Document And Entity Information
Document And Entity Information - shares | 6 Months Ended | |
Jun. 30, 2022 | Aug. 04, 2022 | |
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 | 9,722,157 | |
Amendment Flag | false | |
Entity Central Index Key | 0001355839 | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Document Period End Date | Jun. 30, 2022 | |
Document Fiscal Year Focus | 2022 | |
Document Fiscal Period Focus | Q2 | |
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, $0.001 par value | |
Security Exchange Name | NASDAQ | |
Entity Interactive Data Current | Yes |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) | Jun. 30, 2022 | Dec. 31, 2021 |
Current assets: | ||
Cash and cash equivalents | $ 16,850,818 | $ 21,636,860 |
Accounts receivable, net of allowances of $3,648 as of June 30, 2022 and December 31, 2021 | 106,791 | 153,448 |
Prepaid expense and other current assets | 359,944 | 239,258 |
Total current assets | 17,317,553 | 22,029,566 |
Operating lease right-of-use asset | 199,567 | 239,491 |
Property and equipment, net | 17,681 | 69,599 |
Goodwill | 6,326,250 | 6,326,250 |
Intangible assets, net | 3,799,442 | 196,543 |
Digital tokens | 7,262 | |
Other assets | 13,937 | 13,937 |
Total assets | 27,674,430 | 28,882,648 |
Current liabilities: | ||
Accounts payable | 1,464,732 | 1,332,632 |
Accrued expenses and other current liabilities | 182,409 | 344,441 |
Operating lease liabilities, current portion | 81,237 | 80,309 |
Deferred subscription revenue | 1,839,849 | 1,915,493 |
Total current liabilities | 3,568,227 | 3,672,875 |
Operating lease liabilities, non-current portion | 118,330 | 159,182 |
Deferred tax liability | 806,493 | |
Total liabilities | 4,493,050 | 3,832,057 |
Commitments and contingencies (Note 11) | ||
Stockholders’ equity: | ||
Common stock, $0.001 par value, 25,000,000 shares authorized, 9,864,120 shares issued as of June 30, 2022 and December 31, 2021 and 9,722,157 and 9,832,157 shares outstanding as of June 30, 2022 and December 31, 2021, respectively | 9,864 | 9,864 |
Treasury stock, 141,963 and 31,963 shares as of June 30, 2022 and December 31, 2021, respectively | (407,380) | (194,200) |
Additional paid-in capital | 35,851,530 | 35,639,910 |
Accumulated deficit | (12,272,634) | (10,404,983) |
Total stockholders’ equity | 23,181,380 | 25,050,591 |
Total liabilities and stockholders’ equity | $ 27,674,430 | $ 28,882,648 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Parentheticals) - USD ($) | Jun. 30, 2022 | Dec. 31, 2021 |
Statement of Financial Position [Abstract] | ||
Net of allowances (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 | 9,864,120 | 9,864,120 |
Common stock, shares outstanding | 9,722,157 | 9,832,157 |
Treasury stock | 141,963 | 31,963 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations (Unaudited) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2022 | Jun. 30, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | |
Revenues: | ||||
Subscription revenue | $ 2,560,706 | $ 3,121,909 | $ 5,407,045 | $ 6,261,274 |
Advertising revenue | 83,762 | 75,462 | 164,124 | 152,283 |
Technology service revenue | 218,432 | 374,248 | ||
Total revenues | 2,644,468 | 3,415,803 | 5,571,169 | 6,787,805 |
Costs and expenses: | ||||
Cost of revenue | 661,548 | 630,582 | 1,313,644 | 1,277,297 |
Sales and marketing expense | 484,133 | 255,204 | 895,615 | 512,655 |
Product development expense | 1,521,764 | 1,298,767 | 3,051,905 | 2,596,031 |
General and administrative expense | 1,053,347 | 469,502 | 2,099,495 | 1,231,212 |
Impairment loss on digital tokens | 7,262 | 184,737 | 7,262 | 184,737 |
Total costs and expenses | 3,728,054 | 2,838,792 | 7,367,921 | 5,801,932 |
(Loss) income from operations | (1,083,586) | 577,011 | (1,796,752) | 985,873 |
Interest (expense) income, net | (1,595) | (420) | (3,457) | 2,047 |
Gain on extinguishment of term debt | 506,500 | |||
Realized gain from the sale of digital tokens | 247,293 | 247,293 | ||
Other expense, net | (38,772) | (46,658) | ||
(Loss) income from operations before provision for income taxes | (1,123,953) | 823,884 | (1,846,867) | 1,741,713 |
Provision for income taxes | (4,753) | (2,200) | (20,784) | (3,300) |
Net (loss) income | $ (1,128,706) | $ 821,684 | $ (1,867,651) | $ 1,738,413 |
Net (loss) income per share of common stock: | ||||
Basic (in Dollars per share) | $ (0.12) | $ 0.12 | $ (0.19) | $ 0.25 |
Diluted (in Dollars per share) | $ (0.12) | $ 0.12 | $ (0.19) | $ 0.25 |
Weighted average number of shares of common stock used in calculating net (loss) income per share of common stock: | ||||
Basic (in Shares) | 9,771,608 | 6,906,454 | 9,801,715 | 6,906,454 |
Diluted (in Shares) | 9,771,608 | 6,930,041 | 9,801,715 | 6,918,248 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Changes in Stockholders’ Equity (Unaudited) - USD ($) | Common Stock | Treasury Stock | Additional Paid- in Capital | Accumulated Deficit | Total |
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) | |||
Stock-based compensation expense | (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) | |||
Balance at Dec. 31, 2021 | $ 9,864 | $ (194,200) | 35,639,910 | (10,404,983) | 25,050,591 |
Balance (in Shares) at Dec. 31, 2021 | 9,864,120 | (31,963) | |||
Stock-based compensation expense | 152,471 | 152,471 | |||
Net income (loss) | (738,945) | (738,945) | |||
Balance at Mar. 31, 2022 | $ 9,864 | $ (194,200) | 35,792,381 | (11,143,928) | 24,464,117 |
Balance (in Shares) at Mar. 31, 2022 | 9,864,120 | (31,963) | |||
Stock-based compensation expense | 59,149 | 59,149 | |||
Repurchases of common stock | $ (213,180) | (213,180) | |||
Repurchases of common stock (in Shares) | (110,000) | ||||
Net income (loss) | (1,128,706) | (1,128,706) | |||
Balance at Jun. 30, 2022 | $ 9,864 | $ (407,380) | $ 35,851,530 | $ (12,272,634) | $ 23,181,380 |
Balance (in Shares) at Jun. 30, 2022 | 9,864,120 | (141,963) |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) | 6 Months Ended | |
Jun. 30, 2022 | Jun. 30, 2021 | |
Cash flows from operating activities: | ||
Net (loss) income | $ (1,867,651) | $ 1,738,413 |
Adjustments to reconcile net (loss) income from operations to net cash (used in) provided by operating activities: | ||
Depreciation of property and equipment | 51,918 | 101,856 |
Amortization of intangible assets | 132,522 | 92,333 |
Amortization of operating lease right-of-use assets | 39,924 | 34,021 |
Impairment loss on digital tokens | 7,262 | 184,737 |
Realized gain from the sale of digital tokens | (247,293) | |
Gain on extinguishment of term debt | (506,500) | |
Stock-based compensation | 211,620 | (160,974) |
Bad debt expense | (3,235) | |
Changes in operating assets and liabilities: | ||
Digital tokens | (733,835) | |
Accounts receivable | 46,657 | 22,384 |
Digital tokens receivable | 210,000 | |
Operating lease liability | (39,924) | (34,021) |
Digital tokens payable | 149,587 | |
Deferred offering costs | (212,420) | |
Prepaid expense and other current assets | (120,686) | 28,620 |
Accounts payable, accrued expenses and other current liabilities | (29,932) | (4,327) |
