What changed in this filing

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Item 1. Business

2024-03-15 compared with 2023-03-23 · 144 added, 177 removed, 134 unchanged (71% of the section changed)

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.

We are a communications software innovator that

powers multimedia social applications.

Our product portfolio includes Paltalk, Camfrog and Tinychat, which together host a large collection

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.

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.

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 8 patents.

We were incorporated under the laws of the State

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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

Our Consumer Application Products

We operate a network of consumer applications

that we believe 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 basis.

Our consumer applications generate revenue principally from subscription fees, including virtual goods, and advertising

arrangements.

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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.

Live Video Chat

We have three existing

products in the video chat space:

We have three existing products in the video

Paltalk, Camfrog and Tinychat.

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.

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

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

Tinychat is web-based, enables adaptations of our

video technology and does not require a download.

It is primarily targeted for use in alternative markets and is focused on a younger

demographic user base.

Paltalk and Camfrog are both available on Windows,

Mac OS, iOS, Android and other tablet devices.

Together, these products power a large collection 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,

among others.

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

watch a particular broadcaster.

Paltalk and 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.

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.

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 communities.

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 also 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

Our users have a variety of methods by which

to purchase product subscriptions across all of our consumer applications.

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 generally retains up to 15% of the revenue

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

Google also retains generally

Google also generally retains

up to 15% of the revenue that is generated from sales on Android applications via Google wallet through in-app purchases in the United

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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

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

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

During fiscal year 2023, we engaged Cleverbridge,

a growth engine for global technology companies, to, among other things, facilitate and authenticate payments in international geographic

markets to reduce fraud and increase acceptance rates.

Company Business Strategy

User Growth Through Marketing Efforts

Our continued growth depends on attracting new

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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.

Acquiring and Investing in Complementary Technologies

and Businesses

Our strategy also includes acquiring, or investing

in technologies, solutions or business that complement our business and cross-selling them to additional synergistic businesses.

In furtherance

of this strategy, we have strategically added specialized employees and complementary companies, products and technologies to our existing

In addition, we continue to explore strategic opportunities, including, but not limited to, potential mergers or acquisitions

of other assets or entities that are synergistic to our business.

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.

We continue to develop our existing live video

chat applications by implementing programs and features that enhance our users’ experience on our platforms.

For example, in the

fourth quarter of 2023, we launched the first version of our “Chat History,” a feature that retains messages posted in chat

When fully implemented, we expect to offer our users a searchable database that users can refer to for content.

In addition, we plan to continue leveraging our

integration of the ManyCam product into Paltalk products through upselling initiatives and are developing a user-friendly version of

ManyCam that will be optimized for both consumer and enterprise applications.

Our Paltalk platform’s rewards loyalty

program, “Paltalk Rewards Points”, has 25 reward tiers such as specialty coins, subscriptions, stickers, flair, and other

popular buttons.

Additionally, a real-time asynchronous message board called the “Paltalk Feed” is available on our Paltalk

platform, which grants users the ability to interact with the platform without a live video cam.

The Paltalk Feed also allows our users

to comment, add photos or videos and contribute to conversations around shared interests on a digital message board.

In 2022, we integrated Hive Automated Content

Moderation Solutions into our Paltalk and Camfrog platforms, which reduces spam and objectionable content on our applications.

More recently

in 2023, we made certain updates to the ManyCam product, which now, and following the acquisition, we subsequently released software updates

to provide users with greater ease of use, dark and light modes and enhanced overall rendering performance for high resolution users,

as well as improved quality and performance with regard to virtual backgrounds.

Implementation of Enhanced Processors

As discussed above, during fiscal year 2023,

we engaged Cleverbridge, a growth engine for global technology companies.

Cleverbridge’s robust suite of global payment and eCommerce

capabilities has allowed us to optimize our international markets while minimizing risk and administrative work.

We believe that this

is an important aspect of our business strategy given that Paltalk and Camfrog both attract a demographically and geographically diverse

user base, with users in over 180 different countries.

Paltalk users are domestic and international, and Camfrog users have an even larger

international presence, with a particular concentration in Southeast Asia.

Beyond facilitating and authenticating payments, we believe

Cleverbridge’s chargeback prevention algorithms can help us with acceptance rates and reduce fraud.

Defend our Intellectual Property

We have a portfolio of 8 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.

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.

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

During 2023, we leveraged our in-house

resources in an effort to further define and refine our renewal strategy and optimize cost per new customer acquisition.

Competition and Our Industry

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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.

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

Many of our competitors have substantially greater

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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.

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

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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.

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.

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.

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

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

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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.

Act (“CCPA”), the California Privacy Rights Act (“CPRA”), 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, the Delaware

Personal Data Privacy Act, the Indiana Consumer Data Protection Act, the Iowa Consumer Data Protection Act, the Montana Consumer Data

Privacy Act, the Oregon Consumer Privacy Act, the Tennessee Information Protection Act, the Texas Data Privacy and Security Act, and

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

The European Union implemented a privacy regulation

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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

As of March 11, 2024, we had no part-time employees

and 17 full-time employees.

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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.

statements, Current Reports on Form 8-K, other reports filed with or furnished to the Securities and Exchange Commission (“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