Document And Entity Information
Document And Entity Information - USD ($) | 12 Months Ended | ||
Dec. 31, 2021 | Mar. 21, 2022 | Jun. 30, 2021 | |
Document Information Line Items | |||
Entity Registrant Name | PALTALK, INC. | ||
Trading Symbol | PALT | ||
Document Type | 10-K | ||
Current Fiscal Year End Date | --12-31 | ||
Entity Common Stock, Shares Outstanding | 9,837,157 | ||
Entity Public Float | $ 32,839,404 | ||
Amendment Flag | false | ||
Entity Central Index Key | 0001355839 | ||
Entity Current Reporting Status | Yes | ||
Entity Voluntary Filers | No | ||
Entity Filer Category | Non-accelerated Filer | ||
Entity Well-known Seasoned Issuer | No | ||
Document Period End Date | Dec. 31, 2021 | ||
Document Fiscal Year Focus | 2021 | ||
Document Fiscal Period Focus | FY | ||
Entity Small Business | true | ||
Entity Emerging Growth Company | false | ||
Entity Shell Company | false | ||
ICFR Auditor Attestation Flag | false | ||
Document Annual 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, $0.001 par value | ||
Security Exchange Name | NASDAQ | ||
Entity Interactive Data Current | Yes | ||
Auditor Firm ID | 688 | ||
Auditor Name | Marcum LLP | ||
Auditor Location | Melville, NY |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) | Dec. 31, 2021 | Dec. 31, 2020 |
Current assets: | ||
Cash and cash equivalents | $ 21,636,860 | $ 5,585,420 |
Accounts receivable, net of allowances of $3,648 as of December 31, 2021 and 2020, respectively | 153,448 | 71,410 |
Prepaid expense and other current assets | 239,258 | 236,704 |
Total current assets | 22,029,566 | 5,893,534 |
Operating lease right-of-use asset | 239,491 | 68,967 |
Property and equipment, net | 69,599 | 255,777 |
Goodwill | 6,326,250 | 6,326,250 |
Intangible assets, net | 196,543 | 381,210 |
Digital tokens | 7,262 | 439,145 |
Digital tokens receivable | 210,000 | |
Other assets | 13,937 | 13,937 |
Total assets | 28,882,648 | 13,588,820 |
Current liabilities: | ||
Accounts payable | 1,332,632 | 742,141 |
Accrued expenses and other current liabilities | 344,441 | 254,084 |
Operating lease liabilities, current portion | 80,309 | 68,967 |
Digital tokens payable | 123,397 | |
Term debt, current portion | 338,792 | |
Deferred subscription revenue | 1,915,493 | 2,058,721 |
Total current liabilities | 3,672,875 | 3,586,102 |
Operating lease liabilities, non-current portion | 159,182 | |
Term debt, non-current portion | 167,708 | |
Total liabilities | 3,832,057 | 3,753,810 |
Commitments and contingencies (Note 14) | ||
Stockholders’ equity: | ||
Common stock, $0.001 par value, 25,000,000 shares authorized, 9,864,120 and 6,916,404 shares issued and 9,832,157 and 6,906,454 shares outstanding as of December 31, 2021 and 2020, respectively | 9,864 | 6,917 |
Treasury stock, 31,963 and 9,950 shares as of December 31, 2021 and 2020, respectively | (194,200) | (10,859) |
Additional paid-in capital | 35,639,910 | 21,568,041 |
Accumulated deficit | (10,404,983) | (11,729,089) |
Total stockholders’ equity | 25,050,591 | 9,835,010 |
Total liabilities and stockholders’ equity | $ 28,882,648 | $ 13,588,820 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parentheticals) - USD ($) | Dec. 31, 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 | 9,864,120 | 6,916,404 |
Common stock, shares outstanding | 9,832,157 | 6,906,454 |
Treasury stock | 31,963 | 9,950 |
Consolidated Statements of Inco
Consolidated Statements of Income - USD ($) | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Revenues | ||
Subscription revenue | $ 12,368,008 | $ 11,966,497 |
Advertising revenue | 451,337 | 325,475 |
Technology service revenue | 454,504 | 540,700 |
Total revenue | 13,273,849 | 12,832,672 |
Costs and expenses | ||
Costs of revenue | 2,720,189 | 2,573,083 |
Sales and marketing expense | 1,170,386 | 825,069 |
Product development expense | 5,391,819 | 5,025,482 |
General and administrative expense | 2,706,733 | 3,166,343 |
Impairment loss on digital tokens | 765,232 | |
Total costs and expenses | 12,754,359 | 11,589,977 |
Income from operations | 519,490 | 1,242,695 |
Interest income, net | 133 | 7,119 |
Gain from sale of Secured Communications Assets | 250,000 | |
Gain on extinguishment of term debt | 506,500 | |
Realized gain (loss) from the sale of digital tokens | 307,934 | (72,123) |
Other expense | (56,042) | |
Income from operations before provision for income taxes | 1,334,057 | 1,371,649 |
Income tax expense | (9,951) | (387) |
Net income | $ 1,324,106 | $ 1,371,262 |
Net income per share of common stock: | ||
Basic (in Dollars per share) | $ 0.17 | $ 0.2 |
Diluted (in Dollars per share) | $ 0.17 | $ 0.2 |
Weighted average number of shares of common stock used in calculating net income per share of common stock: | ||
Basic (in Shares) | 7,766,111 | 6,884,690 |
Diluted (in Shares) | 7,809,132 | 6,887,808 |
Consolidated Statements of Chan
Consolidated Statements of Changes in Stockholders’ Equity - USD ($) | Common Stock | Treasury Stock | Additional Paid-in Capital | Retained Earnings (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 | 243,197 | 243,197 | |||
Issuance of common stock for consulting services | $ 38 | 43,462 | 43,500 | ||
Issuance of common stock for consulting services (in Shares) | 37,500 | ||||
Repurchases of common stock | $ (8,844) | (8,844) | |||
Repurchases of common stock (in Shares) | (8,050) | ||||
Net income | 1,371,262 | 1,371,262 | |||
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 | (35,653) | (35,653) | |||
Issuance of common stock | $ 2,886 | 13,916,240 | 13,919,126 | ||
Issuance of common stock (in Shares) | 2,885,810 | ||||
Issuance of common stock pursuant to cashless option exercises | $ 38 | (38) | |||
Issuance of common stock pursuant to cashless option exercises (in Shares) | 38,464 | ||||
Treasury stock received from cashless option exercises | $ 22 | $ (183,341) | 183,319 | ||
Treasury stock received from cashless option exercises (in Shares) | 22,013 | (22,013) | |||
Issuance of common stock pursuant to option exercise | $ 1 | 8,001 | 8,002 | ||
Issuance of common stock pursuant to option exercise (in Shares) | 1,429 | ||||
Net income | 1,324,106 | 1,324,106 | |||
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) |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Cash flows from operating activities: | ||
Net income | $ 1,324,106 | $ 1,371,262 |
Adjustments to reconcile net income from operations to net cash provided by operating activities: | ||
Depreciation of property and equipment | 186,178 | 325,044 |
Amortization of intangible assets | 184,667 | 246,681 |
Amortization of operating lease right-of-use assets | 74,416 | 104,083 |
Gain on cancellation of office lease | (141,001) | |
Loss on disposal of property and equipment | 39,238 | |
Gain on extinguishment of digital token liability | (338,553) | |
Impairment loss on digital tokens | 765,232 | |
Realized (gain) loss from the sale of digital tokens | (307,934) | 72,823 |
Write-off of note receivable | 56,042 | |
Gain on extinguishment of term debt | (506,500) | |
Stock-based compensation | (35,653) | 243,197 |
Bad debt expense | (3,235) | 4,015 |
Common stock issued for consulting services | 43,500 | |
Changes in operating assets and liabilities: | ||
Digital tokens | (884,263) | (439,145) |
Accounts receivable | (78,803) | 55,261 |
Digital tokens receivable | 210,000 | (210,000) |
Operating lease liability | (74,416) | (107,674) |
Digital tokens payable | 215,156 | 123,397 |
Prepaid expense and other current assets | (2,554) | (219,263) |
Other assets | 16,897 | |
Accounts payable, accrued expenses and other current liabilities | 680,848 | (378,285) |
Deferred subscription revenue | (143,228) | 229,228 |
Net cash provided by operating activities | 1,265,464 | 1,435,300 |
Cash flows from investing activities: | ||
Proceeds from Secured Communications Assets | 150,000 | |
Proceeds from the sale of digital tokens | 858,848 | 75,406 |
Net cash provided by investing activities | 858,848 | 225,406 |
Cash flows from financing activities: | ||
Borrowings of term debt | 506,500 | |
Proceeds from issuance of common stock, net of issuance costs | 13,919,126 | |
Proceeds from issuance of common stock pursuant to option exercise | 8,002 | |
Purchase of treasury stock | (8,844) | |
Net cash provided by financing activities | 13,927,128 | 497,656 |
Net increase in cash and cash equivalents | 16,051,440 | 2,158,362 |
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 | 21,636,860 | 5,585,420 |
Non-cash investing and financing activities: | ||
Modification of operating lease right-of-use asset and liability | 244,940 | |
Issuance of common stock pursuant to cashless option exercises | 38 | |
Treasury stock received from cashless option exercises | $ 183,341 |
Organization and Description of
Organization and Description of Business | 12 Months Ended |
Dec. 31, 2021 | |
Organization and Description of Business [Abstract] | |
Organization and Description of Business | 1. Organization and Description of Business The accompanying 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’s product portfolio includes Paltalk, Camfrog and Tinychat, which together host one of the world’s largest collections 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 Company has an over 20-year history of technology innovation and hold 14 patents. 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 | 12 Months Ended |
Dec. 31, 2021 | |
Organization and Description of Business [Abstract] | |
