8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the

Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): November 7, 2023

PALTALK, INC.

(Exact name of registrant as specified in its charter)

Delaware	001-38717	20-3191847
(State or other jurisdiction	(Commission File Number)	(IRS Employer
of incorporation)		Identification No.)

30 Jericho Executive Plaza, Suite 400E Jericho, NY	11753
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code: (212) 967-5120

(Former name or former address, if changed since last report)

Not Applicable

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $0.001 par value	PALT	The Nasdaq Capital Market

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Section 2 - Financial Information

Item 2.02 Results of Operations and Financial Condition.

On November 7, 2023, Paltalk, Inc. issued a press release announcing its financial results for the quarter ended September 30, 2023. The press release is furnished as Exhibit 99.1.

The information in this Current Report on Form 8-K (including Exhibit 99.1) is being furnished pursuant to Item 2.02 and shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise be subject to the liabilities of that section, nor shall it be deemed to be incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, whether made before or after the date hereof and regardless of any general incorporation language in such filing.

Section 9 - Financial Statements and Exhibits

Item 9.01 Financial Statements and Exhibits.

(d) Exhibits

Exhibit No.	Description
99.1	Press Release of Paltalk, Inc., dated November 7, 2023 (furnished pursuant to Item 2.02).
104	Cover Page Interactive Data File (embedded within the Inline XBRL document).

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Date: November 7, 2023	PALTALK, INC.
	By:	/s/ Jason Katz
		Jason Katz
		Chief Executive Officer

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EX-99.1

Exhibit 99.1

Paltalk, Inc. Reports an Increase in Revenue of 5.5% in Third Quarter 2023

Generated Positive Cash Flow from Operations for Quarter

Jericho, NY – November 7, 2023 (GLOBE NEWSWIRE) -- via NewMediaWire -- Paltalk, Inc. (“Paltalk,” the “Company,” “we,” “our” or “us”) (Nasdaq: PALT), a communications software innovator that powers multimedia social applications, today announced financial and operational results for the third quarter ended September 30, 2023.

Key Financial Highlights for Third Quarter Ended September 30, 2023 Compared to Prior Year Period

● Revenue increased 5.5% to $2.8 million

● Subscription revenue increased 5% to $2.7 million

● Advertising revenue increased 12% to $0.1 million

● Net loss was $0.2 million compared to a net loss of $1.1 million, a decrease of 83%

● Adjusted EBITDA loss, a non-GAAP measure, was $0.1 million compared to Adjusted EBITDA loss of $0.8 million, a decrease of 84%

● Positive cash flow from operations for the quarter

Key Financial Highlights for Nine Months Ended September 30, 2023 Compared to Prior Year Period

● Revenue increased 1% to $8.3 million

● Subscription revenue increased 1% to $8.1 million

● Advertising revenue decreased 10% to $0.2 million

● Net loss was $0.8 million compared to a net loss of $2.9 million, a decrease of 73%

● Adjusted EBITDA loss, a non-GAAP measure, was $0.8 million compared to Adjusted EBITDA loss of $2.2 million, a decrease of 64%

● Deferred revenue of $2.2 million as of September 30, 2023

● The Company had $13.7 million in cash and no long-term debt on its balance sheet as of September 30, 2023

Recent Corporate and Business Highlights

● Appointed Geoff Cook to Board of Directors; previously, Mr. Cook co-founded and grew The Meet Group and ultimately sold it in 2020 for approximately $500 million

● Engaged Cleverbridge to serve international markets and to optimize Paltalk’s geographic reach with global payment processing capabilities

Near Term Business Objectives

● Leveraging our integration of the ManyCam product into Paltalk through upselling initiatives

● Further optimizing marketing spend to effectively realize a positive return on our investment

● Evaluating ways to optimize and reduce expenses with our infrastructure

● Continuing to explore strategic opportunities, including, but not limited to, potential mergers or acquisitions of other assets or entities that are synergistic to our businesses

● Continuing to defend our intellectual property

Management Commentary

Jason Katz, Chairman and CEO of Paltalk, commented, “We are pleased with our continued revenue growth and achievement of generating positive cash flow from operations in the third quarter. Our efforts to optimize our platforms and streamline our costs have resulted in a significant decrease in operating expenses and an improvement in reducing our operating losses and net losses. As we continue to prudently execute on our revenue growth plans, we believe we are well-positioned for profitability with our current expense infrastructure.”