Deferred subscription revenue | (75,644) | (47,358) |
Net cash (used in) provided by operating activities | (1,643,934) | 611,988 |
Cash flows from investing activities: | ||
Acquisition of ManyCam assets | (2,700,000) | |
Acquisition related costs of ManyCam assets | (228,928) | |
Proceeds from the sale of digital tokens | 304,304 | |
Net cash (used in) provided by investing activities | (2,928,928) | 304,304 |
Cash flows from financing activities: | ||
Purchase of treasury stock | (213,180) | |
Net cash used in financing activities | (213,180) | |
Net (decrease) increase in cash and cash equivalents | (4,786,042) | 916,292 |
Balance of cash and cash equivalents at beginning of period | 21,636,860 | 5,585,420 |
Balance of cash and cash equivalents at end of period | 16,850,818 | 6,501,712 |
Supplemental disclosure of cash flow information: | ||
Interest | ||
Taxes | ||
Non-cash investing and financing activities: | ||
Write-off of property and equipment | 1,475,649 | |
Deferred tax liability associated with the acquisition of ManyCam assets | $ 806,493 |
Organization and Description of
Organization and Description of Business | 6 Months Ended |
Jun. 30, 2022 | |
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., ManyCam ULC, 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’s product portfolio includes Paltalk, Camfrog and Tinychat, which together host and serve a large collection of video-based communities. The Company’s other products include ManyCam and Vumber. ManyCam is a live streaming software and virtual camera that allows users to deliver professional live videos on streaming platforms, video conferencing apps and distance learning tools On June 9, 2022 (the “Effective Date”), the Company entered into a Securities Purchase Agreement (the “Securities Purchase Agreement”) by and among the Company, ManyCam ULC, an unlimited liability company incorporated under the laws of the Province of Alberta and a wholly owned subsidiary of the Company (the “Purchaser”), Visicom Media Inc., a Canadian corporation (the “Visicom”), and 2434936 Alberta ULC, an unlimited liability company incorporated under the laws of the Province of Alberta (“Target NewCo”), pursuant to which the Purchaser purchased, effective as of the Effective Date, all of the issued and outstanding shares of Target NewCo (the “ManyCam Acquisition”). Prior to the ManyCam Acquisition, Target NewCo held all assets related to, or used by Visicom in connection with, the business of developing and distributing virtual webcam driver software, including virtual backgrounds and/or “masks” or other camera effects (other than the Excluded Contracts (as defined in the Securities Purchase Agreement)), whether tangible or intangible, including, but not limited to, Target NewCo’s ManyCam software (“ManyCam”) and related source code, customer lists, customer relationships and all associated customer information, contracts with contractors and suppliers, brand names, trade secrets, trademarks, trade names, designs, copyrights, websites, all URLs, goodwill and intellectual property associated with each of the foregoing (collectively, the “Conveyed Assets”). The Company concluded that the acquisition of the Conveyed Assets is not considered a business under Regulation S-X and in accordance with Accounting Standards Codification (“ASC”) 805, Business Combinations The purchase price for the Conveyed Assets was $2.7 million in cash consideration, plus a potential earn-out payment of up to $600,000 upon the achievement of certain performance thresholds over the six-month period following the closing of the ManyCam Acquisition. For more information regarding the ManyCam Acquisition, see Note 3. 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, 2021, filed with the SEC on March 23, 2022 (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 six months ended June 30, 2022 are not necessarily indicative of results for the year ending December 31, 2022, or for any other period. Macro-Economic Factors and COVID-19 Update The Company’s results of operations have and may continue to be negatively impacted by the uncertainty regarding COVID-19 and macro-economic factors, including the timing of any economic recession and/or recovery and the overall inflationary environment. 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 were able to support the increased demand the Company experienced from the second quarter of 2020 through the year ended December 31, 2021, 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 as well as the lifting of COVID-19 restrictions 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. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 6 Months Ended |
Jun. 30, 2022 | |
Organization and Description of Business [Abstract] | |
Summary of Significant Accounting Policies | 2. Summary of Significant Accounting Policies During the six months ended June 30, 2022, there were no significant changes made to the Company’s significant accounting policies, except for the acquisition of the ManyCam assets which is discussed in Note 3 below. For a detailed discussion about the Company’s significant accounting policies, see the Form 10-K. 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, subscription revenues net of refunds, credits, and known and estimated credit card chargebacks as well as valuation inputs used in determining the fair value of the ManyCam assets, described more fully below. 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. 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. Fair Value Measurements The fair value framework under the guidance issued by the Financial Accounting Standards Board (“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 three and six months ended June 30, 2022 and 2021, subscriptions were offered in durations of one-, three-, six-, twelve- and twenty-four-month terms. All subscription fees, however, are paid by credit card at the origination of the subscription regardless of the term of the subscription. Revenues from multi-month subscriptions are recognized on a straight-line basis over the period where the service is offered to the customer, indicated by length of the subscription term purchased. The unearned portion of subscription revenue is presented as deferred revenue in the accompanying condensed consolidated balance sheets. Deferred revenue at December 31, 2021 was $1,915,493, $1,180,225 of which was subsequently recognized as subscription revenue during the six months ended June 30, 2022. The ending balance of deferred revenue at June 30, 2022 and 2021 was $1,839,849 and $ $2,011,363, respectively. 