Summary of Significant Accounting Policies | 2. Summary of Significant Accounting Policies Principles of Consolidation The accompanying consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries and were prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”) and with the requirements of the Security and Exchange Commission (“SEC”). All intercompany balances and transactions have been eliminated upon consolidation. 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 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 and the fair value of digital tokens. 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. 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 Accounting Standards Codification (“ASC”) 606, Revenue from Contracts with Customers Subscription Revenue The Company generates subscription revenue primarily from monthly premium subscription services. Subscription revenues are presented net of refunds, credits, and known and estimated credit card chargebacks. During the years ended December 31, 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 consolidated balance sheets. Deferred revenue at December 31, 2020 was $2,058,721, which was subsequently recognized as subscription revenue during the year ended December 31, 2021. The ending balance of deferred revenue at December 31, 2021 was $1,915,493. 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 consolidated statements of income. Virtual gift revenue is presented as deferred revenue in the consolidated balance sheets until virtual gifts are redeemed. Virtual gift revenue was $5,586,710 and $5,188,858 for the years ended December 31, 2021 and 2020, respectively. The ending balance of deferred revenue from virtual gifts at December 31, 2021 and 2020 was $293,737 and $348,677, 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 is generated under service and partnership agreements that the Company negotiates with third parties which includes development, integration, engineering, licensing or other services that the Company provides. On May 29, 2020, the Company entered into an Asset Purchase Agreement, which was subsequently amended and restated (the “Amended and Restated Agreement”), with SecureCo, LLC (“SecureCo”), pursuant to which the Company agreed to sell substantially all of the assets related to its secure communications business to SecureCo. 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 SecureCo, with the aggregate amount of such royalty payments not to exceed $500,000. The royalty payments, if received, will be recorded as technology service revenue. The Company does not expect to continue to pursue secure communications products or technology implementation services as part of its overall business strategy. The Company also 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 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 7 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 quarters 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 consolidated statements of income and digital tokens receivable in the consolidated balance sheets. 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 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 year ended December 31, 2021, the Company received 1.5 million Props tokens for the validator service and 24.3 million Props tokens under the loyalty platform. The net revenue earned was recorded under “technology service revenue” in the consolidated statements of income. 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 year ended December 31, 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 7 for additional information on the fair value of the Props tokens). The total net revenue value recognized as earned was estimated to be $454,504 and $525,748 for the years ended December 31, 2021 and 2020, respectively. 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. 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 consolidated statements of income. 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 such as specialty coins, subscriptions, stickers, flair, and other popular buttons. As of the termination of the YouNow Agreement, the Company held 8,575,638 Props, or $338,553, under “digital tokens payable” in our consolidated balance sheets. In accordance with ASC 405-20-40, the Company recorded a $338,553 gain on extinguishment of digital tokens payable under the Company’s operation expenses in the statement of income for the year ended December 31, 2021. Revisions to the Company’s estimates may result in increases or decreases to revenues and income and are reflected in the 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 consolidated statements of operations. There were no contract losses for the periods presented. Digital Tokens At December 31, 2020, digital tokens and digital tokens receivable 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, management has exercised significant judgment in determining the appropriate accounting treatment and in the event that authoritative guidance is enacted by the FASB, the Company may be required to change its policies, which could have an effect on the Company’s consolidated financial position and results from operations. The Company determined to account for digital tokens as indefinite-lived intangible assets in accordance with ASC 350, Intangibles-Goodwill and Other In testing for impairment, the Company has the option to first perform a qualitative assessment to determine whether it is more likely than not that an impairment exists. If it is determined that it is not more likely than not that an impairment exists, a quantitative impairment test is not necessary. Otherwise, it is required to perform a quantitative impairment test. If, at the time of an impairment test, the carrying amount of an intangible asset exceeds its fair value, an impairment loss in an amount equal to the excess is recognized. Subsequent reversal of impairment losses is not permitted. Gains (if any) are not recorded until realized upon sale, at which point they would be presented net of any impairment losses in the Company’s consolidated statements of income. In determining the gain to be recognized upon sale, the Company calculates the difference between the sales price and carrying value of the specific digital token sold immediately prior to sale. During year the ended December 31, 2021, the Company sold approximately 36.9 million Props tokens for total proceeds of $0.9 million. The realized gain of the sale of digital tokens was approximately $307,934 for the year ended December 31, 2021 and is included in the consolidated statements of income. The Company determines the fair value of its digital tokens on a nonrecurring basis in accordance with ASC 820, Fair Value Measurement. See Note 7, Digital Tokens, to the consolidated financial statements for further information regarding the Company’s digital tokens. Cost of Revenue Cost of revenue consists primarily of compensation (including stock-based compensation) and other employee-related costs for personnel engaged in data center and customer care functions, credit card processing fees, hosting fees, and data center rent and bandwidth costs. Cost of revenue also includes compensation and other employee-related costs for technical personnel and subcontracting costs relating to technology service revenue. Sales and Marketing Sales and marketing expense consists primarily of advertising expenditures and compensation (including stock-based compensation) and other employee-related costs for personnel engaged in sales and sales support functions. Advertising and promotional spend includes online marketing, including fees paid to search engines, and offline marketing, which primarily consists of partner-related payments to those who direct traffic to the Company’s brands. Total advertising expense for the year ended December 31, 2021 was approximately $1.2 million and $0.8 million for the year ended December 31, 2020. Product Development Product development expense, which relates to the development of technology of the Company’s applications, consists primarily of compensation (including stock-based compensation) and other employee-related costs that are not capitalized for personnel engaged in the design, testing and enhancement of service offerings as well as amortization of capitalized website development costs. General and Administrative General and administrative expense consists primarily of compensation (including stock-based compensation) and other employee-related costs for personnel engaged in executive management, finance, legal, tax, human resources and facilities costs and fees for other professional services. General and administrative expense also includes depreciation of property and equipment and amortization of intangible assets. Reportable Segment The Company operates in one reportable segment, and management assesses the Company’s financial performance and makes operating decisions based on a single operating segment. Income Taxes The Company accounts for income taxes under the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements. Under this method, the Company determines deferred tax assets and liabilities on the basis of the differences between the financial statement and tax bases of assets and liabilities by using enacted tax rates in effect for the year in which the differences are expected to reverse. The effect of a change in tax rates on deferred tax assets and liabilities is recognized in income in the period that includes the enactment date. The Company recognizes deferred tax assets to the extent that the Company believes that these assets are more likely than not to be realized. In making such a determination, the Company considers all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, tax-planning strategies, and results of recent operations. If the Company determines that it would be able to realize deferred taxes in the future in excess of their net recorded amount, the Company would make an adjustment to the deferred tax asset valuation allowance, which would reduce the provision for income taxes. The Company records uncertain tax positions in accordance with ASC No. 740, Accounting for Income Taxes The Company recognizes interest and penalties related to unrecognized tax benefits on the income tax expense line in the accompanying consolidated statement of income. Accrued interest and penalties would be included on the related tax liability line in the accompanying consolidated balance sheets. Stock-Based Compensation In accordance with ASC No. 718, Compensation – Stock Compensation Equity instruments issued to non-employees are recorded on the basis of the fair value of the instruments, as required by Accounting Standards Update (“ASU”) No. 2018-07, Compensation — Stock Compensation (Topic 718) The fair value of each option granted under the Company’s Amended and Restated 2011 Long-Term Incentive Plan (the “2011 Plan”) and 2016 Long-Term Incentive Plan (the “2016 Plan”) was estimated using the Black-Scholes option-pricing model (see Note 10 for further details). Using this model, fair value is calculated based on assumptions with respect to the (i) expected volatility of the Company’s common stock price, (ii) expected life of the award, which for options is the period of time over which employees and non- employees are expected to hold their options prior to exercise, (iii) expected dividend yield on the Company’s common stock, and (iv) a risk-free interest rate, which is based on quoted U.S. Treasury rates for securities with maturities approximating the expected term. Expected volatility is estimated based on the Company’s historical volatilities. The expected life of options has been determined using the “simplified” method, which uses the midpoint between the vesting date and the end of the contractual term. The expected dividend yield is zero as the Company has never paid dividends and does not currently anticipate paying dividends in the foreseeable future. Net Income Per Share Basic earnings and net income per share are computed by dividing the net 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 