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<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%"><tr style="vertical-align: top"><td style="width: 24px"><font style="font: 10pt Times New Roman, Times, Serif"><b>11.</b></font></td>
<td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><b>Net Income (Loss) Per Share</b></font></td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Basic net income (loss) per share of common
stock is computed based upon the number of weighted average shares of common stock outstanding as defined by ASC Topic 260, <i>Earnings
Per Share</i>. Diluted net income (loss) per share of common stock includes the dilutive effects of stock options and stock equivalents.
To the extent stock options are antidilutive, they are excluded from the calculation of diluted net income (loss) per share of
common stock.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">For the three months ended March 31, 2020,
773,375 of shares issuable upon the exercise of outstanding stock options were not included in the computation of diluted net income
(loss) per share for continuing operations because their inclusion would be antidilutive.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">  </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">For the three months ended March 31, 2019,
1,062,745 shares issuable upon the exercise of outstanding stock options and 79,286 shares of unvested restricted stock were not
included in the computation of diluted net income per share because their inclusion would be anti-dilutive. </p>
1062745
773375
<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
<tr style="vertical-align: bottom">
<td> </td><td style="font-weight: bold"> </td>
<td colspan="6" style="font-weight: bold; text-align: center">Three Months Ended</td><td style="font-weight: bold"> </td></tr>
<tr style="vertical-align: bottom">
<td> </td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td>
<td colspan="6" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">March 31,</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td></tr>
<tr style="vertical-align: bottom">
<td> </td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">2020</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">2019</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="width: 76%; text-indent: 10pt">Revenues</td><td style="width: 1%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">    -</td><td style="width: 1%; text-align: left"> </td><td style="width: 1%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">440,225</td><td style="width: 1%; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-indent: 10pt">Costs of revenue</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">-</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">(115,338</td><td style="text-align: left">)</td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left; text-indent: 10pt">Sales and marketing expense</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">-</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">(270,200</td><td style="text-align: left">)</td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left; text-indent: 10pt">Product development expense</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">-</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">(76,845</td><td style="text-align: left">)</td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left; padding-bottom: 1.5pt; text-indent: 10pt">General and administrative expense</td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">-</td><td style="padding-bottom: 1.5pt; text-align: left"> </td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">(82,722</td><td style="padding-bottom: 1.5pt; text-align: left">)</td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left; padding-bottom: 4pt">Loss from discontinued operations</td><td style="padding-bottom: 4pt"> </td>
<td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">-</td><td style="padding-bottom: 4pt; text-align: left"> </td><td style="padding-bottom: 4pt"> </td>
<td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">(104,880</td><td style="padding-bottom: 4pt; text-align: left">)</td></tr>
</table>
<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%"><tr style="vertical-align: top"><td style="width: 24px"><font style="font: 10pt Times New Roman, Times, Serif"><b>7.</b></font></td>
<td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><b>Digital Tokens</b></font></td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Digital tokens consist of XPX tokens received
in connection with the ProximaX Agreement. Given that there is limited precedent regarding the classification and measurement of
cryptocurrencies and other digital tokens under current GAAP, the Company has determined to account for these tokens as indefinite-lived
intangible assets in accordance with ASC 350, <i>Intangibles-Goodwill and Other</i> until further guidance is issued by the FASB.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Indefinite-lived intangible assets are recorded
at cost and are not subject to amortization but shall be tested for impairment annually and more frequently if events or changes
in circumstances indicate that it is more likely than not that the asset is impaired. If, at the time of an impairment test, the
carrying amount of an intangible asset exceeds its fair value, an impairment loss in an amount equal to the excess is recognized.
Fair value of the digital tokens had been based on the quoted market prices for the XPX tokens.</p>
79286
<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%"><tr style="vertical-align: top"><td style="width: 24px"><font style="font: 10pt Times New Roman, Times, Serif"><b>4.</b></font></td>
<td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><b>Property and Equipment, Net</b></font></td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b> </b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Property and equipment, net consisted of the
following at March 31, 2020 and December 31, 2019:</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
<tr style="vertical-align: bottom">
<td style="text-align: center"> </td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">March 31, <br /> 2020</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">December 31, <br /> 2019</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td></tr>
<tr style="vertical-align: bottom">
<td style="text-align: justify"> </td><td style="font-weight: bold"> </td>
<td colspan="2" style="font-weight: bold; text-align: center">(unaudited)</td><td style="font-weight: bold"> </td><td> </td>
<td colspan="2" style="text-align: right"> </td><td> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="width: 76%; text-align: justify">Computer equipment</td><td style="width: 1%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">3,706,017</td><td style="width: 1%; text-align: left"> </td><td style="width: 1%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">3,706,017</td><td style="width: 1%; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: justify">Website development</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">3,076,323</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">3,076,323</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: justify">Furniture and fixtures</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">89,027</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">89,027</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: justify; padding-bottom: 1.5pt">Leasehold improvements</td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">32,726</td><td style="padding-bottom: 1.5pt; text-align: left"> </td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">32,726</td><td style="padding-bottom: 1.5pt; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: justify">Total property and equipment</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">6,904,093</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">6,904,093</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: justify; padding-bottom: 1.5pt">Less: Accumulated depreciation</td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">(6,372,894</td><td style="padding-bottom: 1.5pt; text-align: left">)</td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">(6,284,034</td><td style="padding-bottom: 1.5pt; text-align: left">)</td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: justify; padding-bottom: 4pt">Total property and equipment, net</td><td style="padding-bottom: 4pt"> </td>
<td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">531,199</td><td style="padding-bottom: 4pt; text-align: left"> </td><td style="padding-bottom: 4pt"> </td>
<td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">620,059</td><td style="padding-bottom: 4pt; text-align: left"> </td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Depreciation expense for the three months ended
March 31, 2020 was $88,860 as compared to $88,614 for the three months ended March 31, 2019.</p>
<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%"><tr style="vertical-align: top"><td style="width: 24px"><font style="font: 10pt Times New Roman, Times, Serif"><b>8.</b></font></td>
<td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><b>Accrued Expenses and Other Current Liabilities</b></font></td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b> </b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Accrued expenses and other current liabilities
consisted of the following at March 31, 2020 and December 31, 2019:</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
<tr style="vertical-align: bottom">
<td style="text-align: justify"> </td><td style="font-weight: bold"> </td>
<td colspan="2" style="font-weight: bold; text-align: center">March 31,</td><td style="font-weight: bold"> </td><td style="font-weight: bold"> </td>
<td colspan="2" style="font-weight: bold; text-align: center">December 31,</td><td style="font-weight: bold"> </td></tr>
<tr style="vertical-align: bottom">
<td style="text-align: justify"> </td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">2020</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">2019</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td></tr>
<tr style="vertical-align: bottom">
<td style="text-align: justify"> </td><td style="font-weight: bold"> </td>
<td colspan="2" style="font-weight: bold; text-align: center">(unaudited)</td><td style="font-weight: bold"> </td><td> </td>
<td colspan="2" style="text-align: right"> </td><td> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="width: 76%; text-align: justify">Compensation, benefits and payroll taxes</td><td style="width: 1%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">168,000</td><td style="width: 1%; text-align: left"> </td><td style="width: 1%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">347,601</td><td style="width: 1%; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: justify">Income tax payable</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">20,172</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">17,672</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: justify; padding-bottom: 1.5pt">Other accrued expenses</td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">123,527</td><td style="padding-bottom: 1.5pt; text-align: left"> </td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">69,466</td><td style="padding-bottom: 1.5pt; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: justify; padding-bottom: 4pt">Total accrued expenses and other current liabilities</td><td style="padding-bottom: 4pt"> </td>
<td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">311,699</td><td style="padding-bottom: 4pt; text-align: left"> </td><td style="padding-bottom: 4pt"> </td>
<td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">434,739</td><td style="padding-bottom: 4pt; text-align: left"> </td></tr></table>
<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
<tr style="vertical-align: bottom">
<td style="text-align: center"> </td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">March 31, <br /> 2020</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">December 31, <br /> 2019</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td></tr>
<tr style="vertical-align: bottom">
<td style="text-align: justify"> </td><td style="font-weight: bold"> </td>
<td colspan="2" style="font-weight: bold; text-align: center">(unaudited)</td><td style="font-weight: bold"> </td><td> </td>
<td colspan="2" style="text-align: right"> </td><td> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="width: 76%; text-align: justify">Computer equipment</td><td style="width: 1%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">3,706,017</td><td style="width: 1%; text-align: left"> </td><td style="width: 1%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">3,706,017</td><td style="width: 1%; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: justify">Website development</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">3,076,323</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">3,076,323</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: justify">Furniture and fixtures</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">89,027</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">89,027</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: justify; padding-bottom: 1.5pt">Leasehold improvements</td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">32,726</td><td style="padding-bottom: 1.5pt; text-align: left"> </td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">32,726</td><td style="padding-bottom: 1.5pt; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: justify">Total property and equipment</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">6,904,093</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">6,904,093</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: justify; padding-bottom: 1.5pt">Less: Accumulated depreciation</td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">(6,372,894</td><td style="padding-bottom: 1.5pt; text-align: left">)</td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">(6,284,034</td><td style="padding-bottom: 1.5pt; text-align: left">)</td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: justify; padding-bottom: 4pt">Total property and equipment, net</td><td style="padding-bottom: 4pt"> </td>
<td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">531,199</td><td style="padding-bottom: 4pt; text-align: left"> </td><td style="padding-bottom: 4pt"> </td>
<td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">620,059</td><td style="padding-bottom: 4pt; text-align: left"> </td></tr>
</table>
<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
<tr style="vertical-align: bottom">
<td style="text-align: justify"> </td><td style="font-weight: bold"> </td>
<td colspan="2" style="font-weight: bold; text-align: center">March 31,</td><td style="font-weight: bold"> </td><td style="font-weight: bold"> </td>
<td colspan="2" style="font-weight: bold; text-align: center">December 31,</td><td style="font-weight: bold"> </td></tr>
<tr style="vertical-align: bottom">
<td style="text-align: justify"> </td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">2020</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">2019</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td></tr>
<tr style="vertical-align: bottom">
<td style="text-align: justify"> </td><td style="font-weight: bold"> </td>
<td colspan="2" style="font-weight: bold; text-align: center">(unaudited)</td><td style="font-weight: bold"> </td><td> </td>
<td colspan="2" style="text-align: right"> </td><td> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="width: 76%; text-align: justify">Compensation, benefits and payroll taxes</td><td style="width: 1%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">168,000</td><td style="width: 1%; text-align: left"> </td><td style="width: 1%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">347,601</td><td style="width: 1%; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: justify">Income tax payable</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">20,172</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">17,672</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: justify; padding-bottom: 1.5pt">Other accrued expenses</td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">123,527</td><td style="padding-bottom: 1.5pt; text-align: left"> </td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">69,466</td><td style="padding-bottom: 1.5pt; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: justify; padding-bottom: 4pt">Total accrued expenses and other current liabilities</td><td style="padding-bottom: 4pt"> </td>
<td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">311,699</td><td style="padding-bottom: 4pt; text-align: left"> </td><td style="padding-bottom: 4pt"> </td>
<td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">434,739</td><td style="padding-bottom: 4pt; text-align: left"> </td></tr>
</table>
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Commenced on September 1, 2016 and runs through November 30, 2021.
