Document And Entity Information
Document And Entity Information - shares | 9 Months Ended | |
Sep. 30, 2021 | Nov. 05, 2021 | |
Document Information Line Items | ||
Entity Registrant Name | PALTALK, INC. | |
Trading Symbol | PALT | |
Document Type | 10-Q | |
Current Fiscal Year End Date | --12-31 | |
Entity Common Stock, Shares Outstanding | 9,832,157 | |
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, 2021 | |
Document Fiscal Year Focus | 2021 | |
Document Fiscal Period Focus | Q3 | |
Entity Small Business | true | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Document Quarterly Report | true | |
Document Transition Report | false | |
Entity File Number | 001-38717 | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 20-3191847 | |
Entity Address, Address Line One | 30 Jericho Executive Plaza Suite 400E | |
Entity Address, City or Town | Jericho | |
Entity Address, State or Province | NY | |
Entity Address, Postal Zip Code | 11753 | |
City Area Code | (212) | |
Local Phone Number | 967-5120 | |
Title of 12(b) Security | Common Stock, $0.001 par value | |
Security Exchange Name | NASDAQ | |
Entity Interactive Data Current | Yes |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) | Sep. 30, 2021 | Dec. 31, 2020 |
Current assets: | ||
Cash and cash equivalents | $ 10,712,832 | $ 5,585,420 |
Accounts receivable, net of allowances of $3,648 as of September 30, 2021 and December 31, 2020, respectively | 117,588 | 71,410 |
Prepaid expense and other current assets | 211,262 | 236,704 |
Total current assets | 11,041,682 | 5,893,534 |
Operating lease right-of-use asset | 259,282 | 68,967 |
Property and equipment, net | 107,830 | 255,777 |
Goodwill | 6,326,250 | 6,326,250 |
Intangible assets, net | 242,710 | 381,210 |
Digital tokens | 53,899 | 439,145 |
Digital tokens receivable | 210,000 | |
Other assets | 13,937 | 13,937 |
Total assets | 18,045,590 | 13,588,820 |
Current liabilities: | ||
Accounts payable | 1,108,628 | 742,141 |
Accrued expenses and other current liabilities | 157,697 | 254,084 |
Operating lease liabilities, current portion | 79,849 | 68,967 |
Digital tokens payable | 333,446 | 123,397 |
Term debt, current portion | 338,792 | |
Deferred subscription revenue | 1,858,955 | 2,058,721 |
Total current liabilities | 3,538,575 | 3,586,102 |
Operating lease liabilities, non-current portion | 179,433 | |
Term debt, non-current portion | 167,708 | |
Total liabilities | 3,718,008 | 3,753,810 |
Commitments and Contingencies (Note 12) | ||
Stockholders’ equity: | ||
Common stock, $0.001 par value, 25,000,000 shares authorized, and 8,249,714 and 6,916,404 shares issued and 8,239,764 and 6,906,454 shares outstanding as of September 30, 2021 and December 31, 2020, respectively | 8,250 | 6,917 |
Treasury stock, 9,950 shares at par as of September 30, 2021 and December 31, 2020 | (10,859) | (10,859) |
Additional paid-in capital | 24,729,903 | 21,568,041 |
Accumulated deficit | (10,399,712) | (11,729,089) |
Total stockholders’ equity | 14,327,582 | 9,835,010 |
Total liabilities and stockholders’ equity | $ 18,045,590 | $ 13,588,820 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Parentheticals) - USD ($) | Sep. 30, 2021 | Dec. 31, 2020 |
Statement of Financial Position [Abstract] | ||
Allowances and reserves (in Dollars) | $ 3,648 | $ 3,648 |
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 | 8,249,714 | 6,916,404 |
Common stock, shares outstanding | 8,239,764 | 6,906,454 |
Treasury stock | 9,950 | 9,950 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations (Unaudited) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | |
Revenues: | ||||
Subscription revenue | $ 3,148,822 | $ 3,124,999 | $ 9,410,096 | $ 8,985,741 |
Advertising revenue | 151,318 | 86,256 | 303,601 | 199,779 |
Technology service revenue | 77,507 | 98,000 | 451,755 | 224,952 |
Total revenues | 3,377,647 | 3,309,255 | 10,165,452 | 9,410,472 |
Costs and expenses: | ||||
Cost of revenue | 744,566 | 632,462 | 2,021,863 | 1,940,616 |
Sales and marketing expense | 323,758 | 204,371 | 836,413 | 617,457 |
Product development expense | 1,334,732 | 1,223,818 | 3,930,763 | 3,730,398 |
General and administrative expense | 859,675 | 704,812 | 2,090,887 | 2,411,149 |
Impairment loss on digital tokens | 571,458 | 756,195 | ||
Total costs and expenses | 3,834,189 | 2,765,463 | 9,636,121 | 8,699,620 |
Income (loss) from operations | (456,542) | 543,792 | 529,331 | 710,852 |
Interest (expense) income, net | (195) | (1,959) | 1,852 | 9,018 |
Gain from sale of Secured Communications Assets | 250,000 | 250,000 | ||
Gain on extinguishment of term debt | 506,500 | |||
Realized gain (loss) from the sale of digital tokens | 53,867 | (48,285) | 301,160 | (72,123) |
Other expense | (56,042) | |||
Income (loss) from operations before provision for income taxes | (402,870) | 743,548 | 1,338,843 | 841,705 |
Benefit (expense) for income taxes | (6,166) | 3,300 | (9,466) | (1,700) |
Net income (loss) | $ (409,036) | $ 746,848 | $ 1,329,377 | $ 840,005 |
Net income (loss) per share of common stock: | ||||
Basic (in Dollars per share) | $ (0.05) | $ 0.11 | $ 0.19 | $ 0.12 |
Diluted (in Dollars per share) | $ (0.05) | $ 0.11 | $ 0.18 | $ 0.12 |
Weighted average number of shares of common stock used in calculating net income per share of common stock: | ||||
Basic (in Shares) | 7,718,034 | 6,889,334 | 7,179,953 | 6,877,355 |
Diluted (in Shares) | 7,718,034 | 6,895,588 | 7,201,504 | 6,879,440 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Changes in Stockholders’ Equity (Unaudited) - USD ($) | Common Shares | Treasury Shares | Additional Paid- in Capital | Accumulated Deficit | Total |
Balance at Dec. 31, 2019 | $ 6,879 | $ (2,015) | $ 21,281,382 | $ (13,100,351) | $ 8,185,895 |
Balance (in Shares) at Dec. 31, 2019 | 6,878,904 | (1,900) | |||
Stock-based compensation expense | 89,206 | 89,206 | |||
Repurchases of common stock | $ (7,240) | (7,240) | |||
Repurchases of common stock (in Shares) | (6,600) | ||||
Net income (loss) | (438,384) | (438,384) | |||
Balance at Mar. 31, 2020 | $ 6,879 | $ (9,255) | 21,370,588 | (13,538,735) | 7,829,477 |
Balance (in Shares) at Mar. 31, 2020 | 6,878,904 | (8,500) | |||
Stock-based compensation expense | 57,183 | 57,183 | |||
Repurchases of common stock | $ (1,604) | (1,604) | |||
Repurchases of common stock (in Shares) | (1,450) | ||||
Net income (loss) | 531,541 | 531,541 | |||
Balance at Jun. 30, 2020 | $ 6,879 | $ (10,859) | 21,427,771 | (13,007,194) | 8,416,597 |
Balance (in Shares) at Jun. 30, 2020 | 6,878,904 | (9,950) | |||
Stock-based compensation expense | 47,707 | 47,707 | |||
Shares issued for consulting services | $ 38 | 43,462 | 43,500 | ||
Shares issued for consulting services (in Shares) | 37,500 | ||||
Net income (loss) | 746,848 | 746,848 | |||
Balance at Sep. 30, 2020 | $ 6,917 | $ (10,859) | 21,518,940 | (12,260,346) | 9,254,652 |
Balance (in Shares) at Sep. 30, 2020 | 6,916,404 | (9,950) | |||
Balance at Dec. 31, 2020 | $ 6,917 | $ (10,859) | 21,568,041 | (11,729,089) | 9,835,010 |
Balance (in Shares) at Dec. 31, 2020 | 6,916,404 | (9,950) | |||
Stock-based compensation expense | 31,368 | 31,368 | |||
Net income (loss) | 916,729 | 916,729 | |||
Balance at Mar. 31, 2021 | $ 6,917 | $ (10,859) | 21,599,409 | (10,812,360) | 10,783,107 |
Balance (in Shares) at Mar. 31, 2021 | 6,916,404 | (9,950) | |||
Reversal of stock compensation expense of non-vested options, net | (192,342) | (192,342) | |||
Net income (loss) | 821,684 | 821,684 | |||
Balance at Jun. 30, 2021 | $ 6,917 | $ (10,859) | 21,407,067 | (9,990,676) | 11,412,449 |
Balance (in Shares) at Jun. 30, 2021 | 6,916,404 | (9,950) | |||
Stock-based compensation expense | 93,430 | 93,430 | |||
Net income (loss) | (409,036) | (409,036) | |||
Public offering of common stock, net of issuance costs | $ 1,333 | 3,229,406 | 3,230,739 | ||
Public offering of common stock, net of issuance costs (in Shares) | 1,333,310 | ||||
Balance at Sep. 30, 2021 | $ 8,250 | $ (10,859) | $ 24,729,903 | $ (10,399,712) | $ 14,327,582 |
Balance (in Shares) at Sep. 30, 2021 | 8,249,714 | (9,950) |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) | 9 Months Ended | |
Sep. 30, 2021 | Sep. 30, 2020 | |
Cash flows from operating activities: | ||
Net income | $ 1,329,377 | $ 840,005 |
Adjustments to reconcile net income from operations to net cash provided by operating activities: | ||
Depreciation of property and equipment | 147,947 | 249,614 |
Amortization of intangible assets | 138,500 | 192,250 |
Amortization of operating lease right-of-use assets | 54,625 | 89,532 |
Gain on cancellation of office lease | (141,001) | |
Impairment loss on digital tokens | 756,195 | |
Realized (gain) loss from the sale of digital tokens | (301,160) | 72,123 |
Write-off of note receivable | 56,042 | |
Gain on extinguishment of term debt | (506,500) | |
Stock-based compensation | (67,544) | 194,096 |
