RDE Inc

Previous wording

The Company has a history of reporting net losses. At March 31, 2024, the Company had cash of $5,400,821 available to fund its operations, including expansion plans, and to service its debt, and a working capital deficit of $228,112.

Current wording

The Company has a history of reporting net losses and negative operating cash flows. At June 30, 2024, the Company had cash of $4,663,623 available to fund its operations, including expansion plans, and to service its debt, and a working capital deficit of $1,133,903.

Previous wording

Sales for the three months ended March 31, 2024, were $21,521,894, a decrease of approximately $2,639,834, or 10.9%, as compared to $24,161,728 in the three months ended March 31, 2022. During the current year period, we focused on improving our gross margin. We assessed the quality of our purchased gift card brands, allowing us to increase the sales price to our customers, resulting in a gross margin of 15.1%, as compared to a gross margin of 12.1% in the prior year period. While our sales decreased 10.6% over the prior year period, our gross profit increased over the prior year period.

Current wording

Sales for the three months ended June 30, 2024, were $20,020,502, a decrease of approximately $1,071,155, or 5.1%, as compared to $21,091,657 in the three months ended June 30, 2023. During the current year period, we focused on improving our gross margin. We assessed the quality of our purchased gift card brands, allowing us to increase the sales price to our customers, resulting in a gross margin of 16.3%, as compared to a gross margin of 12.4% in the prior year period. While our sales decreased 5.1% over the prior year period, our gross profit increased over the prior year period.

Previous wording

Costs of sales for the three months ended March 31, 2024 increased to $18,264,618, as compared to $21,248,078 during the three months ended March 31, 2023. Our cost of sales, as a percentage of sales, were 84.5% and 87.9%, respectively. The decline in our cost of sales, and the increase in our gross margin, as compared to the prior year period, is discussed above.

Current wording

Costs of sales for the three months ended June 30, 2024 decreased to $16,760,007, as compared to $18,474,119 during the three months ended June 30, 2023. Our cost of sales, as a percentage of sales, were 83.7% and 87.6%, respectively. The decline in our cost of sales, and the increase in our gross margin, as compared to the prior year period, is discussed above.

Previous wording

Amortization of capitalized software costs. Amortization expenses are primarily attributable to the Company’s capitalized software development costs. Amortization expenses were $378,737 for the three months ended March 31, 2024, as compared to $312,703 during the three months ended March 31, 2023.

Current wording

Amortization of capitalized software costs. Amortization expenses are primarily attributable to the Company’s capitalized software development costs. Amortization expenses were $302,737 for the three months ended June 30, 2024, as compared to $223,268 during the three months ended June 30, 2023.

Previous wording

For the three months ended March 31, 2024, we incurred a loss from operations of $2,943,419, as compared to a loss from operations of $276,881 for the three months ended March 31, 2023. The increase in loss from operations was due to our increased gross profit offset by increased stock-based compensation expense, operating costs, and amortization expense, as discussed above.

Current wording

For the three months ended June 30, 2024, we incurred a loss from operations of $7,482,429, as compared to a loss from operations of $506,243 for the three months ended June 30, 2023. The increase in loss from operations was due to our increased gross profit offset by increased stock-based compensation expense, operating costs, and amortization expense, as discussed above.

Previous wording

We had other expenses of $247,301 for the three months ended March 31, 2024, as compared to other expenses of $181,894 for the three months ended March 31, 2023. Other expenses consist solely of interest expenses.

Current wording

We had other expenses of $261,917 for the three months ended June 30, 2024, as compared to other expenses of $170,414 for the three months ended June 30, 2023. Other expenses consist solely of interest expenses offset by interest income.

Previous wording

We realized a net loss of $3,190,720 for the three months ended March 31, 2024, as compared to a net loss of $430,378 for the three months ended March 31, 2023. The increase in net loss was due to our increased gross profit offset by increased stock-based compensation expense, operating costs, amortization expense, and interest expense, as discussed above.