Cash and Cash Equivalents The Company considers all highly liquid investments with an original maturity of three months or less at the date of purchase to be cash equivalents. Cash and cash equivalents consist of cash on deposit with banks and money market funds. The Company maintains cash in bank accounts which, at times, may exceed federally insured limits. As part of its cash management process, the Company periodically reviews the relative credit standing of these banks. The Company has not experienced any losses in such accounts and periodically evaluates the credit worthiness of the financial institutions and has determined the credit exposure to be negligible. Receivables Accounts receivable are composed of amounts due from our advertising partners and from credit card processing companies following the initiation of subscription arrangements originated by the Company’s subscribers, which pay by credit card. These receivables are unsecured and are typically settled by the payment processing company within several days of transaction processing accordingly, an allowance for doubtful accounts is considered. Accounts receivable from advertising partners and payment processing companies amounted to $153,448 and $71,410 on December 31, 2021 and December 31, 2020, respectively. As of December 31, 2021, three advertising partners accounted for 48% of accounts receivable. As of December 31, 2021, the three advertising partners made up 22%, 15%, and 11% of accounts receivable, respectively. Property and Equipment Property and equipment are stated at cost, less accumulated depreciation and amortization. Depreciation and amortization are calculated using the straight-line method over the estimated useful lives of those assets, as follows: Computers and equipment 5 years Website development 3 years Furniture and fixtures 7 years Leasehold improvements Shorter of estimated useful life or remaining lease term Repairs and maintenance costs are expensed as incurred Property and equipment is evaluated for recoverability whenever events or changes in circumstances indicate that the carrying amounts of the assets might not be recoverable. In evaluating an asset for recoverability, the Company estimates the future cash flow expected to result from the use and eventual disposition of the asset. If the expected future undiscounted cash flow is less than the carrying amount of the asset, an impairment loss, equal to the excess of the carrying amount over the fair value of the asset, is recognized. No impairment losses were recorded on property and equipment for the periods presented in these consolidated financial statements. Website Development Costs In accordance with ASC 350-50, Website Development Costs Goodwill Goodwill is recorded when the purchase price paid for an acquisition exceeds the estimated fair value of the net identified tangible and intangible assets acquired. The Company evaluates its goodwill for impairment in accordance with ASC 350, Intangibles – Goodwill and Other (as amended by ASU 2017-04) The Company tests the recorded amount of goodwill for impairment on an annual basis on December 31 of each fiscal year or more frequently if there are indicators that the carrying amount of the goodwill exceeds its carried value. The Company has one reporting unit. The Company performed a qualitative assessment and concluded that no impairment existed as of December 31, 2021 and 2020. Intangible Assets The Company’s intangible assets represent definite lived intangible assets, which are being amortized on a straight-line basis over their estimated useful lives as follows: Patents 20 years Trade names, trademarks, product names, URLs 5-10 years Internally developed software 5-6 years Non-compete agreements 3 years Subscriber/customer relationships 3-12 years The Company reviews intangible assets for impairment whenever events or changes in business circumstances indicate that the carrying amount of the assets might not be recoverable. Factors that the Company considers in deciding when to perform an impairment review include significant underperformance of the business in relation to expectations, significant negative industry or economic trends, and significant changes or planned changes in the use of the assets. If an impairment review is performed to evaluate a long-lived asset for recoverability, the Company compares forecasts of undiscounted cash flows expected to result from the use and eventual disposition of the long-lived asset to its carrying value. An impairment loss would be recognized when estimated undiscounted future cash flows expected to result from the use of an asset are less than its carrying amount. The impairment loss would be based on the excess of the carrying value of the impaired asset over its fair value, determined based on discounted cash flows. No impairments were recorded on intangible assets as no impairment indicators were noted for the periods presented in these consolidated financial statements. Leases The Company accounts for its leases under ASC 842, Leases Recent Accounting Pronouncements In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes 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 | 12 Months Ended |
Dec. 31, 2021 | |
Property, Plant and Equipment [Abstract] | |
Property and Equipment, Net | 4. Property and Equipment, Net Property and equipment, net consisted of the following for the periods presented: 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 (3,920,646 ) (3,734,468 ) Total property and equipment, net $ 69,599 $ 255,777 Depreciation expense, which includes amortization of website development costs, for the years ended December 31, 2021 and 2020 was $186,178 and $325,044, respectively. Loss on disposal of property and equipment for the years ended December 31, 2021 and 2020 was $0 and $39,238, respectively, as a result from the termination of one of our office leases. |
Goodwill
Goodwill | 12 Months Ended |
Dec. 31, 2021 | |
Goodwill [Abstract] | |
Goodwill | 5. Goodwill The Company tests goodwill and indefinite-lived intangible assets for impairment annually and whenever events or circumstances arise that indicate an impairment may exist. The Company determined there were no indicators that would lead to a test for impairment during the years ended December 31, 2021 and 2020. Goodwill was $6,326,250 as of December 31, 2021 and December 31, 2020. |
Intangible Assets, Net
Intangible Assets, Net | 12 Months Ended |
Dec. 31, 2021 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Intangible Assets, Net | 6. Intangible Assets, Net Intangible assets, net consisted of the following for the periods presented: December 31, 2021 2020 Gross Accumulated Net Gross Accumulated Net Patents $ 50,000 $ (31,251 ) $ 18,749 $ 50,000 $ (28,750 ) $ 21,250 Trade names, trademarks, product names, URLs 555,000 (509,148 ) 45,852 555,000 (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 (2,147,058 ) 131,942 2,279,000 (1,980,392 ) 298,608 Total intangible assets $ 4,874,000 $ (4,677,457 ) $ 196,543 $ 4,874,000 $ (4,492,790 ) $ 381,210 Amortization expense for the years ended December 31, 2021 and 2020 was $184,667 and $246,681, respectively. The aggregate amortization expense for each of the next three years and thereafter is estimated to be $149,944 in 2022, $18,000 in 2023, $17,349 in 2024 and $11,250 thereafter. |
Digital Tokens
Digital Tokens | 12 Months Ended |
Dec. 31, 2021 | |
Digital Tokens [Abstract] | |
Digital Tokens | 7. 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 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. As the Props tokens do not currently have access to a liquid marketplace, a discount for lack of marketability was applied to the implied fair value using a protective put calculation. A summary of the key inputs used in the Backsolve model at 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 June 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. Given the recent trading availability of Props tokens in various active markets, during the year ended December 31, 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 December 31, 2021, the Company recorded $7,262 under digital tokens. During the year ended December 31, 2021, the Company recorded a non-cash impairment charge in the amount of $765,232, which is reported in the accompanying consolidated statements of income 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. 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. During year the ended December 31, 2021, the Company sold approximately 36.9 million Props tokens for proceeds $0.9 million. The realized gain of the sale of digital tokens was approximately $307,934 for the year ended December 31, 2021 and is included in the consolidated statements of income. |
Income Taxes
Income Taxes | 12 Months Ended |
Dec. 31, 2021 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | 8. Income Taxes On March 27, 2020, the CARES Act was enacted in response to COVID-19 pandemic. Under ASC 740, the effects of changes in tax rates and laws are recognized in the period which the new legislation is enacted. The CARES Act made various tax law changes including among other things (i) increased the limitation under IRC Section 163(j) for 2019 and 2020 to permit additional expensing of interest (ii) enacted a technical correction so that qualified improvement property can be immediately expensed under IRC Section 168(k), (iii) made modifications to the federal net operating loss rules including permitting federal net operating losses incurred in 2018, 2019, and 2020 to be carried back to the five preceding taxable years in order to generate a refund of previously paid income taxes and (iv) enhanced recoverability of AMT tax credits. Given the Company’s full valuation allowance position, the CARES Act did not have a material impact on the financial statements. The Company’s provision for income taxes is comprised of the following: December 31, 2021 2020 Current Federal $ - $ - State and local 9,951 387 Total Current 9,951 387 Deferred Federal - - State and local - - Change in Valuation Allowance - - Total Deferred - - Total Provision (Benefit) $ 9,951 $ 387 Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of the Company’s deferred tax assets and liabilities are as follows: December 31, 2021 2020 Deferred Tax Assets: Net operating losses $ 3,907,758 $ 4,098,329 Share-based compensation 767,318 859,100 Amortization of Intangible Assets 716,598 769,742 Rent 56,251 15,272 Tax Credits 62,969 62,969 Other 266,986 160,762 Subtotal 5,777,880 5,966,174 Less Valuation Allowance: (5,713,490 ) (5,903,825 ) Total Deferred Tax Assets 64,390 62,349 Deferred Tax Liabilities: Property and equipment (64,390 ) (62,349 ) Total Deferred Tax Liabilities (64,390 ) (62,349 ) Net Deferred Tax Assets $ - $ - In assessing the Company’s ability to recover its deferred tax assets, the Company evaluated whether it is more likely than not that some portion or the entire deferred tax asset will be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income in those periods in which temporary differences become deductible and/or net operating losses can be utilized. The Company considered all positive and negative evidence when determining the amount of the net deferred tax assets that are more likely than not to be realized. This evidence includes, but is not limited to, historical earnings, scheduled reversal of taxable temporary differences, tax planning strategies and projected future taxable income. Based on these factors including cumulative losses in recent years, the Company determined that its deferred tax assets are not realizable on a more-likely-than-not basis and has recorded a valuation allowance against its net deferred tax assets. The Company’s valuation allowance decreased by $190,335 during 2021. The Company will continue to evaluate its deferred tax assets to determine whether any changes in circumstances could affect the realization of their future benefit. If it is determined in future periods that portions of the Company’s deferred income tax assets satisfy the realization standards, the valuation allowance will be reduced accordingly. As of December 31, 2021, the Company has U.S. federal net operating loss carryforwards of approximately $17.4 million, of which $13.1 million may be subject to an annual limitation under Section 382 of the Internal Revenue Code. Of the $17.4 million, approximately, $16.2 million are available to offset 100% of future taxable income but expire in varying amounts between 2030 to 2037, if not utilized. The remaining $1.2 million is available to offset 80% of future taxable income but may be carried forward indefinitely. The Company’s effective tax rate differs from the U.S. federal statutory income tax rate of 21% for 2021 and 2020 as follows: 2021 2020 Income tax (expense) benefit at federal statutory rate 21.0 % 21.0 % Permanent Differences 0.2 % 0.2 % State and local taxes (4.5 )% 1.9 % Valuation allowance (14.3 )% (37.0 )% Deferred tax adjustment 2.6 % 0.0 % Share based compensation 3.9 % 14.6 % PPP Loan Forgiveness (8.0 )% - Other (0.2 )% (0.6 )% Effective tax rate 0.7 % 0.1 % The Company applies the applicable authoritative guidance which prescribes a comprehensive model for the manner in which a company should recognize, measure, present and disclose in its financial statements all material uncertain tax positions that the Company has taken or expects to take on a tax return. As of December 31, 2021, the Company has no uncertain tax positions. As such, there are no uncertain tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will significantly increase or decrease within twelve months from December 31, 2021. The Company files a federal income tax return and income tax returns in various state tax jurisdictions. The open tax years for the federal income tax return are 2018 through 2021. The state income tax returns have varying statutes of limitations. The open tax years relating to any of the Company’s federal and state net operating losses begin in 2011. |
Accrued Expenses and Other Curr
Accrued Expenses and Other Current Liabilities | 12 Months Ended |
Dec. 31, 2021 | |
Disclosure Text Block Supplement [Abstract] | |
Accrued Expenses and Other Current Liabilities | 9. Accrued Expenses and Other Current Liabilities Accrued expenses and other current liabilities consisted of the following for the periods presented: December 31, 2021 2020 Compensation, benefits and payroll taxes $ 318,150 $ 226,500 Other accrued expenses 26,291 27,584 Total accrued expenses and other current liabilities $ 344,441 $ 254,084 |
Stockholders' Equity
Stockholders' Equity | 12 Months Ended |
Dec. 31, 2021 | |
Stockholders' Equity Note [Abstract] | |
Stockholders' Equity | 10. Stockholders’ Equity The Paltalk, Inc. Amended and Restated 2011 Long-Term Incentive Plan (the “2011 Plan”) was terminated as to future awards on May 16, 2016. A total of 121,930 shares of the Company’s common stock may be issued pursuant to outstanding options awarded under the 2011 Plan; however, no additional awards may be granted under such plan. The Paltalk, Inc. 2016 Long-Term Incentive Plan (“the 2016 Plan”) was adopted by the Company’s stockholders on May 16, 2016 and permits the Company to award stock options (both incentive stock options and non-qualified stock options), stock appreciation rights, restricted stock, restricted stock units, performance awards, dividend equivalent rights, and other stock-based awards and cash-based incentive awards to its employees (including an employee who is also a director or officer under certain circumstances), non-employee directors and consultants. The maximum number of shares of common stock that may be issued pursuant to awards under the 2016 Plan is 1,300,000 shares, 100% of which may be issued pursuant to incentive stock options. In addition, the maximum number of shares of common stock that may be issued under the 2016 Plan may be increased by an indeterminate number of shares of common stock underlying outstanding awards issued under the 2011 Plan that are forfeited, expired, cancelled or settled in cash. As of December 31, 2021, there were 978,359 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 (Registration 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 Topic 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. October 2021 Underwritten Public Offering On October 19, 2021, we announced the pricing and closing of an underwritten public offering of an aggregate of 1,552,500 shares of our 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 (Registration 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 were approximately $11.6 million, before deducting underwriting discounts and commissions and other estimated offering expenses of approximately $955,400. These costs were recorded in stockholders’ equity as a reduction of additional paid-in capital in connection with Staff Accounting Bulletin Topic 5A. 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 years ended: December 31, 2021 2020 Expected volatility 178.0 – 197.0 % 188.0 % Expected life of option 5.0 – 5.5 5.3 Risk free interest rate 0.81 – 0.88 % 0.6 % Expected dividend yield 0.0 % 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 tables summarize stock option activity during the year ended December 31, 2021: Weighted Average Number of Exercise Options Price Outstanding at January 1, 2021 622,036 $ 5.53 Granted 37,932 3.77 Exercised during period (61,906 ) 3.09 Forfeited or canceled, during the period (128,569 ) 4.06 Expired, during the period (33,723 ) 16.50 Outstanding at December 31, 2021 435,770 $ 5.31 Exercisable at December 31, 2021 394,075 $ 5.65 At December 31, 2021, there was $71,222 of total unrecognized compensation expense related to stock options, which is expected to be recognized over a weighted average period of 1.96 years. On December 31, 2021, the aggregate intrinsic value of stock options that were outstanding and exercisable was $149,394 and $109,644, respectively. On December 31, 2020, the aggregate intrinsic value of stock options that were outstanding and exercisable was $15,840 and $15,840, 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 year ended December 31, 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 year ended December 31, 2021, the Company also granted options to employees to purchase an aggregate of 13,932 shares of common stock. These options have a vesting date ranging 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. The aggregate fair value for the options granted during the years ended December 31, 2021 and 2020 was $145,522 and $18,664, respectively. Stock-based compensation expense for the Company’s stock options included in the consolidated statements of income was as follows: Years Ended December 31, 2021 2020 Cost of revenue $ 67,182 $ 1,527 Sales and marketing expense 294 90 Product development expense 11,302 19,491 General and administrative expense (114,431 ) 222,089 Total stock-based compensation expense $ (35,653 ) $ 243,197 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 consolidated balance sheets. In addition, the Company retained 22,013 in treasury shares as part of a net share exercise of stock options by former employees. As of December 31, 2021, the Company had 31,963 shares of its common stock classified as treasury shares on the Company’s consolidated balance sheets. |
Net Income Per Share
Net Income Per Share | 12 Months Ended |
Dec. 31, 2021 | |
Net Income Per Share [Abstract] | |
Net Income Per Share | 11. Net Income Per Share Basic earnings and net income per share are computed by dividing the net 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 income per share calculation for the periods presented: Years Ended December 31, 2021 2020 Net income from operations – basic and diluted $ 1,324,106 $ 1,371,262 Weighted average shares outstanding – basic 7,766,111 6,884,690 Weighted average shares outstanding – diluted 7,809,132 6,887,808 Per share data: Basic from operations $ 0. 17 $ 0. 20 Diluted from operations $ 0. 17 $ 0. 20 |
Leases
Leases | 12 Months Ended |
Dec. 31, 2021 | |
Leases [Abstract] | |
Leases | 12. Leases Operating 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 commenced 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 December 31, 2021, the Company had no long-term leases that were classified as financing leases. As of December 31, 2021, the Company did not have additional operating and financing leases that had not yet commenced. At December 31, 2021, the Company had operating lease liabilities of approximately $239,000 and right-of-use assets of approximately $239,000, which are included in the consolidated balance sheets. Total rent expense for the year ended December 31, 2021 was $84,525, of which $4,500 was sublease income. Total rent expense for year ended December 31, 2020 was $206,347, of which $36,095 was sublease income. Rent expense is recorded under general and administrative expense in the consolidated statements of income. The following table summarizes the Company’s operating leases for the periods presented: Years Ended December 31, 2021 2020 Cash paid for amounts included in the measurement of operating lease liabilities: $ 74,416 $ 107,674 Weighted average assumptions: Remaining lease term 2.9 0.9 Discount rate 2.3 % 3.5 % As of December 31, 2021, future minimum payments under non-cancelable operating leases were as follows: For the years ending December 31, Amount 2022 $ 84,975 2023 84,975 2024 77,894 Total $ 247,844 Less: present value adjustment (8,353 ) Present value of minimum lease payments $ 239,491 |
