What changed in this filing

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Item 1. Business

2023-03-23 compared with 2022-03-23 · 298 added, 279 removed, 13 unchanged (98% of the section changed)

are a leading communications software innovator that powers multimedia social applications.

Our 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.

Company Overview

We are a leading communications software innovator

that powers multimedia social applications.

Our product portfolio includes Paltalk, Camfrog and Tinychat, which together host one of

the world’s largest collections of video-based communities.

Our other products include ManyCam and Vumber.

ManyCam is a live streaming

software and virtual camera that allows users to deliver professional live videos on streaming platforms, video conferencing apps and

distance learning tools.

Vumber 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.

We have an over 20-year

history of technology innovation and hold 10 patents.

were incorporated under the laws of the State of Delaware in 2005.

Our principal executive office is located at 30 Jericho Executive

Plaza Suite 400E, Jericho, NY 11753.

Services and Products

operate a leading network of consumer applications that we believe create a unique social media enterprise where users can meet, see,

chat, broadcast and message in real time in a secure environment with others in our network.

Our consumer applications generate revenue

principally from subscription fees and advertising arrangements.

believe that the scale of our user base presents a competitive advantage in the video social networking industry and provides growth

opportunities to advance our existing products with up-sell opportunities and build future brands with cross-sell offers.

We also believe

that our proprietary consumer app technology platform can scalably support large communities of users in activities such as video, voice

and text chat, online card and board games and provide robust user monetization tools.

continued growth depends on attracting new consumer application users through the introduction of new applications, features and partnerships

and further penetration of our existing markets.

Our principal growth strategy is to invest in the development of proprietary software,

expand our sales and marketing efforts with respect to such software, and increase our consumer application user base through potential

platform partnerships and new and existing advertising campaigns that we run through internet and mobile advertising networks, all while

balancing the capital needs of the business.

Our strategy also includes the acquisition of, or investment in, technologies, solutions

or businesses that complement our business.

strategy is to approach these opportunities in a measured way, being mindful of our resources and evaluating factors such as potential

revenue, time to market and amount of capital needed to invest in the opportunity.

operate a leading network of consumer applications that create a unique social media enterprise where users can meet, see, chat, broadcast,

play online card and board games and message in real time in a secure environment with others in our network.

The proprietary technology

underlying our products allows us to operate thousands of simultaneous streams, including on mobile platforms, which support interactions

on a one-on-one, one-to-many and many-to-many basis.

We were incorporated under the laws of the State

of Delaware in 2005.

Our principal executive office is located at 30 Jericho Executive Plaza Suite 400E, Jericho, NY 11753.

Our Services and Products

We operate a leading network of consumer applications

that we believe create a unique social media enterprise where users can meet, see, chat, broadcast and message in real time in a secure

environment with others in our network.

Our consumer applications generate revenue principally from subscription fees and advertising

arrangements.

We believe that the scale of our user base presents

a competitive advantage in the video social networking industry and provides growth opportunities to advance our existing products with

up-sell opportunities and build future brands with cross-sell offers.

We also believe that our proprietary consumer app technology platform

can scalably support large communities of users in activities such as video, voice and text chat, online card games and board games and

provide robust user monetization tools.

Our continued growth depends on attracting new

consumer application users through the introduction of new applications, features and partnerships and further penetration of our existing

Our principal growth strategy is to invest in the development of proprietary software, expand our sales and marketing efforts

with respect to such software, and increase our consumer application user base through potential platform partnerships and new and existing

advertising campaigns that we run through internet and mobile advertising networks, all while balancing the capital needs of the business.

Our strategy also includes acquiring, or investing in technologies, solutions or business that complement our business and cross-selling

them to additional synergistic businesses.

Our strategy is to approach these opportunities

in a measured way, being mindful of our resources and evaluating factors such as potential revenue, time to market and amount of capital

needed to invest in the opportunity.

Consumer Applications

We operate a leading network of consumer applications

that create a unique social media enterprise where users can meet, see, chat, broadcast, play online card games and board games and message

in real time in a secure environment with others in our network.

The proprietary technology underlying our products allows us to operate

thousands of simultaneous streams, including on mobile platforms, which support interactions on a one-on-one, one-to-many and many-to-many

Furthermore, our technology is supported by a portfolio of 10 issued patents.

We have three existing products in the video chat space:

Live Video Chat .

We have three existing

products in the video chat space:

Paltalk, Camfrog and Tinychat.