Katz concluded, “We are very excited to have Geoff Cook join our Board, as he has successfully accomplished what we intend to do, which is to grow via strategic acquisitions to enhance shareholder value. In July of 2023, Geoff was named CEO of Noom, Inc., a leading digital health platform combining personalized psychology with modern medicine. Before that, Geoff executed numerous acquisitions while growing The Meet Group, and ultimately sold it in 2020 for approximately $500 million to ProSiebenSat.1 Media. We look forward to leveraging Geoff’s experience, knowledge, success and relationships to complement what we are currently doing with our internal efforts with Roth Capital.” Mr. Katz also added, “While our trial against Cisco was pushed back again to an expected trial date in May of 2024, the Court recently denied Cisco’s motion for summary judgement, and we look forward to continuing to defend our intellectual property.”

Patent Litigation

On July 23, 2021, a wholly owned subsidiary of the Company, Paltalk Holdings, Inc., filed a patent infringement lawsuit against WebEx Communications, Inc., Cisco WebEx LLC, and Cisco Systems, Inc. (collectively, “Cisco”), in the U.S. District Court for the Western District of Texas (the “Court”). The Company alleges that certain of Cisco’s 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. On September 7, 2022, the United States Patent Office issued a reexamination of U.S. Patent No. 6,683,858, and on January 19, 2023, the Examiner issued an Ex Parte Reexamination Certificate, ending the reexamination and confirming the patentability of claims 1-10 of U.S. Patent No. 6,683,858. On June 29, 2023, the Court held a pretrial conference with the parties and denied Cisco’s motion for summary judgement. The trial is expected to be held in May of 2024.

Financial Results for Three Months Ended September 30, 2023

● Revenue for the three months ended September 30, 2023 increased by 5.5% to $2.8 million, compared to $2.6 million for the three months ended September 30, 2022. The increase in revenue was primarily attributed to an increase in virtual goods revenue from Paltalk, increased revenue from Vumber, as well as an increase in ManyCam revenue;

● Loss from operations for the three months ended September 30, 2023 decreased by 63.3%, or $0.7 million, to a loss of $0.4 million, compared to a loss of $1.1 million for the three months ended September 30, 2022. The decrease in loss from operations was attributed to increased revenue for the three months ended September 30, 2023;

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● Net loss for the three months ended September 30, 2023 decreased 82.7% to $0.2 million, compared to a net loss of $1.1 million the three months ended September 30, 2022. The decrease in net loss was due to the increase in subscription revenue and the reduction of operating expenses;

● Adjusted EBITDA loss, a non-GAAP measure, for the three months ended September 30, 2023 decreased by 83.8%, to an Adjusted EBITDA loss of $0.1 million, compared to Adjusted EBITDA loss of $0.8 million for the three months ended September 30, 2022;

● Cash and cash equivalents totaled $13.7 million at September 30, 2023, a decrease of $1.0 million compared to $14.7 million at December 31, 2022; and

● The Company had no long-term debt on its balance sheet at September 30, 2023.

Financial Results for Nine Months Ended September 30, 2023

● Revenue for the nine months ended September 30, 2023 increased by 1.0% to $8.3 million, compared to $8.2 million for the nine months ended September 30, 2022. The increase in revenue was attributed to an increase in subscription revenue;

● Loss from operations for the nine months ended September 30, 2023 decreased by 44.8%, or $1.3 million, to a loss of $1.6 million, compared to a loss of $2.9 million for the nine months ended September 30, 2022. The decrease in loss from operations was primarily attributable to an increase in revenue and reduced operating expenses in connection with the implementation of operating efficiencies;

● Net loss for the nine months ended September 30, 2023 decreased by 73.1%, or $2.1 million, to $0.8 million, compared to a net loss of $2.9 million for the nine months ended September 30, 2022. The decrease in net loss was attributed to an increase in revenue and decreases in operating expenses as well as an increase in other income in connection with the Company’s recording of a refundable employee retention tax credit; and

● Adjusted EBITDA loss, a non-GAAP measure, for the nine months ended September 30, 2023 decreased by 63.7%, or $1.4 million, to an Adjusted EBITDA loss of $0.8 million, compared to Adjusted EBITDA loss of $2.2 million for the nine months ended September 30, 2022.