Bad debt expense | (3,235) | (28,461) |
Common stock issued for consulting services | 43,500 | |
Changes in operating assets and liabilities: | ||
Digital tokens | (876,407) | |
Accounts receivables | (42,943) | 118,939 |
Digital tokens receivable | 210,000 | (210,000) |
Operating lease liability | (54,625) | (93,123) |
Digital tokens payable | 210,049 | |
Prepaid expenses and other current assets | 25,442 | (214,229) |
Other assets | 16,897 | |
Accounts payable, accrued expenses and other current liabilities | 270,100 | (420,478) |
Deferred subscription revenue | (199,766) | 146,855 |
Net cash provided by operating activities | 1,090,055 | 912,561 |
Cash flows from investing activities: | ||
Proceeds from Secured Communications Assets | 150,000 | |
Proceeds from the sale of digital tokens | 806,618 | 75,406 |
Net cash provided by investing activities | 806,618 | 225,406 |
Cash flows from financing activities: | ||
Borrowings of term debt | 506,500 | |
Proceeds from issuance of common stock, net of issuance costs | 3,230,739 | |
Purchase of treasury stock | (8,844) | |
Net cash provided by financing activities | 3,230,739 | 497,656 |
Net increase in cash and cash equivalents | 5,127,412 | 1,635,623 |
Balance of cash and cash equivalents at beginning of period | 5,585,420 | 3,427,058 |
Balance of cash and cash equivalents at end of period | 10,712,832 | 5,062,681 |
Non-cash investing and financing activities: | ||
Modification of operating lease right-of-use asset and liability | $ 244,940 |
Organization and Description of
Organization and Description of Business | 9 Months Ended |
Sep. 30, 2021 | |
Organization and Description of Business [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”). The Company is a communications software innovator that powers multimedia social applications. The Company has an over 20-year history of technology innovations and holds 18 patents. The Company’s product portfolio includes Paltalk, Camfrog and Tinychat, which together host a large collection of video-based communities. The Company’s other product is Vumber which is a telecommunications services provider that enables users to communicate privately by having multiple phone numbers with any area code through which calls can be forwarded to a user’s existing telephone number. 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, 2020, filed with the SEC on March 23, 2021 (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 sheets and statements of operations, cash flows and changes in 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, 2021 are not necessarily indicative of results for the year ending December 31, 2021, or for any other period. Update on COVID-19 The World Health Organization declared COVID-19 a pandemic on March 11, 2020. The global spread of the COVID-19 pandemic and the various attempts to contain it have created significant volatility, uncertainty and economic disruption. COVID-19 continues to have an unpredictable and unprecedented impact on the U.S. economy as federal, state and local governments react to this public health crisis with travel restrictions and potential quarantines. Although the Company’s core multimedia social applications have been able to support the increased demand we have experienced, the extent of the future impact of the COVID-19 pandemic on our business is highly uncertain and difficult to predict. Adverse economic and market conditions as a result of COVID-19 could also affect the demand for the Company’s applications and the ability of the Company’s users to satisfy their obligations to the Company. If the pandemic continues to cause significant negative impacts to economic conditions, the Company’s results of operations, financial condition and liquidity could be materially and adversely impacted. On April 13, 2020, to help ensure adequate liquidity in light of the uncertainties posed by the COVID-19 pandemic, the Company applied for a loan under the Small Business Administration (“SBA”) Paycheck Protection Program (“PPP”) under the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”), and on May 3, 2020, 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”). On January 13, 2021, the Note was fully forgiven by the SBA and the Lender in compliance with the provisions of the CARES Act. The Company does not expect to incur additional indebtedness under the CARES Act. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 9 Months Ended |
Sep. 30, 2021 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | 2. Summary of Significant Accounting Policies Deferred Offering Costs The Company capitalizes certain legal and professional fees that are directly related to public offerings of common stock as deferred offering costs until such financing is consummated. See Note 8 for more information regarding the Company’s recent public offerings of common stock. At the consummation of such equity financing, these costs are recorded in stockholders’ equity as a reduction of additional paid-in capital generated. For a detailed discussion about the Company’s significant accounting policies, see the Form 10-K. During the nine months ended September 30, 2021, there were no other 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 (“ASU”) No. 2019-12, “Income Taxes (Topic 740) Simplifying the Accounting for Income Taxes”, as part of its initiative to reduce complexity in the accounting standards. The ASU eliminates certain exceptions from Accounting Standards Codification (“ASC”) 740 related to the approach for intra-period tax allocation, the methodology for calculating income taxes in an interim period and the recognition of deferred tax liabilities for outside basis differences. ASU 2019-12 also clarifies and simplifies other aspects of the accounting for income taxes. The guidance is effective for fiscal years beginning after December 15, 2020 and for interim periods within those fiscal years. The Company adopted ASU 2019-12 on January 1, 2021. The adoption of this standard did not have a material impact on the Company’s consolidated financial statements. Fair Value Measurements The fair value framework under the guidance issued by the FASB requires the categorization of assets and liabilities into three levels based upon the assumptions used to measure the assets or liabilities. Level 1 provides the most reliable measure of fair value, whereas Level 3, if applicable, would generally require significant management judgment. The three levels for categorizing assets and liabilities under the fair value measurement requirements are as follows: ● Level 1: Fair value measurement of the asset or liability using observable inputs such as quoted prices in active markets for identical assets or liabilities; ● Level 2: Fair value measurement of the asset or liability using inputs other than quoted prices that are observable for the applicable asset or liability, either directly or indirectly, such as quoted prices for similar (as opposed to identical) assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are not active; and ● Level 3: Fair value measurement of the asset or liability using unobservable inputs that reflect the Company’s own assumptions regarding the applicable asset or liability. The Company reviews the appropriateness of fair value measurements including validation processes, and the reconciliation of period-over-period fluctuations based on changes in key market inputs. All fair value measurements are subject to the Company’s analysis. Review and approval by management is required as part of the validation process. The carrying amounts of the Company’s cash and cash equivalents, accounts receivable and accounts payable, approximate fair value due to the short-term nature of these instruments. Revenue Recognition In accordance with 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, 2021 and 2020, 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, 2020 was $2,058,721, of which $1,529,597 was subsequently recognized as subscription revenue during the nine months ended September 30, 2021. The ending balance of deferred revenue at September 30, 2021 was $1,858,955. 