As of September 30, 2020, the Props tokens were estimated to have a price equal to $0.02 per token (see Note 7 for additional information on the fair value of the Props tokens). The total contract value to be recognized was estimated to be $210,000, which is recognized on the completion dates of the integration services performed. |
Discontinued Operations (Detail
Discontinued Operations (Details) $ in Millions | Jan. 31, 2019USD ($) |
Discontinued Operations and Disposal Groups [Abstract] | |
Cash purchase price | $ 1.6 |
Discontinued Operations (Deta_2
Discontinued Operations (Details) - Schedule of loss from discontinued operations - Dating Services Business [Member] - USD ($) | 9 Months Ended | |
Sep. 30, 2020 | Sep. 30, 2019 | |
Discontinued Operations (Details) - Schedule of loss from discontinued operations [Line Items] | ||
Revenues | $ 440,225 | |
Costs of revenue | (115,338) | |
Sales and marketing expense | (270,200) | |
Product development expense | (76,845) | |
General and administrative expense | (82,722) | |
Loss from discontinued operations | $ (104,880) |
Property and Equipment, Net (De
Property and Equipment, Net (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Property, Plant and Equipment [Abstract] | ||||
Depreciation | $ 77,888 | $ 84,587 | $ 249,614 | $ 262,022 |
Property and Equipment, Net (_2
Property and Equipment, Net (Details) - Schedule of property and equipment, net - USD ($) | Sep. 30, 2020 | Dec. 31, 2019 |
Property, Plant and Equipment [Line Items] | ||
Total property and equipment | $ 6,904,093 | $ 6,904,093 |
Less: Accumulated depreciation | (6,533,648) | (6,284,034) |
Total property and equipment, net | 370,445 | 620,059 |
Computer equipment [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Total property and equipment | 3,706,017 | 3,706,017 |
Website development [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Total property and equipment | 3,076,323 | 3,076,323 |
Furniture and fixtures [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Total property and equipment | 89,027 | 89,027 |
Leasehold improvements [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Total property and equipment | $ 32,726 | $ 32,726 |
Goodwill (Details)
Goodwill (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2019 | Sep. 30, 2020 | |
Goodwill and Intangible Assets Disclosure [Abstract] | ||
Impairment | $ 6,760,222 | |
Market price per share (in Dollars per share) | $ 1.29 | |
Goodwill | $ 6,326,250 | $ 6,326,250 |
Intangible Assets, Net (Details
Intangible Assets, Net (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Goodwill and Intangible Assets Disclosure [Abstract] | ||||
Amortization expense | $ 64,083 | $ 64,084 | $ 192,250 | $ 192,249 |
Estimated aggregate amortization expense for 2020 | 54,431 | 54,431 | ||
Estimated aggregate amortization expense for 2021 | 184,667 | 184,667 | ||
Estimated aggregate amortization expense for 2022 | 149,944 | 149,944 | ||
Estimated aggregate amortization expense for 2023 | 18,000 | 18,000 | ||
Estimated aggregate amortization expense for 2024 | 17,354 | 17,354 | ||
Estimated aggregate amortization expense for thereafter | $ 11,245 | $ 11,245 |
Intangible Assets, Net (Detai_2
Intangible Assets, Net (Details) - Schedule of intangible assets, net - USD ($) | Sep. 30, 2020 | Dec. 31, 2019 |
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | $ 4,874,000 | $ 4,874,000 |
Accumulated Amortization | (4,438,359) | (4,246,109) |
Net Carrying Amount | 435,641 | 627,891 |
Patents [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | 50,000 | 50,000 |
Accumulated Amortization | (28,125) | (26,250) |
Net Carrying Amount | 21,875 | 23,750 |
Trade names, trademarks product names, URLs [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | 555,000 | 555,000 |