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 $1,091,487 and $2,361,024 for the three and six months ended June 30, 2022, respectively. Virtual gift revenue was $1,389,046 and $2,809,176 for the three and six months ended June 30, 2021, respectively. The ending balance of deferred revenue from virtual gifts at June 30, 2022 and 2021 was $349,552 and $317,889, 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 Technology service revenue was historically generated under service and partnership agreements that the Company negotiated with third parties which included development, integration, engineering, licensing or other services that the Company provided. During 2021, the Company recorded 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 the Company’s Camfrog and Paltalk applications (as amended, the “YouNow Agreement”). Pursuant to the terms of the YouNow Agreement, once the integration of Props tokens into the Company’s 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 was 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. In August 2021, the Company received notice from YouNow that it was terminating the YouNow Agreement, and that it would no longer support the Props platform past the end of calendar year 2021. As a result of the termination of the YouNow Agreement, the Company notified its users that it would no longer be issuing Props starting October 15, 2021, and would be replacing any user’s outstanding Props with a new internal rewards program. The new rewards loyalty program for Paltalk and Camfrog allowed users to keep their existing rewards earned from the former Props program as internal rewards and also have the opportunity to earn new internal rewards points. In connection with the internal rewards points, the Company added 25 new reward tiers, including specialty coins, subscriptions, stickers, flair, and other popular buttons. Given the trading availability of Props tokens in various active markets, 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. The total net revenue value recognized as earned was $218,432 and $374,248 for the three and six months ended June 30, 2021, respectively. As of June 30, 2022, the value of all digital tokens has been reduced to zero. The Company did not generate any technology service revenue during the three and six months ended June 30, 2022. |
Asset Acquisition _ Securities
Asset Acquisition – Securities Purchase Agreement | 6 Months Ended |
Jun. 30, 2022 | |
Asset Acquisition [Abstract] | |
Asset Acquisition – Securities Purchase Agreement | 3. Asset Acquisition – Securities Purchase Agreement As discussed above, on June 9, 2022, the Company entered into the Securities Purchase Agreement by and among the Company, the Purchaser, Visicom and Target NewCo, pursuant to which the Purchaser purchased, effective as of the Effective Date, all of the issued and outstanding shares of Target NewCo. The Purchaser acquired the Conveyed Assets for a cash purchase price of $2.7 million (the “Cash Consideration”). In addition to the Cash Consideration, Visicom is entitled to receive an additional payment of up to $600,000 (the “Earn-Out Payment”) based on the sales of the ManyCam software less chargebacks and refunds (“Gross Sales”) in the six-month period following the Closing (the “Earn-Out Period”) as follows: (i) if the Gross Sales during the Earn-Out Period are greater than $800,000, the Earn-Out Payment shall be $600,000, (ii) if the Gross Sales during the Earn-Out Period are greater than $700,000 but less than $800,000, the Earn-Out Payment shall be $300,000, (iii) if the Gross Sales during the Earn-Out Period are greater than $600,000 but less than $700,000, the Earn-Out Payment shall be $150,000 and (iv) if the Gross Sales during the Earn-Out Period do not exceed $600,000, then the Seller will not be paid any portion of the Earn-Out Payment. The Company concluded that the acquisition of the Conveyed Assets is not considered a business under Regulation S-X and in accordance with ASC 805, Business Combinations As part of a valuation analysis, the Company identified intangible assets, including internally developed software, subscriber relationships/customer list and intellectual property (trade names, trademarks, URLs). The fair value of identifiable intangible assets is determined primarily using the “income approach,” which requires a forecast of all of the expected future cash flows. Final allocation was determined by a third-party valuation specialist hired by Company management. The following table summarizes the fair value of the identifiable intangible assets and their respective useful lives: Estimated Fair Estimated Useful Internally developed software $ 1,504,000 7 Intellectual property (trade names, trademarks, URLs) $ 321,000 3 Subscriber Relationships/Customer List $ 875,000 7 Total acquired assets $ 2,700,000 The estimated aggregate amortization expense for each of the next five years and thereafter will approximate $185,238 for the remainder of 2022, $444,571 in 2023, $444,571 in 2024, $393,071 in 2025, $341,571 in 2026 and $853,930 thereafter. The Company incurred approximately $230,000 of expenses in connection with the ManyCam Acquisition and capitalized them accordingly. As part of the accounting for the ManyCam assets, the Company provisionally recorded a deferred tax liability of $0.8 million with an offset to intangible assets related to the excess financial reporting basis over the tax basis of the Conveyed Assets. On June 30, 2022, the Company entered into a License Agreement with Visicom (the “License Agreement”), pursuant to which the Company agreed to distribute, at the discretion and direction of Visicom, a specified number of ManyCam software updates to certain license holders to whom Visicom has previously granted a “lifetime” license to ManyCam software. As consideration for distributing the software updates, Visicom paid the Company an initial upfront nonrefundable payment of $65,000. The License Agreement provides that Visicom may purchase additional licenses at prices specified therein. Other than providing a one-time, limited license to Visicom for the distribution of ManyCam software updates pursuant to the terms of the License Agreement, the Company does not have any obligation to provide support or service to the licensee end users. |
Property and Equipment, Net
Property and Equipment, Net | 6 Months Ended |
Jun. 30, 2022 | |
Property, Plant and Equipment [Abstract] | |
Property and Equipment, Net | 4. Property and Equipment, Net Property and equipment, net consisted of the following at June 30, 2022 and December 31, 2021: June 30, December 31, 2022 2021 (unaudited) Computer equipment $ 311,335 $ 866,459 Website development 2,155,798 3,076,323 Furniture and fixtures 47,463 47,463 Total property and equipment 2,514,596 3,990,245 Less: Accumulated depreciation (2,496,915 ) (3,920,646 ) Total property and equipment, net $ 17,681 $ 69,599 Depreciation expense for the three and six months ended June 30, 2022 was $21,820 and $51,918, respectively, as compared to $53,076 and $101,856 for the three and six months ended June 30, 2021, respectively. |
Intangible Assets, Net
Intangible Assets, Net | 6 Months Ended |