The term of the lease runs until April 26, 2023.
The term of the sublease runs until April 26, 2023.
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"></p>
<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
<tr style="vertical-align: top">
<td style="width: 24px"><font style="font: 10pt Times New Roman, Times, Serif"><b>9.</b></font></td>
<td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><b>Income Taxes</b></font></td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b> </b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The Company's provision for income taxes
consists of federal and state taxes, as applicable, in amounts necessary to align the Company's year-to-date tax provision
with the effective rate that it expects to achieve for the full year. Each quarter the Company updates its estimate of the annual
effective tax rate and records cumulative adjustments as necessary. As of March 31, 2020, our conclusion regarding the realizability
of our U.S. deferred tax assets did not change and we have recorded a full valuation allowance against them.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">On March 27, 2020, the Coronavirus Aid, Relief
and Economic Security Act (the "CARES Act") was enacted in response to COVID-19 pandemic. Under ASC 740, the effects
of changes in tax rates and laws are recognized in the period in which the new legislation is enacted. The CARES Act made various
tax law changes. including. among other things. (i) increasing the limitation under Section 163(j) of the Internal Revenue Code
of 1986, as amended (the "Code"), for 2018 through 2020 to permit additional expensing of interest, (ii) enacting a
technical correction so that qualified improvement property can be immediately expensed under Section 168(k) of the IRC, (iii)
making modifications to the federal net operating loss rules, including permitting federal net operating losses incurred in 2018,
2019, and 2020 to be carried back to the five preceding taxable years in order to generate a refund of previously paid income taxes,
and (iv) enhancing the recoverability of alternative minimum tax credits. Given the Company's full valuation allowance position,
the CARES Act did not have a material impact on the Company's condensed consolidated financial statements.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">For the three months ended March 31, 2020,
the Company recorded an income tax provision of $2,500. The effective tax rate for the three months ended March 31, 2020 was (0.57%).
The effective tax rate differs from the statutory rate of 21% as the Company has concluded that its deferred tax assets are not
realizable on a more-likely-than-not basis.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">For the three months ended March 31, 2019,
the Company recorded an income tax benefit from continuing operations of $158,990 on a pre-tax loss of $75,275. As a result of
the gain recorded in discontinued operations in connection with the sale of the Dating Services Business, the Company was able
to record an income tax benefit in continuing operations under the intra-period allocation guidance. As such, our effective tax
rate of 211.21% differed from the statutory rate of 21%.</p>
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<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; width: 100%"><tr style="vertical-align: top; text-align: justify"><td style="width: 0.25in; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"><b>13.</b></font></td><td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><b>Commitments
and Contingencies</b></font></td>
</tr></table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><i>Legal Proceedings</i></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">On December 16, 2016, a wholly owned subsidiary
of the Company, Paltalk Holdings, Inc., filed a patent infringement lawsuit in Delaware against Riot Games, Inc. and Valve Corporation
for infringement of U.S. Patent Nos. 5,822,523 and 6,226,686 with respect to their online games League of Legends and Defense of
the Ancients 2. These two patents were previously asserted against, and then licensed to, Microsoft, Sony, and Activision. In 2018,
Valve Corporation moved to transfer the litigation from Delaware to the Western District of Washington. Such motion was granted
by the court.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">  </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Riot Games, Inc. has filed a total of four
<i>inter partes</i> reviews at the Patent Trial and Appeal Board ("PTAB") of the United States Patent and Trademark
Office, two per patent held by Paltalk Holdings, Inc., seeking to have the Paltalk Holdings, Inc. patents declared invalid. On
May 14, 2019, the PTAB rejected the validity of the patents. On September 27, 2019, the Company filed an appeal of the PTAB's
ruling.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The Company may be included in legal proceedings,
claims and assessments arising in the ordinary course of business. The Company evaluates the need for a reserve for specific legal
matters based on the probability of an unfavorable outcome and the reasonability of an estimable loss. No reserve was deemed necessary
as of March 31, 2020.<b> </b></p>
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PeerStream, Inc.
