Paltalk, Inc. reported significant financial challenges in its latest 10-Q filing for the quarter ending September 30, 2024. Total revenues for the three months were $2.1 million, a decrease of 23.4% from $2.8 million in the same period of 2023. For the nine months ended September 30, 2024, revenues totaled $6.9 million, down 16.2% from $8.3 million year-over-year. The decline in revenue was primarily attributed to a drop in subscription revenue, which fell to $2.0 million in Q3 2024 from $2.7 million in Q3 2023, largely due to a decrease in virtual gift revenue.

The company's total costs and expenses for Q3 2024 increased by 20.6% to $3.8 million, compared to $3.2 million in Q3 2023. This rise was driven by a substantial increase in general and administrative expenses, which surged by 76.6% to $1.6 million, largely due to legal and professional fees associated with ongoing merger activities. As a result, Paltalk reported a loss from operations of $1.7 million for Q3 2024, compared to a loss of $389,416 in Q3 2023. The net loss for the quarter was $1.5 million, a significant increase from a loss of $181,576 in the prior year.

For the nine-month period, the net loss reached $2.9 million, up from $784,245 in the same period of 2023. The company also reported a net cash used in operating activities of $1.6 million for the nine months ended September 30, 2024, compared to $980,720 in the previous year.

Paltalk is currently pursuing a merger with Newtek Technology Solutions, Inc., which involves a cash payment of $4 million and the issuance of 4 million shares of preferred stock. The merger is contingent upon various conditions, including stockholder approval and the sale of certain applications. Additionally, Paltalk has entered into a divestiture agreement to sell its telecommunications services provider, Vumber, along with its Paltalk and Camfrog applications for $1.35 million.

As of September 30, 2024, Paltalk's cash and cash equivalents stood at $12.1 million, down from $13.6 million at the end of 2023. Total assets decreased to $21.7 million, while total liabilities increased to $4.3 million. The company’s stockholders’ equity also fell to $17.4 million from $20.1 million at the end of 2023.

In a notable legal development, Paltalk was awarded $65.7 million in a patent infringement lawsuit against Cisco Systems, although it is estimated that the company will receive only a fraction of this amount after legal expenses.