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 condensed consolidated balance sheets until virtual gifts are redeemed. Virtual gift revenue was $1,450,757 and $4,259,933 for the three and nine months ended September 30, 2021, respectively. Virtual gift revenue was $1,288,717 and $3,931,151 for the three and nine months ended September 30, 2020, respectively. The ending balance of deferred revenue from virtual gifts at September 30, 2021 and 2020 was $305,767 and $276,661, 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 Service Revenue The Company records technology service revenue in connection with its agreement to serve as a launch partner with Open Props, Inc. (formerly YouNow, Inc., and referred to herein as “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 Company’s Paltalk application. In determining the value of the contract, the Company converted the Props tokens into U.S. dollars using an independent third-party valuation. The Props tokens were estimated to have a price equal to $0.02 per token (see Note 5 for additional information on the fair value of the Props tokens) at the contract inception date. The total contract value to be recognized was estimated to be $210,000, which was recognized on the completion dates of the integration services performed during the second and third quarter of 2020. The upfront fee was 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 year ended December 31, 2020, the Company recognized $60,000 of the upfront fee and $150,000 from the completion of the first and second integration milestones under technology service revenue in the condensed consolidated statements of operations and digital tokens receivable in the condensed consolidated balance sheets. Once the integration of Props tokens to the Paltalk and Camfrog applications was completed, the Company began receiving Props tokens for providing a validator service and for allowing users to participate in the loyalty platform. The loyalty platform is intended to drive engagement and incentivize users financially by providing users with the ability to earn Props tokens while using the Paltalk and Camfrog applications. During the third and fourth quarters of 2020, the Company received an aggregate of 1.1 million Props tokens for the validator service and 13.5 million Props tokens under the loyalty platform. During the three and nine months ended September 30, 2021, the Company received 104 thousand and 455 thousand Props tokens, respectively, for the validator service and 3.0 million and 10.2 million Props tokens under the loyalty platform. The number of Props tokens earned and reserved by users for the nine months ended September 30, 2021 and for the year ended December 31, 2020 was 8.2 million and 4.0 million, respectively, which is recorded under “digital tokens payable” in the condensed consolidated balance sheets and the net revenue earned is recorded under “technology service revenue” in the condensed consolidated statements of operations. The total net revenue value is recognized as earned. For the year ended December 31, 2020, the Company retained an independent third-party to estimate the dollar value of the revenue for the validator service and digital tokens earned through the loyalty platform. Given the recent trading availability of Props tokens in various active markets, during the three and nine months ended September 30, 2021, the Company calculated the fair value of digital tokens based on the observable daily quoted market prices (Level 1 inputs) on multiple international exchanges, as recorded on CoinmarketCap (see Note 5 for additional information on the fair value of the Props tokens). The total net revenue value recognized as earned was estimated to be $77,507 and $451,755 for the three and nine months ended September 30, 2021, respectively. In August 2021, the Company received notice from YouNow that it was terminating the YouNow Agreement, and that it would not support the Props platform past the end of calendar year 2021. In connection with the notice of termination and in accordance with the YouNow Agreement, the Company received an additional 2,625,000 Props tokens. The value of these tokens was recorded as revenue under “technology service revenue” in the condensed consolidated statements of income. During the three and nine months ended September 30, 2021, the Company sold approximately 29.5 million and 32.4 million Props tokens, respectively, for proceeds of $502,314 and $806,618, respectively. The realized gain of the sale of digital tokens was approximately $53,867 and $301,160 for the three and nine months ended September 30, 2021, respectively, and is included in the condensed consolidated statements of income. 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 revenue 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. Reclassifications Certain prior period amounts have been reclassified for comparative purposes to conform to the current presentation. These reclassifications have no impact on the previously reported net income. |
Property and Equipment, Net
Property and Equipment, Net | 9 Months Ended |
Sep. 30, 2021 | |
Property, Plant and Equipment [Abstract] | |
Property and Equipment, Net | 3. Property and Equipment, Net Property and equipment, net consisted of the following at September 30, 2021 and December 31, 2020: September 30, December 31, 2021 2020 Computer equipment $ 866,459 $ 866,459 Website development 3,076,323 3,076,323 Furniture and fixtures 47,463 47,463 Total property and equipment 3,990,245 3,990,245 Less: Accumulated depreciation (3,882,415 ) (3,734,468 ) Total property and equipment, net $ 107,830 $ 255,777 Depreciation expense for the three and nine months ended September 30, 2021 was $46,090 and $147,947, respectively as compared to $77,888 and $249,614 for the three and nine months ended September 30, 2020, respectively. |
Intangible Assets, Net
Intangible Assets, Net | 9 Months Ended |
Sep. 30, 2021 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Intangible Assets, Net | 4. Intangible Assets, Net Intangible assets, net consisted of the following at September 30, 2021 and December 31, 2020: September 30, 2021 December 31, 2020 Gross Net Gross Net Carrying Accumulated Carrying Carrying Accumulated Carrying Amount Amortization Amount Amount Amortization Amount Patents $ 50,000 $ (30,625 ) $ 19,375 $ 50,000 $ (28,750 ) $ 21,250 Trade names, trademarks product names, URLs 555,000 (505,273 ) 49,727 555,000 (493,648 ) 61,352 Internally developed software 1,990,000 (1,990,000 ) - 1,990,000 (1,990,000 ) - Subscriber/customer relationships 2,279,000 (2,105,392 ) 173,608 2,279,000 (1,980,392 ) 298,608 Total intangible assets $ 4,874,000 $ (4,631,290 ) $ 242,710 $ 4,874,000 $ (4,492,790 ) $ 381,210 Amortization expense for the three and nine months ended September 30, 2021 was $46,167 and $138,500, respectively, as compared to $64,083 and $192,250 for the three and nine months ended September 30, 2020, respectively. The aggregate amortization expense for each of the next five years and thereafter is estimated to be $46,166 in 2021, $149,944 in 2022, $18,000 in 2023, $17,354 in 2024, $2,500 in 2025 and $8,746 thereafter. |
Digital Tokens
Digital Tokens | 9 Months Ended |
Sep. 30, 2021 | |
Digital Tokens [Abstract] | |
Digital Tokens | 5. Digital Tokens Digital tokens, digital tokens receivable and digital tokens payable for the periods presented consist of 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 Props Tokens The Props tokens received, receivable and payable from YouNow are intangible assets that are accounted for at cost, less impairment charges. According to the FASB guidance noted above, 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 to the lowest price during the period in which the Props tokens are held as the carrying amount for purposes of testing for impairment. During the year ended December 31, 2020, to calculate the fair value of the Props tokens received, receivable and payable pursuant to the YouNow Agreement, the Company, through a third-party valuation, 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 (Level 3 inputs). 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. During the year ended December 31, 2020, the Props tokens did not have access to a liquid marketplace, and therefore 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 December 31, 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. Digital tokens earned, receivable or payable before September 30, 2020, were recorded based on an estimated fair value of $0.02. Digital tokens earned, receivable or payable from July 1, 2020 through December 31, 2020 were recorded based on an estimated fair value of $0.039. At December 31, 2020, the Company recorded $439,145 under digital tokens, $123,397 under digital tokens payable and $210,000 under digital tokens receivable pursuant to the YouNow Agreement. Given the recent trading availability of Props tokens in various active markets, during the three and nine months ended September 30, 2021, the Company calculated the fair value of digital tokens based on the observable daily quoted market prices (Level 1 inputs) on multiple international exchanges, as recorded on CoinmarketCap. At September 30, 2021, the Company recorded $53,899 under digital tokens and $333,446 under digital tokens payable pursuant to the YouNow Agreement. During the three and nine months ended September 30, 2021, the Company recorded a non-cash impairment charge in the amount of $571,458 and $756,195, respectively, which is reported in the accompanying condensed consolidated statements of operations as a result of recent declines in the quoted market prices of certain digital tokens below the market price of their acquisition. In August 2021, the Company received notice from YouNow that it was terminating the YouNow Agreement, and that it would not support the Props platform past the end of calendar year 2021. In connection with the notice of termination and in accordance with the YouNow Agreement, the Company received an additional 2,625,000 Props tokens. The value of these tokens was recorded as revenue under “technology service revenue” in the condensed consolidated statements of income. During the three and nine months ended September 30, 2021, the Company sold approximately 29.5 million and 32.4 million Props tokens, respectively, for proceeds of $502,314 and $806,618, respectively. The realized gain of the sale of digital tokens was approximately $53,867 and $301,160 for the three and nine months ended September 30, 2021, respectively, and is included in the condensed consolidated statements of income. |