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10-Q
<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%"><tr style="vertical-align: top"><td style="width: 24px"><font style="font: 10pt Times New Roman, Times, Serif"><b>6.</b></font></td>
<td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><b>Intangible Assets, Net</b></font></td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Intangible assets, net consisted of the following
at March 31, 2020 and December 31, 2019: </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">  </p>
<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
<tr style="vertical-align: bottom">
<td style="text-align: center"> </td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td>
<td colspan="10" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">March 31, 2020</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td>
<td colspan="10" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">December 31, 2019</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td></tr>
<tr style="vertical-align: bottom">
<td style="text-align: center"> </td><td style="font-weight: bold"> </td>
<td colspan="10" style="font-weight: bold; text-align: center">(unaudited)</td><td style="font-weight: bold"> </td><td> </td>
<td colspan="2" style="text-align: center"> </td><td> </td><td> </td>
<td colspan="6"> </td><td> </td></tr>
<tr style="vertical-align: bottom">
<td style="text-align: center"> </td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">Gross<br /> Carrying<br /> Amount</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">Accumulated<br /> Amortization</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">Net<br /> Carrying<br /> Amount</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">Gross<br /> Carrying<br /> Amount</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">Accumulated<br /> Amortization</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">Net<br /> Carrying<br /> Amount</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="width: 34%; text-indent: -9pt; padding-left: 9pt">Patents</td><td style="width: 1%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 8%; text-align: right">50,000</td><td style="width: 1%; text-align: left"> </td><td style="width: 1%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 8%; text-align: right">(26,875</td><td style="width: 1%; text-align: left">)</td><td style="width: 1%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 8%; text-align: right">23,125</td><td style="width: 1%; text-align: left"> </td><td style="width: 1%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 8%; text-align: right">50,000</td><td style="width: 1%; text-align: left"> </td><td style="width: 1%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 8%; text-align: right">(26,250</td><td style="width: 1%; text-align: left">)</td><td style="width: 1%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 8%; text-align: right">23,750</td><td style="width: 1%; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left; text-indent: -9pt; padding-left: 9pt">Trade names, trademarks product names, URLs</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">555,000</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">(460,354</td><td style="text-align: left">)</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">94,646</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">555,000</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">(446,479</td><td style="text-align: left">)</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">108,521</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left; text-indent: -9pt; padding-left: 9pt">Internally developed software</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">1,990,000</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">(1,967,572</td><td style="text-align: left">)</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">22,428</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">1,990,000</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">(1,959,655</td><td style="text-align: left">)</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">30,345</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left; padding-bottom: 1.5pt; text-indent: -9pt; padding-left: 9pt">Subscriber/customer relationships</td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">2,279,000</td><td style="padding-bottom: 1.5pt; text-align: left"> </td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">(1,855,392</td><td style="padding-bottom: 1.5pt; text-align: left">)</td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">423,608</td><td style="padding-bottom: 1.5pt; text-align: left"> </td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">2,279,000</td><td style="padding-bottom: 1.5pt; text-align: left"> </td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">(1,813,725</td><td style="padding-bottom: 1.5pt; text-align: left">)</td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">465,275</td><td style="padding-bottom: 1.5pt; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left; padding-bottom: 4pt; text-indent: -9pt; padding-left: 9pt">Total intangible assets</td><td style="padding-bottom: 4pt"> </td>
<td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">4,874,000</td><td style="padding-bottom: 4pt; text-align: left"> </td><td style="padding-bottom: 4pt"> </td>
<td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">(4,310,193</td><td style="padding-bottom: 4pt; text-align: left">)</td><td style="padding-bottom: 4pt"> </td>
<td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">563,807</td><td style="padding-bottom: 4pt; text-align: left"> </td><td style="padding-bottom: 4pt"> </td>
<td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">4,874,000</td><td style="padding-bottom: 4pt; text-align: left"> </td><td style="padding-bottom: 4pt"> </td>
<td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">(4,246,109</td><td style="padding-bottom: 4pt; text-align: left">)</td><td style="padding-bottom: 4pt"> </td>
<td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">627,891</td><td style="padding-bottom: 4pt; text-align: left"> </td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.05pt">Amortization expense for
the three months ended March 31, 2020 was $64,084, as compared to $64,082 for the three months ended March 31, 2019. The estimated
aggregate amortization expense for each of the next five years and thereafter will be $182,597 in 2020, $184,667 in 2021, $149,944
in 2022, $18,000 in 2023, $17,354 in 2024 and $11,245 thereafter.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b></b></p>
<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
<tr style="vertical-align: top">
<td style="width: 24px"><font style="font: 10pt Times New Roman, Times, Serif"><b>14.</b></font></td>
<td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><b>Pending Sale of Secured Communications Assets</b></font></td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b> </b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">On February 21, 2020, we entered into an Asset
Purchase Agreement (the "SecureCo Purchase Agreement") with SecureCo, LLC ("SecureCo"), whereby we agreed
to sell substantially all of the assets related to our secure communications business, which includes communication solutions and
operations capabilities with respect to the development and commercialization of secure messaging and data applications, software
and middleware for enterprise and government client targets (the "Secure Communications Assets"), to SecureCo for a
cash purchase price of approximately $540,000, which is comprised of a base purchase price of $500,000 plus the reimbursement or
waiver of certain severance expenses payable by the Company to certain former executive officers. In addition, we shall be entitled
to receive a transition service fee of five percent (5%) of all revenue received by SecureCo or its Affiliates pursuant to certain
unassignable contracts.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The closing of the sale of the Assets is subject
to the fulfilment of certain conditions by the Company and SecureCo, including, among other things, a condition that SecureCo shall
have received financing that is sufficient to fund the purchase price. If the transaction is consummated, we do not expect to continue
to pursue secured communications products or technology implementation services as part of our overall business strategy. The SecureCo
Purchase Agreement may be terminated by either party if the conditions to closing have not been fulfilled by April 15, 2020, provided
that such date may be extended to May 31, 2020 conditioned upon a $2,000 per business day increase in the purchase price payable
by SecureCo for every day past April 15, 2020. As of April 15, 2020, the conditions to closing under the SecureCo Purchase Agreement
had not been fulfilled, and accordingly, the purchase price payable by SecureCo began and will continue to increase by $2,000 per
business day until the conditions to closing under the SecureCo Purchase Agreement have been fulfilled. If the transaction is not
consummated, we expect to take a measured approach with respect to the potential commercialization of these products in a fiscally
responsible manner.</p>
<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
<tr style="vertical-align: bottom">
<td style="text-align: center"> </td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td>
<td colspan="10" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">March 31, 2020</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td>
<td colspan="10" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">December 31, 2019</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td></tr>
<tr style="vertical-align: bottom">
<td style="text-align: center"> </td><td style="font-weight: bold"> </td>
<td colspan="10" style="font-weight: bold; text-align: center">(unaudited)</td><td style="font-weight: bold"> </td><td> </td>
<td colspan="2" style="text-align: center"> </td><td> </td><td> </td>
<td colspan="6"> </td><td> </td></tr>
<tr style="vertical-align: bottom">
<td style="text-align: center"> </td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">Gross<br /> Carrying<br /> Amount</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">Accumulated<br /> Amortization</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">Net<br /> Carrying<br /> Amount</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">Gross<br /> Carrying<br /> Amount</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">Accumulated<br /> Amortization</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">Net<br /> Carrying<br /> Amount</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="width: 34%; text-indent: -9pt; padding-left: 9pt">Patents</td><td style="width: 1%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 8%; text-align: right">50,000</td><td style="width: 1%; text-align: left"> </td><td style="width: 1%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 8%; text-align: right">(26,875</td><td style="width: 1%; text-align: left">)</td><td style="width: 1%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 8%; text-align: right">23,125</td><td style="width: 1%; text-align: left"> </td><td style="width: 1%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 8%; text-align: right">50,000</td><td style="width: 1%; text-align: left"> </td><td style="width: 1%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 8%; text-align: right">(26,250</td><td style="width: 1%; text-align: left">)</td><td style="width: 1%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 8%; text-align: right">23,750</td><td style="width: 1%; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left; text-indent: -9pt; padding-left: 9pt">Trade names, trademarks product names, URLs</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">555,000</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">(460,354</td><td style="text-align: left">)</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">94,646</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">555,000</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">(446,479</td><td style="text-align: left">)</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">108,521</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left; text-indent: -9pt; padding-left: 9pt">Internally developed software</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">1,990,000</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">(1,967,572</td><td style="text-align: left">)</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">22,428</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">1,990,000</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">(1,959,655</td><td style="text-align: left">)</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">30,345</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left; padding-bottom: 1.5pt; text-indent: -9pt; padding-left: 9pt">Subscriber/customer relationships</td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">2,279,000</td><td style="padding-bottom: 1.5pt; text-align: left"> </td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">(1,855,392</td><td style="padding-bottom: 1.5pt; text-align: left">)</td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">423,608</td><td style="padding-bottom: 1.5pt; text-align: left"> </td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">2,279,000</td><td style="padding-bottom: 1.5pt; text-align: left"> </td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">(1,813,725</td><td style="padding-bottom: 1.5pt; text-align: left">)</td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">465,275</td><td style="padding-bottom: 1.5pt; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left; padding-bottom: 4pt; text-indent: -9pt; padding-left: 9pt">Total intangible assets</td><td style="padding-bottom: 4pt"> </td>