Our major revenue-generating

live video chat products are Paltalk and Camfrog.

Each product enables individuals to self-organize around topics and users with common

Tinychat enables adaptations of our video technology for use in alternative markets, focused on a younger demographic user

and Camfrog are both leading providers of live video social networking applications available on Windows, Mac OS, iOS, Android and other

tablet devices.

Together, these products power one of the world’s largest global collections of video-based communities, with proprietary

technology to host thousands of simultaneous live group conversations on topics such as politics, financial markets, music and dating.

Our proprietary client server technology helps maintain high quality video and audio, even as many users simultaneously watch a particular

Paltalk and Camfrog both attract a demographically and geographically diverse user base, with users in over 180 different

Paltalk users are approximately one-third domestic and two-thirds international, and Camfrog users have an even larger international

presence, with a particular concentration in Southeast Asia.

Our major revenue-generating live video chat products are Paltalk and

Each product enables individuals to self-organize around topics and users with common affinities.

Tinychat enables adaptations

of our video technology for use in alternative markets, focused on a younger demographic user base.

Paltalk and Camfrog are both leading providers

of live video social networking applications available on Windows, Mac OS, iOS, Android and other tablet devices.

Together, these products

power one of the world’s largest global collections of video-based communities, with proprietary technology to host thousands of

simultaneous live group conversations on topics such as politics, financial markets, music and dating.

Our proprietary client server

technology helps maintain high quality video and audio, even as many users simultaneously watch a particular broadcaster.

Camfrog both attract a demographically and geographically diverse user base, with users in over 180 different countries.

Paltalk users

are approximately one-third domestic and two-thirds international, and Camfrog users have an even larger international presence, with

a particular concentration in Southeast Asia.

Live Streaming Software.

In 2022, we acquired

ManyCam, a live streaming software and virtual camera that allows users to deliver professional live videos on streaming platforms, video

conferencing apps and distance learning tools.

The ManyCam software provides multiple camera feeds, backgrounds and effects while also

enabling users to share presentations, spreadsheets and documents.

Telecommunications .

We own and operate a small telecommunications services provider called Vumber that enables users to have multiple phone numbers in any

area code through which calls can be forwarded to a user’s existing cell phone or land line telephone number.

Vumber serves both

the retail and small business community.

Vumber not only allows individuals to communicate while protecting privacy, but also gives business

professionals the ability to add a new business line with any chosen area code to their cell phones.

Vumber provides an in-depth data

analytics platform that can track, record and analyze calls to gain new insights into one’s business.

Payment Options .

Our users have a variety of methods by which to purchase product subscriptions across all of our platforms.

can pay by credit card, PayPal, Western Union, check, local e-wallet providers, or complete an in-app purchase through the Apple App

Store or Google Play Store for Android users.

retains generally up to 30% of the revenue that is generated from sales on our iPhone applications through in-app purchases in the United

Google also retains generally up to 30% of the revenue that is generated from sales on Android applications via Google wallet

through in-app purchases in the United States.

of our credit card transactions are processed through various payment providers.

Video chat users in certain international territories

also have an option to purchase through local resellers.

Local resellers prepay in bulk for services and debit the prepaid balance as

one-time subscriptions and virtual currency are sold to end users.

Regardless of which payment method is utilized, users may access our

products through any of the gateways we offer.

service revenue is generated under service and partnership agreements that we negotiate with third parties which includes development,

integration, engineering, licensing or other services that we provide.

May 29, 2020, we entered into an Asset Purchase Agreement, which was subsequently amended and restated (the “Amended and Restated

Agreement”) with SecureCo, LLC (“SecureCo”), pursuant to which we agreed to sell substantially all of the assets related

to our secure communications business to SecureCo.

The Amended and Restated Agreement also provides for a revenue sharing arrangement,

pursuant to which we are 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.

We do not expect to continue to pursue secure communications products or technology implementation services as part

of our overall business strategy.

the years ended December 31, 2020 and 2021, we also recorded technology service revenue in connection with our 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 our Camfrog and Paltalk applications (as amended, the “YouNow Agreement”).

We own and operate

a small telecommunications services provider called Vumber that enables users to have multiple phone numbers in any area code through

which calls can be forwarded to a user’s existing cell phone or land line telephone number.

Vumber serves both the retail and small

business community.

Vumber not only allows individuals to communicate while protecting privacy, but also gives business professionals

the ability to add a new business line with any chosen area code to their cell phones.

