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Video app maker Paltalk, cited in Snowden slide, files to uplist, sell stock

Jericho Executive Plaza where Paltalk Inc. is located.

Jericho Executive Plaza where Paltalk Inc. is located. Credit: Howard Schnapp

Video app maker Paltalk Inc., which gained notoriety when it landed in a PowerPoint slide leaked by Edward Snowden, has filed to sell stock and list on the Nasdaq Capital Market.

Paltalk's government filing earlier this month did not specify how much the company expects to raise in the stock sale, but it did say that it plans to use $1 million to develop software and $1.2 million for advertising and marketing.

A spokeswoman for the Jericho company cited Securities and Exchange Commission regulations that govern new offerings in withholding comment.

Snowden, a whistleblower who had served as a contract analyst for consultancy Booz Allen Hamilton, leaked a PowerPoint deck made public in 2013 about PRISM, a classified National Security Agency program. The United States filed espionage charges against Snowden, who fled the country.

PRISM collected communications data from technology giants like Google, Microsoft, Facebook and Apple. Paltalk, which posted revenue of $3.4 million in the quarter ended March 31, attracted attention for its inclusion as a tiny outlier among the PRISM targets.

Media speculation back then suggested that the NSA's interest was piqued by terrorists' use of Paltalk's chat rooms and heavy traffic from the Middle East during the Syrian Civil War. A Paltalk spokesman declined comment to CNN at the time.

Paltalk has three video chat products: Paltalk, Camfrog and Tinychat, with the first two — available on Windows, Mac OS, iOS and Android — providing most revenue.

The filing said that Paltalk and Camfrog have users in more than 180 countries, with Paltalk's user base about one-third domestic and two-thirds international. Camfrog has an even stronger foreign footprint concentrated in Southeast Asia, the filing said.

Paltalk, which moved its headquarters from Manhattan to Jericho last summer, also operates Vumber, which lets users have multiple phone numbers and forward calls to an existing phone.

In the fourth quarter of 2020, the company rolled out card and board games, including poker, blackjack and chess, that let players see real time video and audio of their opponents.

The company's video-based communities host "thousands of live group conversations on topics such as politics, financial markets, music and dating," the filing said.

"Our principal competitors are BIGO Live, Cisco Webex, Facebook Live, Google Meet, Houseparty, Instagram Live, Live.ly, Live.me, Microsoft Teams, Skype, Twitch, YouNow, YouTube Live and Zoom," the company said.

Paul Trapani, president of the Long Island Software and Technology Network (LISTnet), said that Paltalk is a player in a burgeoning market.

"Video chat is exploding," he said. "It was already growing pre-COVID. COVID pushed it a lot further."

Shares of Paltalk rose 12.1% to $3.30 Wednesday afternoon on the OTCQB, the middle tier of the OTC markets .

The company, with 22 employees as of March 19, will retain the "PALT" stock ticker when it moves to the Nasdaq, the company said.

Formerly known as PeerStream Inc., the company changed its name to Paltalk in May 2020 to reflect its focus on multimedia social apps, it said in a news release at the time.

In 2019, the company sold assets of its FirstMet, 50More and The Grade dating services.

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