Accumulated Amortization | (488,104) | (446,479) |
Net Carrying Amount | 66,896 | 108,521 |
Internally developed software [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | 1,990,000 | 1,990,000 |
Accumulated Amortization | (1,983,405) | (1,959,655) |
Net Carrying Amount | 6,595 | 30,345 |
Subscriber/customer relationships [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | 2,279,000 | 2,279,000 |
Accumulated Amortization | (1,938,725) | (1,813,725) |
Net Carrying Amount | $ 340,275 | $ 465,275 |
Digital Tokens (Details)
Digital Tokens (Details) | 9 Months Ended |
Sep. 30, 2020$ / item | |
Digital Tokens (Details) [Line Items] | |
Digital tokens, description | the Company sold 124,752,914 digital tokens for proceeds of $75,406. The recorded loss of approximately $72,100 is included under “other expense, net” in the condensed consolidated statements of operations. |
Props token purchase price | 0.07 |
Warrant [Member] | |
Digital Tokens (Details) [Line Items] | |
Props token purchase price | 0.07 |
Digital Tokens (Details) - Sche
Digital Tokens (Details) - Schedule of marketable basis of value | 9 Months Ended |
Sep. 30, 2020 | |
Schedule of marketable basis of value [Abstract] | |
Maturity (time until an exit or liquidity) | 1 year |
Volatility | 197.00% |
Risk free rate of return | 0.16% |
Accrued Expenses and Other Cu_3
Accrued Expenses and Other Current Liabilities (Details) - Schedule of accrued expenses and other current liabilities - USD ($) | Sep. 30, 2020 | Dec. 31, 2019 |
Schedule of accrued expenses and other current liabilities [Abstract] | ||
Compensation, benefits and payroll taxes | $ 110,250 | $ 347,601 |
Income tax payable | 19,372 | 17,672 |
Other accrued expenses | 47,594 | 69,466 |
Total accrued expenses and other current liabilities | $ 177,216 | $ 434,739 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Income Tax Disclosure [Abstract] | ||||
Income tax benefit from continuing operations | $ (3,300) | $ (157,180) | $ 1,700 | $ (152,680) |
Effective tax rate | (0.44%) | 10.00% | 0.20% | 12.73% |
Effective tax rate from statutory rate | 21.00% | |||
Pre-tax loss | $ 743,548 | $ (1,571,822) | $ 841,705 | $ (1,199,213) |
Stockholders' Equity (Details)
Stockholders' Equity (Details) | 1 Months Ended | 3 Months Ended | 9 Months Ended | |||||
Apr. 29, 2019USD ($)shares | May 16, 2016shares | Sep. 30, 2020USD ($)$ / sharesshares | Sep. 30, 2019USD ($) | Sep. 30, 2020USD ($)$ / sharesshares | Sep. 30, 2019USD ($) | Aug. 11, 2020shares | Dec. 31, 2019shares | |
Stockholders' Equity (Details) [Line Items] | ||||||||
Repurchased shares of common stock | $ | $ 500,000 | |||||||
Repurchase plan expires date | Apr. 29, 2020 | |||||||
Repurchase of common stock shares (in Shares) | shares | 9,950 | |||||||
Common stock issued (in Shares) | shares | 6,916,404 | 6,916,404 | 6,916,404 | |||||
General and administrative expense | $ | $ 704,812 | $ 1,423,430 | $ 2,411,149 | $ 4,915,289 | ||||
Total unrecognized compensation expense | $ | 177,145 | $ 177,145 | ||||||
Weighted average expected recognition period of unrecognized compensation expense | 1 year 109 days | |||||||
Aggregate intrinsic value of stock options, outstanding | $ | 7,200 | 22,173 | $ 7,200 | 22,173 | ||||
Aggregate intrinsic value of stock options, exercisable | $ | $ 5,400 | $ 9,363 | $ 5,400 | 9,363 | ||||
Aggregate granted options to board of director, Shares (in Shares) | shares | 24,000 | |||||||
Weighted average exercise price (in Dollars per share) | $ / shares | $ 0.80 | $ 0.80 | ||||||
Number of equal installments | 4 | |||||||
Stock option term | 10 years | |||||||
Aggregate fair value of options granted | $ | $ 18,664 | $ 337,598 | ||||||