Vumber provides an in-depth data analytics platform

that can track, record and analyze calls to gain new insights into one’s business.

Product Payment Options .

Our users have

a variety of methods by which to purchase product subscriptions across all of our platforms.

Users can pay by credit card, PayPal, Western

Union, check, local e-wallet providers, or complete an in-app purchase through the Apple App Store or Google Play Store for Android users.

Apple retains generally up to 30% of the revenue

that is generated from sales on our iPhone applications through in-app purchases in the United States.

Google also retains generally

up to 30% of the revenue that is generated from sales on Android applications via Google wallet through in-app purchases in the United

All of our credit card transactions are processed

through various payment providers.

Video chat users in certain international territories also have an option to purchase through local

Local resellers prepay in bulk for services and debit the prepaid balance as one-time subscriptions and virtual currency are

sold to end users.

Regardless of which payment method is utilized, users may access our products through any of the gateways we offer.

Technology Services

Technology service revenue was historically generated

under service and partnership agreements that we negotiated with third parties, which included development, integration, engineering,

licensing or other services that we provided.

During the fiscal year ended December 31, 2021,

we recorded technology service revenue in connection with our agreement to serve as a launch partner with Open Props, Inc.

YouNow, Inc., and referred to herein as “YouNow”) and to integrate YouNow’s props infrastructure (the “Props

platform”) into our Camfrog and Paltalk applications (as amended, the “YouNow Agreement”).

Pursuant to the terms of the YouNow Agreement,

YouNow agreed to pay us, in exchange for our services, an aggregate of 10.5 million cryptographic props tokens (“Props tokens”)

upon the achievement of certain milestones.

Once the integration of Props tokens into our Paltalk and Camfrog applications was completed,

we began receiving Props tokens for providing a validator service and for allowing users to participate in the loyalty platform.

platform was intended to drive engagement and incentivize users financially by providing users with the ability to earn Props tokens while

using the Paltalk and Camfrog applications.

The net revenue earned was recorded under “technology service revenue” in the

consolidated statements of operations.

August 2021, we 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,

we received an additional 2.6 million Props tokens.

The value of these tokens was recorded as revenue under “technology service

revenue” in the consolidated statements of income.

Following the termination of the YouNow Agreement, we expect that most of our

technology service revenue generated in the future will result from opportunistic partnerships between us and third parties.

Business Strategy

Growth Through Marketing Efforts

continued growth depends on attracting new consumer application users through the introduction of new applications, features and partnerships

and further penetration of our existing markets.

Our principal growth strategy is to invest in the development of proprietary software,

expand our sales and marketing efforts with respect to such software, and increase our consumer application user base through potential

platform partnerships and new and existing advertising campaigns that we run through internet and mobile advertising networks, all while

balancing the capital needs of the business.

strategy is to approach these opportunities in a measured way, being mindful of our resources and evaluating factors such as potential

revenue, time to market and amount of capital needed to invest in the opportunity.

During the first quarter of 2022, we engaged two

marketing agencies to help us drive consumer engagement through the Paltalk and Camfrog applications.

Existing Live Video Chat Applications

plan to enhance our existing live video chat applications, which we anticipate will include several initiatives intended to improve usage

and revenue potential.

We plan to add incentives for loyal or valuable users to enhance retention and overall user activity in the products.

We also intend to improve our product and marketing capabilities on mobile, to enhance monetization and our ability to acquire new users

on mobile platforms.

In addition, we expect to increase the quality and quantity of live streaming entertainment content and broaden

the distribution across our user base.

Finally, we plan to continue integrating certain technical functions of Paltalk and Camfrog, which

will reduce operating costs and speed time-to-market of future enhancements.

In August 2020, we began serving as a launch partner

with YouNow to integrate YouNow’s props infrastructure into our Camfrog and Paltalk applications, which allowed users to earn Props

tokens while using the Paltalk and Camfrog applications.

On October 15, 2021, we launched our new rewards loyalty program, Paltalk Rewards

Points, and simultaneously ended the distribution of Props tokens, our prior rewards program.

Paltalk and Camfrog users kept their existing

rewards earned from the former Props program as Paltalk Rewards Points and now have the opportunity to earn new Paltalk Rewards Points.

In connection with the Paltalk Rewards Points, we added 25 new reward tiers such as specialty coins, subscriptions, stickers, flair, and

other popular buttons.

