Jason Katz - Chief Executive Officer Kara Jenny - Chief Financial Officer

Good afternoon, and welcome to the Paltalk Second Quarter 2022 Earnings Call. At this time all participants have been placed on a listen-only-mode. It is now my pleasure to turn the floor over to your host, Jason Katz, Chief Executive Officer of Paltalk and Kara Jenny, Chief Financial Officer of Paltalk. Kara, the floor is yours.

Hello everyone and welcome to the Paltalk second quarter 2022 operating and financial results conference call for the three months ended June 30, 2022. By now everyone should have had access to the earnings results press release, which was issued earlier today after the market closed at 4:00 p.m. Eastern Time. This call is being webcast and will be available for replay. In our remarks today we will include statements that are considered forward-looking within the meaning of the Private Securities Litigation Reform Act of 1995, including forward-looking statements about future results of operations, business strategies and plans, our relationships with our customers as well as market and potential growth opportunities. Forward-looking statements are based on management’s current knowledge and expectations as of today and are subject to certain risks, uncertainties and assumptions related to factors that may cause actual results to differ materially from those anticipated in the forward-looking statements. We offer no assurance that these expectations and beliefs will prove to be correct. A detailed discussion of such risks and uncertainties are contained in our filings with the SEC, including our most recent Annual Report on Form 10-K for the year ended December 31, 2021. You should refer to and consider these factors when relying on such forward-looking information. The company does not undertake and expressly disclaims any obligation to update or alter our forward-looking statements, whether as a result of new information, future events or otherwise, except as required by applicable law. On this call we will refer to certain non-GAAP measures, including adjusted EBITDA, that when used in combination with GAAP results provides us with additional analytical tools to understand our operations. For each non-GAAP measure, we have provided a reconciliation to the most directly comparable GAAP financial measure in our earnings press release, which will be posted to the Investor Relations section of our website at paltalk.com. And with that, I would like to introduce Paltalk’s Chief Executive Officer, Jason Katz.

Thank you, Kara, and good afternoon to everyone. We greatly appreciate you taking the time to join us on today’s call. We will discuss our operating highlights and financial results for the second quarter ended June 30, 2022. Additionally, we will provide an update on our strategy to target subscribers and advertising growth, discuss our recent acquisition of ManyCam assets and our engagement of Roth Capital Partners for strategic accretive acquisitions. After my opening statement, our CFO, Kara Jenny, will give a summary of our financial results for the second quarter ended June 30, 2022. With that, I would now like to walk you through the recent highlights. We’ve continued to fine-tune our strategy to focus on adjusted-EBITDA, optimization, the integration of the newly acquired ManyCam assets, and adjusting our spending to align with current macro-economic conditions. Our cash position as of June 30, 2022 remains solid at $16.9 million after utilizing $2.7 million for the acquisition of the ManyCam assets. We plan to continue to invest in a measured way with responsible cash management. Now I'd like to provide an update on ManyCam, our recently closed asset acquisition that I am very excited about and our engagement with Roth Capital Partners. During the second quarter we closed an asset acquisition involving ManyCam Software. ManyCam is a live streaming software and virtual camera that allows users to global professional live videos on streaming platforms; video and conferencing apps and distance learning tools. We were pleased that within days of acquiring the ManyCam assets we were able to launch ManyCam version 8.0, a software update with vast improvements over prior versions. ManyCam Version 8.0 offers quicker access, dark and light modes, and overall rendering performance improvement for high resolution users, as well as improve quality and performance with regard to virtual…

Thank you, Jason. Our local operations for the three months ended June 30, 2022 are as follows: Revenue for the three months ended June 30, 2022 decreased by 23% to $2.6 million compared to $3.4 million for the three months ended June 30, 2021. This decline was attributed to the decrease in technology service revenue as a result of the termination of our partnership with Open Props, Inc. formally YouNow, as well as a decrease in subscription revenue of 18% or $0.6 million, which we believe was primarily attributed to the macroeconomic environment conditions. Advertising revenue increased by over 11% to $0.1 million. Loss from operations for the three months ended June 30, 2022 totaled $1.1million, a decrease in operating income of $1.7 million compared to operating income of $0.6 million for the three months ended June 30, 2021. The decrease in operating income is primarily due to a decrease in revenue of $0.8 million, coupled with increased marketing expenses of $0.2 million or 90%, in connection with our investment and marketing, increased product development expenses of $0.2 million or 17%, in connection with the implementation of newly purchased software tools for marketing, as well as increased general and administrative expenses of $0.6 million or 124% in connection with non-cash stock based compensation and increased professional fees. Net loss for the three months ended June 30, 2022 totaled $1.1 million, a decrease of $1.9 million compared to net income of $0.8 million for the three months ended June 30, 2021. The resulting net loss per share of common stock for the three months ended June 30, 2022 was a loss of $0.12 as compared to net income per share of common stock of $0.12 for the three months ended June 30, 2021. Adjusted EBITDA for the three months ended June 30 decreased by $1.6 million to a loss of $0.9 million, compared to adjusted EBITDA of $0.7 million for the three months ended June 30, 2021. Cash and cash equivalents totaled $16.9 million at June 30, 2022, a decrease of $4.7 million compared to $21.6 million at December 31, 2021. Of the $4.7 million change in cash, $2.9 million of cash was used in connection with the ManyCam transaction and $0.2 million was used in connection with the repurchase of shares and $1.6 million was used in operation. Currently the company has no long term debt on its balance sheet. Jason, back to you to close out the presentation.

Thanks everyone for your support and for joining us today. We are very grateful for your interest in our business. We look forward to updating the market and our stockholders with our progress and our growth initiatives organically, and the potential strategic accretive acquisitions which we continue to identify and analyze. We plan on having our next quarterly results call in early to mid-November. Have a great day!

Thank you ladies and gentlemen. This does conclude today's conference call. You may disconnect your phone lines at this time and have a wonderful day! Thank you for your participation.