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): March 23, 2021

PALTALK, INC.
(Exact name of registrant as specified in its charter)
Delaware	001-38717	20-3191847
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(State or other jurisdiction	(Commission File Number)	(IRS Employer
of incorporation)		Identification No.)

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30 Jericho Executive Plaza, Suite 400E<br> <br>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)

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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: None

Title of each class	Trading Symbol(s)	Name of each exchange on which<br> registered
—	—	—

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

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Item 2.02 Results of Operations and Financial Condition.

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On March 23, 2021, Paltalk, Inc. (the “Company”) issued a press release announcing its financial results for the year and quarter ended December 31, 2020. 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 March 23, 2021 (furnished pursuant to Item 2.02).

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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: March 23, 2021
	PALTALK, INC.
	By:	/s/ Jason Katz
		Jason Katz
		Chief Executive Officer

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Exhibit99.1

Paltalk, Inc. Reports Fourth Quarter and Full Year 2020 Financial Results

PositiveNet Income for Q4 and Full Year and Cash Flow Positive for Full Year

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JERICHO, NY, March 23, 2021 (GLOBE NEWSWIRE) -- via NewMediaWire -- Paltalk, Inc., formerly known as PeerStream, Inc., (“Paltalk,” the “Company,” “we,” “our” or “us”) (OTCQB: PALT), a leading communications software innovator that powers multimedia social applications, today announced financial and operational results for the fourth quarter and full year ended December 31, 2020.

During the fourth quarter and full year ended December 31, 2020, the Company executed key components of its business objectives, which resulted in the following:

2020Fourth Quarter Financial Highlights:

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●	Revenue<br>for the three months ended December 31, 2020 was $3.4 million, an increase of 33% compared to the three months ended December<br>31, 2019. This growth was driven primarily by an increase in subscription revenue of $0.5 million, or 19%, compared to the same<br>period in the prior year;
●	Achieved<br>net income from continuing operations for the three months ended December 31, 2020 of $0.5 million, an increase of $8.4 million,<br>or 107%, compared to the three months ended December 31, 2019; and
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●	Reduced<br>operating expenses by 72%, or $7.5 million, compared to the three months ended December 31, 2019. These reductions were a result<br>of the Company’s streamlined operating plan, which eliminated costs associated with our secure communications business headcount<br>as well as overall operating expenses.
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2020Full Year Financial Highlights:

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●	Revenue<br> for the year ended December 31, 2020 was $12.8 million, a decrease of 16% compared to<br> revenue of $15.3 million for the year ended December 31, 2019. This decrease is primarily<br> a result of the decrease in technology service revenue, which was associated with our<br> secure communications business, and was offset by growth of our subscription revenue<br> of approximately 5%;
●	Net<br> income from continuing operations for the year ended December 31, 2020 was $1.2 million<br> compared to a loss of $8.6 million for the year ended December 31, 2019, an improvement<br> of 114%;
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●	Adjusted<br> EBITDA, a non-GAAP measure, was $2.0 million for the year ended December 31, 2020 compared<br> to Adjusted EBITDA of $135<br>thousand for the year ended December 31, 2019; and
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●	Revenue<br> per subscriber increased by approximately 5% when compared to December 31, 2019, while<br> our active subscribers were relatively unchanged at approximately 103,700.
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2020Business and Operational Highlights:

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●	Launched<br> private rooms, in beta;
●	Launched<br> real time voice and video card games in the fourth quarter for our video-based communities<br> that includes poker, blackjack, gin rummy, bridge, chess and backgammon;
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●	Created<br> new advertising partnerships to promote paid desktop advertising programs;
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●	Launched<br> Props rewards tokens into the Paltalk and Camfrog application;
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●	Sold<br> secure communications assets;
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●	Changed<br> corporate name to Paltalk, Inc.; and
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●	Offered<br> free video in certain countries hit hardest by the COVID pandemic in order to serve base<br> customers.
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Liquidityand Capital Resources:

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●	Achieved<br> positive cash flow from operations of $1.4 million for the year ended December 31, 2020,<br> an improvement of $5.9 million compared to the year ended December 31, 2019;
●	Realized<br> positive net cash flow of approximately $2.2 million for the year ended December 31,<br> 2020, an improvement of $5.3 million compared to the year ended December 31, 2019; and
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●	Cash<br> and cash equivalents totaled $5.6 million at December 31, 2020, an increase of $2.2 million<br> compared to December 31, 2019.
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“I am gratified that our consistent and continued effort throughout the year to reduce expenses and grow subscription revenue has yielded positive results and enabled us to achieve profitability for the full year of 2020 for the first time in our history, as well as generate positive cash flow,” said Jason Katz, CEO of Paltalk, Inc. “This achievement was the result of many actions including our strategic decision early last year to refocus and unify our efforts on our core business and dispose of non-core assets. We also invested in new and creative functionality for our users, increasing their engagement and importantly, the profitability per user for the Company. We achieved these results against the backdrop of the global pandemic and I am proud that our team successfully met the challenges that the pandemic presented. Looking ahead, we are planning new innovation and functionality for our users, a greater revenue contribution from our new advertising partnerships and continued corporate discipline on costs and expenses. Taken together, we believe that these actions will result in a successful year for Paltalk in 2021.”

FinancialOverview (in thousands, except for percentages and active subscriber counts)

Currentquarter compared to same quarter last year:

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****	Three Months Ended December 31,				****	Change				****
GAAP Results (unaudited)	2020		2019		****		****	%		****
Subscription revenue	$	2,981	$	2,504					19.0	%
Advertising revenue		126		119					5.9	%
Technology service revenue		316		(44	)
Total revenue	$	3,423	$	2,579					32.7	%
Income (loss) from continuing operations	$	532	$	(7,846	)
Net income (loss)	$	531	$	(7,896	)
Net cash provided by (used in) operating activities	$	523	$	(178	)
Financial Metrics (unaudited)
Active subscribers (at period end)		103,700		103,800			)		(0.1	)%
Adjusted EBITDA (a non-GAAP measure)	$	750	$	(783	)

All values are in US Dollars.

Fullyear compared to same period last year:

****	Year Ended December 31,				****	Change				****
GAAP Results (unaudited)	2020		2019		****		****	%		****
Subscription revenue	$	11,966	$	11,406					4.9	%
Advertising revenue		325		439			)		(26.0	)%
Technology service revenue		541		3,439			)		(84.3	)%
Total revenue	$	12,832	$	15,284			)		(16.0	)%
Income (loss) from continuing operations	$	1,243	$	(8,615	)
Net income (loss)	$	1,371	$	(8,380	)
Net cash provided by (used in) operating activities	$	1,435	$	(4,465	)
Financial Metrics (unaudited)
Active subscribers (at period end)		103,700		103,800			)		(0.1	)%
Adjusted EBITDA (a non-GAAP measure)	$	1,956	$	135					1,348.9	%

All values are in US Dollars.

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ABOUT PALTALK, INC. (OTCQB: PALT)

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Paltalk, Inc. is a communications software innovator that powers multimedia social applications. Our product portfolio includes Paltalk and Camfrog, which together host one of the world’s largest collections of video-based communities. Our other products include Tinychat and Vumber. The Company has an over 20-year history of technology innovation and holds 18 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/.

FORWARD-LOOKINGSTATEMENTS:

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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, the impact of the recent coronavirus outbreak on our results of operations and our business; our ability to effectively market and generate revenue from our applications; 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, such as Props tokens, to enhance our applications, and our ability to timely complete development of applications using new technologies; our ability to effectively integrate Props tokens into our existing applications; our ability to effectively secure new software development and licensing customers; the use of the internet and privacy and protection of user data; risks related to our holdings of digital tokens, including risks related to the volatility of the trading price of digital tokens and our ability to convert digital tokens into fiat currency; 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.

CONTACTS:

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IR@paltalk.com

Stephanie Prince

PCG Advisory

sprince@pcgadvisory.com

646-863-6341

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PALTALK, INC.

RECONCILIATIONOF GAAP TO NON-GAAP RESULTS

(Unaudited)

****	Three Months Ended December 31,					****	Year Ended December 31,					****
****	2020		****	2019		****	2020		****	2019		****
Reconciliation of net income (loss) to Adjusted EBITDA:
Net income (loss)	$	531,257		$	(7,896,139	)	$	1,371,262		$	(8,380,060	)
Interest expense (income), net		1,899			(82,740	)		(7,119	)		(156,423	)
Net loss from discontinued operations		-			-			-			104,880
Gain on sale of dating applications		-			-			-			(826,770	)
Income tax expense (benefit) from continuing operations		(1,313	)		11,074			387			17,672
Depreciation and amortization expense		129,861			151,145			571,725			605,415
Gain on office lease termination		-			-			(141,001	)		-
Impairment loss on goodwill		-			6,760,222			-			6,760,222
Gain from sale of secured communications assets		-			-			(250,000	)		-
Loss on disposal of property and equipment		39,238			-			39,238			-
Other expense		-			-			128,165			-
Impairment loss on digital tokens					121,904			-			625,368
Stock-based compensation expense		49,101			151,156			243,197			1,385,118
Adjusted EBITDA	$	750,043			$(783,378	)	$	1,955,854		$	135,422