<td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">4,874,000</td><td style="padding-bottom: 4pt; text-align: left"> </td><td style="padding-bottom: 4pt"> </td>
<td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">(4,310,193</td><td style="padding-bottom: 4pt; text-align: left">)</td><td style="padding-bottom: 4pt"> </td>
<td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">563,807</td><td style="padding-bottom: 4pt; text-align: left"> </td><td style="padding-bottom: 4pt"> </td>
<td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">4,874,000</td><td style="padding-bottom: 4pt; text-align: left"> </td><td style="padding-bottom: 4pt"> </td>
<td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">(4,246,109</td><td style="padding-bottom: 4pt; text-align: left">)</td><td style="padding-bottom: 4pt"> </td>
<td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">627,891</td><td style="padding-bottom: 4pt; text-align: left"> </td></tr>
</table>
<p style="margin: 0pt"></p>
<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
<tr style="vertical-align: bottom">
<td style="text-align: justify"> </td><td style="font-weight: bold"> </td>
<td colspan="2" style="font-weight: bold; text-align: center">Three Months Ended</td><td style="font-weight: bold"> </td></tr>
<tr style="vertical-align: bottom">
<td style="text-align: justify"> </td><td style="font-weight: bold"> </td>
<td colspan="2" style="font-weight: bold; text-align: center">March 31,</td><td style="font-weight: bold"> </td></tr>
<tr style="vertical-align: bottom">
<td style="text-align: justify"> </td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">2020</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="width: 88%; text-align: justify">Expected volatility</td><td style="width: 1%"> </td>
<td style="width: 1%; text-align: left"> </td><td style="width: 9%; text-align: right">188.0</td><td style="width: 1%; text-align: left">%</td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: justify">Expected life of option (in years)</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">5.3</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: justify">Risk free interest rate</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">0.59</td><td style="text-align: left">%</td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: justify">Expected dividend yield</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">0.0</td><td style="text-align: left">%</td></tr>
</table>
<p style="margin: 0pt"></p>
<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
<tr style="vertical-align: bottom">
<td style="text-align: justify"> </td><td> </td>
<td colspan="2"> </td><td> </td><td style="font-weight: bold"> </td>
<td colspan="2" style="font-weight: bold; text-align: center">Weighted</td><td style="font-weight: bold"> </td></tr>
<tr style="vertical-align: bottom">
<td style="text-align: justify"> </td><td style="font-weight: bold"> </td>
<td colspan="2" style="font-weight: bold; text-align: center">Number of</td><td style="font-weight: bold"> </td><td style="font-weight: bold"> </td>
<td colspan="2" style="font-weight: bold; text-align: center">Average<br /> Exercise</td><td style="font-weight: bold"> </td></tr>
<tr style="vertical-align: bottom">
<td style="text-align: justify"> </td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">Options</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">Price</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td></tr>
<tr style="vertical-align: bottom">
<td style="font-weight: bold; text-align: justify">Stock Options:</td><td> </td>
<td colspan="2" style="text-align: right"> </td><td> </td><td> </td>
<td colspan="2" style="text-align: right"> </td><td> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="width: 76%; text-align: justify">Outstanding at January 1, 2020</td><td style="width: 1%"> </td>
<td style="width: 1%; text-align: left"> </td><td style="width: 9%; text-align: right">1,021,243</td><td style="width: 1%; text-align: left"> </td><td style="width: 1%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">4.82</td><td style="width: 1%; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: justify">Granted</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">24,000</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">0.80</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: justify">Forfeited or canceled, during the period</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">(229,575</td><td style="text-align: left">)</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">3.61</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: justify; padding-bottom: 1.5pt">Expired, during the period</td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">(42,293</td><td style="padding-bottom: 1.5pt; text-align: left">)</td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">4.07</td><td style="padding-bottom: 1.5pt; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: justify; padding-bottom: 1.5pt">Outstanding at March 31, 2020</td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">773,375</td><td style="padding-bottom: 1.5pt; text-align: left"> </td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left">$</td><td style="border-bottom: Black 1.5pt solid; text-align: right">5.09</td><td style="padding-bottom: 1.5pt; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: justify; padding-bottom: 4pt">Exercisable at March 31, 2020</td><td style="padding-bottom: 4pt"> </td>
<td style="border-bottom: Black 4pt double; text-align: left"> </td><td style="border-bottom: Black 4pt double; text-align: right">551,093</td><td style="padding-bottom: 4pt; text-align: left"> </td><td style="padding-bottom: 4pt"> </td>
<td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">6.03</td><td style="padding-bottom: 4pt; text-align: left"> </td></tr>
</table>
<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
<tr style="vertical-align: bottom">
<td style="text-align: justify"> </td><td style="font-weight: bold"> </td>
<td colspan="6" style="font-weight: bold; text-align: center">Three Months Ended</td><td style="font-weight: bold"> </td></tr>
<tr style="vertical-align: bottom">
<td style="text-align: justify"> </td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td>
<td colspan="6" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">March 31,</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td></tr>
<tr style="vertical-align: bottom">
<td style="text-align: justify"> </td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">2020</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">2019</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="width: 76%; text-align: justify; padding-left: 9pt">Cost of revenue</td><td style="width: 1%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">373</td><td style="width: 1%; text-align: left"> </td><td style="width: 1%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">361</td><td style="width: 1%; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: justify; padding-left: 9pt">Sales and marketing expense</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">20</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">45</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: justify; padding-left: 9pt">Product development expense</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">7,381</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">89,743</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: justify; padding-bottom: 1.5pt; padding-left: 9pt">General and administrative expense</td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">81,432</td><td style="padding-bottom: 1.5pt; text-align: left"> </td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">177,002</td><td style="padding-bottom: 1.5pt; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: justify; padding-bottom: 4pt">Total stock compensation expense</td><td style="padding-bottom: 4pt"> </td>
<td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">89,206</td><td style="padding-bottom: 4pt; text-align: left"> </td><td style="padding-bottom: 4pt"> </td>
<td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">267,151</td><td style="padding-bottom: 4pt; text-align: left"> </td></tr>
</table>
1829493
1764634
1215061
1420834
204121
0
Pursuant to the terms of the ProximaX Agreement, ProximaX agreed to pay the Company, among other things, up to an aggregate of $10.0 million of cash or certain highly liquid cryptocurrencies in exchange for the Company’s services, $5.0 million of which was paid in May 2018, $2.5 million of which was due upon completion the second development milestone set forth in the ProximaX Agreement and $2.5 million of which was due upon completion of the third development milestone set forth in the ProximaX Agreement. The contractual upfront fee was paid in the Ethereum cryptocurrency and subsequently converted into U.S. dollars. The upfront fee also included 216.0 million XPX tokens. The total upfront fee was recognized as revenue under the input method based on proportional performance using labor hours as the unit of measurement.
During the final stages of delivery of the second milestone, ProximaX informed the Company that capital constraints made it unable to pay the Company the $2.5 million as stipulated under the ProximaX Agreement. Accordingly, the Company and ProximaX entered into an agreement, effective June 24, 2019, to terminate the ProximaX Agreement (the “Termination Agreement”) and provide for payment terms for the remaining $2.5 million due under the ProximaX Agreement. The portion of the upfront fee that remained unrecognized as of the termination of the ProximaX Agreement was $1.6 million and was recognized as revenue upon such termination, in addition to the $1.7 million of revenue recognized in the first quarter of 2019. Since there is no assurance of collectability on the remaining payments, revenue is being recognized as the payments under the Termination Agreement are received.
Users may purchase credits in $5, $10 or $20 increments that can be redeemed for a host of virtual gifts such as a rose, a beer or a car, among other items.
15000
4874000
50000
555000
1990000
2279000
4874000
50000
555000
1990000
2279000
4246109
26250
446479
1959655
1813725
4310193
26875
460354
1967572
1855392
627891
23750
108521
30345
465275
563807
23125
94646
22428
423608
182597
184667
149944
18000
17354
11245
1.880
P5Y3M19D
0.0059
0.000
1021243
773375
24000
229575
42293
551093
4.82
5.09
0.8
3.61
4.07
6.03
187429
18664
303703
P1Y8M12D
1300000
121930
1.00
702660
238293
1440
124821
360
24000
500000
8500
2020-04-29
0.80
The options vest in four equal quarterly installments on the last day of each calendar quarter in 2020 and have a term of ten years.
540000
500000
In addition, we shall be entitled to receive a transition service fee of five percent (5%) of all revenue received by SecureCo or its Affiliates pursuant to certain unassignable contracts.
286944
382237
120490
55667
1748330
14952
4873175
2720742
952219
622724
377151
191670
1771565
1250696
1877472
1019254
4978407
3084344
-105232
-363602
29957
12187
-75275
-435884
-158990
2500
83715
-438384
826770
104880
158990
562900
646615
-438384
0.01
-0.06
0.08
0.09
-0.06
0.01
-0.06
0.08
0.09
-0.06
6794660
6873571
6794660
6873571
1600000
100000
89206
89206
700000
<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%"><tr style="vertical-align: top"><td style="width: 24px"><font style="font: 10pt Times New Roman, Times, Serif"><b>1.</b></font></td>
<td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><b>Organization and Description of Business</b></font></td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The accompanying condensed consolidated financial
statements include PeerStream, Inc. and its wholly owned subsidiaries, A.V.M. Software, Inc., Paltalk Software Inc., Paltalk Holdings,
Inc., Tiny Acquisition Inc., Camshare, Inc., Fire Talk LLC and Vumber LLC (collectively, the "Company," "we,"
"our" or "us").</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The Company is a communications software innovator
that powers multimedia social applications. The Company has also developed a secure business communication solution for use worldwide.