November 2021, we launched a real-time asynchronous message board feature, the “Paltalk Feed”, which grants users the ability

to interact with the platform without a live video cam.

The Paltalk Feed allows our users to comment, add photos or videos and contribute

to conversations around shared interests on a digital message board.

addition, during the first quarter of 2022, we integrated Hive Automated Content Moderation Solutions (“Hive”) into our Paltalk

and Camfrog platforms in an effort to enhance our user experience by reducing spam and objectionable content on our applications.

Rooms and Online Games

January 12, 2021, we launched a private room functionality on our Paltalk platform in beta version.

In private rooms, users are able

to set up their own unique URL private room that can be used again and again.

Users are able to invite up to twelve friends to video

chat for unlimited use, unlike other similar offerings which have a 40-minute time out for free users.

Private rooms are currently available

on our desktop application, Android platforms and the iOS platform.

We are optimistic that our users will take advantage of this new

feature due to its audio and video fidelity and expect that as the feature gains popularity, these users will utilize other paid services

offered by us.

Additionally, users can play online card and board games such as poker, blackjack, gin rummy, bridge, and chess on the

Paltalk platform.

our Intellectual Property

have a portfolio of 14 issued patents.

We have successfully defended certain of our intellectual property in the past and have generated

tens of millions of dollars in licensing fees for the use of our patents.

once the integration of Props tokens into our Paltalk and Camfrog applications was completed, we began receiving Props tokens for providing

a validator service and for allowing users to participate in the loyalty platform.

The loyalty platform was intended to drive engagement

and incentivize users financially by providing users with the ability to earn Props tokens while using the Paltalk and Camfrog applications.

The net revenue earned was recorded under “technology service revenue” in the condensed consolidated statements of operations.

The total net revenue value was recognized as earned.

We determined the fair value of the Props tokens

using observable daily quoted market prices on multiple international exchanges, as recorded on CoinmarketCap.

In August 2021, we 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.

The YouNow Agreement was terminated effective on November 23, 2021.

We expect that the majority of our future technology service revenue,

if any, will result from opportunistic collaborations with third parties, however, any such collaborations are not a primary focus for

Company Business Strategy

User Growth Through Marketing Efforts

Our continued growth depends on attracting new

consumer application users through the introduction of new applications, features and partnerships and further penetration of our existing

Our principal growth strategy is to invest in the development of proprietary software, expand our sales and marketing efforts

with respect to such software, and increase our consumer application user base through potential platform partnerships and new and existing

advertising campaigns that we run through internet and mobile advertising networks, all while balancing the capital needs of the business.

Our strategy is to approach these opportunities

in a measured way, being mindful of our resources and evaluating factors such as potential revenue, time to market and amount of capital

needed to invest in the opportunity.

During 2022, we engaged two marketing agencies

to help us drive consumer engagement through the Paltalk and Camfrog applications, but we subsequently scaled back the marketing agencies’

efforts in the fourth quarter of 2022 in response to the overall macro-economic environment.

Enhance Existing Live Video Chat Applications

We plan to enhance our existing live video chat

applications, which we anticipate will include several initiatives intended to improve usage and revenue potential.

We plan to add incentives

for loyal or valuable users to enhance retention and overall user activity in the products.

We also intend to improve our product and

marketing capabilities on mobile, to enhance monetization and our ability to acquire new users on mobile platforms.

In addition, we expect

to increase the quality and quantity of live streaming entertainment content and broaden the distribution across our user base.

we plan to continue integrating certain technical functions of Paltalk and Camfrog, which will reduce operating costs and speed time-to-market

of future enhancements.

In 2021, we launched our new rewards loyalty

program, Paltalk Rewards Points, and added 25 new reward tiers such as specialty coins, subscriptions, stickers, flair, and other popular

Also in 2021, we launched a real-time asynchronous message board feature, the “Paltalk Feed”, which grants users

the ability to interact with the platform without a live video cam.

The Paltalk Feed allows our users to comment, add photos or videos

and contribute to conversations around shared interests on a digital message board.

During the first quarter of 2022, we integrated

Hive Automated Content Moderation Solutions (“Hive”) into our Paltalk and Camfrog platforms in an effort to enhance our user

experience by reducing spam and objectionable content on our applications.

Furthermore, during the second quarter of 2022, we acquired

and introduced the ManyCam software on our platforms, which provides multiple camera feeds, backgrounds and effects while also enabling

users to share presentations, spreadsheets and documents.