Non-GAAP Financial Measures and Key Metrics

The Company has provided in this release certain non-GAAP financial measures, including Adjusted EBITDA, and other key metrics, including active subscribers and subscription bookings, to supplement the consolidated financial statements, which are prepared in accordance with generally accepted accounting principles in the United States (“GAAP”). The Company defines Adjusted EBITDA as net income (loss) adjusted to exclude net loss from discontinued operations, interest expense (income), net, gain from the sale of secured communications assets, other expense, gain on the sale of dating applications, income tax expense (benefit) from continuing operations, gain on office lease termination, impairment loss on goodwill, loss on disposal of property and equipment, depreciation and amortization expense, impairment loss on digital tokens and stock-based compensation expense. Active subscribers means users of the Company’s consumer applications that have prepaid a fee, redeemed credits or received an upgrade from another user as a gift for current unlocked application features such as enhanced voice and video access, elevated status in the community or unrestricted communication on our applications and whose subscription period has not yet expired. The Company calculates subscription bookings as subscription revenue recognized during the period plus the change in deferred subscription revenue recognized during the period.

Management uses these financial metrics 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 these financial metrics in assessing our performance and when planning, forecasting and analyzing future periods. The Company believes these financial metrics are 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:

●	Adjusted<br>EBITDA does not reflect cash capital expenditures for assets underlying depreciation and amortization expense that may need to<br>be replaced or for new capital expenditures;
●	Adjusted<br> EBITDA does not reflect our working capital requirements;
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●	Adjusted<br> EBITDA does not reflect the impairment loss on goodwill or digital tokens;
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●	Adjusted<br> EBITDA does not consider the potentially dilutive impact of stock-based compensation;
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●	Adjusted<br> EBITDA does not consider the gain from the office lease cancellation;
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●	Adjusted<br> EBITDA does not reflect the gain on the sale of our dating applications or our secured<br> communications business or our loss from discontinued operations or any income tax (benefit)<br> from continuing operations; and
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●	Other<br> companies, including companies in our industry, may calculate Adjusted EBITDA differently,<br> which reduces its usefulness as a comparative measure.
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Because of these limitations, you should consider these financial metrics along with other financial performance measures, including total revenues, subscription revenue, deferred revenue, net income (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.

CONSOLIDATED BALANCE SHEETS

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			2019
Assets
Current assets:
Cash and cash equivalents	5,585,420		$	3,427,058
Accounts receivable, net of allowances of 3,648 and 23,832, as of December 31, 2020 and 2019, respectively	71,410			130,686
Prepaid expense and other current assets	236,704			167,441
Total current assets	5,893,534			3,725,185
Digital tokens receivable	210,000			-
Operating lease right-of-use asset	68,967			685,042
Property and equipment, net	255,777			620,059
Goodwill	6,326,250			6,326,250
Intangible assets, net	381,210			627,891
Digital tokens	439,145			148,229
Other assets	13,937			86,876
Total assets	13,588,820		$	12,219,532
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable	742,141		$	1,007,851
Accrued expenses and other current liabilities	254,084			434,739
Operating lease liabilities, current portion	68,967			178,479
Digital tokens payable	123,397			-
Term debt, current portion	338,792			-
Deferred subscription revenue	2,058,721			1,829,493
Total current liabilities	3,586,102			3,450,562
Operating lease liabilities, non-current portion	-			583,075
Term debt, non-current portion	167,708			-
Total liabilities	3,753,810			4,033,637
Commitments and contingencies
Stockholders’ equity:
Common stock, 0.001 par value, 25,000,000 shares authorized, 6,916,404 and 6,878,904 shares issued and 6,906,454 and 6,877,004 shares outstanding as of December 31, 2020 and 2019, respectively	6,917			6,879
Treasury stock, 9,950 and 1,900 shares, at par as of December 31, 2020 and 2019, respectively	(10,859	)		(2,015	)
Additional paid-in capital	21,568,041			21,281,382
Accumulated deficit	(11,729,089	)		(13,100,351	)
Total stockholders’ equity	9,835,010			8,185,895
Total liabilities and stockholders’ equity	13,588,820		$	12,219,532

All values are in US Dollars.

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PALTALK, INC.