Consulting Service [Member] | ||||||||
Stockholders' Equity (Details) [Line Items] | ||||||||
Common stock issued (in Shares) | shares | 37,500 | |||||||
General and administrative expense | $ | $ 43,500 | |||||||
Stock Compensation Plan One [Member] | ||||||||
Stockholders' Equity (Details) [Line Items] | ||||||||
Number of shares issued under plan (in Shares) | shares | 121,930 | |||||||
Stock Compensation Plan [Member] | ||||||||
Stockholders' Equity (Details) [Line Items] | ||||||||
Number of shares issued under plan (in Shares) | shares | 1,300,000 | |||||||
Percentage of common stock delivered pursuant to incentive stock options | 100.00% | |||||||
2016 Plan [Member] | ||||||||
Stockholders' Equity (Details) [Line Items] | ||||||||
Number of stock available for future issuance (in Shares) | shares | 844,279 | 844,279 |
Stockholders' Equity (Details)
Stockholders' Equity (Details) - Schedule of assumptions used in Black-Scholes pricing model to estimate the fair value of the options granted | 9 Months Ended |
Sep. 30, 2020 | |
Schedule of assumptions used in Black-Scholes pricing model to estimate the fair value of the options granted [Abstract] | |
Expected volatility | 188.00% |
Expected life of option (in years) | 5 years 109 days |
Risk free interest rate | 0.59% |
Expected dividend yield | 0.00% |
Stockholders' Equity (Details_2
Stockholders' Equity (Details) - Schedule of stock option activity | 9 Months Ended |
Sep. 30, 2020$ / sharesshares | |
Stock Options: | |
Number of Options, Outstanding beginning balance | shares | 1,021,243 |
Weighted Average Exercise Price, Outstanding beginning balance | $ / shares | $ 4.82 |
Number of Options, Granted | shares | 24,000 |
Weighted Average Exercise Price, Granted | $ / shares | $ 0.80 |
Number of Options, Forfeited or canceled, during the period | shares | (343,476) |
Weighted Average Exercise Price, Forfeited or canceled, during the period | $ / shares | $ 3.44 |
Number of Options, Expired, during the period | shares | (70,011) |
Weighted Average Exercise Price, Expired, during the period | $ / shares | $ 3.57 |
Number of Options, Outstanding ending balance | shares | 631,756 |
Weighted Average Exercise Price, Outstanding ending balance | $ / shares | $ 5.55 |
Number of Options, Exercisable | shares | 456,492 |
Weighted Average Exercise Price, Exercisable | $ / shares | $ 6.60 |
Stockholders' Equity (Details_3
Stockholders' Equity (Details) - Schedule of stock-based compensation expense - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Stockholders' Equity (Details) - Schedule of stock-based compensation expense [Line Items] | ||||
Stock compensation expense | $ 47,707 | $ 152,402 | $ 194,096 | $ 677,840 |
Cost of revenue [Member] | ||||
Stockholders' Equity (Details) - Schedule of stock-based compensation expense [Line Items] | ||||
Stock compensation expense | 386 | 375 | 1,137 | 1,099 |
Sales and marketing expense [Member] | ||||
Stockholders' Equity (Details) - Schedule of stock-based compensation expense [Line Items] | ||||
Stock compensation expense | 21 | 20 | 61 | 110 |
Product development expense [Member] | ||||
Stockholders' Equity (Details) - Schedule of stock-based compensation expense [Line Items] | ||||
Stock compensation expense | 4,118 | 8,824 | 15,338 | 108,633 |
General and administrative expense [Member] | ||||
Stockholders' Equity (Details) - Schedule of stock-based compensation expense [Line Items] | ||||
Stock compensation expense | $ 43,182 | $ 143,183 | $ 177,560 | $ 567,998 |
Net Income (Loss) Per Share (De
Net Income (Loss) Per Share (Details) - shares | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Earnings Per Share [Abstract] | ||||