Term Debt
Term Debt | 12 Months Ended |
Dec. 31, 2021 | |
Debt Disclosure [Abstract] | |
Term debt | 13. Term Debt On April 13, 2020, to help ensure adequate liquidity in light of the uncertainties posed by the coronavirus pandemic, the Company applied for a loan under the SBA 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 | 12 Months Ended |
Dec. 31, 2021 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | 14. Commitments and Contingencies Patent Litigations 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 early 2023. 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 December 31, 2021. |
Subsequent Events
Subsequent Events | 12 Months Ended |
Dec. 31, 2021 | |
Subsequent Events [Abstract] | |
Subsequent Events | 16. Subsequent Events On January 28, 2022, the Board of Directors approved the issuance of 145,000 stock options to employees of the Company. Management has evaluated subsequent events or transactions occurring through the date the 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) | 12 Months Ended |
Dec. 31, 2021 | |
Organization and Description of Business [Abstract] | |
Principles of Consolidation | Principles of Consolidation The accompanying consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries and were prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”) and with the requirements of the Security and Exchange Commission (“SEC”). All intercompany balances and transactions have been eliminated upon consolidation. |
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 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 and the fair value of digital tokens. 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. |
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 Accounting Standards Codification (“ASC”) 606, Revenue from Contracts with Customers Subscription Revenue The Company generates subscription revenue primarily from monthly premium subscription services. Subscription revenues are presented net of refunds, credits, and known and estimated credit card chargebacks. During the years ended December 31, 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 consolidated balance sheets. Deferred revenue at December 31, 2020 was $2,058,721, which was subsequently recognized as subscription revenue during the year ended December 31, 2021. The ending balance of deferred revenue at December 31, 2021 was $1,915,493. 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 consolidated statements of income. Virtual gift revenue is presented as deferred revenue in the consolidated balance sheets until virtual gifts are redeemed. Virtual gift revenue was $5,586,710 and $5,188,858 for the years ended December 31, 2021 and 2020, respectively. The ending balance of deferred revenue from virtual gifts at December 31, 2021 and 2020 was $293,737 and $348,677, 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 is generated under service and partnership agreements that the Company negotiates with third parties which includes development, integration, engineering, licensing or other services that the Company provides. On May 29, 2020, the Company entered into an Asset Purchase Agreement, which was subsequently amended and restated (the “Amended and Restated Agreement”), with SecureCo, LLC (“SecureCo”), pursuant to which the Company agreed to sell substantially all of the assets related to its secure communications business to SecureCo. 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 SecureCo, with the aggregate amount of such royalty payments not to exceed $500,000. The royalty payments, if received, will be recorded as technology service revenue. The Company does not expect to continue to pursue secure communications products or technology implementation services as part of its overall business strategy. The Company also 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 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 7 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 quarters 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 consolidated statements of income and digital tokens receivable in the consolidated balance sheets. 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 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 year ended December 31, 2021, the Company received 1.5 million Props tokens for the validator service and 24.3 million Props tokens under the loyalty platform. The net revenue earned was recorded under “technology service revenue” in the consolidated statements of income. 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 year ended December 31, 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 7 for additional information on the fair value of the Props tokens). The total net revenue value recognized as earned was estimated to be $454,504 and $525,748 for the years ended December 31, 2021 and 2020, respectively. 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. 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 consolidated statements of income. 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 such as specialty coins, subscriptions, stickers, flair, and other popular buttons. As of the termination of the YouNow Agreement, the Company held 8,575,638 Props, or $338,553, under “digital tokens payable” in our consolidated balance sheets. In accordance with ASC 405-20-40, the Company recorded a $338,553 gain on extinguishment of digital tokens payable under the Company’s operation expenses in the statement of income for the year ended December 31, 2021. Revisions to the Company’s estimates may result in increases or decreases to revenues and income and are reflected in the 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 consolidated statements of operations. There were no contract losses for the periods presented. |
Digital Tokens | Digital Tokens At December 31, 2020, digital tokens and digital tokens receivable 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, management has exercised significant judgment in determining the appropriate accounting treatment and in the event that authoritative guidance is enacted by the FASB, the Company may be required to change its policies, which could have an effect on the Company’s consolidated financial position and results from operations. The Company determined to account for digital tokens as indefinite-lived intangible assets in accordance with ASC 350, Intangibles-Goodwill and Other In testing for impairment, the Company has the option to first perform a qualitative assessment to determine whether it is more likely than not that an impairment exists. If it is determined that it is not more likely than not that an impairment exists, a quantitative impairment test is not necessary. Otherwise, it is required to perform a quantitative impairment test. If, at the time of an impairment test, the carrying amount of an intangible asset exceeds its fair value, an impairment loss in an amount equal to the excess is recognized. Subsequent reversal of impairment losses is not permitted. Gains (if any) are not recorded until realized upon sale, at which point they would be presented net of any impairment losses in the Company’s consolidated statements of income. In determining the gain to be recognized upon sale, the Company calculates the difference between the sales price and carrying value of the specific digital token sold immediately prior to sale. During year the ended December 31, 2021, the Company sold approximately 36.9 million Props tokens for total proceeds of $0.9 million. The realized gain of the sale of digital tokens was approximately $307,934 for the year ended December 31, 2021 and is included in the consolidated statements of income. The Company determines the fair value of its digital tokens on a nonrecurring basis in accordance with ASC 820, Fair Value Measurement. See Note 7, Digital Tokens, to the consolidated financial statements for further information regarding the Company’s digital tokens. |
Cost of Revenue | Cost of Revenue Cost of revenue consists primarily of compensation (including stock-based compensation) and other employee-related costs for personnel engaged in data center and customer care functions, credit card processing fees, hosting fees, and data center rent and bandwidth costs. Cost of revenue also includes compensation and other employee-related costs for technical personnel and subcontracting costs relating to technology service revenue. |
Sales and Marketing | Sales and Marketing Sales and marketing expense consists primarily of advertising expenditures and compensation (including stock-based compensation) and other employee-related costs for personnel engaged in sales and sales support functions. Advertising and promotional spend includes online marketing, including fees paid to search engines, and offline marketing, which primarily consists of partner-related payments to those who direct traffic to the Company’s brands. Total advertising expense for the year ended December 31, 2021 was approximately $1.2 million and $0.8 million for the year ended December 31, 2020. |
Product Development | Product Development Product development expense, which relates to the development of technology of the Company’s applications, consists primarily of compensation (including stock-based compensation) and other employee-related costs that are not capitalized for personnel engaged in the design, testing and enhancement of service offerings as well as amortization of capitalized website development costs. |
General and Administrative | General and Administrative General and administrative expense consists primarily of compensation (including stock-based compensation) and other employee-related costs for personnel engaged in executive management, finance, legal, tax, human resources and facilities costs and fees for other professional services. General and administrative expense also includes depreciation of property and equipment and amortization of intangible assets. |
Reportable Segment | Reportable Segment The Company operates in one reportable segment, and management assesses the Company’s financial performance and makes operating decisions based on a single operating segment. |