Jun. 30, 2022 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Intangible Assets, Net | 5. Intangible Assets, Net Intangible assets, net consisted of the following at June 30, 2022 and December 31, 2021: June 30, 2022 December 31, 2021 Gross Net Gross Net Carrying Accumulated Carrying Carrying Accumulated Carrying Amount Amortization Amount Amount Amortization Amount Patents $ 50,000 $ (32,500 ) $ 17,500 $ 50,000 $ (31,251 ) $ 18,749 Trade names, trademarks product names, URLs 999,100 (526,571 ) 472,529 555,000 (509,148 ) 45,852 Internally developed software 4,070,768 (2,009,216 ) 2,061,552 1,990,000 (1,990,000 ) - Subscriber/customer relationships 3,489,553 (2,241,692 ) 1,247,861 2,279,000 (2,147,058 ) 131,942 Total intangible assets $ 8,609,421 $ (4,809,979 ) $ 3,799,442 $ 4,874,000 $ (4,677,457 ) $ 196,543 Amortization expense for the three and six months ended June 30, 2022 was $86,356 and $132,522, respectively, as compared to $46,166 and $92,333 for the three and six months ended June 30, 2021, respectively. The aggregate amortization expense for each of the next five years and thereafter is estimated to be $300,190 for the remainder of 2022, $502,745 in 2023, $502,100 in 2024, $419,536 in 2025, $371,173 in 2026 and $897,205 thereafter. |
Accrued Expenses and Other Curr
Accrued Expenses and Other Current Liabilities | 6 Months Ended |
Jun. 30, 2022 | |
Disclosure Text Block Supplement [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: June 30, December 31, 2022 2021 (unaudited) Compensation, benefits and payroll taxes $ 134,076 $ 318,150 Income tax payable 3,235 - Other accrued expenses 45,098 26,291 Total accrued expenses and other current liabilities $ 182,409 $ 344,441 |
Income Taxes
Income Taxes | 6 Months Ended |
Jun. 30, 2022 | |
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 June 30, 2022, our conclusion regarding the realizability of our US deferred tax assets did not change and we have recorded a full valuation allowance against them. On March 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 six months ended June 30, 2022, the Company recorded an income tax provision of $4,753 and $20,784, respectively, primarily related to state and local taxes. The effective tax rate for the three and six months ended June 30, 2022 was (0.39)% and (1.08)%, 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 and six months ended June 30, 2021, the Company recorded an income tax provision of $2,200 and $3,300, respectively, primarily related to state and local taxes. The effective tax rate for the three and six months ended June 30, 2021 was 0.28% and 0.19%, 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 | 6 Months Ended |
Jun. 30, 2022 | |
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 36,402 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 June 30, 2022, there were 767,728 shares available for future issuance under the 2016 Plan. Stock Repurchase Plan On March 21, 2022, the Board of Directors of the Company approved a stock repurchase plan for up to $1,750,000 of the Company’s outstanding common stock (the “Stock Repurchase Plan”). The Stock Repurchase Plan is effective as of March 29, 2022 and expires on the one-year anniversary of such date. Shares may be repurchased from time-to-time in open market transactions at prevailing market prices, in privately negotiated transactions or by other means in accordance with federal securities laws, including Rule 10b5-1 programs, and the Stock Repurchase Plan may be suspended or discontinued at any time. The actual timing, number and value of shares repurchased will be determined by a committee of the Board of Directors at its discretion and will depend on a number of factors, including the market price of the Company’s common stock, general market and economic conditions, alternative investment opportunities and other corporate considerations. As of June 30, 2022, 110,000 shares of common stock had been repurchased by the Company pursuant to the Stock Repurchase Plan. 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 six months ended June 30, 2022: Expected volatility 173% - 182 % Expected life of option (in years) 5.2 - 6.2 Risk free interest rate 2.53 % 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 six months ended June 30, 2022: Weighted Average Number of Exercise Options Price Stock Options: Outstanding at January 1, 2022 435,770 $ 5.31 Granted 248,500 2.66 Forfeited or canceled, during the period (31,787 ) 2.97 Expired, during the period (6,082 ) 54.08 Outstanding at June 30, 2022 646,401 $ 3.95 Exercisable at June 30, 2022 434,900 $ 4.65 At June 30, 2022, there was $479,162 of total unrecognized compensation expense related to stock options, which is expected to be recognized over a weighted average period of 3.52 years. On June 30, 2022, the aggregate intrinsic value of stock options that were outstanding and exercisable was $45,840 and $38,340, respectively. On June 30, 2021, the aggregate intrinsic value of stock options that were outstanding and exercisable was $258,359 and $159,558, 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 six months ended June 30, 2022, 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 $2.66 per share. The stock options vest in four equal quarterly installments on the last day of each calendar quarter in 2022 and have a term of ten years. During the six months ended June 30, 2022, the Company also granted options to employees to purchase an aggregate of 224,500 shares of common stock. These options have varying vesting dates ranging between the grant date and up to four years, have a term of ten years and have an exercise price of $2.66. The aggregate fair value for the stock options granted during the six months ended June 30, 2022 and 2021 was $636,957 and $78,522, respectively. Stock-based compensation expense for the Company’s stock options included in the condensed consolidated statements of operations was as follows: Three Months Ended Six Months Ended June 30, June 30, 2022 2021 2022 2021 Cost of revenue $ 2,192 $ - $ 15,056 $ 182 Sales and marketing expense 637 96 756 103 Product development expense 7,270 2,740 10,739 5,784 General and administrative expense 49,050 (195,178 ) 185,069 (167,043 ) Total stock compensation expense $ 59,149 $ (192,342 ) $ 211,620 $ (160,974 ) 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. In addition, during the year ended December 31, 2021, the Company retained 22,013 in treasury shares as part of a net share exercise of stock options by former employees. As discussed above, on March 29, 2022, the Company implemented the Stock Repurchase Plan to repurchase up to $1,750,000 of its outstanding common stock for cash. The Stock Repurchase Plan expires on March 29, 2023. As of June 30, 2022, 110,000 shares of common stock had been repurchased by the Company pursuant to the Stock Repurchase Plan, which shares have been classified as treasury shares on the Company’s condensed consolidated balance sheets. As of June 30, 2022 and December 31, 2021, the Company had 141,963 and 31,963 shares, respectively, of its common stock classified as treasury shares. |
Net (Loss) Income Per Share
Net (Loss) Income Per Share | 6 Months Ended |