Accrued Expenses and Other Curr
Accrued Expenses and Other Current Liabilities | 9 Months Ended |
Sep. 30, 2021 | |
Accrued Expenses and Other Ourrent Liabilities [Abstract] | |
Accrued Expenses and Other Current Liabilities | 6. Accrued Expenses and Other Current Liabilities Accrued expenses and other current liabilities consisted of the following for the periods presented: September 30, December 31, 2021 2020 Compensation, benefits and payroll taxes $ 120,375 $ 226,500 Prepaid income tax (27,674 ) - Other accrued expenses 64,996 27,584 Total accrued expenses and other current liabilities $ 157,697 $ 254,084 |
Income Taxes
Income Taxes | 9 Months Ended |
Sep. 30, 2021 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | 7. 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, 2021, our conclusion regarding the realizability of our U.S. deferred tax assets did not change and we have recorded a full valuation allowance against them. On March 11, 2021, the American Rescue Plan Act of 2021 (“American Rescue Plan”) was signed into law to provide additional relief in connection with the ongoing COVID-19 pandemic. The American Rescue Plan includes, among other things, provisions relating to PPP loan expansion, defined pension contributions, excessive employee remuneration, and the repeal of the election to allocate interest expense on a worldwide basis. Under ASC 740, the effects of new legislation are recognized upon enactment. The enactment of the American Rescue Plan did not impact on the Company’s income tax provision. For the three and nine months ended September 30, 2021, the Company recorded an income tax provision of $6,166 and $9,466, respectively, primarily related to state and local taxes. The effective tax rate for the three and nine months ended September 30, 2021 was (1.51)% and 0.70%, 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, 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. |
Stockholders' Equity
Stockholders' Equity | 9 Months Ended |
Sep. 30, 2021 | |
Stockholders' Equity Note [Abstract] | |
Stockholders' Equity | 8. 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, 2021, there were 958,063 shares available for future issuance under the 2016 Plan. August 2021 Underwritten Public Offering On August 5, 2021, the Company announced the pricing and closing of an underwritten public offering (the “August 2021 Offering”), in which the Company sold an aggregate of 1,333,310 shares of the Company’s common stock (which includes 173,910 shares sold to the underwriter pursuant to the full exercise of the underwriter’s over-allotment option) at a public offering price of $3.00 per share. The August 2021 Offering was made pursuant to the Company’s Registration Statement on Form S-1 (File No. 333-257036), initially filed with the SEC on June 11, 2021, and was subsequently amended and declared effective on August 2, 2021. Gross proceeds received by the Company from the August 2021 Offering were approximately $4.0 million, before deducting underwriting discounts and commissions and other estimated offering expenses of approximately $769,200. These costs were recorded in stockholders’ equity as a reduction of additional paid-in capital in connection with Staff Accounting Bulletin 5A. In connection with the August 2021 Offering, the Company’s common stock was approved for listing on The Nasdaq Capital Market under the symbol “PALT” and began trading on The Nasdaq Capital Market on August 3, 2021. 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. 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, 2021: Expected volatility 178%-197 % Expected life of option (in years) 5.0-5.5 Risk free interest rate 0.81-0.88 % 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, 2021: Weighted Average Number of Exercise Options Price Stock Options: Outstanding at January 1, 2021 622,036 $ 5.53 Granted 37,932 3.77 Forfeited or canceled, during the period (128,569 ) 4.06 Expired, during the period (13,427 ) 5.01 Outstanding at September 30, 2021 517,972 $ 5.78 Exercisable at September 30, 2021 446,527 $ 6.37 At September 30, 2021, there was $103,205 of total unrecognized compensation expense related to stock options, which is expected to be recognized over a weighted average period of 1.7 years. On September 30, 2021, the aggregate intrinsic value of stock options that were outstanding and exercisable was $3,186,961 and $2,578,975, respectively. On September 30, 2020, the aggregate intrinsic value of stock options that were outstanding and exercisable was $7,200 and $5,400, 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, 2021, 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 $3.20 per share. The stock options vest in four equal quarterly installments on the last day of each calendar quarter in 2021 and have a term of ten years. During the nine months ended September 30, 2021, the Company also granted options to employees to purchase an aggregate of 13,932 shares of common stock. These options vest between the grant date and up to four years, have a term of ten years and have an exercise price of $3.20 to $4.90. During the nine months ended September 30, 2021, an unvested executive performance award was forfeited and an expense reversal of $218,679 was recorded under general and administrative expense in the condensed consolidated statements of operations. The aggregate fair value for the stock options granted during the nine months ended September 30, 2021 and 2020 was $145,522 and $18,664, 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, 2021 2020 2021 2020 Cost of revenue $ 67,000 $ 386 $ 67,182 $ 1,137 Sales and marketing expense 95 21 198 61 Product development expense 2,755 4,118 8,539 15,338 General and administrative expense 23,580 43,182 (143,463 ) 177,560 Total stock compensation expense $ 93,430 $ 47,707 $ (67,544 ) $ 194,096 |
Net Income (Loss) Per Share
Net Income (Loss) Per Share | 9 Months Ended |
Sep. 30, 2021 | |
Earnings Per Share [Abstract] | |
Net Income (Loss) Per Share | 9. Net Income (Loss) Per Share Basic earnings and loss per share are computed by dividing the net income or loss available to common stockholders by the weighted average number of common shares outstanding during the period as defined by ASC Topic 260, Earnings Per Share For the three and nine months ended September 30, 2020, 625,502 and 629,671, respectively, of shares issuable upon the exercise of outstanding stock options were not included in the computation of diluted net income (loss) per share from operations because their inclusion would be antidilutive. For the three and nine months ended September 30, 2020, 6,254 and 2,085 of shares issuable upon the exercise of outstanding stock options, respectively, were included in the computation of diluted net income (loss) per share from operations because their inclusion would be dilutive. 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, 2021 2020 2021 2020 Net income (loss) from operations – basic and diluted $ (409,036 ) $ 746,848 $ 1,329,377 $ 840,005 Weighted average shares outstanding – basic 7,718,034 6,889,334 7,179,953 6,877,335 Weighted average shares outstanding – diluted 7,718,034 6,895,588 7,201,504 6,879,440 Per share data: Basic from operations $ (0.05 ) $ 0.11 $ 0.19 $ 0.12 Diluted from operations $ (0.05 ) $ 0.11 $ 0.18 $ 0.12 |
Leases
Leases | 9 Months Ended |
Sep. 30, 2021 | |
Lease of Lessee Disclosure [Abstract] | |