Shares not included in the computation of diluted net income per share | 625,502 | 1,055,691 | 629,671 | 79,286 |
Shares included in the computation of diluted net income per share | 6,254 | 2,085 |
Net Income (Loss) Per Share (_2
Net Income (Loss) Per Share (Details) - Schedule of net income (loss) per share - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Schedule of net income (loss) per share [Abstract] | ||||
Net income (loss) from continuing operations - basic and diluted | $ 746,848 | $ (1,573,920) | $ 840,005 | $ (1,046,533) |
Weighted average shares outstanding - basic | 6,889,334 | 6,874,679 | 6,877,335 | 6,874,437 |
Weighted average shares outstanding - diluted | 6,895,588 | 6,874,679 | 6,879,440 | 6,893,886 |
Per share data: | ||||
Basic from continuing operations | $ 0.11 | $ (0.23) | $ 0.12 | $ (0.15) |
Diluted from continuing operations | $ 0.11 | $ (0.23) | $ 0.12 | $ (0.15) |
Leases (Details)
Leases (Details) - USD ($) | May 01, 2019 | Jun. 07, 2016 | Sep. 30, 2020 | Sep. 30, 2019 | Jun. 22, 2020 |
Leases (Details) [Line Items] | |||||
Operating lease, description | The term of the lease ran until April 26, 2023. | commenced on September 1, 2016 and runs through November 30, 2021. | |||
Rent payments per month | $ 33,492 | $ 5,900 | |||
Security deposit amount | $ 133,968 | $ 133,968 | |||
Gain on lease cancellation | $ 141,001 | ||||
Operating lease right-of-use asset | 100,000 | ||||
Operating lease liabilities | 100,000 | ||||
Rent expenses | 183,523 | ||||
Sublease income | $ 36,095 | $ 242,809 | |||
Lease Agreements [Member] | |||||
Leases (Details) [Line Items] | |||||
Operating lease, description | The term of the sublease ran until April 26, 2023. | ||||
Rent payments per month | $ 11,164 |
Leases (Details) - Schedule of
Leases (Details) - Schedule of operating leases - USD ($) | 9 Months Ended | |
Sep. 30, 2020 | Sep. 30, 2019 | |
Schedule of operating leases [Abstract] | ||
Cash paid for amounts included in the measurement of operating lease liabilities | $ 93,123 | $ 564,914 |
Weighted average assumptions: | ||
Remaining lease term | 1 year 73 days | 3 years 146 days |
Discount rate | 3.50% | 2.50% |
Leases (Details) - Schedule o_2
Leases (Details) - Schedule of minimum operating lease payments | Sep. 30, 2020USD ($) |
Schedule of minimum operating lease payments [Abstract] | |
2020 | $ 22,823 |
2021 | 84,370 |
Total | 107,193 |
Less: present value adjustment | (23,675) |
Present value of minimum lease payments | $ 83,518 |
Term Debt (Details)
Term Debt (Details) - Small Business Administration [Member] | Apr. 13, 2020 |
Term Debt (Details) [Line Items] | |
Term of note | 2 years |
Interest rate per annum | 1.00% |
Term Debt (Details) - Schedule
Term Debt (Details) - Schedule of future principal payments - USD ($) | Sep. 30, 2020 | Dec. 31, 2019 |
Schedule of future principal payments [Abstract] | ||
2020 | $ 28,139 | |
2021 | 337,667 | |
2022 | 140,694 | |
Total term debt | 506,500 | |
Less: current portion of term debt | (281,009) | |
Non-current portion of term debt | $ 225,491 |
Sale of Secured Communication_2
Sale of Secured Communications Assets (Details) | 1 Months Ended |
Jul. 23, 2020 | |
Pending Sale Of Secured Communications Assets [Abstract] | |
Sale of assets, description | the Company completed the Asset Sale for a cash purchase price of $250,000, $150,000 of which was paid at closing and $100,000 of which is payable in four equal installments over the next fifteen months. The Amended and Restated Agreement also provides for a revenue sharing arrangement, pursuant to which the Company is entitled to receive quarterly royalty payments ranging from 5% to 10% of certain revenues received by the Buyer, with the aggregate amount of such royalty payments not to exceed $500,000. |