Jun. 30, 2022 | |
Net Income Per Share [Abstract] | |
Net (Loss) Income Per Share | 9. Net (Loss) Income Per Share Basic earnings and net (loss) income per share are computed by dividing the net (loss) income 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 The following table summarizes the net (loss) income per share calculation for the periods presented: Three Months Ended Six Months Ended June 30, June 30, 2022 2021 2022 2021 Net (loss) income from operations – basic and diluted $ (1,128,706 ) $ 821,684 $ (1,867,651 ) $ 1,738,413 Weighted average shares outstanding – basic 9,771,608 6,906,454 9,801,715 6,906,454 Weighted average shares outstanding – diluted 9,771,608 6,930,041 9,801,715 6,918,248 Per share data: Basic from operations $ (0.12 ) $ 0.12 $ (0.19 ) $ 0. 25 Diluted from operations $ (0.12 ) $ 0.12 $ (0.19 ) $ 0.25 |
Leases
Leases | 6 Months Ended |
Jun. 30, 2022 | |
Leases [Abstract] | |
Leases | 10. Leases 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 commenced on December 1, 2021 and runs through November 30, 2024. The Company’s monthly office rent payments under the lease are currently approximately $7,081 per month. The lease extension resulted in an increase in the Company’s right-of-use (“ROU”) assets and lease liabilities of $0.2 million, using a discount rate of 2.30%. As of June 30, 2022, the Company had no long-term leases that were classified as financing leases. As of June 30, 2022, the Company did not have additional operating and financing leases that had not yet commenced. At June 30, 2022, the Company had operating lease liabilities of approximately $200,000 and ROU assets of approximately $200,000, which are included in the condensed consolidated balance sheets. Total rent expense for the six months ended June 30, 2022 was $43,075, of which $3,000 was sublease income. Total rent expense for the six months ended June 30, 2021 was $52,119, of which $1,500 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: Six Months Ended June 30, 2022 2021 Cash paid for amounts included in the measurement of operating lease liabilities: $ 39,924 $ 34,021 Weighted average assumptions: Remaining lease term 2.4 0.4 Discount rate 2.3 % 3.5 % As of June 30, 2022, future minimum payments under non-cancelable operating leases were as follows: For the year ending December 31, Amount 2022 42,488 2023 84,975 2024 77,893 Total $ 205,356 Less: present value adjustment (5,789 ) Present value of minimum lease payments $ 199,567 |
Commitments and Contingencies
Commitments and Contingencies | 6 Months Ended |
Jun. 30, 2022 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | 11. Commitments and Contingencies Officer Employment Agreements On March 23, 2022, the Company entered into Amended and Restated Employment Agreements with the Company’s Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”), which amends and restates their existing employment agreements with the Company dated October 7, 2016 and December 9, 2019, respectively. The agreements are each for terms of one year with auto renewal provisions. Except for adjustments to base salaries, all other terms and conditions of the prior employment agreements between the Company and the CEO and CFO will remain in full force and effect. The CEO agreement is retroactive to February 2021. The CFO agreement is retroactive to January 2022. Aggregate commitments of base salaries under the agreements for 2022 total $490,000. Should the agreements be renewed for 2023 and beyond, the aggregate base salary commitments would total $510,000 per year. 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 took place on February 24, 2022 and a trial is scheduled for February 2023. Other 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 June 30, 2022. |
Subsequent Events
Subsequent Events | 6 Months Ended |
Jun. 30, 2022 | |
Subsequent Events [Abstract] | |
Subsequent Events | 12. Subsequent Events Management has evaluated subsequent events or transactions occurring through the date the condensed consolidated financial statements were issued and determined that no events or transactions are required to be disclosed herein. |
Accounting Policies, by Policy
Accounting Policies, by Policy (Policies) | 6 Months Ended |
Jun. 30, 2022 | |
Organization and Description of Business [Abstract] | |
Significant Estimates and Assumptions | Significant Estimates and Assumptions The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenue and expenses during the reporting period. Significant estimates relied upon in preparing these financial statements include the estimates used to determine the fair value of the stock options issued in share-based payment arrangements, subscription revenues net of refunds, credits, and known and estimated credit card chargebacks as well as valuation inputs used in determining the fair value of the ManyCam assets, described more fully below. 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. 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. |
Fair Value Measurements | Fair Value Measurements The fair value framework under the guidance issued by the Financial Accounting Standards Board (“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 three and six months ended June 30, 2022 and 2021, subscriptions were offered in durations of one-, three-, six-, twelve- and twenty-four-month terms. All subscription fees, however, are paid by credit card at the origination of the subscription regardless of the term of the subscription. Revenues from multi-month subscriptions are recognized on a straight-line basis over the period where the service is offered to the customer, indicated by length of the subscription term purchased. The unearned portion of subscription revenue is presented as deferred revenue in the accompanying condensed consolidated balance sheets. Deferred revenue at December 31, 2021 was $1,915,493, $1,180,225 of which was subsequently recognized as subscription revenue during the six months ended June 30, 2022. The ending balance of deferred revenue at June 30, 2022 and 2021 was $1,839,849 and $ $2,011,363, respectively. 