Leases | 10. 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 $7,081 per month. On April 9, 2021, the Company entered into a lease extension agreement with Jericho Executive Center LLC for the office space at 30 Jericho Executive Plaza in Jericho, New York, which commences on December 1, 2021 and runs through November 30, 2024. The modification resulted in an increase its ROU assets and lease liabilities of $0.2 million, using a discount rate of 2.30%. As of September 30, 2021, the Company had no long-term leases that were classified as financing leases. As of September 30, 2021, the Company did not have additional operating and financing leases that had not yet commenced. At September 30, 2021, the Company had operating lease liabilities of approximately $259,000 and right-of-use assets of approximately $259,000, which are included in the condensed consolidated balance sheets. Total rent expense for the nine months ended September 30, 2021 was $64,782, of which $3,000 was sublease income. Total rent expense for the nine months ended September 30, 2020 was $183,523, of which $36,095 was sublease income. Rent expense is recorded under general and administrative expense in the condensed consolidated statements of operations. The following table summarizes the Company’s operating leases for the periods presented: Nine Months Ended September 30, 2021 2020 Cash paid for amounts included in the measurement of operating lease liabilities $ 54,625 $ 93,123 Weighted average assumptions: Remaining lease term 3.2 1.2 Discount rate 2.3 % 3.5 % As of September 30, 2021, future minimum payments under non-cancelable operating leases were as follows: For the year ending December 31, Amount 2021 21,244 2022 84,975 2023 84,975 2024 77,894 Total $ 269,088 Less: present value adjustment (9,806 ) Present value of minimum lease payments $ 259,282 |
Term Debt
Term Debt | 9 Months Ended |
Sep. 30, 2021 | |
Debt Disclosure [Abstract] | |
Term debt | 11. 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 PPP under the CARES Act. On May 3, 2020, the Company entered into the Note in favor of the Lender. The Note had an aggregate principal amount of $506,500, a two-year term, a maturity date of May 3, 2022 and borne interest at a stated rate of 1.0% per annum. 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 provided for customary events of default, including, among others, those relating to failure to make payment, bankruptcy, breaches of representations and material adverse effects. On January 13, 2021, the Note was fully forgiven by the SBA and the Lender in compliance with the provisions of the CARES Act. |
Commitments and Contingencies
Commitments and Contingencies | 9 Months Ended |
Sep. 30, 2021 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | 12. Commitments and Contingencies Patent Litigation On July 23, 2021, a wholly owned subsidiary of the Company, Paltalk Holdings, Inc., filed a patent infringement lawsuit against WebEx Communications, Inc., Cisco WebEx LLC, and Cisco Systems, Inc. (collectively, “Cisco”), in the U.S. District Court for the Western District of Texas. The Company alleges that Cisco’s Webex products have infringed U.S. Patent No. 6,683,858, and that the Company is entitled to damages. A Markman hearing is scheduled for the first quarter of 2022. Legal Proceedings 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, 2021. |
Sale of Secured Communications
Sale of Secured Communications Assets | 9 Months Ended |
Sep. 30, 2021 | |
Sale Of Secured Communications Assets [Abstract] | |
Sale of Secured Communications Assets | 13. Sale of Secured Communications Assets 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 included 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 fifteen-month period following the closing of the Asset Sale and was recorded under other current assets in the condensed consolidated balance sheets as of December 31, 2020. 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 in the condensed consolidated statements of operations for the year ended December 31, 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, 2021 | |
Subsequent Events [Abstract] | |
Subsequent Events | 14. Subsequent Events October 2021 Underwritten Public Offering On October 19, 2021, the Company announced the pricing and closing of an underwritten public offering, in which the Company sold an aggregate of 1,552,500 shares of the Company’s common stock (which includes 202,500 shares sold to the underwriter pursuant to the full exercise of the underwriter’s over-allotment option) at a public offering price of $7.50 per share (the “October 2021 Offering”). The October 2021 Offering was made pursuant to an effective shelf registration statement on Form S-3 (File No. 333-260063), previously filed with the SEC on October 5, 2021 and declared effective on October 14, 2021. The October 2021 Offering was offered by means of a prospectus supplement and accompanying prospectus, forming part of the registration statement. Gross proceeds received by the Company from the October 2021 Offering before deducting underwriting discounts, commissions and other offering expenses were approximately $11.6 million, inclusive of the over-allotment option. Management has evaluated subsequent events or transactions occurring through the date the condensed consolidated financial statements were issued and determined that no other events or transactions are required to be disclosed herein. |
Accounting Policies, by Policy
Accounting Policies, by Policy (Policies) | 9 Months Ended |
Sep. 30, 2021 | |
Accounting Policies [Abstract] | |
Deferred Offering Costs | Deferred Offering Costs The Company capitalizes certain legal and professional fees that are directly related to public offerings of common stock as deferred offering costs until such financing is consummated. See Note 8 for more information regarding the Company’s recent public offerings of common stock. At the consummation of such equity financing, these costs are recorded in stockholders’ equity as a reduction of additional paid-in capital generated. For a detailed discussion about the Company’s significant accounting policies, see the Form 10-K. During the nine months ended September 30, 2021, there were no other significant changes made to the Company’s significant accounting policies. |
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 (“ASU”) No. 2019-12, “Income Taxes (Topic 740) Simplifying the Accounting for Income Taxes”, as part of its initiative to reduce complexity in the accounting standards. The ASU eliminates certain exceptions from Accounting Standards Codification (“ASC”) 740 related to the approach for intra-period tax allocation, the methodology for calculating income taxes in an interim period and the recognition of deferred tax liabilities for outside basis differences. ASU 2019-12 also clarifies and simplifies other aspects of the accounting for income taxes. The guidance is effective for fiscal years beginning after December 15, 2020 and for interim periods within those fiscal years. The Company adopted ASU 2019-12 on January 1, 2021. The adoption of this standard did not have a material impact on the Company’s consolidated financial statements. |
Fair Value Measurements | Fair Value Measurements The fair value framework under the guidance issued by the FASB requires the categorization of assets and liabilities into three levels based upon the assumptions used to measure the assets or liabilities. Level 1 provides the most reliable measure of fair value, whereas Level 3, if applicable, would generally require significant management judgment. The three levels for categorizing assets and liabilities under the fair value measurement requirements are as follows: ● Level 1: Fair value measurement of the asset or liability using observable inputs such as quoted prices in active markets for identical assets or liabilities; ● Level 2: Fair value measurement of the asset or liability using inputs other than quoted prices that are observable for the applicable asset or liability, either directly or indirectly, such as quoted prices for similar (as opposed to identical) assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are not active; and ● Level 3: Fair value measurement of the asset or liability using unobservable inputs that reflect the Company’s own assumptions regarding the applicable asset or liability. The Company reviews the appropriateness of fair value measurements including validation processes, and the reconciliation of period-over-period fluctuations based on changes in key market inputs. All fair value measurements are subject to the Company’s analysis. Review and approval by management is required as part of the validation process. The carrying amounts of the Company’s cash and cash equivalents, accounts receivable and accounts payable, approximate fair value due to the short-term nature of these instruments. |