Current wording

We realized a net loss of $7,744,646 for the three months ended June 30, 2024, as compared to a net loss of $676,657 for the three months ended June 30, 2023. The increase in net loss was due to our increased gross profit offset by increased stock-based compensation expense, operating costs, amortization expense, and interest expense, as discussed above.

Previous wording

Selling, general and administrative expenses were $5,214,041 for the three months ended March 31, 2024, as compared to $2,802,828 for the three months ended March 31, 2023, an increase of $2,411,213. The increase was from the recording of $37,126 of stock-based compensation expense during the three months ended March 31, 2024, and approximately $202,000 of legal and professional fees related to our recent acquisition. Both of these current year expenses did not occur in the prior year period. The remaining change in selling, general and administrative expenses was from general changes in our business and operations.

Current wording

Selling, general and administrative expenses were $15,046,311 for the six months ended June 30, 2024, as compared to $5,638,341 for the six months ended June 30, 2023, an increase of $9,407,970. The increase was from the recording of $7,513,421 of stock-based compensation expense during the six months ended June 30, 2024, and approximately $202,000 of legal and professional fees related to our recent acquisition. Both of these current year expenses did not occur in the prior year period. The remaining change in selling, general and administrative expenses was from general changes in our business and operations.

Previous wording

We have a history of reporting net losses. At March 31, 2024, we had cash of $5,400,821 available to fund our operations, including expansion plans, and to service our debt, and a working capital deficit of $228,112. We anticipate our cash balance will last until at least March 2025. As a result, we have concluded that there is substantial doubt about the Company’s ability to continue as a going concern. Our consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Current wording

We have a history of reporting net losses. At June 30, 2024, we had cash of $4,663,623 available to fund our operations, including expansion plans, and to service our debt, and a working capital deficit of $1,037,619. We anticipate our cash balance will last until at least June 2025. As a result, we have concluded that there is substantial doubt about the Company’s ability to continue as a going concern. Our consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Previous wording

Cash used in operating activities for the three months ended March 31, 2024 was approximately $6,636 and consisted of our net loss, adjusted for non-cash items, including amortization of intangible assets, fair value of vested stock options, and the fair value of common stock issued to executives, employees, and advisors, and routine changes in working capital and other activities.

Current wording

Cash used in operating activities for the six months ended June 30, 2024 was approximately $2,341,031 and consisted of our net loss, adjusted for non-cash items, including amortization of intangible assets, fair value of vested stock options, and the fair value of common stock issued to executives, employees, and advisors, and routine changes in working capital and other activities.

Previous wording

Cash provided by operating activities for the three months ended March 31, 2023 was approximately $803,483 and consisted of our net loss, adjusted for non-cash items, including amortization of intangible assets, goodwill impairment, fair value of vested stock options, and the fair value of common stock issued to executives, and routine changes in working capital and other activities.

Current wording

Cash used in operating activities for the six months ended June 30, 2023 was approximately $437,725 and consisted of our net loss, adjusted for non-cash items, including amortization of intangible assets, goodwill impairment, fair value of vested stock options, and the fair value of common stock issued to executives, and routine changes in working capital and other activities.

Previous wording

Cash used for investing activities for the three months ended March 31, 2024 was $224,815, which was for capital expenditures.

Current wording

Cash used for investing activities for the six months ended June 30, 2024 was $449,646, which was for capital expenditures.

Previous wording

Cash used for investing activities for the three months ended March 31, 2023, was $38,449, which was for capital expenditures.

Current wording

Cash used for investing activities for the six months ended June 30, 2023, was $450,000, which was for capital expenditures.

Previous wording

Cash provided by financing activities for the three months ended March 31, 2024 was $1,532,535, which was from proceeds of $2,709,000 on the private sale of common stock, less partial repayment of our line of credit balance of $676,465, and payment of $500,000 on our acquisition obligation.