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	Three Months Ended September 30,
	(unaudited)						Change
	2023			2022			$		%
Subscription revenue	$	2,673		$	2,539		$	134		5.3	%
Advertising revenue		95			85			10		11.7	%
Total revenues		2,768			2,624			144		5.5	%
Loss from operations		(389	)		(1,060	)		671		63.3	%
Net loss	$	(182	)	$	(1,050	)	$	868		82.7	%
Net Cash Provided by (Used in) Operating Activities	$	16		$	(980	)	$	996		101.6	%
Adjusted EBITDA (a non-GAAP measure)	$	(127	)	$	(781	)	$	654		83.8	%

	Nine Months Ended September 30,
	(unaudited)						Change
	2023			2022			$			%
Subscription revenue	$	8,064		$	7,946		$	118			1.5	%
Advertising revenue		224			249			(25	)		-10.0	%
Total revenues		8,288			8,195			93			1.1	%
Loss from operations		(1,576	)		(2,857	)		1,281			44.8	%
Net loss	$	(784	)	$	(2,918	)	$	2,134			73.1	%
Net cash used in operating activities	$	(981	)	$	(2,624	)	$	1,643			62.6	%
Adjusted EBITDA (a non-GAAP measure)	$	(790	)	$	(2,174	)	$	1,384			63.7	%

ABOUT PALTALK, INC. (Nasdaq: PALT)

Paltalk, Inc. is a communications software innovator that powers multimedia social applications. Our product portfolio includes Paltalk and Camfrog, which together host a large collection of video-based communities. Our other products include ManyCam, Tinychat and Vumber. The Company has an over 20-year history of technology innovation and holds 10 patents. For more information, please visit: http://www.paltalk.com.

To be added to our news distribution list, please visit: http://www.paltalk.com/investor-alerts/.

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FORWARD-LOOKING STATEMENTS:

This press release contains “forward-looking statements.” Such statements may be preceded by the words “intends,” “may,” “will,” “plans,” “expects,” “anticipates,” “projects,” “predicts,” “estimates,” “aims,” “believes,” “hopes,” “potential,” or similar words.  Forward-looking statements are not guarantees of future performance, are based on certain assumptions and are subject to various known and unknown risks and uncertainties, many of which are beyond the Company’s control, and cannot be predicted or quantified and consequently, actual results may differ materially from those expressed or implied by such forward-looking statements. Such risks and uncertainties include, without limitation, any economic recession and the overall inflationary environment on our results of operations and our business; our ability to effectively market and generate revenue from our applications; our ability to generate and maintain active users and to effectively monetize our user base; our ability to improve, market and promote the ManyCam software; the Company’s ability to retain the listing of its common stock on The Nasdaq Capital Market; our ability to release new applications or improve upon or add features to existing applications on schedule or at all; risks and uncertainties related to our increasing focus on the use of new and novel technologies to enhance our applications, and our ability to timely complete development of applications using new technologies; our ability to effectively compete with existing competitors and new market entrants; our ability to effectively secure new software development and licensing customers; our ability to protect our intellectual property rights; the use of the internet and privacy and protection of user data; our ability to consummate favorable acquisitions and effectively integrate any companies or properties that we acquire; and our ability to manage our partnerships and strategic alliances. More detailed information about the Company and the risk factors that may affect the realization of forward-looking statements is set forth in the Company’s filings with the Securities and Exchange Commission (“SEC”), including the Company’s most recent Annual Report on Form 10-K and Quarterly Reports on Form 10-Q. Investors and security holders are urged to read these documents free of charge on the SEC’s website at www.sec.gov.

All forward-looking statements speak only as of the date on which they are made. The Company undertakes no obligation to update any forward-looking statement or statements to reflect events or circumstances after the date on which such statement was made, except to the extent required by applicable securities laws.

Investor Contacts:

IR@paltalk.com

ClearThink

nyc@clearthink.capital

917-658-7878

PALTALK, INC.