Income Taxes | Income Taxes The Company accounts for income taxes under the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements. Under this method, the Company determines deferred tax assets and liabilities on the basis of the differences between the financial statement and tax bases of assets and liabilities by using enacted tax rates in effect for the year in which the differences are expected to reverse. The effect of a change in tax rates on deferred tax assets and liabilities is recognized in income in the period that includes the enactment date. The Company recognizes deferred tax assets to the extent that the Company believes that these assets are more likely than not to be realized. In making such a determination, the Company considers all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, tax-planning strategies, and results of recent operations. If the Company determines that it would be able to realize deferred taxes in the future in excess of their net recorded amount, the Company would make an adjustment to the deferred tax asset valuation allowance, which would reduce the provision for income taxes. The Company records uncertain tax positions in accordance with ASC No. 740, Accounting for Income Taxes The Company recognizes interest and penalties related to unrecognized tax benefits on the income tax expense line in the accompanying consolidated statement of income. Accrued interest and penalties would be included on the related tax liability line in the accompanying consolidated balance sheets. |
Stock-Based Compensation | Stock-Based Compensation In accordance with ASC No. 718, Compensation – Stock Compensation Equity instruments issued to non-employees are recorded on the basis of the fair value of the instruments, as required by Accounting Standards Update (“ASU”) No. 2018-07, Compensation — Stock Compensation (Topic 718) The fair value of each option granted under the Company’s Amended and Restated 2011 Long-Term Incentive Plan (the “2011 Plan”) and 2016 Long-Term Incentive Plan (the “2016 Plan”) was estimated using the Black-Scholes option-pricing model (see Note 10 for further details). Using this model, fair value is calculated based on assumptions with respect to the (i) expected volatility of the Company’s common stock price, (ii) expected life of the award, which for options is the period of time over which employees and non- employees are expected to hold their options prior to exercise, (iii) expected dividend yield on the Company’s common stock, and (iv) a risk-free interest rate, which is based on quoted U.S. Treasury rates for securities with maturities approximating the expected term. Expected volatility is estimated based on the Company’s historical volatilities. The expected life of options has been determined using the “simplified” method, which uses the midpoint between the vesting date and the end of the contractual term. The expected dividend yield is zero as the Company has never paid dividends and does not currently anticipate paying dividends in the foreseeable future. |
Net Income Per Share | Net Income Per Share Basic earnings and net income per share are computed by dividing the net 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 |
Cash and Cash Equivalents | Cash and Cash Equivalents The Company considers all highly liquid investments with an original maturity of three months or less at the date of purchase to be cash equivalents. Cash and cash equivalents consist of cash on deposit with banks and money market funds. The Company maintains cash in bank accounts which, at times, may exceed federally insured limits. As part of its cash management process, the Company periodically reviews the relative credit standing of these banks. The Company has not experienced any losses in such accounts and periodically evaluates the credit worthiness of the financial institutions and has determined the credit exposure to be negligible. |
Receivables | Receivables Accounts receivable are composed of amounts due from our advertising partners and from credit card processing companies following the initiation of subscription arrangements originated by the Company’s subscribers, which pay by credit card. These receivables are unsecured and are typically settled by the payment processing company within several days of transaction processing accordingly, an allowance for doubtful accounts is considered. Accounts receivable from advertising partners and payment processing companies amounted to $153,448 and $71,410 on December 31, 2021 and December 31, 2020, respectively. As of December 31, 2021, three advertising partners accounted for 48% of accounts receivable. As of December 31, 2021, the three advertising partners made up 22%, 15%, and 11% of accounts receivable, respectively. |
Property and Equipment | Property and Equipment Property and equipment are stated at cost, less accumulated depreciation and amortization. Depreciation and amortization are calculated using the straight-line method over the estimated useful lives of those assets, as follows: Computers and equipment 5 years Website development 3 years Furniture and fixtures 7 years Leasehold improvements Shorter of estimated useful life or remaining lease term Repairs and maintenance costs are expensed as incurred Property and equipment is evaluated for recoverability whenever events or changes in circumstances indicate that the carrying amounts of the assets might not be recoverable. In evaluating an asset for recoverability, the Company estimates the future cash flow expected to result from the use and eventual disposition of the asset. If the expected future undiscounted cash flow is less than the carrying amount of the asset, an impairment loss, equal to the excess of the carrying amount over the fair value of the asset, is recognized. No impairment losses were recorded on property and equipment for the periods presented in these consolidated financial statements. |
Website Development Costs | Website Development Costs In accordance with ASC 350-50, Website Development Costs |
Goodwill | Goodwill Goodwill is recorded when the purchase price paid for an acquisition exceeds the estimated fair value of the net identified tangible and intangible assets acquired. The Company evaluates its goodwill for impairment in accordance with ASC 350, Intangibles – Goodwill and Other (as amended by ASU 2017-04) The Company tests the recorded amount of goodwill for impairment on an annual basis on December 31 of each fiscal year or more frequently if there are indicators that the carrying amount of the goodwill exceeds its carried value. The Company has one reporting unit. The Company performed a qualitative assessment and concluded that no impairment existed as of December 31, 2021 and 2020. |
Intangible Assets | Intangible Assets The Company’s intangible assets represent definite lived intangible assets, which are being amortized on a straight-line basis over their estimated useful lives as follows: Patents 20 years Trade names, trademarks, product names, URLs 5-10 years Internally developed software 5-6 years Non-compete agreements 3 years Subscriber/customer relationships 3-12 years The Company reviews intangible assets for impairment whenever events or changes in business circumstances indicate that the carrying amount of the assets might not be recoverable. Factors that the Company considers in deciding when to perform an impairment review include significant underperformance of the business in relation to expectations, significant negative industry or economic trends, and significant changes or planned changes in the use of the assets. If an impairment review is performed to evaluate a long-lived asset for recoverability, the Company compares forecasts of undiscounted cash flows expected to result from the use and eventual disposition of the long-lived asset to its carrying value. An impairment loss would be recognized when estimated undiscounted future cash flows expected to result from the use of an asset are less than its carrying amount. The impairment loss would be based on the excess of the carrying value of the impaired asset over its fair value, determined based on discounted cash flows. No impairments were recorded on intangible assets as no impairment indicators were noted for the periods presented in these consolidated financial statements. |
Leases | Leases The Company accounts for its leases under ASC 842, Leases |
Recent Accounting Pronouncements | Recent Accounting Pronouncements In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes |
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. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Organization and Description of Business [Abstract] | |
Schedule of property plant and equipment useful life | Computers and equipment 5 years Website development 3 years Furniture and fixtures 7 years Leasehold improvements Shorter of estimated useful life or remaining lease term Repairs and maintenance costs are expensed as incurred |
Schedule of finite lived intangible assets useful life | Patents 20 years Trade names, trademarks, product names, URLs 5-10 years Internally developed software 5-6 years Non-compete agreements 3 years Subscriber/customer relationships 3-12 years |
Property and Equipment, Net (Ta
Property and Equipment, Net (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Property, Plant and Equipment [Abstract] | |
Schedule of property and equipment, net | 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 (3,920,646 ) (3,734,468 ) Total property and equipment, net $ 69,599 $ 255,777 |
Intangible Assets, Net (Tables)
Intangible Assets, Net (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of intangible assets, net | December 31, 2021 2020 Gross Accumulated Net Gross Accumulated Net Patents $ 50,000 $ (31,251 ) $ 18,749 $ 50,000 $ (28,750 ) $ 21,250 Trade names, trademarks, product names, URLs 555,000 (509,148 ) 45,852 555,000 (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 (2,147,058 ) 131,942 2,279,000 (1,980,392 ) 298,608 Total intangible assets $ 4,874,000 $ (4,677,457 ) $ 196,543 $ 4,874,000 $ (4,492,790 ) $ 381,210 |
Digital Tokens (Tables)
Digital Tokens (Tables) | 12 Months Ended |
Dec. 31, 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 % |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Income Tax Disclosure [Abstract] | |
Schedule of provision for income taxes | December 31, 2021 2020 Current Federal $ - $ - State and local 9,951 387 Total Current 9,951 387 Deferred Federal - - State and local - - Change in Valuation Allowance - - Total Deferred - - Total Provision (Benefit) $ 9,951 $ 387 |
Schedule of company’s deferred tax assets and liabilities | December 31, 2021 2020 Deferred Tax Assets: Net operating losses $ 3,907,758 $ 4,098,329 Share-based compensation 767,318 859,100 Amortization of Intangible Assets 716,598 769,742 Rent 56,251 15,272 Tax Credits 62,969 62,969 Other 266,986 160,762 Subtotal 5,777,880 5,966,174 Less Valuation Allowance: (5,713,490 ) (5,903,825 ) Total Deferred Tax Assets 64,390 62,349 Deferred Tax Liabilities: Property and equipment (64,390 ) (62,349 ) Total Deferred Tax Liabilities (64,390 ) (62,349 ) Net Deferred Tax Assets $ - $ - |