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 $1,091,487 and $2,361,024 for the three and six months ended June 30, 2022, respectively. Virtual gift revenue was $1,389,046 and $2,809,176 for the three and six months ended June 30, 2021, respectively. The ending balance of deferred revenue from virtual gifts at June 30, 2022 and 2021 was $349,552 and $317,889, 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 Technology service revenue was historically generated under service and partnership agreements that the Company negotiated with third parties which included development, integration, engineering, licensing or other services that the Company provided. During 2021, the Company recorded 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 the Company’s Camfrog and Paltalk applications (as amended, the “YouNow Agreement”). Pursuant to the terms of the YouNow Agreement, once the integration of Props tokens into the Company’s 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 was 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. In August 2021, the Company received notice from YouNow that it was terminating the YouNow Agreement, and that it would no longer support the Props platform past the end of calendar year 2021. As a result of the termination of the YouNow Agreement, the Company notified its users that it would no longer be issuing Props starting October 15, 2021, and would be replacing any user’s outstanding Props with a new internal rewards program. The new rewards loyalty program for Paltalk and Camfrog allowed users to keep their existing rewards earned from the former Props program as internal rewards and also have the opportunity to earn new internal rewards points. In connection with the internal rewards points, the Company added 25 new reward tiers, including specialty coins, subscriptions, stickers, flair, and other popular buttons. Given the trading availability of Props tokens in various active markets, 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. The total net revenue value recognized as earned was $218,432 and $374,248 for the three and six months ended June 30, 2021, respectively. As of June 30, 2022, the value of all digital tokens has been reduced to zero. The Company did not generate any technology service revenue during the three and six months ended June 30, 2022. |
Asset Acquisition _ Securitie_2
Asset Acquisition – Securities Purchase Agreement (Tables) | 6 Months Ended |
Jun. 30, 2022 | |
Asset Acquisition [Abstract] | |
Schedule of summarizes the fair value of the identifiable intangible assets | Estimated Fair Estimated Useful Internally developed software $ 1,504,000 7 Intellectual property (trade names, trademarks, URLs) $ 321,000 3 Subscriber Relationships/Customer List $ 875,000 7 Total acquired assets $ 2,700,000 |
Property and Equipment, Net (Ta
Property and Equipment, Net (Tables) | 6 Months Ended |
Jun. 30, 2022 | |
Property, Plant and Equipment [Abstract] | |
Schedule of property and equipment, net | June 30, December 31, 2022 2021 (unaudited) Computer equipment $ 311,335 $ 866,459 Website development 2,155,798 3,076,323 Furniture and fixtures 47,463 47,463 Total property and equipment 2,514,596 3,990,245 Less: Accumulated depreciation (2,496,915 ) (3,920,646 ) Total property and equipment, net $ 17,681 $ 69,599 |
Intangible Assets, Net (Tables)
Intangible Assets, Net (Tables) | 6 Months Ended |
Jun. 30, 2022 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of intangible assets, net | June 30, 2022 December 31, 2021 Gross Net Gross Net Carrying Accumulated Carrying Carrying Accumulated Carrying Amount Amortization Amount Amount Amortization Amount Patents $ 50,000 $ (32,500 ) $ 17,500 $ 50,000 $ (31,251 ) $ 18,749 Trade names, trademarks product names, URLs 999,100 (526,571 ) 472,529 555,000 (509,148 ) 45,852 Internally developed software 4,070,768 (2,009,216 ) 2,061,552 1,990,000 (1,990,000 ) - Subscriber/customer relationships 3,489,553 (2,241,692 ) 1,247,861 2,279,000 (2,147,058 ) 131,942 Total intangible assets $ 8,609,421 $ (4,809,979 ) $ 3,799,442 $ 4,874,000 $ (4,677,457 ) $ 196,543 |
Accrued Expenses and Other Cu_2
Accrued Expenses and Other Current Liabilities (Tables) | 6 Months Ended |
Jun. 30, 2022 | |
Disclosure Text Block Supplement [Abstract] | |
Schedule of accrued expenses and other current liabilities | June 30, December 31, 2022 2021 (unaudited) Compensation, benefits and payroll taxes $ 134,076 $ 318,150 Income tax payable 3,235 - Other accrued expenses 45,098 26,291 Total accrued expenses and other current liabilities $ 182,409 $ 344,441 |
Stockholders' Equity (Tables)
Stockholders' Equity (Tables) | 6 Months Ended |
Jun. 30, 2022 | |
Stockholders' Equity Note [Abstract] | |
Schedule black-scholes pricing model to estimate the fair value | Expected volatility 173% - 182 % Expected life of option (in years) 5.2 - 6.2 Risk free interest rate 2.53 % Expected dividend yield 0.0 % |
Schedule of stock option activity | Weighted Average Number of Exercise Options Price Stock Options: Outstanding at January 1, 2022 435,770 $ 5.31 Granted 248,500 2.66 Forfeited or canceled, during the period (31,787 ) 2.97 Expired, during the period (6,082 ) 54.08 Outstanding at June 30, 2022 646,401 $ 3.95 Exercisable at June 30, 2022 434,900 $ 4.65 |
Schedule of stock-based compensation expense | Three Months Ended Six Months Ended June 30, June 30, 2022 2021 2022 2021 Cost of revenue $ 2,192 $ - $ 15,056 $ 182 Sales and marketing expense 637 96 756 103 Product development expense 7,270 2,740 10,739 5,784 General and administrative expense 49,050 (195,178 ) 185,069 (167,043 ) Total stock compensation expense $ 59,149 $ (192,342 ) $ 211,620 $ (160,974 ) |
Net (Loss) Income Per Share (Ta
Net (Loss) Income Per Share (Tables) | 6 Months Ended |
Jun. 30, 2022 | |
Net Income Per Share [Abstract] | |
Schedule of net income per share | Three Months Ended Six Months Ended June 30, June 30, 2022 2021 2022 2021 Net (loss) income from operations – basic and diluted $ (1,128,706 ) $ 821,684 $ (1,867,651 ) $ 1,738,413 Weighted average shares outstanding – basic 9,771,608 6,906,454 9,801,715 6,906,454 Weighted average shares outstanding – diluted 9,771,608 6,930,041 9,801,715 6,918,248 Per share data: Basic from operations $ (0.12 ) $ 0.12 $ (0.19 ) $ 0. 25 Diluted from operations $ (0.12 ) $ 0.12 $ (0.19 ) $ 0.25 |
Leases (Tables)
Leases (Tables) | 6 Months Ended |
Jun. 30, 2022 | |
Leases [Abstract] | |
Schedule of operating leases | Six Months Ended June 30, 2022 2021 Cash paid for amounts included in the measurement of operating lease liabilities: $ 39,924 $ 34,021 Weighted average assumptions: Remaining lease term 2.4 0.4 Discount rate 2.3 % 3.5 % |
Schedule of future minimum payments under non-cancelable operating leases | For the year ending December 31, Amount 2022 42,488 2023 84,975 2024 77,893 Total $ 205,356 Less: present value adjustment (5,789 ) Present value of minimum lease payments $ 199,567 |
Organization and Description _2
Organization and Description of Business (Details) - USD ($) | 6 Months Ended | |
Jun. 30, 2022 | Apr. 13, 2020 | |
Organization and Description of Business [Abstract] | ||
Conveyed assets | $ 2,700,000 | |
Earn-out payment | $ 600,000 | |
Principle amount | $ 506,500 |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Details) - USD ($) | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2022 | Jun. 30, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | Dec. 31, 2021 | |
Summary of Significant Accounting Policies (Details) [Line Items] | |||||
Deferred revenue | $ 1,839,849 | $ 2,011,363 | $ 1,839,849 | $ 2,011,363 | $ 1,915,493 |
Subscription revenue | $ 1,180,225 | ||||
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. | ||||
Virtual gift revenue | $ 1,091,487 | $ 2,361,024 | |||
Net revenue | 218,432 | 374,248 | |||
Subscription Arrangement [Member] | |||||
Summary of Significant Accounting Policies (Details) [Line Items] | |||||