RECONCILIATION OF GAAP TO NON-GAAP RESULTS

	Three Months Ended						Nine Months Ended
	September 30, (unaudited)						September 30, (unaudited)
	2023			2022			2023			2022
Reconciliation of net loss to Adjusted EBITDA:
Net loss	$	(181,576	)	$	(1,050,365	)	$	(784,245	)	$	(2,918,016	)
Interest (income) expense, net		(169,925	)		(19,750	)		(462,433	)		3,004
Other (income) expense, net		-			-			(343,045	)		27,361
Income tax (benefit) expense		(37,915	)		9,712			13,590			30,496
Impairment loss on digital tokens		-			-			-			7,262
Depreciation and amortization expense		205,583			220,124			616,750			404,565
Stock-based compensation expense		57,380			59,729			169,691			271,349
Adjusted EBITDA	$	(126,453	)	$	(780,550	)	$	(789,692	)	$	(2,173,979	)

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Non-GAAP Financial Measures and Key Metrics

The Company has provided in this release Adjusted EBITDA, a non-GAAP financial measure, to supplement the consolidated financial statements, which are prepared in accordance with generally accepted accounting principles in the United States (“GAAP”). Adjusted EBITDA is defined as net loss adjusted to exclude interest (income) expense, net, other (income) expense, net, income tax (benefit) expense, impairment loss on digital tokens, depreciation and amortization expense, and stock-based compensation expense.

Management uses Adjusted EBITDA internally in analyzing the Company’s financial results to assess operational performance and to determine the Company’s future capital requirements. The presentation of this financial information is not intended to be considered in isolation or as a substitute for the financial information prepared in accordance with GAAP. The Company believes that both management and investors benefit from referring to Adjusted EBITDA in assessing its performance and when planning, forecasting and analyzing future periods. The Company believes Adjusted EBITDA is useful to investors and others to understand and evaluate the Company’s operating results and it allows for a more meaningful comparison between the Company’s performance and that of competitors. Our use of Adjusted EBITDA has limitations as an analytical tool, and you should not consider this performance measure in isolation from or as a substitute for analysis of our results as reported under GAAP. Some of these limitations are that Adjusted EBITDA does not reflect, among other things: interest (income) expense, net, income tax (benefit) expense, depreciation and amortization expense, other (income) expense, net, and stock-based compensation. Other companies, including companies in our industry, may calculate Adjusted EBITDA differently, which reduces its usefulness as a comparative measure.

Because of these limitations, you should consider Adjusted EBITDA along with other financial performance measures, including total revenues, subscription revenue, deferred revenue, net loss, cash and cash equivalents, restricted cash, net cash used in operating activities and our financial results presented in accordance with GAAP.

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PALTALK, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

	September 30,			December 31,
	2023			2022
Assets	(unaudited)
Current assets:
Cash and cash equivalents	$	13,667,000		$	14,739,933
Accounts receivable, net of allowances of $13,648 as of September 30, 2023 and $3,648 as of December 31, 2022		143,222			122,297
Employee retention tax credit receivable, net		114,212			-
Prepaid expense and other current assets		822,647			543,199
Total current assets		14,747,081			15,405,429
Operating lease right-of-use asset		97,727			159,181
Goodwill		6,326,250			6,326,250
Intangible assets, net		2,910,061			3,526,811
Other assets		13,937			13,937
Total assets	$	24,095,056		$	25,431,608
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable	$	680,187		$	1,013,637
Accrued expenses and other current liabilities		65,466			225,193
Operating lease liabilities, current portion		76,886			82,176
Contingent consideration		-			85,000
Deferred subscription revenue		2,200,517			2,257,452
Total current liabilities		3,023,056			3,663,458
Operating lease liabilities, non-current portion		20,841			77,005
Deferred tax liability		698,684			716,903
Total liabilities		3,742,581			4,457,366
Commitments and contingencies (Note 9)
Stockholders’ equity:
Common stock, $0.001 par value, 25,000,000 shares authorized, 9,864,120 shares issued and 9,222,157 and 9,227,349 shares outstanding as of September 30, 2023 and December 31, 2022, respectively		9,864			9,864
Treasury stock, 641,963 and 636,771 shares repurchased as of September 30, 2023 and December 31, 2022, respectively		(1,199,337	)		(1,192,124	)
Additional paid-in capital		36,143,426			35,973,735
Accumulated deficit		(14,601,478	)		(13,817,233	)
Total stockholders’ equity		20,352,475			20,974,242
Total liabilities and stockholders’ equity	$	24,095,056		$	25,431,608

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PALTALK, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