Schedule of effective tax rate differs from the U.S. federal statutory income tax rate | 2021 2020 Income tax (expense) benefit at federal statutory rate 21.0 % 21.0 % Permanent Differences 0.2 % 0.2 % State and local taxes (4.5 )% 1.9 % Valuation allowance (14.3 )% (37.0 )% Deferred tax adjustment 2.6 % 0.0 % Share based compensation 3.9 % 14.6 % PPP Loan Forgiveness (8.0 )% - Other (0.2 )% (0.6 )% Effective tax rate 0.7 % 0.1 % |
Accrued Expenses and Other Cu_2
Accrued Expenses and Other Current Liabilities (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Disclosure Text Block Supplement [Abstract] | |
Schedule of accrued expenses and other current liabilities | December 31, 2021 2020 Compensation, benefits and payroll taxes $ 318,150 $ 226,500 Other accrued expenses 26,291 27,584 Total accrued expenses and other current liabilities $ 344,441 $ 254,084 |
Stockholders' Equity (Tables)
Stockholders' Equity (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Stockholders' Equity Note [Abstract] | |
Schedule of assumptions used in Black-Scholes pricing model to estimate the fair value of the options granted | December 31, 2021 2020 Expected volatility 178.0 – 197.0 % 188.0 % Expected life of option 5.0 – 5.5 5.3 Risk free interest rate 0.81 – 0.88 % 0.6 % Expected dividend yield 0.0 % 0.0 % |
Schedule of stock option activity | Weighted Average Number of Exercise Options Price Outstanding at January 1, 2021 622,036 $ 5.53 Granted 37,932 3.77 Exercised during period (61,906 ) 3.09 Forfeited or canceled, during the period (128,569 ) 4.06 Expired, during the period (33,723 ) 16.50 Outstanding at December 31, 2021 435,770 $ 5.31 Exercisable at December 31, 2021 394,075 $ 5.65 |
Schedule of stock-based compensation expense | Years Ended December 31, 2021 2020 Cost of revenue $ 67,182 $ 1,527 Sales and marketing expense 294 90 Product development expense 11,302 19,491 General and administrative expense (114,431 ) 222,089 Total stock-based compensation expense $ (35,653 ) $ 243,197 |
Net Income Per Share (Tables)
Net Income Per Share (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Net Income Per Share [Abstract] | |
Schedule of net income per share | Years Ended December 31, 2021 2020 Net income from operations – basic and diluted $ 1,324,106 $ 1,371,262 Weighted average shares outstanding – basic 7,766,111 6,884,690 Weighted average shares outstanding – diluted 7,809,132 6,887,808 Per share data: Basic from operations $ 0. 17 $ 0. 20 Diluted from operations $ 0. 17 $ 0. 20 |
Leases (Tables)
Leases (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Leases [Abstract] | |
Schedule of operating leases | Years Ended December 31, 2021 2020 Cash paid for amounts included in the measurement of operating lease liabilities: $ 74,416 $ 107,674 Weighted average assumptions: Remaining lease term 2.9 0.9 Discount rate 2.3 % 3.5 % |
Schedule of future minimum payments under non-cancelable operating leases | For the years ending December 31, Amount 2022 $ 84,975 2023 84,975 2024 77,894 Total $ 247,844 Less: present value adjustment (8,353 ) Present value of minimum lease payments $ 239,491 |
Organization and Description _2
Organization and Description of Business (Details) | May 03, 2020USD ($) |
Organization and Description of Business [Abstract] | |
Principal amount | $ 506,500 |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Details) - USD ($) | Oct. 15, 2021 | Aug. 31, 2021 | May 29, 2020 | Dec. 31, 2021 | Dec. 31, 2020 |
Summary of Significant Accounting Policies (Details) [Line Items] | |||||
Deferred revenue | $ 1,915,493 | $ 2,058,721 | |||
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. | ||||
Royalty payments | $ 500,000 | ||||
Total net revenue | $ 454,504 | 525,748 | |||
Company hold amount | $ 8,575,638 | ||||
Digital tokens payable | $ 338,553 | $ 338,553 | |||
Props tokens | 36.9 | ||||
Total proceeds | $ 900,000 | ||||
Gain on sale of props tokens | 307,934 | ||||
Advertising expense | $ 1,200,000 | 800,000 | |||
Percentage of tax benefit | 50.00% | ||||
Advertising partners | $ 153,448 | ||||
Processing payment | $ 71,410 | ||||
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 year ended December 31, 2021, the Company received 1.5 million Props tokens for the validator service and 24.3 million Props tokens under the loyalty platform. | ||||
Accounts Receivable [Member] | |||||
Summary of Significant Accounting Policies (Details) [Line Items] | |||||
Concentration risk, percentage | 48.00% | ||||
Advertising partners A [Member] | |||||
Summary of Significant Accounting Policies (Details) [Line Items] | |||||
Concentration risk, percentage | 3.00% | ||||
Advertising partners B [Member] | |||||
Summary of Significant Accounting Policies (Details) [Line Items] | |||||
Concentration risk, percentage | 15.00% | ||||
Advertising partners C [Member] | |||||
Summary of Significant Accounting Policies (Details) [Line Items] | |||||
Concentration risk, percentage | 11.00% | ||||
Minimum [Member] | |||||
Summary of Significant Accounting Policies (Details) [Line Items] | |||||
Royalty payments ranging percent | 5.00% | ||||
Maximum [Member] | |||||
Summary of Significant Accounting Policies (Details) [Line Items] | |||||
Royalty payments ranging percent | 10.00% | ||||
Subscription Arrangement [Member] | |||||
Summary of Significant Accounting Policies (Details) [Line Items] | |||||
Virtual gift revenue | $ 5,586,710 | $ 5,188,858 | |||
Deferred revenue from virtual gifts | $ 293,737 | $ 348,677 | |||
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 7 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 quarters 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 $150,000 from the completion of the first and second integration milestones under technology service revenue in the consolidated statements of income and digital tokens receivable in the consolidated balance sheets. | ||||
Additional props tokens received (in Shares) | 2,625,000 |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies (Details) - Schedule of property plant and equipment useful life | 12 Months Ended |
Dec. 31, 2021USD ($) | |
Summary of Significant Accounting Policies (Details) - Schedule of property plant and equipment useful life [Line Items] | |
Repairs and maintenance costs are expensed as incurred (in Dollars) | |
Computers and equipment [Member] | |
Summary of Significant Accounting Policies (Details) - Schedule of property plant and equipment useful life [Line Items] | |
Property and equipment, estimated useful life | 5 years |
Website development [Member] | |
Summary of Significant Accounting Policies (Details) - Schedule of property plant and equipment useful life [Line Items] | |
Property and equipment, estimated useful life | 3 years |
Furniture and fixtures [Member] | |
Summary of Significant Accounting Policies (Details) - Schedule of property plant and equipment useful life [Line Items] | |
Property and equipment, estimated useful life | 7 years |
Leasehold improvements [Member] | |
Summary of Significant Accounting Policies (Details) - Schedule of property plant and equipment useful life [Line Items] | |
Property and equipment, description of estimated useful life | Shorter of estimated useful life or remaining lease term |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies (Details) - Schedule of finite lived intangible assets useful life | 12 Months Ended |
Dec. 31, 2021 | |
Patents [Member] | |
Summary of Significant Accounting Policies (Details) - Schedule of finite lived intangible assets useful life [Line Items] | |
Intangible assets estimated useful lives | 20 years |
Trade names, trademarks, product names, URLs [Member] | Minimum [Member] | |
Summary of Significant Accounting Policies (Details) - Schedule of finite lived intangible assets useful life [Line Items] | |
Intangible assets estimated useful lives | 5 years |
Trade names, trademarks, product names, URLs [Member] | Maximum [Member] | |
Summary of Significant Accounting Policies (Details) - Schedule of finite lived intangible assets useful life [Line Items] | |
Intangible assets estimated useful lives | 10 years |
Internally developed software [Member] | Minimum [Member] | |
Summary of Significant Accounting Policies (Details) - Schedule of finite lived intangible assets useful life [Line Items] | |
Intangible assets estimated useful lives | 5 years |
Internally developed software [Member] | Maximum [Member] | |
Summary of Significant Accounting Policies (Details) - Schedule of finite lived intangible assets useful life [Line Items] | |
Intangible assets estimated useful lives | 6 years |
Non-compete agreements [Member] | |
Summary of Significant Accounting Policies (Details) - Schedule of finite lived intangible assets useful life [Line Items] | |
Intangible assets estimated useful lives | 3 years |
Subscriber/customer relationships [Member] | Minimum [Member] | |
Summary of Significant Accounting Policies (Details) - Schedule of finite lived intangible assets useful life [Line Items] | |
Intangible assets estimated useful lives | 3 years |
Subscriber/customer relationships [Member] | Maximum [Member] | |
Summary of Significant Accounting Policies (Details) - Schedule of finite lived intangible assets useful life [Line Items] | |
Intangible assets estimated useful lives | 12 years |
Property and Equipment, Net (De
Property and Equipment, Net (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Property, Plant and Equipment [Abstract] | ||
Depreciation expense | $ 186,178 | $ 325,044 |
Loss on disposal of property and equipment | $ 0 | $ 39,238 |
Property and Equipment, Net (_2
Property and Equipment, Net (Details) - Schedule of property and equipment, net - USD ($) | Dec. 31, 2021 | Dec. 31, 2020 |
Property, Plant and Equipment [Line Items] | ||
Total property and equipment | $ 3,990,245 | $ 3,990,245 |
Less: Accumulated depreciation | (3,920,646) | (3,734,468) |
Total property and equipment, net | 69,599 | 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 |
Goodwill (Details)
Goodwill (Details) - USD ($) | Dec. 31, 2021 | Dec. 31, 2020 |
Goodwill [Abstract] | ||
Goodwill | $ 6,326,250 | $ 6,326,250 |
Intangible Assets, Net (Details
Intangible Assets, Net (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Goodwill and Intangible Assets Disclosure [Abstract] | ||
Amortization expense | $ 184,667 | $ 246,681 |
Estimated aggregate amortization expense for 2022 | 149,944 | |
Estimated aggregate amortization expense for 2023 | 18,000 | |
Estimated aggregate amortization expense for 2024 | 17,349 | |
Estimated aggregate amortization expense for 2025 | $ 11,250 |
Intangible Assets, Net (Detai_2
Intangible Assets, Net (Details) - Schedule of intangible assets, net - USD ($) | Dec. 31, 2021 | Dec. 31, 2020 |
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | $ 4,874,000 | $ 4,874,000 |
Accumulated Amortization | (4,677,457) | (4,492,790) |
Net Carrying Amount | 196,543 | 381,210 |