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.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The condensed consolidated financial statements
included in this report have been prepared on a going concern basis in accordance with generally accepted accounting principles
in the United States ("GAAP") and the rules and regulations of the Securities and Exchange Commission (the "SEC")
for interim financial information. The Company has not included certain information and notes required by GAAP for complete financial
statements pursuant to those rules and regulations, although it believes that the disclosure included herein is adequate to make
the information presented not misleading. The condensed consolidated financial statements contained herein should be read in conjunction
with the Company's audited consolidated financial statements and the related notes included in the Company's Annual
Report on Form 10-K for the year ended December 31, 2019, filed with the SEC on March 24, 2020 (the "Form 10-K").</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">In the opinion of management, the accompanying
unaudited condensed consolidated financial information contains all normal and recurring adjustments necessary to fairly present
the condensed consolidated balance sheet, results of operations, cash flows and changes in the stockholders' equity of the
Company for the interim periods presented. The Company's historical results are not necessarily indicative of future operating
results, and the results for the three months ended March 31, 2020 are not necessarily indicative of results for the year ending
December 31, 2020, or for any other period.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><i>Reclassifications</i></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><i> </i></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Certain prior period amounts have been reclassified
for comparative purposes to conform to the current presentation. These reclassifications have no impact on the previously reported
net income (loss).</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"></p>
<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
<tr style="vertical-align: top">
<td style="width: 24px"><font style="font: 10pt Times New Roman, Times, Serif"><b>2.</b></font></td>
<td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><b>Summary of Significant Accounting Policies</b></font></td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">For a detailed discussion about the Company's
significant accounting policies, see the Form 10-K.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">During the three months ended March 31, 2020,
there were no significant changes made to the Company's significant accounting policies.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b><i>Significant Estimates and Assumptions</i></b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The preparation of financial statements in
conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities
at the date of the condensed consolidated financial statements and the reported amounts of revenue and expenses during the reporting
period.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Significant estimates relied upon in preparing
these financial statements include the estimates used to determine the fair value of the stock options issued in share based payment
arrangements, collectability of the Company's accounts receivable, measurements of proportional performance under certain
service contracts, subscription revenues net of refunds, credits, and known and estimated credit card chargebacks, the valuation
allowance on deferred tax assets, fair value of digital tokens and impairment assessment of goodwill. Management evaluates these
estimates on an ongoing basis. Changes in estimates are recorded in the period in which they become known. The Company bases estimates
on historical experience and various other assumptions that it believes to be reasonable under the circumstances. Actual results
may differ from the Company's estimates.  </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b><i>Recent Accounting Pronouncements</i></b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b><i> </i></b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">In December 2019, the Financial Accounting
Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2019-12, <i>Income Taxes (Topic 740):
Simplifying the Accounting for Income Taxes </i>("ASU 2019-12"), which is intended to simplify various aspects related
to accounting for income taxes. ASU 2019-12 removes certain exceptions to the general principles in Topic 740 and also clarifies
and amends existing guidance to improve consistent application. ASU 2019-12 is effective for fiscal years beginning after December
15, 2021. The Company has not early adopted ASU 2019-12 and is currently evaluating its impact on the Company's financial
position, results of operations, and cash flows.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b><i>Revenue</i></b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">In accordance with Accounting Standards Codification
("ASC") 606, <i>Revenue from Contracts with Customers</i>, revenue from contracts with customers is recognized when
control of the promised services is transferred to the customers in an amount that reflects the consideration the Company expects
to receive in exchange for those services. Sales tax is excluded from reported revenue. The Company has elected the practical expedient
allowable by the guidance to not disclose information about remaining performance obligations pertaining to contracts that have
an original expected duration of one year or less. </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><i>Subscription Revenue</i></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The Company generates subscription revenue
primarily from monthly premium subscription services. Subscription revenues are presented net of refunds, credits, and known and
estimated credit card chargebacks. During the three months ended March 31, 2020 and 2019, subscriptions were offered in durations
of one-, three-, six- and twelve- month terms. All subscription fees, however, are paid by credit card at the origination of the
subscription regardless of the term of the subscription. Revenues from multi-month subscriptions are recognized on a straight-line
basis over the period where the service is offered to the customer, indicated by length of the subscription term purchased. The
unearned portion of subscription revenue is presented as deferred revenue in the accompanying condensed consolidated balance sheets.
The deferred revenue at December 31, 2019 was $1,829,493, of which $1,043,533 was subsequently recognized as subscription revenue
during the three months ended March 31, 2020. The ending balance of deferred revenue at March 31, 2020 was $1,764,634. </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">In addition, the Company offers virtual gifts
to its users. Users may purchase credits in $5, $10 or $20 increments that can be redeemed for a host of virtual gifts such as
a rose, a beer or a car, among other items. These gifts are given among users to enhance communication and are typically redeemed
within 30 days of purchase. Upon purchase, the virtual gifts are credited to the users' account and are under the users'
control. Virtual gift revenue is recognized upon the users' utilization of such at the fixed transaction price and included
in subscription revenue in the accompanying condensed consolidated statements of operations. Virtual gift revenue was approximately
$1,215,061 and $1,420,834 for the three months ended March 31, 2020 and 2019, respectively. The ending balance of deferred revenue
from virtual gifts at March 31, 2020 and 2019 was $204,121 and $0, respectively.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><i>Advertising Revenue</i></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The Company generates advertising revenue from
the display of advertisements on its products through contractual agreements with third parties that are based on the number of
advertising impressions delivered. Measurements of impressions include when a customer clicks an advertisement (CPC basis), views
an advertisement impression (CPM basis), or registers for an external website via an advertisement by clicking on or through the
application (CPA basis). Advertising revenue is dependent upon traffic as well as the advertising inventory placed on the Company's
products.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><i>Technology Service Revenue </i></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><i> </i></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Revenue under the Company's technology
services agreement (the "ProximaX Agreement") with ProximaX Limited ("ProximaX") was recognized based upon
proportional performance using labor hours as the unit of measurement. Pursuant to the terms of the ProximaX Agreement, ProximaX
agreed to pay the Company, among other things, up to an aggregate of $10.0 million of cash or certain highly liquid cryptocurrencies
in exchange for the Company's services, $5.0 million of which was paid in May 2018, $2.5 million of which was due upon completion
the second development milestone set forth in the ProximaX Agreement and $2.5 million of which was due upon completion of the third
development milestone set forth in the ProximaX Agreement. The contractual upfront fee was paid in the Ethereum cryptocurrency
and subsequently converted into U.S. dollars. The upfront fee also included 216.0 million XPX tokens. The total upfront fee was
recognized as revenue under the input method based on proportional performance using labor hours as the unit of measurement.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">In the second quarter of 2019, the Company
completed, and ProximaX accepted delivery of, the work constituting the second development milestone under the ProximaX Agreement.
During the final stages of delivery of the second milestone, ProximaX informed the Company that capital constraints made it unable
to pay the Company the $2.5 million as stipulated under the ProximaX Agreement. Accordingly, the Company and ProximaX entered into
an agreement, effective June 24, 2019, to terminate the ProximaX Agreement (the "Termination Agreement") and provide
for payment terms for the remaining $2.5 million due under the ProximaX Agreement. The portion of the upfront fee that remained
unrecognized as of the termination of the ProximaX Agreement was $1.6 million and was recognized as revenue upon such termination,
in addition to the $1.7 million of revenue recognized in the first quarter of 2019. Since there is no assurance of collectability
on the remaining payments, revenue is being recognized as the payments under the Termination Agreement are received. For the three
months ended March 31, 2020, the Company recognized approximately $15.0 thousand in revenue in connection with payments received
under the Termination Agreement.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b><i>Significant Estimates and Assumptions</i></b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The preparation of financial statements in
conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities
at the date of the condensed consolidated financial statements and the reported amounts of revenue and expenses during the reporting
period.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Significant estimates relied upon in preparing
these financial statements include the estimates used to determine the fair value of the stock options issued in share based payment
arrangements, collectability of the Company's accounts receivable, measurements of proportional performance under certain
service contracts, subscription revenues net of refunds, credits, and known and estimated credit card chargebacks, the valuation
allowance on deferred tax assets, fair value of digital tokens and impairment assessment of goodwill. Management evaluates these
estimates on an ongoing basis. Changes in estimates are recorded in the period in which they become known. The Company bases estimates
on historical experience and various other assumptions that it believes to be reasonable under the circumstances. Actual results
may differ from the Company's estimates.  </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b><i>Recent Accounting Pronouncements</i></b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b><i> </i></b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">In December 2019, the Financial Accounting
Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2019-12, <i>Income Taxes (Topic 740):
Simplifying the Accounting for Income Taxes </i>("ASU 2019-12"), which is intended to simplify various aspects related
to accounting for income taxes. ASU 2019-12 removes certain exceptions to the general principles in Topic 740 and also clarifies
and amends existing guidance to improve consistent application. ASU 2019-12 is effective for fiscal years beginning after December
15, 2021. The Company has not early adopted ASU 2019-12 and is currently evaluating its impact on the Company's financial
position, results of operations, and cash flows.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b><i>Revenue</i></b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">In accordance with Accounting Standards Codification
("ASC") 606, <i>Revenue from Contracts with Customers</i>, revenue from contracts with customers is recognized when
control of the promised services is transferred to the customers in an amount that reflects the consideration the Company expects
to receive in exchange for those services. Sales tax is excluded from reported revenue. The Company has elected the practical expedient
allowable by the guidance to not disclose information about remaining performance obligations pertaining to contracts that have
an original expected duration of one year or less. </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><i>Subscription Revenue</i></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The Company generates subscription revenue
primarily from monthly premium subscription services. Subscription revenues are presented net of refunds, credits, and known and
estimated credit card chargebacks. During the three months ended March 31, 2020 and 2019, subscriptions were offered in durations
of one-, three-, six- and twelve- month terms. All subscription fees, however, are paid by credit card at the origination of the
subscription regardless of the term of the subscription. Revenues from multi-month subscriptions are recognized on a straight-line
basis over the period where the service is offered to the customer, indicated by length of the subscription term purchased. The
unearned portion of subscription revenue is presented as deferred revenue in the accompanying condensed consolidated balance sheets.