Current wording

Cash provided by financing activities for the six months ended June 30, 2024 was $3,354,563, which was from proceeds of $2,921,500 on the private sale of common stock, borrowing on our line of credit balance of $933,063, and payment of $500,000 on our acquisition obligation.

Previous wording

Cash used in financing activities for the three months ended March 31, 2023 was $494,351, which was from net repayment of our line of credit facility of $494,351.

Current wording

Cash used in financing activities for the six months ended June 30, 2023 was $343,742, which was from borrowing on our line of credit facility of $343,742.

Previous wording

On November 5, 2018, RDE completed the acquisition of Incumaker, Inc. and assumed certain outstanding convertible notes payable. At December 31, 2023, there was one remaining assumed convertible note payable outstanding that matured July 2017, and is past due. At March 31, 2024, the principal balance of $20,000, and accrued interest of $20,887, are convertible at $1.50 per share into 27,258 shares of the Company’s common stock.

Current wording

On November 5, 2018, RDE completed the acquisition of Incumaker, Inc. and assumed certain outstanding convertible notes payable. At December 31, 2023, there was one remaining assumed convertible note payable outstanding that matured July 2017, and is past due. At June 30, 2024, the principal balance of $20,000, and accrued interest of $21,637, are convertible at $1.50 per share into 27,758 shares of the Company’s common stock.

Previous wording

On December 29, 2023, the Company issued two year promissory notes totaling $1,500,000 as partial consideration for the acquisition of CardCash (see Note 3). $750,000 is payable on the December 29, 2025, bearing simple annual interest of 5%, and $750,000 is to be paid upon the earlier of (a) the completion of a firm commitment underwriting RDE’s initial public offering to allow the Company to become listed on the Nasdaq Capital Market or (b) December 29, 2024. As of December 31, 2023, the notes payable had an aggregate principal balance outstanding of $1,500,000. As of March 31, 2024, the notes payable had an aggregate principal balance outstanding of $1,500,000 and accrued interest payable of $18,750.

Current wording

On December 29, 2023, the Company issued two year promissory notes totaling $1,500,000 as partial consideration for the acquisition of CardCash (see Note 3). $750,000 is payable on the December 29, 2025, bearing simple annual interest of 5%, and $750,000 is to be paid upon the earlier of (a) the completion of a firm commitment underwriting RDE’s initial public offering to allow the Company to become listed on the Nasdaq Capital Market or (b) December 29, 2024. As of December 31, 2023, the notes payable had an aggregate principal balance outstanding of $1,500,000. As of June 30, 2024, the notes payable had an aggregate principal balance outstanding of $1,500,000 and accrued interest payable of $37,500.

Previous wording

As of December 31, 2023, the notes payable had an aggregate principal balance outstanding of $102,199 and accrued interest payable of $821. As of March 31, 2024, the notes payable had an aggregate principal balance outstanding of $102,199 and accrued interest payable of $1,027.

Current wording

As of December 31, 2023, the notes payable had an aggregate principal balance outstanding of $102,199 and accrued interest payable of $821. As of June 30, 2024, the notes payable had an aggregate principal balance outstanding of $102,199 and accrued interest payable of $1,233.

Previous wording

The loans bear interest at 3.75% per annum, with a combined repayment of principal and interest of $3,500 per month beginning 12 months from the date of the promissory note over a period of 30 years. As of December 31, 2023, the note payable had a principal balance outstanding of $664,500 and accrued interest payable of $27,259. As of March 31, 2024, the note payable had a principal balance outstanding of $664,500 and accrued interest payable of $23,487.

Current wording

The loans bear interest at 3.75% per annum, with a combined repayment of principal and interest of $3,500 per month beginning 12 months from the date of the promissory note over a period of 30 years. As of December 31, 2023, the note payable had a principal balance outstanding of $664,500 and accrued interest payable of $27,259. As of June 30, 2024, the note payable had a principal balance outstanding of $664,500 and accrued interest payable of $19,714.