Patents [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | 50,000 | 50,000 |
Accumulated Amortization | (31,251) | (28,750) |
Net Carrying Amount | 18,749 | 21,250 |
Trade names, trademarks, product names, URLs [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | 555,000 | 555,000 |
Accumulated Amortization | (509,148) | (493,648) |
Net Carrying Amount | 45,852 | 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 | (2,147,058) | (1,980,392) |
Net Carrying Amount | $ 131,942 | $ 298,608 |
Digital Tokens (Details)
Digital Tokens (Details) | 1 Months Ended | 6 Months Ended | 12 Months Ended | ||
Aug. 31, 2021shares | Jun. 30, 2020$ / shares | Dec. 31, 2020USD ($)$ / shares | Dec. 31, 2021USD ($) | Dec. 31, 2020USD ($)$ / 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 | $ 0.02 | $ 0.039 | |||
Digital tokens | $ 439,145 | $ 7,262 | $ 439,145 | ||
Digital tokens payable | 123,397 | 123,397 | |||
Digital tokens receivable | $ 210,000 | $ 210,000 | |||
Digital tokens amount | 7,262 | ||||
Non-cash impairment charge | 765,232 | ||||
Sale of props tokens | 36,900,000 | ||||
Proceeds from props tokens | 900,000 | ||||
Gain on sale of digital tokens | $ 307,934 | ||||
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] | |
Maturity (time until an exit or liquidity) | 1 year |
Volatility | 197.00% |
Risk free rate of return | 0.16% |
Income Taxes (Details)
Income Taxes (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Income Taxes (Details) [Line Items] | ||
Valuation allowance increased | $ 190,335 | |
Annual limitation description | which $13.1 million may be subject to an annual limitation under Section 382 of the Internal Revenue Code. Of the $17.4 million, approximately, $16.2 million are available to offset 100% of future taxable income but expire in varying amounts between 2030 to 2037, if not utilized. The remaining $1.2 million is available to offset 80% of future taxable income but may be carried forward indefinitely. | |
Effective tax rate from statutory rate | 21.00% | 21.00% |
Federal Tax [Member] | ||
Income Taxes (Details) [Line Items] | ||
Net operating loss carryforwards | $ 17,400,000 |
Income Taxes (Details) - Schedu
Income Taxes (Details) - Schedule of provision for income taxes - USD ($) | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Current | ||
Federal | ||
State and local | 9,951 | 387 |
Total Current | 9,951 | 387 |
Deferred | ||
Federal | ||
State and local | ||
Change in Valuation Allowance | ||
Total Deferred | ||
Total Provision (Benefit) | $ 9,951 | $ 387 |
Income Taxes (Details) - Sche_2
Income Taxes (Details) - Schedule of company’s deferred tax assets and liabilities - USD ($) | Dec. 31, 2021 | Dec. 31, 2020 |
Deferred Tax Assets: | ||
Net operating losses | $ 3,907,758 | $ 4,098,329 |
Share-based compensation | 767,318 | 859,100 |
Amortization of Intangible Assets | 716,598 | 769,742 |
Rent | 56,251 | 15,272 |
Tax Credits | 62,969 | 62,969 |
Other | 266,986 | 160,762 |
Subtotal | 5,777,880 | 5,966,174 |
Less Valuation Allowance: | (5,713,490) | (5,903,825) |
Total Deferred Tax Assets | 64,390 | 62,349 |
Deferred Tax Liabilities: | ||
Property and equipment | (64,390) | (62,349) |
Total Deferred Tax Liabilities | (64,390) | (62,349) |
Net Deferred Tax Assets |
Income Taxes (Details) - Sche_3
Income Taxes (Details) - Schedule of effective tax rate differs from the U.S. federal statutory income tax rate | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Schedule of effective tax rate differs from the U.S. federal statutory income tax rate [Abstract] | ||
Income tax (expense) benefit at federal statutory rate | 21.00% | 21.00% |
Permanent Differences | 0.20% | 0.20% |
State and local taxes | (4.50%) | 1.90% |
Valuation allowance | (14.30%) | (37.00%) |
Deferred tax adjustment | 2.60% | 0.00% |
Share based compensation | 3.90% | 14.60% |
PPP Loan Forgiveness | (8.00%) | |
Other | (0.20%) | (0.60%) |
Effective tax rate | 0.70% | 0.10% |
Accrued Expenses and Other Cu_3
Accrued Expenses and Other Current Liabilities (Details) - Schedule of accrued expenses and other current liabilities - USD ($) | Dec. 31, 2021 | Dec. 31, 2020 |
Schedule of accrued expenses and other current liabilities [Abstract] | ||
Compensation, benefits and payroll taxes | $ 318,150 | $ 226,500 |
Other accrued expenses | 26,291 | 27,584 |
Total accrued expenses and other current liabilities | $ 344,441 | $ 254,084 |
Stockholders' Equity (Details)
Stockholders' Equity (Details) - USD ($) | Aug. 05, 2021 | Oct. 31, 2021 | Oct. 19, 2021 | Aug. 31, 2021 | Apr. 29, 2020 | Apr. 29, 2019 | May 16, 2016 | Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 |
Stockholders' Equity (Details) [Line Items] | ||||||||||
Gross proceeds | $ 13,919,126 | |||||||||
Public offering price per share (in Dollars per share) | $ 7.5 | |||||||||
Gross proceeds | $ 11,600,000 | |||||||||
Offering expenses | $ 955,400 | |||||||||
Total unrecognized compensation expense | $ 71,222 | |||||||||
Weighted average expected recognition period of unrecognized compensation expense | 1 year 11 months 15 days | |||||||||
Aggregate intrinsic value of stock options, outstanding | $ 149,394 | 15,840 | ||||||||
Aggregate intrinsic value of stock options, exercisable | $ 109,644 | 15,840 | ||||||||
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 | |||||||||
Exercise price (in Dollars per share) | $ 3.09 | |||||||||
Aggregate fair value of options granted | $ 145,522 | $ 18,664 | ||||||||
Repurchased shares of common stock | $ 9,950 | $ 500,000 | ||||||||
Repurchase plan expires date | Apr. 29, 2020 | |||||||||
Net share exercise (in Shares) | 22,013 | |||||||||
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 | |||||||||
Treasury Stock [Member] | ||||||||||
Stockholders' Equity (Details) [Line Items] | ||||||||||
Common stock, treasury shares (in Shares) | (31,963) | (9,950) | (1,900) | |||||||
2016 Plan [Member] | ||||||||||
Stockholders' Equity (Details) [Line Items] | ||||||||||
Number of stock available for future issuance (in Shares) | 978,359 | |||||||||
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 | |||||||||
Underwriter [Member] | ||||||||||
Stockholders' Equity (Details) [Line Items] | ||||||||||
Aggregate of public offering (in Shares) | 1,552,500 | |||||||||
Over-Allotment Option [Member] | ||||||||||
Stockholders' Equity (Details) [Line Items] | ||||||||||
Shares sold to the underwriter (in Shares) | 202,500 |
Stockholders' Equity (Details)
Stockholders' Equity (Details) - Schedule of assumptions used in Black-Scholes pricing model to estimate the fair value of the options granted | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
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 | 188.00% | |
Expected life of option | 5 years 3 months 18 days | |
Risk free interest rate | 0.60% | |
Expected dividend yield | 0.00% | 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 | 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 | 5 years 6 months | |
Risk free interest rate | 0.88% |
Stockholders' Equity (Details_2
Stockholders' Equity (Details) - Schedule of stock option activity | 12 Months Ended |
Dec. 31, 2021$ / sharesshares | |
Schedule of stock option activity [Abstract] | |
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,, Exercised during period | shares | (61,906) |
Weighted Average Exercise Price, Exercised during period | $ / shares | $ 3.09 |
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 | (33,723) |
Weighted Average Exercise Price, Expired, during the period | $ / shares | $ 16.5 |
Number of Options, Outstanding ending balance | shares | 435,770 |
Weighted Average Exercise Price, Outstanding ending balance | $ / shares | $ 5.31 |
Number of Options, Exercisable | shares | 394,075 |
Weighted Average Exercise Price, Exercisable | $ / shares | $ 5.65 |
Stockholders' Equity (Details_3
Stockholders' Equity (Details) - Schedule of stock-based compensation expense - USD ($) | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Total stock compensation expense | $ (35,653) | $ 243,197 |
Cost of revenue [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Total stock compensation expense | 67,182 | 1,527 |
Sales and marketing expense [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Total stock compensation expense | 294 | 90 |
Product development expense [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Total stock compensation expense | 11,302 | 19,491 |
General and administrative expense [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Total stock compensation expense | $ (114,431) | $ 222,089 |
Net Income Per Share (Details)
Net Income Per Share (Details) - shares | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Net Income Per Share [Abstract] | ||
Exercise of outstanding stock options, antidilutive | 392,749 | 618,918 |
Exercise of outstanding stock options, dilutive | 43,021 | 3,118 |
Net Income Per Share (Details)
Net Income Per Share (Details) - Schedule of net income per share - USD ($) | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Schedule of net income per share [Abstract] | ||
Net income from operations – basic and diluted | $ 1,324,106 | $ 1,371,262 |
Weighted average shares outstanding – basic | 7,766,111 | 6,884,690 |
Weighted average shares outstanding – diluted | 7,809,132 | 6,887,808 |
Per share data: | ||
Basic from operations | $ 0.17 | $ 0.20 |
Diluted from operations | $ 0.17 | $ 0.20 |
Leases (Details)
Leases (Details) - USD ($) | Jun. 07, 2016 | Dec. 31, 2021 | Dec. 31, 2020 |
Leases (Textual) | |||
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 | ||
Lease liabilities | $ 200,000 | ||
Discount rate | 2.30% | ||
Operating lease liabilities | $ 239,000 | ||
Right-of-use assets | 239,000 | ||
Total rent expense | 84,525 | $ 206,347 | |
Sublease income | $ 4,500 | $ 36,095 |
Leases (Details) - Schedule of
Leases (Details) - Schedule of operating leases - USD ($) | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Schedule of operating leases [Abstract] | ||
Cash paid for amounts included in the measurement of operating lease liabilities: | $ 74,416 | $ 107,674 |
Weighted average assumptions: | ||
Remaining lease term | 2 years 10 months 24 days | 10 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 | Dec. 31, 2021USD ($) |
Schedule of future minimum payments under non-cancelable operating leases [Abstract] | |
2022 | $ 84,975 |
2023 | 84,975 |
2024 | 77,894 |
Total | 247,844 |
Less: present value adjustment | (8,353) |
Present value of minimum lease payments | $ 239,491 |
Term Debt (Details)
Term Debt (Details) | 12 Months Ended |
Dec. 31, 2021 | |
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. |
Subsequent Events (Details)
Subsequent Events (Details) | Jan. 28, 2022shares |
Subsequent Event [Member] | |
Subsequent Events (Details) [Line Items] | |
Issuance of stock options | 145,000 |