The deferred revenue at December 31, 2019 was $1,829,493, of which $1,043,533 was subsequently recognized as subscription revenue
during the three months ended March 31, 2020. The ending balance of deferred revenue at March 31, 2020 was $1,764,634. </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">In addition, the Company offers virtual gifts
to its users. Users may purchase credits in $5, $10 or $20 increments that can be redeemed for a host of virtual gifts such as
a rose, a beer or a car, among other items. These gifts are given among users to enhance communication and are typically redeemed
within 30 days of purchase. Upon purchase, the virtual gifts are credited to the users' account and are under the users'
control. Virtual gift revenue is recognized upon the users' utilization of such at the fixed transaction price and included
in subscription revenue in the accompanying condensed consolidated statements of operations. Virtual gift revenue was approximately
$1,215,061 and $1,420,834 for the three months ended March 31, 2020 and 2019, respectively. The ending balance of deferred revenue
from virtual gifts at March 31, 2020 and 2019 was $204,121 and $0, respectively.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><i>Advertising Revenue</i></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The Company generates advertising revenue from
the display of advertisements on its products through contractual agreements with third parties that are based on the number of
advertising impressions delivered. Measurements of impressions include when a customer clicks an advertisement (CPC basis), views
an advertisement impression (CPM basis), or registers for an external website via an advertisement by clicking on or through the
application (CPA basis). Advertising revenue is dependent upon traffic as well as the advertising inventory placed on the Company's
products.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><i>Technology Service Revenue </i></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><i> </i></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Revenue under the Company's technology
services agreement (the "ProximaX Agreement") with ProximaX Limited ("ProximaX") was recognized based upon
proportional performance using labor hours as the unit of measurement. Pursuant to the terms of the ProximaX Agreement, ProximaX
agreed to pay the Company, among other things, up to an aggregate of $10.0 million of cash or certain highly liquid cryptocurrencies
in exchange for the Company's services, $5.0 million of which was paid in May 2018, $2.5 million of which was due upon completion
the second development milestone set forth in the ProximaX Agreement and $2.5 million of which was due upon completion of the third
development milestone set forth in the ProximaX Agreement. The contractual upfront fee was paid in the Ethereum cryptocurrency
and subsequently converted into U.S. dollars. The upfront fee also included 216.0 million XPX tokens. The total upfront fee was
recognized as revenue under the input method based on proportional performance using labor hours as the unit of measurement.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">In the second quarter of 2019, the Company
completed, and ProximaX accepted delivery of, the work constituting the second development milestone under the ProximaX Agreement.
During the final stages of delivery of the second milestone, ProximaX informed the Company that capital constraints made it unable
to pay the Company the $2.5 million as stipulated under the ProximaX Agreement. Accordingly, the Company and ProximaX entered into
an agreement, effective June 24, 2019, to terminate the ProximaX Agreement (the "Termination Agreement") and provide
for payment terms for the remaining $2.5 million due under the ProximaX Agreement. The portion of the upfront fee that remained
unrecognized as of the termination of the ProximaX Agreement was $1.6 million and was recognized as revenue upon such termination,
in addition to the $1.7 million of revenue recognized in the first quarter of 2019. Since there is no assurance of collectability
on the remaining payments, revenue is being recognized as the payments under the Termination Agreement are received. For the three
months ended March 31, 2020, the Company recognized approximately $15.0 thousand in revenue in connection with payments received
under the Termination Agreement.</p>
<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%"><tr style="vertical-align: top"><td style="width: 24px"><font style="font: 10pt Times New Roman, Times, Serif"><b>3.</b></font></td>
<td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><b>Discontinued Operations</b></font></td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b> </b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">On January 31, 2019, the Company entered into
an Asset Purchase Agreement with The Dating Company, LLC, pursuant to which the Company sold substantially all of the assets related
to its online dating services business under the domain names FirstMet, 50more, and The Grade (collectively, the "Dating
Services Business") for a cash purchase price of $1.6 million, with $100.0 thousand of the purchase price held in an escrow
account to secure certain of the Company's post-closing indemnification obligations. The closing of the asset sale was effective
as of January 31, 2019.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b> </b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">In the first quarter of 2019, management determined
that the disposal of the Dating Services Business met the criteria for presentation as discontinued operations. Accordingly, the
results of the Dating Services Business are presented as discontinued operations in our consolidated statements of operations and
are excluded from continuing operations for all periods presented. In addition, the assets and liabilities of the Dating Services
Business are classified as held for sale in our consolidated balance sheets for all periods presented.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The operations of the Dating Services Business
are included in our results as discontinued operations through January 31, 2019, the date of sale.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The following tables summarize the major line
items included in loss from discontinued operations for the Dating Services Business:</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
<tr style="vertical-align: bottom">
<td> </td><td style="font-weight: bold"> </td>
<td colspan="6" style="font-weight: bold; text-align: center">Three Months Ended</td><td style="font-weight: bold"> </td></tr>
<tr style="vertical-align: bottom">
<td> </td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td>
<td colspan="6" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">March 31,</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td></tr>
<tr style="vertical-align: bottom">
<td> </td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">2020</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">2019</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="width: 76%; text-indent: 10pt">Revenues</td><td style="width: 1%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">    -</td><td style="width: 1%; text-align: left"> </td><td style="width: 1%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">440,225</td><td style="width: 1%; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-indent: 10pt">Costs of revenue</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">-</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">(115,338</td><td style="text-align: left">)</td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left; text-indent: 10pt">Sales and marketing expense</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">-</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">(270,200</td><td style="text-align: left">)</td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left; text-indent: 10pt">Product development expense</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">-</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">(76,845</td><td style="text-align: left">)</td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left; padding-bottom: 1.5pt; text-indent: 10pt">General and administrative expense</td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">-</td><td style="padding-bottom: 1.5pt; text-align: left"> </td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">(82,722</td><td style="padding-bottom: 1.5pt; text-align: left">)</td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left; padding-bottom: 4pt">Loss from discontinued operations</td><td style="padding-bottom: 4pt"> </td>
<td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">-</td><td style="padding-bottom: 4pt; text-align: left"> </td><td style="padding-bottom: 4pt"> </td>
<td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">(104,880</td><td style="padding-bottom: 4pt; text-align: left">)</td></tr></table>
<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; margin-top: 0; margin-bottom: 0"><tr style="vertical-align: top"><td style="width: 0.25in"><b>5.</b></td><td><b>Goodwill</b></td></tr></table>
<p style="font: 10pt/11.45pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt/115% Times New Roman, Times, Serif; margin: 0 1pt 0 0; text-align: justify">The Company tests goodwill and
indefinite-lived intangible assets for impairment annually and whenever events or circumstances arise that indicate an impairment
may exist.</p>
<p style="font: 10pt/8.5pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt/107% Times New Roman, Times, Serif; margin: 0; text-align: justify">The Company recorded $6,760,222 of goodwill
impairment for the year ended December 31, 2019 due to a sustained decrease in market price per share of the Company's common
stock. At December 31, 2019, the market price per share of the Company's common stock declined to $1.29 and as such, the
Company tested for an impairment and concluded that the goodwill should be reduced as result of the decline in the market price
per share and fair value of the reporting unit.</p>
<p style="font: 10pt/107% Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt/107% Times New Roman, Times, Serif; margin: 0; text-align: justify">The Company determined there were no indicators that would lead
to a test for impairment during the three
months ended, March 31, 2020. Goodwill was $6,326,250 at March 31, 2020 and December 31, 2019.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"></p>
<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
<tr style="vertical-align: top">
<td style="width: 24px"><font style="font: 10pt Times New Roman, Times, Serif"><b>10.</b></font></td>
<td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><b>Stockholders' Equity</b></font></td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b> </b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The PeerStream, Inc. Amended and Restated 2011
Long-Term Incentive Plan (the "2011 Plan") was terminated as to future awards on May 16, 2016. A total of 121,930 shares
of the Company's common stock may be issued pursuant to outstanding options awarded under the 2011 Plan; however, no additional
awards may be granted under such plan. The PeerStream, Inc. 2016 Long-Term Incentive Plan (the "2016 Plan") was adopted
by the Company's stockholders on May 16, 2016 and permits the Company to award stock options (both incentive stock options
and non-qualified stock options), stock appreciation rights, restricted stock, restricted stock units, performance awards, dividend
equivalent rights, and other stock-based awards and cash-based incentive awards to its employees (including an employee who is
also a director or officer under certain circumstances), non-employee directors and consultants. The maximum number of shares of
common stock that may be issued pursuant to awards under the 2016 Plan is 1,300,000 shares, 100% of which may be issued pursuant
to incentive stock options. In addition, the maximum number of shares of common stock that may be issued under the 2016 Plan may
be increased by an indeterminate number of shares of common stock underlying outstanding awards issued under the 2011 Plan that
are forfeited, expired, cancelled or settled in cash. As of March 31, 2020, there were 702,660 shares available for future issuance
under the 2016 Plan.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><i>Treasury Shares</i></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">On April 29, 2019, the Company implemented
a stock repurchase plan to repurchase up to $500,000 of its common stock for cash. The repurchase plan expired on April 29, 2020.