We subsequently released updates to the ManyCam software to provide quicker

access, dark and light modes and overall rendering performance improvement for high resolution users as well as improved quality and

performance with regard to virtual backgrounds.

Private Rooms and Online Games

On January 12, 2021, we launched a private room

functionality on our Paltalk platform in beta version.

In private rooms, users are able to set up their own unique URL private room that

can be used again and again.

Users are able to invite up to twelve friends to video chat for unlimited use, unlike other similar offerings

which have a 40-minute time out for free users.

Private rooms are currently available on our desktop application, Android platforms and

the iOS platform.

We are optimistic that our users will take advantage of this new feature due to its audio and video fidelity and expect

that as the feature gains popularity, these users will utilize other paid services offered by us.

Additionally, users can play online

card games and board games such as poker, blackjack, gin rummy, bridge, and chess on the Paltalk platform.

In 2022, we continued to develop

our online game offerings as we launched our mobile backgammon game enabling Paltalk users to play with friends, other users or privately

with real-time voice and video.

Defend our Intellectual Property

We have a portfolio of 10 issued patents.

have successfully defended certain of our intellectual property in the past and have generated tens of millions of dollars in licensing

fees for the use of our patents.

We intend to continue defending our intellectual property rights.

invest in advertising and marketing primarily for the purpose of acquiring users for our consumer applications.

We adapt our marketing

expenditures and channels as we gather the data to analyze the success of our campaigns.

We primarily advertise through internet and

mobile advertising networks and run hundreds of campaigns at any given time, targeting various audiences of users, and focusing on campaigns

that we believe will produce a positive return over the lifetime of new users.

We also generate new sign-ups organically, as people find

our sites and applications through brand recognition and word of mouth, search engines and product review websites.

During the first quarter of 2022, we engaged two

marketing agencies to help us drive consumer engagement through the Paltalk and Camfrog applications.

We expect that increasing our marketing

efforts by partnering with these marketing agencies and increasing our annual marketing spend will provide a meaningful contribution to

new users and generate revenue.

and Our Industry

in our industry remains fierce.

The market for consumer applications is extremely dynamic and is undergoing constant change.

this environment creates significant opportunities for us as well as our direct and indirect competitors.

Our principal competitors are

BIGO Live, Cisco Webex, Facebook Live, Google Meet, Houseparty, Instagram Live, Live.ly, Live.me, Microsoft Teams, Skype, Twitch, YouTube

Live and Zoom.

of our competitors have substantially greater financial, managerial, technological and other resources than we do.

In addition, there

are relatively few barriers to entry into the consumer applications industry, and, as a result, any organization that has adequate financial

resources and access to technical expertise and skilled personnel may become one of our competitors.

order to compete effectively, we seek to offer software, services and applications that are differentiated from existing products, superior

in quality and more appealing than those of our competitors.

We believe that our applications compete favorably against those offered

by our competitors due to their ability to scale, their cost-efficiency and their innovative technology.

We also believe that we have

the tools and expertise to attract new users through Facebook and other sources at a lower cost per subscriber than certain of our traditional

we believe we have the capability to compete effectively in the consumer applications industry, our competitors may offer products, services

and applications that we do not provide, and that may have more desirable features or may be offered at lower prices, and they may be

able to devote greater resources to the development, promotion, sale and support of their products.

In addition, many of our competitors

have more extensive customer bases and broader customer relationships than we have, including relationships with our potential customers.

are subject to a number of U.S.

federal and state laws and regulations that affect companies conducting business on the internet, many

of which are still evolving and being litigated in the courts and could be interpreted in ways that could harm our business.

and regulations may involve user privacy, data protection, content, intellectual property, distribution, electronic contracts and other

communications, competition, protection of minors, consumer protection, taxation and online payment services.

In particular, we are subject

to federal and state laws regarding privacy and protection of user data, which are constantly evolving and can be subject to significant

Marketing Strategy

We invest in advertising and marketing primarily

for the purpose of acquiring users for our consumer applications.

We adapt our marketing expenditures and channels as we gather the data

to analyze the success of our campaigns.

We primarily advertise through internet and mobile advertising networks and run hundreds of

campaigns at any given time, targeting various audiences of users, and focusing on campaigns that we believe will produce a positive

return over the lifetime of new users.

We also generate new sign-ups organically, as people find our sites and applications through brand

recognition and word of mouth, search engines and product review websites.