Virtual gift revenue | $ 1,389,046 | 2,809,176 | |||
Deferred revenue from virtual gifts | $ 349,552 | $ 317,889 |
Asset Acquisition _ Securitie_3
Asset Acquisition – Securities Purchase Agreement (Details) | 6 Months Ended |
Jun. 30, 2022 USD ($) | |
Asset Acquisition – Securities Purchase Agreement (Details) [Line Items] | |
Cash purchase price | $ 2,700,000 |
Additional payment | $ 600,000 |
Asset acquisition description | (i) if the Gross Sales during the Earn-Out Period are greater than $800,000, the Earn-Out Payment shall be $600,000, (ii) if the Gross Sales during the Earn-Out Period are greater than $700,000 but less than $800,000, the Earn-Out Payment shall be $300,000, (iii) if the Gross Sales during the Earn-Out Period are greater than $600,000 but less than $700,000, the Earn-Out Payment shall be $150,000 and (iv) if the Gross Sales during the Earn-Out Period do not exceed $600,000, then the Seller will not be paid any portion of the Earn-Out Payment. The Company concluded that the acquisition of the Conveyed Assets is not considered a business under Regulation S-X and in accordance with ASC 805, Business Combinations. |
Acquisition cost | $ 230,000 |
Deferred tax liability | 800,000 |
Nonrefundable payment | 65,000 |
Amortization Expense [Member] | |
Asset Acquisition – Securities Purchase Agreement (Details) [Line Items] | |
Amortization expense 2022 | 185,238 |
Amortization expense 2023 | 444,571 |
Amortization expense 2024 | 444,571 |
Amortization expense 2025 | 393,071 |
Amortization expense 2025 | 341,571 |
Amortization expense thereafter | $ 853,930 |
Asset Acquisition _ Securitie_4
Asset Acquisition – Securities Purchase Agreement (Details) - Schedule of summarizes the fair value of the identifiable intangible assets | 6 Months Ended |
Jun. 30, 2022 USD ($) | |
Asset Acquisition – Securities Purchase Agreement (Details) - Schedule of summarizes the fair value of the identifiable intangible assets [Line Items] | |
Estimated Fair Value | $ 2,700,000 |
Intellectual property (trade names, trademarks, URLs) [Member] | |
Asset Acquisition – Securities Purchase Agreement (Details) - Schedule of summarizes the fair value of the identifiable intangible assets [Line Items] | |
Estimated Fair Value | $ 321,000 |
Estimated Useful Life in Years | 3 years |
Internally developed software [Member] | |
Asset Acquisition – Securities Purchase Agreement (Details) - Schedule of summarizes the fair value of the identifiable intangible assets [Line Items] | |
Estimated Fair Value | $ 1,504,000 |
Estimated Useful Life in Years | 7 years |
Subscriber Relationships/Customer List [Member] | |
Asset Acquisition – Securities Purchase Agreement (Details) - Schedule of summarizes the fair value of the identifiable intangible assets [Line Items] | |
Estimated Fair Value | $ 875,000 |
Estimated Useful Life in Years | 7 years |
Property and Equipment, Net (De
Property and Equipment, Net (Details) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2022 | Jun. 30, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | |
Property, Plant and Equipment [Abstract] | ||||
Depreciation expenses | $ 21,820 | $ 53,076 | $ 51,918 | $ 101,856 |
Property and Equipment, Net (_2
Property and Equipment, Net (Details) - Schedule of property and equipment, net - USD ($) | Jun. 30, 2022 | Dec. 31, 2021 |
Property, Plant and Equipment [Line Items] | ||
Total property and equipment | $ 2,514,596 | $ 3,990,245 |
Less: Accumulated depreciation | (2,496,915) | (3,920,646) |
Total property and equipment, net | 17,681 | 69,599 |
Computer equipment [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Total property and equipment | 311,335 | 866,459 |
Website development [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Total property and equipment | 2,155,798 | 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 | 6 Months Ended | ||
Jun. 30, 2022 | Jun. 30, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | |
Intangible Assets, Net (Details) [Line Items] | ||||
Amortization expense | $ 86,356 | $ 46,166 | $ 132,522 | $ 92,333 |
Intangible Assets, [Member] | ||||
Intangible Assets, Net (Details) [Line Items] | ||||
Aggregate amortization expense 2022 | 300,190 | 300,190 | ||
Aggregate amortization expense 2023 | 502,745 | 502,745 | ||
Aggregate amortization expense 2024 | 502,100 | 502,100 | ||
Aggregate amortization expense 2025 | 419,536 | 419,536 | ||
Aggregate amortization expense 2026 | 371,173 | 371,173 | ||
Aggregate amortization expense for thereafter | $ 897,205 | $ 897,205 |
Intangible Assets, Net (Detai_2
Intangible Assets, Net (Details) - Schedule of intangible assets, net - USD ($) | Jun. 30, 2022 | Dec. 31, 2021 |
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | $ 8,609,421 | $ 4,874,000 |
Accumulated Amortization | (4,809,979) | (4,677,457) |
Net Carrying Amount | 3,799,442 | 196,543 |
Patents [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | 50,000 | 50,000 |
Accumulated Amortization | (32,500) | (31,251) |
Net Carrying Amount | 17,500 | 18,749 |
Trade names, trademarks product names, URLs [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | 999,100 | 555,000 |
Accumulated Amortization | (526,571) | (509,148) |
Net Carrying Amount | 472,529 | 45,852 |
Internally developed software [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | 4,070,768 | 1,990,000 |
Accumulated Amortization | (2,009,216) | (1,990,000) |
Net Carrying Amount | 2,061,552 | |
Subscriber/customer relationships [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | 3,489,553 | 2,279,000 |
Accumulated Amortization | (2,241,692) | (2,147,058) |
Net Carrying Amount | $ 1,247,861 | $ 131,942 |
Accrued Expenses and Other Cu_3
Accrued Expenses and Other Current Liabilities (Details) - Schedule of accrued expenses and other current liabilities - USD ($) | Jun. 30, 2022 | Dec. 31, 2021 |
Schedule of accrued expenses and other current liabilities [Abstract] | ||
Compensation, benefits and payroll taxes | $ 134,076 | $ 318,150 |
Income tax payable | 3,235 | |
Other accrued expenses | 45,098 | 26,291 |
Total accrued expenses and other current liabilities | $ 182,409 | $ 344,441 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2022 | Jun. 30, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | |
Income Tax Disclosure [Abstract] | ||||
Income tax provision (in Dollars) | $ 4,753 | $ 2,200 | $ 20,784 | $ 3,300 |
Effective tax rate percentage | (0.39%) | 0.28% | (1.08%) | 0.19% |
Effective tax rate from statutory rate | 21% | 21% |
Stockholders' Equity (Details)
Stockholders' Equity (Details) - USD ($) | 1 Months Ended | 6 Months Ended | 12 Months Ended | ||||
Apr. 29, 2020 | Apr. 29, 2019 | Jun. 30, 2022 | Jun. 30, 2021 | Dec. 31, 2021 | Mar. 29, 2022 | Mar. 21, 2022 | |
Stockholders' Equity (Details) [Line Items] | |||||||
Common stock outstanding | $ 1,750,000 | ||||||
Stock repurchase (in Shares) | 110,000 | ||||||
Total unrecognized compensation expense | $ 479,162 | ||||||
Weighted average period | 3 years 6 months 7 days | ||||||