The Company had purchased 8,500 shares of its common stock under the repurchase plan as of March 31, 2020 and has classified them
as treasury shares.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><i>Stock Options</i></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The following table summarizes the assumptions
used in the Black-Scholes pricing model to estimate the fair value of the options granted during the following period:</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
<tr style="vertical-align: bottom">
<td style="text-align: justify"> </td><td style="font-weight: bold"> </td>
<td colspan="2" style="font-weight: bold; text-align: center">Three Months Ended</td><td style="font-weight: bold"> </td></tr>
<tr style="vertical-align: bottom">
<td style="text-align: justify"> </td><td style="font-weight: bold"> </td>
<td colspan="2" style="font-weight: bold; text-align: center">March 31,</td><td style="font-weight: bold"> </td></tr>
<tr style="vertical-align: bottom">
<td style="text-align: justify"> </td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">2020</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="width: 88%; text-align: justify">Expected volatility</td><td style="width: 1%"> </td>
<td style="width: 1%; text-align: left"> </td><td style="width: 9%; text-align: right">188.0</td><td style="width: 1%; text-align: left">%</td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: justify">Expected life of option (in years)</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">5.3</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: justify">Risk free interest rate</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">0.59</td><td style="text-align: left">%</td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: justify">Expected dividend yield</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">0.0</td><td style="text-align: left">%</td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">   </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The expected life of the options is the period
of time over which employees and non-employees are expected to hold their options prior to exercise. The expected life of options
has been determined using the "simplified" method as prescribed by Staff Accounting Bulletin 110, which uses the midpoint
between the vesting date and the end of the contractual term. The volatility of the Company's common stock is calculated
using the Company's historical volatilities beginning at the grant date and going back for a period of time equal to the
expected life of the award. The Company estimates potential forfeitures of stock awards and adjusts recorded stock-based compensation
expense accordingly. The Company estimates pre-vesting forfeitures primarily based on the Company's historical experience
and is adjusted to reflect actual forfeitures as the stock-based awards vest.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The following table summarizes stock option
activity during the three months ended March 31, 2020:</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
<tr style="vertical-align: bottom">
<td style="text-align: justify"> </td><td> </td>
<td colspan="2"> </td><td> </td><td style="font-weight: bold"> </td>
<td colspan="2" style="font-weight: bold; text-align: center">Weighted</td><td style="font-weight: bold"> </td></tr>
<tr style="vertical-align: bottom">
<td style="text-align: justify"> </td><td style="font-weight: bold"> </td>
<td colspan="2" style="font-weight: bold; text-align: center">Number of</td><td style="font-weight: bold"> </td><td style="font-weight: bold"> </td>
<td colspan="2" style="font-weight: bold; text-align: center">Average<br /> Exercise</td><td style="font-weight: bold"> </td></tr>
<tr style="vertical-align: bottom">
<td style="text-align: justify"> </td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">Options</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">Price</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td></tr>
<tr style="vertical-align: bottom">
<td style="font-weight: bold; text-align: justify">Stock Options:</td><td> </td>
<td colspan="2" style="text-align: right"> </td><td> </td><td> </td>
<td colspan="2" style="text-align: right"> </td><td> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="width: 76%; text-align: justify">Outstanding at January 1, 2020</td><td style="width: 1%"> </td>
<td style="width: 1%; text-align: left"> </td><td style="width: 9%; text-align: right">1,021,243</td><td style="width: 1%; text-align: left"> </td><td style="width: 1%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">4.82</td><td style="width: 1%; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: justify">Granted</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">24,000</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">0.80</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: justify">Forfeited or canceled, during the period</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">(229,575</td><td style="text-align: left">)</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">3.61</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: justify; padding-bottom: 1.5pt">Expired, during the period</td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">(42,293</td><td style="padding-bottom: 1.5pt; text-align: left">)</td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">4.07</td><td style="padding-bottom: 1.5pt; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: justify; padding-bottom: 1.5pt">Outstanding at March 31, 2020</td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">773,375</td><td style="padding-bottom: 1.5pt; text-align: left"> </td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left">$</td><td style="border-bottom: Black 1.5pt solid; text-align: right">5.09</td><td style="padding-bottom: 1.5pt; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: justify; padding-bottom: 4pt">Exercisable at March 31, 2020</td><td style="padding-bottom: 4pt"> </td>
<td style="border-bottom: Black 4pt double; text-align: left"> </td><td style="border-bottom: Black 4pt double; text-align: right">551,093</td><td style="padding-bottom: 4pt; text-align: left"> </td><td style="padding-bottom: 4pt"> </td>
<td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">6.03</td><td style="padding-bottom: 4pt; text-align: left"> </td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">At March 31, 2020, there was $303,703 of total
unrecognized compensation expense related to stock options, which is expected to be recognized over a weighted average period of
1.7 years.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">On March 31, 2020, the aggregate intrinsic
value of stock options that were outstanding and exercisable was $1,440 and $360, respectively. On March 31, 2019, the aggregate
intrinsic value of stock options that were outstanding and exercisable was $238,293 and $124,821, respectively. The intrinsic value
for stock options is calculated based on the exercise price of the underlying awards and the fair value of such awards as of the
period-end date.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">During the three months ended March 31, 2020,
the Company granted options to members of the Board of Directors to purchase an aggregate 24,000 shares of common stock at an exercise
price of $0.80 per share. The options vest in four equal quarterly installments on the last day of each calendar quarter in 2020
and have a term of ten years.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The aggregate fair value for the options granted
during the three months ended March 31, 2020 and 2019 was $18,664 and $187,429, respectively.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Stock-based compensation expense for the Company's
stock options included in the condensed consolidated statements of operations is as follows:</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
<tr style="vertical-align: bottom">
<td style="text-align: justify"> </td><td style="font-weight: bold"> </td>
<td colspan="6" style="font-weight: bold; text-align: center">Three Months Ended</td><td style="font-weight: bold"> </td></tr>
<tr style="vertical-align: bottom">
<td style="text-align: justify"> </td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td>
<td colspan="6" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">March 31,</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td></tr>
<tr style="vertical-align: bottom">
<td style="text-align: justify"> </td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">2020</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">2019</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="width: 76%; text-align: justify; padding-left: 9pt">Cost of revenue</td><td style="width: 1%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">373</td><td style="width: 1%; text-align: left"> </td><td style="width: 1%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">361</td><td style="width: 1%; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: justify; padding-left: 9pt">Sales and marketing expense</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">20</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">45</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: justify; padding-left: 9pt">Product development expense</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">7,381</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">89,743</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: justify; padding-bottom: 1.5pt; padding-left: 9pt">General and administrative expense</td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">81,432</td><td style="padding-bottom: 1.5pt; text-align: left"> </td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">177,002</td><td style="padding-bottom: 1.5pt; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: justify; padding-bottom: 4pt">Total stock compensation expense</td><td style="padding-bottom: 4pt"> </td>
<td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">89,206</td><td style="padding-bottom: 4pt; text-align: left"> </td><td style="padding-bottom: 4pt"> </td>
<td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">267,151</td><td style="padding-bottom: 4pt; text-align: left"> </td></tr></table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"></p>
<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
<tr style="vertical-align: top">
<td style="width: 24px"><font style="font: 10pt Times New Roman, Times, Serif"><b>12.</b></font></td>
<td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><b>Leases</b></font></td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><i>Operating Leases</i></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><i> </i> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">On June 7, 2016, the Company entered into a
lease agreement with Jericho Executive Center LLC for office space at 30 Jericho Executive Plaza in Jericho, New York which commenced
on September 1, 2016 and runs through November 30, 2021. The Company's monthly office rent payments under the lease are currently
approximately $5,900 per month.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">On May 1, 2019, the Company entered into a
lease agreement for office space located at 122 East 42nd Street in New York, NY and paid a $133,968 security deposit in the form
of a letter of credit. The term of the lease runs until April 26, 2023. The Company's monthly office rent payments under
the lease are currently approximately $33,492 per month.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">On May 1, 2019, the Company entered into a
sublease agreement with Telecom Infrastructure Corp. for office space located at 122 East 42nd Street in New York, NY, pursuant
to which Telecom Infrastructure Corp. is required to pay the Company $11,164 per month. The term of the sublease runs until April
26, 2023. We have been notified that, due to the coronavirus outbreak, Telecom Infrastructure Corp. is currently unable to make
its monthly payments under the sublease agreement, and such payments ceased being made in March 2020. We are currently in discussions
with Telecom Infrastructure Corp. concerning its nonpayment and we are exploring all remedies available to us.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">As of March 31, 2020, the Company had no long-term