During 2022, we engaged two marketing agencies

to help us drive consumer engagement through the Paltalk and Camfrog applications, but we subsequently scaled back the marketing agencies’

efforts during the fourth quarter of 2022 in response to the overall macro-economic environment.

Competition and Our Industry

Competition in our industry remains fierce.

market for consumer applications is extremely dynamic and is undergoing constant change.

We believe this environment creates significant

opportunities for us as well as our direct and indirect competitors.

Our principal competitors are BIGO Live, Cisco Webex, Facebook Live,

Google Meet, Houseparty, Instagram Live, Live.ly, Live.me, Microsoft Teams, Skype, Twitch, YouTube Live and Zoom.

Many of our competitors have substantially greater

financial, managerial, technological and other resources than we do.

In addition, there are relatively few barriers to entry into the

consumer applications industry, and, as a result, any organization that has adequate financial resources and access to technical expertise

and skilled personnel may become one of our competitors.

In order to compete effectively, we seek to

offer software, services and applications that are differentiated from existing products, superior in quality and more appealing

than those of our competitors.

We believe that our applications compete favorably against those offered by our competitors due to

their ability to scale, their cost-efficiency and their innovative technology.

We also believe that we have the tools and expertise

that may enable us to attract new users through Facebook and other sources at a lower cost per subscriber than certain of our

traditional competitors.

Although we believe we have the capability to

compete effectively in the consumer applications industry, our competitors may offer products, services and applications that we do not

provide, and that may have more desirable features or may be offered at lower prices, and they may be able to devote greater resources

to the development, promotion, sale and support of their products.

In addition, many of our competitors have more extensive customer

bases and broader customer relationships than we have, including relationships with our potential customers.

Governmental Regulations

We are subject to a number of U.S.

and state laws and regulations that affect companies conducting business on the internet, many of which are still evolving and being

litigated in the courts and could be interpreted in ways that could harm our business.

These laws and regulations may involve user

privacy, data protection, content, intellectual property, distribution, electronic contracts, competition, wiretapping, biometrics,

online tracking, protection of minors, consumer protection, taxation and online payment services.

In particular, we are subject to

federal and state laws regarding privacy and protection of user data, which are constantly evolving and can be subject to

significant change.

We are also subject to diverse and evolving laws and regulations in other countries in which we operate.

The application and

interpretation of these laws and regulations are often uncertain, particularly in the new and rapidly-evolving industry in which we operate.

Because our applications are accessible worldwide and used by residents of some foreign countries, foreign jurisdictions may claim that

we must comply with foreign laws, even in jurisdictions in which we have no local business entity, employees or infrastructure.

are also subject to federal laws and regulations regarding online content, user privacy and electronic marketing, including The Communications

Decency Act of 1996, as amended (“The Communications Decency Act”), The Children’s Online Privacy Protection Act of

1998, as amended, The Digital Millennium Copyright Act, The Electronic Communications Privacy Act of 1986, as amended, the USA PATRIOT

Act of 2001, and the Controlling the Assault of Non-Solicited Pornography And Marketing (“CAN-SPAM”) Act of 2003, among others.

The Digital Millennium Copyright Act limits our liability as an online service provider for linking to or hosting third-party content

that infringes copyrights.

The Communications Decency Act provides statutory protections to online service providers like us who distribute

third-party content.

The Children’s Online Privacy Protection Act restricts the ability of online service providers to collect

personal information from children under 13.

Congress, the Federal Trade Commission (“FTC”) and many states have promulgated

laws and regulations regarding email advertising, including the CAN-SPAM Act.

application and interpretation of these laws and regulations are often uncertain, particularly in the new and rapidly evolving

industry in which we operate.

Because our applications are accessible worldwide and used by residents of some foreign countries,

foreign jurisdictions may claim that we must comply with foreign laws, even in jurisdictions in which we have no local business

entity, employees or infrastructure.

We are also subject to federal laws and regulations

regarding online content, user privacy and electronic marketing, including The Communications Decency Act of 1996, as amended.The Children’s

Online Privacy Protection Act of 1998, as amended, The Video Privacy Protection Act of 1998 (“VPPA”), The Digital Millennium

Copyright Act, The Electronic Communications Privacy Act of 1986, as amended, the USA PATRIOT Act of 2001, and the Controlling the Assault

of Non-Solicited Pornography And Marketing (“CAN-SPAM”) Act of 2003, among others.

The Digital Millennium Copyright Act limits

our liability as an online service provider for linking to or hosting third-party content that infringes copyrights.