Aggregate intrinsic value of stock options, outstanding | $ 45,840 | $ 258,359 | |||||
Aggregate intrinsic value of stock options, exercisable | $ 38,340 | 159,558 | |||||
Purchase an aggregate of common stock (in Shares) | 24,000 | ||||||
Exercise price of common stock (in Dollars per share) | $ 2.66 | ||||||
Stock options, term | 10 years | ||||||
Purchase an aggregate of shares to common stock (in Shares) | 224,500 | ||||||
Exercise price (in Dollars per share) | $ 2.66 | ||||||
Aggregate fair value of options granted | $ 636,957 | $ 78,522 | |||||
Repurchased shares of common stock | $ 9,950 | $ 500,000 | |||||
Repurchase plan expires date | Apr. 29, 2020 | ||||||
Net share exercise (in Shares) | 22,013 | ||||||
Outstanding common stock | $ 1,750,000 | ||||||
Common stock, treasury shares (in Shares) | 141,963 | 31,963 | |||||
Treasury Shares [Member] | |||||||
Stockholders' Equity (Details) [Line Items] | |||||||
Stock repurchase (in Shares) | 110,000 | ||||||
2011 Plan [Member] | |||||||
Stockholders' Equity (Details) [Line Items] | |||||||
Number of shares issued under plan (in Shares) | 36,402 | ||||||
2016 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% | ||||||
Number of stock available for future issuance (in Shares) | 767,728 |
Stockholders' Equity (Details)
Stockholders' Equity (Details) - Schedule black-scholes pricing model to estimate the fair value | 6 Months Ended |
Jun. 30, 2022 | |
Stockholders' Equity (Details) - Schedule black-scholes pricing model to estimate the fair value [Line Items] | |
Risk free interest rate | 2.53% |
Expected dividend yield | 0% |
Minimum [Member] | |
Stockholders' Equity (Details) - Schedule black-scholes pricing model to estimate the fair value [Line Items] | |
Expected volatility | 173% |
Expected life of option (in years) | 5 years 2 months 12 days |
Maximum [Member] | |
Stockholders' Equity (Details) - Schedule black-scholes pricing model to estimate the fair value [Line Items] | |
Expected volatility | 182% |
Expected life of option (in years) | 6 years 2 months 12 days |
Stockholders' Equity (Details_2
Stockholders' Equity (Details) - Schedule of stock option activity | 6 Months Ended |
Jun. 30, 2022 $ / shares shares | |
Stock Options: | |
Number of Options, Outstanding beginning balance | shares | 435,770 |
Weighted Average Exercise Price, Outstanding beginning balance | $ / shares | $ 5.31 |
Number of Options, Outstanding ending balance | shares | 646,401 |
Weighted Average Exercise Price, Outstanding ending balance | $ / shares | $ 3.95 |
Number of Options, Exercisable | shares | 434,900 |
Weighted Average Exercise Price, Exercisable | $ / shares | $ 4.65 |
Number of Options, Granted | shares | 248,500 |
Weighted Average Exercise Price, Granted | $ / shares | $ 2.66 |
Number of Options, Forfeited or canceled, during the period | shares | (31,787) |
Weighted Average Exercise Price, Forfeited or canceled, during the period | $ / shares | $ 2.97 |
Number of Options, Expired, during the period | shares | (6,082) |
Weighted Average Exercise Price, Expired, during the period | $ / shares | $ 54.08 |
Stockholders' Equity (Details_3
Stockholders' Equity (Details) - Schedule of stock-based compensation expense - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2022 | Jun. 30, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | |
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | ||||
Total stock compensation expense | $ 59,149 | $ (192,342) | $ 211,620 | $ (160,974) |
Cost of revenue [Member] | ||||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | ||||
Total stock compensation expense | 2,192 | 15,056 | 182 | |
Sales and marketing expense [Member] | ||||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | ||||
Total stock compensation expense | 637 | 96 | 756 | 103 |
Product development expense [Member] | ||||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | ||||
Total stock compensation expense | 7,270 | 2,740 | 10,739 | 5,784 |
General and administrative expense [Member] | ||||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | ||||
Total stock compensation expense | $ 49,050 | $ (195,178) | $ 185,069 | $ (167,043) |
Net (Loss) Income Per Share (De
Net (Loss) Income Per Share (Details) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2022 | Jun. 30, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | |
Net Income Per Share [Abstract] | ||||
Exercise of outstanding stock options, antidilutive | 646,401 | 646,401 | ||
Exercise of outstanding stock options, dilutive | 494,385 | 510,208 | ||
Exercise outstanding stock options (in Dollars) | $ 23,857 | $ 7,764 |
Net (Loss) Income Per Share (_2
Net (Loss) Income Per Share (Details) - Schedule of net income per share - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2022 | Jun. 30, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | |
Schedule of net income per share [Abstract] | ||||
Net (loss) income from operations – basic and diluted | $ (1,128,706) | $ 821,684 | $ (1,867,651) | $ 1,738,413 |
Weighted average shares outstanding – basic | 9,771,608 | 6,906,454 | 9,801,715 | 6,906,454 |
Weighted average shares outstanding – diluted | 9,771,608 | 6,930,041 | 9,801,715 | 6,918,248 |
Per share data: | ||||
Basic from operations | $ (0.12) | $ 0.12 | $ (0.19) | $ 0.25 |
Diluted from operations | $ (0.12) | $ 0.12 | $ (0.19) | $ 0.25 |
Leases (Details)
Leases (Details) - USD ($) | 6 Months Ended | ||
Apr. 09, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | |
Leases (Textual) | |||
Operating lease, description | 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 commenced on December 1, 2021 and runs through November 30, 2024. | ||
Rent payments under the lease | $ 7,081 | ||
Lease liabilities | $ 200,000 | ||
Discount rate | 2.30% | ||
Operating lease liability | $ 200,000 | ||
Right of use asset | 200,000 | ||
Rent expenses | 43,075 | $ 52,119 | |
Sublease income | $ 3,000 | $ 1,500 |
Leases (Details) - Schedule of
Leases (Details) - Schedule of operating leases - USD ($) | 6 Months Ended | |
Jun. 30, 2022 | Jun. 30, 2021 | |
Schedule of operating leases [Abstract] | ||
Cash paid for amounts included in the measurement of operating lease liabilities: | $ 39,924 | $ 34,021 |
Weighted average assumptions: | ||
Remaining lease term | 2 years 4 months 24 days | 4 months 24 days |
Discount rate | 2.30% | 3.50% |
Leases (Details) - Schedule o_2
Leases (Details) - Schedule of future minimum payments under non-cancelable operating leases | Jun. 30, 2022 USD ($) |
Schedule of future minimum payments under non-cancelable operating leases [Abstract] | |
2022 | $ 42,488 |
2023 | 84,975 |
2024 | 77,893 |
Total | 205,356 |
Less: present value adjustment | (5,789) |
Present value of minimum lease payments | $ 199,567 |
Commitments and Contingencies (
Commitments and Contingencies (Details) | 6 Months Ended |
Jun. 30, 2022 USD ($) | |
Commitments and Contingencies (Details) [Line Items] | |
Annualized base salary | $ 510,000 |
CEO and CFO [Member] | |
Commitments and Contingencies (Details) [Line Items] | |
Annualized base salary | $ 490,000 |