leases that were classified as a financing lease. As of March 31, 2020, the Company did not have additional operating and financing
leases that have not yet commenced.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">At March 31, 2020, the Company had operating
lease liabilities of approximately $0.7 million and right of use assets of approximately $0.6 million, which are included in the
condensed consolidated balance sheet.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Total rent expense for the three months ended March 31, 2020 was $61,895, of which $36,095
was sublease income, and $81,816 for the three months ended March 31, 2019. Rent expense is recorded in general and administrative
expense on the condensed consolidated statements of operations.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The following table summarizes the Company's operating leases:</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">  </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"></p>
<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
<tr style="vertical-align: bottom">
<td> </td><td style="font-weight: bold"> </td>
<td colspan="6" style="font-weight: bold; text-align: center">Three Months Ended</td><td style="font-weight: bold"> </td></tr>
<tr style="vertical-align: bottom">
<td> </td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td>
<td colspan="6" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">March 31,</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td></tr>
<tr style="vertical-align: bottom">
<td> </td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">2020</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">2019</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="width: 76%; text-align: left">Cash paid for amounts included in the measurement of operating lease liabilities</td><td style="width: 1%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">38,529</td><td style="width: 1%; text-align: left"> </td><td style="width: 1%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">48,692</td><td style="width: 1%; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td>Weighted average assumptions:</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left">   Remaining lease term</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">2.9</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">2.1</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left">   Discount rate</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">2.5</td><td style="text-align: left">%</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">3.6</td><td style="text-align: left">%</td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">  </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">On March 31, 2020, future minimum payments
under non-cancelable operating leases were as follows: </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
<tr style="vertical-align: bottom">
<td style="border-bottom: Black 1.5pt solid; text-align: left; font-weight: bold">For the years ending December 31,</td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">Amount</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="width: 88%; text-align: left">2020</td><td style="width: 1%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">286,944</td><td style="width: 1%; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left">2021</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">382,237</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left">2022</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">304,101</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left; padding-bottom: 1.5pt">2023</td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">102,418</td><td style="padding-bottom: 1.5pt; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left">Total</td><td> </td>
<td style="text-align: left">$</td><td style="text-align: right">1,075,700</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left; padding-bottom: 1.5pt">Less: present value adjustment</td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">(352,800</td><td style="padding-bottom: 1.5pt; text-align: left">)</td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left; padding-bottom: 4pt">Present value of minimum lease payments</td><td style="padding-bottom: 4pt"> </td>
<td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">722,900</td><td style="padding-bottom: 4pt; text-align: left"> </td></tr></table>
<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
<tr style="vertical-align: bottom">
<td style="border-bottom: Black 1.5pt solid; text-align: left; font-weight: bold">For the years ending December 31,</td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">Amount</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="width: 88%; text-align: left">2020</td><td style="width: 1%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">286,944</td><td style="width: 1%; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left">2021</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">382,237</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left">2022</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">304,101</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left; padding-bottom: 1.5pt">2023</td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">102,418</td><td style="padding-bottom: 1.5pt; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left">Total</td><td> </td>
<td style="text-align: left">$</td><td style="text-align: right">1,075,700</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left; padding-bottom: 1.5pt">Less: present value adjustment</td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">(352,800</td><td style="padding-bottom: 1.5pt; text-align: left">)</td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left; padding-bottom: 4pt">Present value of minimum lease payments</td><td style="padding-bottom: 4pt"> </td>
<td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">722,900</td><td style="padding-bottom: 4pt; text-align: left"> </td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"></p>
<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
<tr style="vertical-align: top">
<td style="width: 30px; font-size: 10pt"><font style="font-size: 10pt"><b>15.</b></font></td>
<td style="font-size: 10pt; text-align: justify"><font style="font-size: 10pt"><b>Subsequent Events</b></font></td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">In December 2019, a strain of coronavirus was
reported to have surfaced in Wuhan, China, and has since reached multiple other countries, including the United States, resulting
in government-imposed quarantines, travel restrictions and other public health safety measures in affected countries. The various
precautionary measures taken by many governmental authorities around the world in order to limit the spread of the coronavirus
has had and could continue to have an adverse effect on the global markets and its economy, including on the availability and pricing
of employees and resources, and other aspects of the global economy. Although we cannot predict the impact that the recent outbreak
of coronavirus will have on our business or results of operations in 2020, to date, our core multimedia social applications have
been able to support the increased demand we have experienced.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">On April 13, 2020, to help ensure adequate
liquidity in light of the uncertainties posed by the coronavirus pandemic, we applied for a $506,500 loan (the "Loan")
under the Small Business Administration ("SBA") Paycheck Protection Program under the recently enacted Coronavirus
Aid, Relief, and Economic Security Act (the "CARES Act"). On May 3, 2020, we entered into a promissory note (the "Note")
in favor of Citibank, N.A., as lender (the "Lender").</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The Note has a two-year term, matures on May
3, 2022, and bears interest at a stated rate of 1.0% per annum. Monthly principal and interest payments will commence in December
2020. We did not provide any collateral or guarantees for the Loan, nor did we pay any facility charge to obtain the Loan. The
Note provides for customary events of default, including, among others, those relating to failure to make payment, bankruptcy,
breaches of representations and material adverse effects. We may prepay the principal of the Loan at any time without incurring
any prepayment charges.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The Loan may be partially or fully forgiven
if we comply with the provisions of the CARES Act, including the use of Loan proceeds for payroll costs, rent, utilities and certain
other expenses, and at least 75% of the Loan proceeds must be used for payroll costs as defined in the CARES Act. Any forgiveness
of the Loan will be subject to approval by the SBA and the Lender. </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">PeerStream continues to serve as a form of
safe and entertaining communication during this global pandemic and in order to help those affected in hardest hit countries will
continue to offer some of our group video conferencing services free of charge.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Management has evaluated subsequent events
or transactions occurring through the date the condensed consolidated financial statements were issued and determined that no other
events or transactions are required to be disclosed herein.</p>
84469
<p style="margin: 0pt"></p>
<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
<tr style="vertical-align: bottom">
<td> </td><td style="font-weight: bold"> </td>
<td colspan="6" style="font-weight: bold; text-align: center">Three Months Ended</td><td style="font-weight: bold"> </td></tr>
<tr style="vertical-align: bottom">
<td> </td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td>
<td colspan="6" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">March 31,</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td></tr>
<tr style="vertical-align: bottom">
<td> </td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">2020</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">2019</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="width: 76%; text-align: left">Cash paid for amounts included in the measurement of operating lease liabilities</td><td style="width: 1%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">38,529</td><td style="width: 1%; text-align: left"> </td><td style="width: 1%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">48,692</td><td style="width: 1%; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td>Weighted average assumptions:</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left">   Remaining lease term</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">2.9</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">2.1</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left">   Discount rate</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">2.5</td><td style="text-align: left">%</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">3.6</td><td style="text-align: left">%</td></tr>
</table>
<p style="margin: 0pt"></p>
The SecureCo Purchase Agreement may be terminated by either party if the conditions to closing have not been fulfilled by April 15, 2020, provided that such date may be extended to May 31, 2020 conditioned upon a $2,000 per business day increase in the purchase price payable by SecureCo for every day past April 15, 2020. As of April 15, 2020, the conditions to closing under the SecureCo Purchase Agreement had not been fulfilled, and accordingly, the purchase price payable by SecureCo began and will continue to increase by $2,000 per business day until the conditions to closing under the SecureCo Purchase Agreement have been fulfilled.
000-52176
The uncertainties posed by the coronavirus pandemic, we applied for a $506,500 loan (the "Loan") under the Small Business Administration ("SBA") Paycheck Protection Program under the recently enacted Coronavirus Aid, Relief, and Economic Security Act (the "CARES Act").
2022-05-03
0.010
Excludes 8,500 shares of common stock that are held as treasury stock by PeerStream, Inc.