The Communications

Decency Act provides statutory protections to online service providers like us who distribute third-party content.

The VPPA restricts

digital video providers from disclosing to third parties personally identifiable information that is tied to the titles of consumers’

viewed videos.

The Children’s Online Privacy Protection Act restricts the ability of online service providers to collect personal

information from children under 13.

Congress, the Federal Trade Commission (“FTC”) and many states have promulgated laws

and regulations regarding email advertising, including the CAN-SPAM Act.

Any changes in these laws or judicial interpretations narrowing

1 unchanged sentence

parts of our business.

Growing public concern about privacy and the use of personal information

may subject us to increased regulatory scrutiny.

Regulation related to treatment of user data by online services is evolving as federal,

state and foreign governments continue to adopt new, or modify existing, laws and regulations addressing data privacy and the collection,

processing, storage, transfer and use of data.

Growing public concern about privacy and the

use of personal information may subject us to increased regulatory scrutiny.

Regulation related to treatment of user data by online services

is evolving as several U.S.

state governments have recently adopted new, or modified existing, laws and regulations addressing data privacy

and the collection, processing, storage, transfer and use of data.

These state laws include, for example:

the California Consumer Protection Act (“CCPA”),

which became effective on January 1, 2020, the California Privacy Rights Act (“CPRA”), which expands upon the CCPA and was

passed in the recent California election in November 2020, and the New York Stop Hacks and Improve Electronic Data Security (SHIELD) Act.

In addition, the FTC regularly investigates and brings enforcement actions against companies that have used personally identifiable information

in a deceptive or unfair manner or in violation of a posted privacy policy.

On May 25, 2018, the European Union implemented a privacy

regulation called the Global Data Protection Regulation (“GDPR”) that imposes additional new regulatory scrutiny on our business

in the European Economic Area, with possible financial consequences for noncompliance.

If we are accused of violating the terms of our

privacy policy, implementing unfair privacy practices or otherwise breaching data privacy laws, we may be forced to expend significant

financial and managerial resources to defend against an action by the FTC, European Data Protection Authorities, or other state or federal

enforcement agencies.

Our user database holds the personal information of our users and subscribers residing in the United States and

other countries, and we could be sued by those users if any of the information is misused or misappropriated.

Any failure by us to adequately

protect our users’ privacy and data could also result in loss of user confidence in our consumer applications and services and ultimately

in a loss of active users, which could adversely affect our business.

addition, virtually every U.S.

state has passed laws requiring notification to users when there is a security breach resulting in unauthorized

disclosure of certain types of personal information, many of which are modeled on California’s Information Practices Act.

are a number of legislative proposals pending before the U.S.

Congress and various state legislative bodies concerning data protection

that could, if adopted, have an adverse effect on our business.

the California Consumer Protection

Act (“CCPA”), the California Privacy Rights Act (“CPRA”), which became effective on January 1, 2023, the Virginia

Consumer Data Protection Act, the Colorado Privacy Act, the Connecticut Act Concerning Personal Data Privacy and Online Monitoring, the

Utah Consumer Privacy Act, and the New York Stop Hacks and Improve Electronic Data Security (“SHIELD”) Act.

The European Union implemented a privacy regulation

called the Global Data Protection Regulation (“GDPR”) that imposes additional regulatory scrutiny on our processing of personal

data from in the European Economic Area, with possible financial consequences for noncompliance of up to 4% of our worldwide revenues.

In addition, virtually every U.S.

state has passed

laws requiring notification to users when there is a security breach resulting in unauthorized disclosure of certain types of personal

information, many of which are modeled on California’s Information Practices Act.

There are a number of legislative proposals pending

before the U.S.

Congress and various state legislative bodies concerning data protection that could, if adopted, have an adverse effect

on our business.

We are unable to determine if and when such legislation may be adopted.

Many jurisdictions, including the European Union, have adopted breach notification and other data protection notification laws designed

to inform users of unauthorized disclosure of personally identifiable information.

The introduction of new privacy and data breach laws

and the interpretation of existing privacy and data breach laws in the United States, Europe and other foreign jurisdictions is constantly

There is a risk that new laws may be introduced or that existing laws may be applied in a way that would conflict our current

data protection practices or prevent the transfer of data between countries in which we operate.

addition, rising concern about the use of social networking technologies for illegal conduct may in the future produce legislation or

other governmental action that could require changes to our applications or restrict or impose additional costs upon the conduct of our

These regulatory and legislative developments, including excessive taxation, may prevent or significantly limit our ability

to expand our business.

may also become subject to laws or regulations in the future that limit our payment processors’ ability to accept bitcoin or other

cryptocurrencies as a form of payment or to otherwise hold bitcoin or other cryptocurrencies.