Revenue Recognition | Revenue Recognition In accordance with 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, 2021 and 2020, 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, 2020 was $2,058,721, of which $1,529,597 was subsequently recognized as subscription revenue during the nine months ended September 30, 2021. The ending balance of deferred revenue at September 30, 2021 was $1,858,955. 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 condensed consolidated balance sheets until virtual gifts are redeemed. Virtual gift revenue was $1,450,757 and $4,259,933 for the three and nine months ended September 30, 2021, respectively. Virtual gift revenue was $1,288,717 and $3,931,151 for the three and nine months ended September 30, 2020, respectively. The ending balance of deferred revenue from virtual gifts at September 30, 2021 and 2020 was $305,767 and $276,661, 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 Service Revenue The Company records technology service revenue in connection with its agreement to serve as a launch partner with Open Props, Inc. (formerly YouNow, Inc., and referred to herein as “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 Company’s Paltalk application. In determining the value of the contract, the Company converted the Props tokens into U.S. dollars using an independent third-party valuation. The Props tokens were estimated to have a price equal to $0.02 per token (see Note 5 for additional information on the fair value of the Props tokens) at the contract inception date. The total contract value to be recognized was estimated to be $210,000, which was recognized on the completion dates of the integration services performed during the second and third quarter of 2020. The upfront fee was 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 year ended December 31, 2020, the Company recognized $60,000 of the upfront fee and $150,000 from the completion of the first and second integration milestones under technology service revenue in the condensed consolidated statements of operations and digital tokens receivable in the condensed consolidated balance sheets. Once the integration of Props tokens to the Paltalk and Camfrog applications was completed, the Company began receiving Props tokens for providing a validator service and for allowing users to participate in the loyalty platform. The loyalty platform is intended to drive engagement and incentivize users financially by providing users with the ability to earn Props tokens while using the Paltalk and Camfrog applications. During the third and fourth quarters of 2020, the Company received an aggregate of 1.1 million Props tokens for the validator service and 13.5 million Props tokens under the loyalty platform. During the three and nine months ended September 30, 2021, the Company received 104 thousand and 455 thousand Props tokens, respectively, for the validator service and 3.0 million and 10.2 million Props tokens under the loyalty platform. The number of Props tokens earned and reserved by users for the nine months ended September 30, 2021 and for the year ended December 31, 2020 was 8.2 million and 4.0 million, respectively, which is recorded under “digital tokens payable” in the condensed consolidated balance sheets and the net revenue earned is recorded under “technology service revenue” in the condensed consolidated statements of operations. The total net revenue value is recognized as earned. For the year ended December 31, 2020, the Company retained an independent third-party to estimate the dollar value of the revenue for the validator service and digital tokens earned through the loyalty platform. Given the recent trading availability of Props tokens in various active markets, during the three and nine months ended September 30, 2021, the Company calculated the fair value of digital tokens based on the observable daily quoted market prices (Level 1 inputs) on multiple international exchanges, as recorded on CoinmarketCap (see Note 5 for additional information on the fair value of the Props tokens). The total net revenue value recognized as earned was estimated to be $77,507 and $451,755 for the three and nine months ended September 30, 2021, respectively. In August 2021, the Company received notice from YouNow that it was terminating the YouNow Agreement, and that it would not support the Props platform past the end of calendar year 2021. In connection with the notice of termination and in accordance with the YouNow Agreement, the Company received an additional 2,625,000 Props tokens. The value of these tokens was recorded as revenue under “technology service revenue” in the condensed consolidated statements of income. During the three and nine months ended September 30, 2021, the Company sold approximately 29.5 million and 32.4 million Props tokens, respectively, for proceeds of $502,314 and $806,618, respectively. The realized gain of the sale of digital tokens was approximately $53,867 and $301,160 for the three and nine months ended September 30, 2021, respectively, and is included in the condensed consolidated statements of income. 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 revenue 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. |
Reclassifications | Reclassifications Certain prior period amounts have been reclassified for comparative purposes to conform to the current presentation. These reclassifications have no impact on the previously reported net income. |
Property and Equipment, Net (Ta
Property and Equipment, Net (Tables) | 9 Months Ended |
Sep. 30, 2021 | |
Property, Plant and Equipment [Abstract] | |
Schedule of property and equipment, net | September 30, December 31, 2021 2020 Computer equipment $ 866,459 $ 866,459 Website development 3,076,323 3,076,323 Furniture and fixtures 47,463 47,463 Total property and equipment 3,990,245 3,990,245 Less: Accumulated depreciation (3,882,415 ) (3,734,468 ) Total property and equipment, net $ 107,830 $ 255,777 |
Intangible Assets, Net (Tables)
Intangible Assets, Net (Tables) | 9 Months Ended |
Sep. 30, 2021 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of intangible assets, net | September 30, 2021 December 31, 2020 Gross Net Gross Net Carrying Accumulated Carrying Carrying Accumulated Carrying Amount Amortization Amount Amount Amortization Amount Patents $ 50,000 $ (30,625 ) $ 19,375 $ 50,000 $ (28,750 ) $ 21,250 Trade names, trademarks product names, URLs 555,000 (505,273 ) 49,727 555,000 (493,648 ) 61,352 Internally developed software 1,990,000 (1,990,000 ) - 1,990,000 (1,990,000 ) - Subscriber/customer relationships 2,279,000 (2,105,392 ) 173,608 2,279,000 (1,980,392 ) 298,608 Total intangible assets $ 4,874,000 $ (4,631,290 ) $ 242,710 $ 4,874,000 $ (4,492,790 ) $ 381,210 |
Digital Tokens (Tables)
Digital Tokens (Tables) | 9 Months Ended |
Sep. 30, 2021 | |
Digital Tokens [Abstract] | |
Schedule of the key inputs used in the Backsolve model | 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, 2021 | |
Accrued Expenses and Other Ourrent Liabilities [Abstract] | |
Schedule of accrued expenses and other current liabilities | September 30, December 31, 2021 2020 Compensation, benefits and payroll taxes $ 120,375 $ 226,500 Prepaid income tax (27,674 ) - Other accrued expenses 64,996 27,584 Total accrued expenses and other current liabilities $ 157,697 $ 254,084 |
Stockholders' Equity (Tables)
Stockholders' Equity (Tables) | 9 Months Ended |
Sep. 30, 2021 | |
Stockholders' Equity Note [Abstract] | |
Schedule of assumptions used in Black-Scholes pricing model to estimate the fair value of the options granted | Expected volatility 178%-197 % Expected life of option (in years) 5.0-5.5 Risk free interest rate 0.81-0.88 % Expected dividend yield 0.0 % |
Schedule of stock option activity | Weighted Average Number of Exercise Options Price Stock Options: Outstanding at January 1, 2021 622,036 $ 5.53 Granted 37,932 3.77 Forfeited or canceled, during the period (128,569 ) 4.06 Expired, during the period (13,427 ) 5.01 Outstanding at September 30, 2021 517,972 $ 5.78 Exercisable at September 30, 2021 446,527 $ 6.37 |
Schedule of stock-based compensation expense | Three Months Ended Nine Months Ended September 30, September 30, 2021 2020 2021 2020 Cost of revenue $ 67,000 $ 386 $ 67,182 $ 1,137 Sales and marketing expense 95 21 198 61 Product development expense 2,755 4,118 8,539 15,338 General and administrative expense 23,580 43,182 (143,463 ) 177,560 Total stock compensation expense $ 93,430 $ 47,707 $ (67,544 ) $ 194,096 |
Net Income (Loss) Per Share (Ta
Net Income (Loss) Per Share (Tables) | 9 Months Ended |
Sep. 30, 2021 | |
Earnings Per Share [Abstract] | |
Schedule of net income (loss) per share | Three Months Ended Nine Months Ended September 30, September 30, 2021 2020 2021 2020 Net income (loss) from operations – basic and diluted $ (409,036 ) $ 746,848 $ 1,329,377 $ 840,005 Weighted average shares outstanding – basic 7,718,034 6,889,334 7,179,953 6,877,335 Weighted average shares outstanding – diluted 7,718,034 6,895,588 7,201,504 6,879,440 Per share data: Basic from operations $ (0.05 ) $ 0.11 $ 0.19 $ 0.12 Diluted from operations $ (0.05 ) $ 0.11 $ 0.18 $ 0.12 |