CONSOLIDATEDSTATEMENTS OF OPERATIONS

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****	Years Ended December 31,					****
	2020			2019
Revenues
Subscription revenue	$	11,966,497		$	11,405,787
Advertising revenue		325,475			438,503
Technology service revenue		540,700			3,439,327
Total revenue		12,832,672			15,283,617
Costs and expenses
Costs of revenue		2,573,083			3,174,453
Sales and marketing expense		825,069			1,056,967
Product development expense		5,025,482			6,563,449
General and administrative expense		3,166,343			6,343,859
Impairment loss on goodwill		-			6,760,222
Total costs and expenses		11,589,977			23,898,950
Income (loss) from continuing operations		1,242,695			(8,615,333	)
Interest income, net		7,119			156,423
Gain from sale of Secured Communications Assets		250,000			-
Other expense		(128,165	)		-
Impairment loss on digital tokens		-			(625,368	)
Income (loss) from continuing operations before provision for income taxes		1,371,649			(9,084,278	)
Income tax (expense) benefit		(387	)		141,593
Net income (loss) from continuing operations		1,371,262			(8,942,685	)
Discontinued Operations:
Gain on sale from discontinued operations		-			826,770
Loss from discontinued operations		-			(104,880	)
Income tax expense from discontinued operations		-			(159,265	)
Net income from discontinued operations		-			562,625
Net income (loss)		1,371,262			(8,380,060	)
Basic net income (loss) per share of common stock:
Continuing operations	$	0.20		$	(1.30	)
Discontinued operations		-			0.08
Net income (loss) per share of common stock	$	0.20		$	(1.22	)
Diluted net income (loss) per share of common stock:
Continuing operations	$	0.20		$	(1.30	)
Discontinued operations		-			0.08
Net loss per share of common stock	$	0.20		$	(1.22	)
Weighted average number of shares of common stock used in calculating net loss per share of common stock:
Basic		6,884,690			6,873,652
Diluted		6,887,808			6,873,652

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PALTALK, INC.

CONSOLIDATEDSTATEMENTS OF CASH FLOWS

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	Years Ended <br> December 31,
	2020			2019
Cash flows from operating activities:
Net income (loss)	$	1,371,262		$	(8,380,060	)
Less: Income from discontinued operations		-			562,625
Income (loss) from continuing operations		1,371,262			(8,942,685	)
Adjustments to reconcile net income (loss) from continuing operations to net cash provided by (used in) operating activities of continuing operations:
Depreciation of property and equipment		325,044			349,082
Amortization of intangible assets		246,681			256,332
Amortization of operating lease right-of-use assets		104,083			178,158
Gain on lease termination		(141,001	)		-
Loss on disposal of property and equipment		39,238			-
Write-off of note receivable		56,042			-
Stock-based compensation		243,197			1,385,118
Common stock issued for consulting services		43,500			29,015
Bad debt expense		4,015			-
Impairment loss on goodwill		-			6,760,222
Impairment loss on digital tokens		-			625,368
Realized (gain) loss from the sale of digital tokens		72,823			(70,995	)
Changes in operating assets and liabilities:
Credit card holdback receivable		-			83,175
Accounts receivable		55,261			196,100
Digital tokens		(439,145	)		-
Digital tokens receivable		(210,000	)		-
Operating lease liability		(107,674	)		(101,647	)
Digital tokens payable		123,397			-
Prepaid expense and other current assets		(219,263	)		113,550
Other assets		16,897			29,891
Accounts payable, accrued expenses and other current liabilities		(378,285	)		(2,138,302	)
Deferred subscription revenue		229,228			360,922
Deferred technology service revenue		-			(3,379,435	)
Net cash provided by (used in) continuing operating activities		1,435,300			(4,266,131	)
Net cash used in discontinued operating activities		-			(199,232	)
Net cash provided by (used in) operating activities		1,435,300			(4,465,363	)
Cash flows from investing activities:
Payment for property and equipment, including website development, net		-			(391,230	)
Proceeds from Secured Communications Assets		150,000			-
Proceeds from the sale of digital tokens		75,406			130,290
Net cash provided by (used in) continuing investing activities		225,406			(260,940	)
Net cash provided by discontinued investing activities		-			1,600,000
Net cash provided by investing activities		225,406			1,339,060
Cash flows from financing activities:
Borrowings of term debt		506,500			-
Purchase of treasury stock		(8,844	)		(2,015	)
Net cash provided by (used in) financing activities		497,656			(2,015	)
Net increase (decrease) in cash and cash equivalents		2,158,362			(3,128,318	)
Balance of cash and cash equivalents at beginning of period		3,427,058			6,555,376
Balance of cash and cash equivalents at end of period	$	5,585,420		$	3,427,058

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