As cryptocurrencies have grown in both

popularity and market size, governments around the world have reacted differently to cryptocurrencies, with certain governments deeming

cryptocurrency offerings and cryptocurrency exchanges illegal, while others have allowed their use and trade.

Governments may in the

future curtail or outlaw the acquisition or use of cryptocurrencies or the exchange of cryptocurrencies for fiat currencies.

of, holding, trading in or participating in offerings of cryptocurrencies may then be considered illegal and subject to sanction.

may also take regulatory action that may increase the cost and/or subject companies that transact in or hold cryptocurrencies to additional

of the video card games that we offer on our Paltalk application are based upon traditional casino games, such as poker and blackjack.

We have structured and operate these games and features with gambling laws in mind and believe that these games and features do not constitute

Our games are intended to be for entertainment purposes only and do not offer an opportunity to win earnings outside of the

As of March 21, 2022, we had 1 part-time employee and 21 full-time

We believe that our future success depends, in part, on our continued ability to hire, assimilate and retain qualified personnel.

We attract and retain employees by offering training, bonus opportunities, competitive salaries and a comprehensive benefits package.

Internet Site and Availability of SEC Filings

corporate website is located at www.paltalk.com .

We make available on that site, as soon as reasonably practicable, our Annual

Reports on Form 10-K, Quarterly Reports on Form 10-Q, proxy statements, Current Reports on Form 8-K, other reports filed with or furnished

to the SEC, as well as any amendments to those filings.

Our SEC filings, as well as our Code of Conduct and other corporate governance

documents, can be found in the Investor Relations section of our site and are available free of charge.

Amendments to our Code of Conduct

and any grant of a waiver from a provision of the Code of Conduct requiring disclosure under applicable SEC rules will be disclosed on

Information on our website is not part of this Annual Report on Form 10-K.

In addition, the SEC maintains a website at www.sec.gov

that contains reports, proxy and information statements, and other information regarding us and other issuers that file electronically

with the SEC.

Many other jurisdictions, including the European

Union, have adopted breach notification and other data protection notification laws designed to inform users of unauthorized disclosure

of personally identifiable information.

The introduction of new privacy and data breach laws and the interpretation of existing privacy

and data breach laws in the United States, Europe and other foreign jurisdictions is constantly evolving.

There is a risk that new laws

may be introduced or that existing laws may be applied in a way that would conflict our current data protection practices or prevent

the transfer of data between countries in which we operate.

In addition, rising concern about the use of

social networking technologies for illegal conduct may in the future produce legislation or other governmental action that could require

changes to our applications or restrict or impose additional costs upon the conduct of our business.

These regulatory and legislative

developments, including excessive taxation, may prevent or significantly limit our ability to expand our business.

Furthermore, some of the video card games that

we offer on our Paltalk application are based upon traditional casino games, such as poker and blackjack.

We have structured and operate

these games and features with gambling laws in mind and believe that these games and features do not constitute gambling.

Our games are

intended to be for entertainment purposes only and do not offer an opportunity to win earnings outside of the platform.

As of March 15, 2023, we had no part-time employee

and 19 full-time employees.

We believe that our future success depends, in part, on our continued ability to hire, assimilate and retain

qualified personnel.

We attract and retain employees by offering training, bonus opportunities, competitive salaries and a comprehensive

benefits package.

Company Internet Site and Availability of SEC Filings

Our corporate website is located at www.paltalk.com .

We make available on that site, as soon as reasonably practicable, our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, proxy

statements, Current Reports on Form 8-K, other reports filed with or furnished to the SEC, as well as any amendments to those filings.

Our SEC filings, as well as our Code of Conduct and other corporate governance documents, can be found in the Investor Relations section

of our site and are available free of charge.

Amendments to our Code of Conduct and any grant of a waiver from a provision of the Code

of Conduct requiring disclosure under applicable SEC rules will be disclosed on our website.

Information on our website is not part of

this Annual Report on Form 10-K.

In addition, the SEC maintains a website at www.sec.gov that contains reports, proxy and information

statements, and other information regarding us and other issuers that file electronically with the SEC.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business