Leases (Tables)
Leases (Tables) | 9 Months Ended |
Sep. 30, 2021 | |
Lease Of Lessee Disclosure [Abstract] | |
Schedule of operating leases | Nine Months Ended September 30, 2021 2020 Cash paid for amounts included in the measurement of operating lease liabilities $ 54,625 $ 93,123 Weighted average assumptions: Remaining lease term 3.2 1.2 Discount rate 2.3 % 3.5 % |
Schedule of future minimum payments under non-cancelable operating leases | For the year ending December 31, Amount 2021 21,244 2022 84,975 2023 84,975 2024 77,894 Total $ 269,088 Less: present value adjustment (9,806 ) Present value of minimum lease payments $ 259,282 |
Organization and Description _2
Organization and Description of Business (Details) | May 03, 2020USD ($) |
Accounting Policies [Abstract] | |
Principal amount | $ 506,500 |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Details) - USD ($) | 1 Months Ended | 3 Months Ended | 9 Months Ended | |||
Aug. 31, 2021 | Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | Dec. 31, 2020 | |
Summary of Significant Accounting Policies (Details) [Line Items] | ||||||
Deferred revenue | $ 1,858,955 | $ 1,858,955 | $ 2,058,721 | |||
Subscription revenue recognized | $ 1,529,597 | |||||
Subscription revenue, description | 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. | |||||
Total net revenue | 77,507 | $ 451,755 | ||||
Sale of props tokens | 29,500,000 | 32,400,000 | ||||
Proceeds from props tokens | 502,314 | 806,618 | ||||
Gain on sale of props tokens | 53,867 | $ 301,160 | ||||
Loyalty Platform [Member] | ||||||
Summary of Significant Accounting Policies (Details) [Line Items] | ||||||
Loyalty platform, description | The loyalty platform is intended to drive engagement and incentivize users financially by providing users with the ability to earn Props tokens while using the Paltalk and Camfrog applications. During the third and fourth quarters of 2020, the Company received an aggregate of 1.1 million Props tokens for the validator service and 13.5 million Props tokens under the loyalty platform. During the three and nine months ended September 30, 2021, the Company received 104 thousand and 455 thousand Props tokens, respectively, for the validator service and 3.0 million and 10.2 million Props tokens under the loyalty platform. The number of Props tokens earned and reserved by users for the nine months ended September 30, 2021 and for the year ended December 31, 2020 was 8.2 million and 4.0 million, respectively, which is recorded under “digital tokens payable” in the condensed consolidated balance sheets and the net revenue earned is recorded under “technology service revenue” in the condensed consolidated statements of operations. The total net revenue value is recognized as earned. | |||||
Subscription Arrangement [Member] | ||||||
Summary of Significant Accounting Policies (Details) [Line Items] | ||||||
Virtual gift revenue | $ 1,450,757 | $ 1,288,717 | $ 4,259,933 | $ 3,931,151 | ||
Deferred revenue from virtual gifts | $ 305,767 | $ 276,661 | ||||
YouNow Agreement [Member] | ||||||
Summary of Significant Accounting Policies (Details) [Line Items] | ||||||
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 Company’s Paltalk application. In determining the value of the contract, the Company converted the Props tokens into U.S. dollars using an independent third-party valuation. The Props tokens were estimated to have a price equal to $0.02 per token (see Note 5 for additional information on the fair value of the Props tokens) at the contract inception date. The total contract value to be recognized was estimated to be $210,000, which was recognized on the completion dates of the integration services performed during the second and third quarter of 2020. | |||||
Description of payments milestone | The upfront fee was 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 year ended December 31, 2020, the Company recognized $60,000 of the upfront fee and $150,000 from the completion of the first and second integration milestones under technology service revenue in the condensed consolidated statements of operations and digital tokens receivable in the condensed consolidated balance sheets. | |||||
Additional props tokens received (in Shares) | 2,625,000 |
Property and Equipment, Net (De
Property and Equipment, Net (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | |
Property, Plant and Equipment [Abstract] | ||||
Depreciation expense | $ 46,090 | $ 77,888 | $ 147,947 | $ 249,614 |
Property and Equipment, Net (_2
Property and Equipment, Net (Details) - Schedule of property and equipment, net - USD ($) | Sep. 30, 2021 | Dec. 31, 2020 |
Property, Plant and Equipment [Line Items] | ||
Total property and equipment | $ 3,990,245 | $ 3,990,245 |
Less: Accumulated depreciation | (3,882,415) | (3,734,468) |
Total property and equipment, net | 107,830 | 255,777 |
Computer equipment [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Total property and equipment | 866,459 | 866,459 |
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 | $ 47,463 | $ 47,463 |
Intangible Assets, Net (Details
Intangible Assets, Net (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | |
Goodwill and Intangible Assets Disclosure [Abstract] | ||||
Amortization expense | $ 46,167 | $ 64,083 | $ 138,500 | $ 192,250 |
Estimated aggregate amortization expense for 2021 | 46,166 | 46,166 | ||
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 2025 | 2,500 | 2,500 | ||
Estimated aggregate amortization expense for thereafter | $ 8,746 | $ 8,746 |
Intangible Assets, Net (Detai_2
Intangible Assets, Net (Details) - Schedule of intangible assets, net - USD ($) | Sep. 30, 2021 | Dec. 31, 2020 |
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | $ 4,874,000 | $ 4,874,000 |
Accumulated Amortization | (4,631,290) | (4,492,790) |
Net Carrying Amount | 242,710 | 381,210 |
Patents [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | 50,000 | 50,000 |
Accumulated Amortization | (30,625) | (28,750) |
Net Carrying Amount | 19,375 | 21,250 |
Trade names, trademarks, product names, URLs [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | 555,000 | 555,000 |
Accumulated Amortization | (505,273) | (493,648) |
Net Carrying Amount | 49,727 | 61,352 |
Internally developed software [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | 1,990,000 | 1,990,000 |
Accumulated Amortization | (1,990,000) | (1,990,000) |
Net Carrying Amount | ||
Subscriber/customer relationships [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | 2,279,000 | 2,279,000 |
Accumulated Amortization | (2,105,392) | (1,980,392) |
Net Carrying Amount | $ 173,608 | $ 298,608 |
Digital Tokens (Details)
Digital Tokens (Details) | 1 Months Ended | 3 Months Ended | 6 Months Ended | 9 Months Ended | 12 Months Ended |
Aug. 31, 2021shares | Sep. 30, 2021USD ($) | Dec. 31, 2020USD ($)$ / shares | Sep. 30, 2021USD ($)$ / shares | Dec. 31, 2020USD ($)$ / shares$ / item | |
Digital Tokens (Details) [Line Items] | |||||
Props token purchase price (in Dollars per Item) | $ / item | 0.07 | ||||
Fair value (in Dollars per share) | $ / shares | $ 0.039 | $ 0.02 | |||
Digital tokens | $ 53,899 | $ 439,145 | $ 53,899 | $ 439,145 | |
Digital tokens payable | 333,446 | 123,397 | 333,446 | 123,397 | |
Digital tokens receivable | $ 210,000 | $ 210,000 | |||
Digital tokens amount | 53,899 | ||||
Non-cash impairment charge | 571,458 | 756,195 | |||
Sale of props tokens | 29,500,000 | 32,400,000 | |||
Proceeds from props tokens | 502,314 | 806,618 | |||
Gain on sale of digital tokens | $ 53,867 | $ 301,160 | |||
Warrant [Member] | |||||
Digital Tokens (Details) [Line Items] | |||||
Strike price (in Dollars per share) | $ / shares | $ 0.07 | ||||
YouNow Agreement [Member] | |||||
Digital Tokens (Details) [Line Items] | |||||
Additional props tokens received (in Shares) | shares | 2,625,000 |
Digital Tokens (Details) - Sche
Digital Tokens (Details) - Schedule of the key inputs used in the Backsolve model | 12 Months Ended |
Dec. 31, 2020 | |
Schedule of the key inputs used in the Backsolve model [Abstract] | |
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, 2021 | Dec. 31, 2020 |
Schedule of accrued expenses and other current liabilities [Abstract] | ||
Compensation, benefits and payroll taxes | $ 120,375 | $ 226,500 |
Prepaid income tax | (27,674) | |
Other accrued expenses | 64,996 | 27,584 |
Total accrued expenses and other current liabilities | $ 157,697 | $ 254,084 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | |
Income Tax Disclosure [Abstract] | ||||
Income tax provision (in Dollars) | $ 6,166 | $ 9,466 | ||
Effective tax rate from statutory rate | 1.51% | 0.44% | 0.70% | 0.20% |
Effective tax rate differs from the statutory rate | 21.00% | 21.00% | ||