	Three Months Ended September 30,						Nine Months Ended September 30,
	2023			2022			2023			2022
Revenues:
Subscription revenue	$	2,673,333		$	2,538,764		$	8,063,992		$	7,945,809
Advertising revenue		94,606			84,703			223,966			248,827
Total revenues		2,767,939			2,623,467			8,287,958			8,194,636
Costs and expenses:
Cost of revenue		826,662			775,330			2,403,165			2,088,974
Sales and marketing expense		210,573			370,772			685,953			1,266,387
Product development expense		1,193,430			1,485,479			3,605,652			4,537,384
General and administrative expense		926,690			1,052,289			3,169,321			3,151,784
Impairment loss on digital tokens		-			-			-			7,262
Total costs and expenses		3,157,355			3,683,870			9,864,091			11,051,791
Loss from operations		(389,416	)		(1,060,403	)		(1,576,133	)		(2,857,155	)
Interest income (expense), net		169,925			19,750			462,433			(3,004	)
Other income (expense), net		-			-			343,045			(27,361	)
Loss from operations before provision for income taxes		(219,491	)		(1,040,653	)		(770,655	)		(2,887,520	)
Income tax benefit (expense)		37,915			(9,712	)		(13,590	)		(30,496	)
Net loss	$	(181,576	)	$	(1,050,365	)	$	(784,245	)	$	(2,918,016	)
Net loss per share of common stock:
Basic	$	(0.02	)	$	(0.11	)	$	(0.09	)	$	(0.30	)
Diluted	$	(0.02	)	$	(0.11	)	$	(0.09	)	$	(0.30	)
Weighted average number of shares of common stock used in calculating net loss per share of common stock:
Basic		9,222,157			9,722,157			9,222,223			9,774,904
Diluted		9,222,157			9,722,157			9,222,223			9,774,904

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PALTALK, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

	Nine Months Ended September 30,
	2023			2022
Cash flows from operating activities:
Net loss	$	(784,245	)	$	(2,918,016	)
Adjustments to reconcile net loss from operations to net cash used in operating activities:
Depreciation of property and equipment		-			65,317
Amortization of intangible assets		616,750			339,247
Amortization of operating lease right-of-use assets		61,454			60,059
Impairment loss on digital tokens		-			7,262
Bad debt expense		10,000			-
Deferred tax benefit		(18,219	)		-
Stock-based compensation		169,691			271,349
Changes in operating assets and liabilities:
Accounts receivable		(30,925	)		33,176
Operating lease liability		(61,454	)		(60,059	)
Prepaid expense and other current assets		(279,448	)		(68,838	)
Accounts payable, accrued expenses and other current liabilities		(493,177	)		(498,553	)
Employee retention tax credit receivable, net		(114,212	)		-
Deferred subscription revenue		(56,935	)		145,374
Net cash used in operating activities		(980,720	)		(2,623,682	)
Cash flows from investing activities:
Acquisition of ManyCam assets		-			(2,700,000	)
Acquisition related costs of ManyCam assets		-			(242,279	)
Payment of contingent consideration		(85,000	)		-
Net cash used in investing activities		(85,000	)		(2,942,279	)
Cash flows from financing activities:
Purchase of treasury stock		(7,213	)		(572,336	)
Net cash used in financing activities		(7,213	)		(572,336	)
Net decrease in cash and cash equivalents		(1,072,933	)		(6,138,297	)
Balance of cash and cash equivalents at beginning of period		14,739,933			21,636,860
Balance of cash and cash equivalents at end of period	$	13,667,000		$	15,498,563
Supplemental disclosure of cash flow information:
Cash paid during the periods:
Interest	$	512		$	-
Taxes	$	23,551		$	-
Non-cash investing and financing activities:
Write-off of property and equipment	$	-		$	1,475,649
Deferred tax liability associated with the acquisition of ManyCam assets	$	-		$	851,298
Accrued contingent consideration	$	-		$	150,000

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Cover	Nov. 07, 2023
Cover [Abstract]
Document Type	8-K
Amendment Flag	false
Document Period End Date	Nov. 07, 2023
Entity File Number	001-38717
Entity Registrant Name	PALTALK, INC.
Entity Central Index Key	0001355839
Entity Tax Identification Number	20-3191847
Entity Incorporation, State or Country Code	DE
Entity Address, Address Line One	30 Jericho Executive Plaza
Entity Address, Address Line Two	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
Written Communications	false
Soliciting Material	false
Pre-commencement Tender Offer	false
Pre-commencement Issuer Tender Offer	false
Title of 12(b) Security	Common Stock, $0.001 par value
Trading Symbol	PALT
Security Exchange Name	NASDAQ
Entity Emerging Growth Company	false