Income tax benefit from continuing operations (in Dollars) | $ 3,300 | $ 1,700 |
Stockholders' Equity (Details)
Stockholders' Equity (Details) - USD ($) | Aug. 05, 2021 | Aug. 31, 2021 | Apr. 29, 2019 | May 16, 2016 | Sep. 30, 2021 | Sep. 30, 2020 |
Stockholders' Equity (Details) [Line Items] | ||||||
Gross proceeds | $ 3,230,739 | |||||
Repurchased shares of common stock | $ 500,000 | |||||
Repurchase plan expires date | Apr. 29, 2020 | |||||
Repurchase of common stock shares (in Shares) | 9,950 | |||||
Total unrecognized compensation expense | $ 103,205 | |||||
Weighted average expected recognition period of unrecognized compensation expense | 1 year 8 months 12 days | |||||
Aggregate intrinsic value of stock options, outstanding | $ 3,186,961 | 7,200 | ||||
Aggregate intrinsic value of stock options, exercisable | $ 2,578,975 | 5,400 | ||||
Purchase an aggregate of common stock (in Shares) | 24,000 | |||||
Exercise price per share (in Dollars per share) | $ 3.2 | |||||
Stock options, term | 10 years | |||||
Aggregate of shares of common stock (in Shares) | 13,932 | |||||
General and administrative expense | $ 218,679 | |||||
Aggregate fair value of options granted | $ 145,522 | $ 18,664 | ||||
Stock Compensation Plan One [Member] | ||||||
Stockholders' Equity (Details) [Line Items] | ||||||
Number of shares issued under plan (in Shares) | 121,930 | |||||
Stock Compensation Plan [Member] | ||||||
Stockholders' Equity (Details) [Line Items] | ||||||
Number of shares issued under plan (in Shares) | 1,300,000 | |||||
Percentage of common stock delivered pursuant to incentive stock options | 100.00% | |||||
Minimum [Member] | ||||||
Stockholders' Equity (Details) [Line Items] | ||||||
Exercise price (in Dollars per share) | $ 3.2 | |||||
Maximum [Member] | ||||||
Stockholders' Equity (Details) [Line Items] | ||||||
Exercise price (in Dollars per share) | $ 4.9 | |||||
2016 Plan [Member] | ||||||
Stockholders' Equity (Details) [Line Items] | ||||||
Number of stock available for future issuance (in Shares) | 958,063 | |||||
August 2021 Underwritten Public Offering [Member] | ||||||
Stockholders' Equity (Details) [Line Items] | ||||||
Sale of stock (in Shares) | 1,333,310 | |||||
Sale of stock to underwriter (in Shares) | 173,910 | |||||
Price per share (in Dollars per share) | $ 3 | |||||
Gross proceeds | $ 4,000,000 | |||||
Offering expenses | $ 769,200 |
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, 2021 | |
Stockholders' Equity (Details) - Schedule of assumptions used in Black-Scholes pricing model to estimate the fair value of the options granted [Line Items] | |
Expected dividend yield | 0.00% |
Minimum [Member] | |
Stockholders' Equity (Details) - Schedule of assumptions used in Black-Scholes pricing model to estimate the fair value of the options granted [Line Items] | |
Expected volatility | 178.00% |
Expected life of option (in years) | 5 years |
Risk free interest rate | 0.81% |
Maximum [Member] | |
Stockholders' Equity (Details) - Schedule of assumptions used in Black-Scholes pricing model to estimate the fair value of the options granted [Line Items] | |
Expected volatility | 197.00% |
Expected life of option (in years) | 5 years 6 months |
Risk free interest rate | 0.88% |
Stockholders' Equity (Details_2
Stockholders' Equity (Details) - Schedule of stock option activity | 9 Months Ended |
Sep. 30, 2021$ / sharesshares | |
Stock Options: | |
Number of Options, Outstanding beginning balance | shares | 622,036 |
Weighted Average Exercise Price, Outstanding beginning balance | $ / shares | $ 5.53 |
Number of Options, Granted | shares | 37,932 |
Weighted Average Exercise Price, Granted | $ / shares | $ 3.77 |
Number of Options, Forfeited or canceled, during the period | shares | (128,569) |
Weighted Average Exercise Price, Forfeited or canceled, during the period | $ / shares | $ 4.06 |
Number of Options, Expired, during the period | shares | (13,427) |
Weighted Average Exercise Price, Expired, during the period | $ / shares | $ 5.01 |
Number of Options, Outstanding ending balance | shares | 517,972 |
Weighted Average Exercise Price, Outstanding ending balance | $ / shares | $ 5.78 |
Number of Options, Exercisable | shares | 446,527 |
Weighted Average Exercise Price, Exercisable | $ / shares | $ 6.37 |
Stockholders' Equity (Details_3
Stockholders' Equity (Details) - Schedule of stock-based compensation expense - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Total stock compensation expense | $ 93,430 | $ 47,707 | $ (67,544) | $ 194,096 |
Cost of revenue [Member] | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Total stock compensation expense | 67,000 | 386 | 67,182 | 1,137 |
Sales and marketing expense [Member] | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Total stock compensation expense | 95 | 21 | 198 | 61 |
Product development expense [Member] | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Total stock compensation expense | 2,755 | 4,118 | 8,539 | 15,338 |
General and administrative expense [Member] | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Total stock compensation expense | $ 23,580 | $ 43,182 | $ (143,463) | $ 177,560 |
Net Income (Loss) Per Share (De
Net Income (Loss) Per Share (Details) - shares | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | |
Earnings Per Share [Abstract] | ||||
Exercise of outstanding stock options | 517,972 | 625,502 | 496,421 | 629,671 |
Shares issued on exercise of outstanding stock options | 21,551 | |||
Exercise of outstanding stock options | 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, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | |
Schedule of net income (loss) per share [Abstract] | ||||
Net income (loss) from operations – basic and diluted | $ (409,036) | $ 746,848 | $ 1,329,377 | $ 840,005 |
Weighted average shares outstanding – basic | 7,718,034 | 6,889,334 | 7,179,953 | 6,877,335 |
Weighted average shares outstanding – diluted | 7,718,034 | 6,895,588 | 7,201,504 | 6,879,440 |
Per share data: | ||||
Basic from operations | $ (0.05) | $ 0.11 | $ 0.19 | $ 0.12 |
Diluted from operations | $ (0.05) | $ 0.11 | $ 0.18 | $ 0.12 |
Leases (Details)
Leases (Details) - USD ($) | Jun. 07, 2016 | Sep. 30, 2021 | Sep. 30, 2020 |
Lease Of Lessee Disclosure [Abstract] | |||
Operating lease, description | 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. | ||
Office rent payment | $ 7,081 | $ 0.2 | |
Discount rate | 2.30% | ||
Operating lease right-of-use asset | $ 259,000 | ||
Operating lease liabilities | 259,000 | ||
Rent expenses | 64,782 | $ 183,523 | |
Sublease income | $ 3,000 | $ 36,095 |
Leases (Details) - Schedule of
Leases (Details) - Schedule of operating leases - USD ($) | 9 Months Ended | |
Sep. 30, 2021 | Sep. 30, 2020 | |
Schedule of operating leases [Abstract] | ||
Cash paid for amounts included in the measurement of operating lease liabilities | $ 54,625 | $ 93,123 |
Weighted average assumptions: | ||
Remaining lease term | 3 years 2 months 12 days | 1 year 2 months 12 days |
Discount rate | 2.30% | 3.50% |
Leases (Details) - Schedule o_2
Leases (Details) - Schedule of future minimum payments under non-cancelable operating leases | 9 Months Ended |
Sep. 30, 2021USD ($) | |
Schedule of future minimum payments under non-cancelable operating leases [Abstract] | |
2021 | $ 21,244 |
2022 | 84,975 |
2023 | 84,975 |
2024 | 77,894 |
Total | 269,088 |
Less: present value adjustment | (9,806) |
Present value of minimum lease payments | $ 259,282 |
Term Debt (Details)
Term Debt (Details) | 9 Months Ended |
Sep. 30, 2021USD ($) | |
Debt Disclosure [Abstract] | |
Term debt description | The Note had an aggregate principal amount of $506,500, a two-year term, a maturity date of May 3, 2022 and borne interest at a stated rate of 1.0% per annum. |
Principal amount | $ 506,500 |
Interest rate per annum | 1.00% |
Sale of Secured Communication_2
Sale of Secured Communications Assets (Details) | 1 Months Ended |
Jul. 23, 2020 | |
Sale Of Secured Communications Assets [Abstract] | |
Asset sale for a cash purchase price, 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 fifteen-month period following the closing of the Asset Sale and was recorded under other current assets in the condensed consolidated balance sheets as of December 31, 2020. 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 $500,000. |
Subsequent Events (Details)
Subsequent Events (Details) - Subsequent Event [Member] - USD ($) | 1 Months Ended | |
Oct. 31, 2021 | Oct. 19, 2021 | |
Subsequent Events (Details) [Line Items] | ||
Aggregate public offering | 1,552,500 | |
Public offering price (in Dollars per share) | $ 7.5 | |
Underwriting discounts, commissions and other offering expenses (in Dollars) | $ 11.6 | |
Underwriter [Member] | ||
Subsequent Events (Details) [Line Items] | ||
Sale of stock shares | 202,500 |