PSQ Holdings Inc
For the period ended Sep 30, 2024. Filed Nov 12, 2024.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Sep 30, 2024 · Filed Nov 12, 2024
PSQH$1.95+18.2%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-06-30; filed 2024-08-14.
0001213900-24-068616
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-09-30; filed 2024-11-12.
0001628280-24-047209
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 177 previous paragraphs and 186 current paragraphs.
133 unchanged; 30 reworded; 19 added; 14 removed; 0 previous and 4 current paragraphs rearranged.
Tables are not compared: 10 previous and 7 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (19)
Current report
•Segment Revenue (see discussion below in “Results of Operations”);
Current report
•Adjusted EBITDA (see “Non-GAAP Financial Measures” for a discussion of Adjusted EBITDA and a reconciliation of net loss, the most directly comparable financial measure calculated and presented in accordance with GAAP, to Adjusted EBITDA); and
Current report
For the three and nine months ended September 30, 2024, GMV was $15.5 million and $45.7 million, respectively, which represented an approximate change of 10% and 14%, respectively, as compared to the same period in 2023. Overall, the increase for the nine months ended September 30, 2024 in GMV was primarily driven by and expanding active merchant base and growth in active consumers, complemented by heightened sales related to election year demand in the firearm segment. Additionally, the increase reflects stronger consumer adoption of our bank-originated financial product.
Current report
For the three months ended September 30, 2024, our GMV growth aligned with broader industry patterns historically seen in federal election cycles. According to the National Shooting Sports Foundation (NSSF), there were no month-over-month increases in background checks from December 2023 until July 2024, highlighting a market trend correlated with election-year activity that positively impacted GMV.
Current report
Other (Expense) Income, Net
Current report
Other (expense) income, net primarily relates to interest income earned on the money market account and the write-off of an other receivable for the three and nine months ended September 30, 2024.
Current report
General and administrative expense increased by $26.1 million, or 350%, for the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023. The increase was primarily due to a $7.7 million increase in staffing-related costs, $10.3 million of share-based compensation expense, $3.3 million of professional services and $4.6 million increase in other administrative expenses, which include insurance, rent, utilities, and other administrative services.
Current report
Research and development expense decreased by $0.5 million, or 34%, for the three months ended September 30, 2024 compared to the three months ended September 30, 2023. The decrease was due to increased capitalization of expenditures related to the development of operating software.
Current report
Research and development expense decreased by $0.2 million, or 5%, for the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023. The decrease was due to increased capitalization of expenditures related to the development of operating software.
Current report
Depreciation and amortization expense increased by $0.2 million, or 10%, for the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023. The increase was primarily related to the amortization of version 2.0 of the Platform along with amortization of the loan receivable.
Current report
Other (Expense) Income, net
Current report
Change in fair value of convertible promissory notes was zero for the three and nine months ended September 30, 2024 compared to zero and $14.6 million for the three and nine months ended September 30, 2023. The change in fair value of convertible promissory notes represents the premium recorded on the convertible promissory note’s date with a charge to expense. The convertible promissory notes were converted to equity at the close of the Business Combination.
Current report
Changes in the fair value of earn-out liabilities for the three and nine months ended September 30, 2024 was a gain of $0.2 million and $0.5 million, respectively, compared to a gain of $0.5 million for the three and nine months ended September 30, 2023. The gain was due to a decrease in the fair value of the earn-out liabilities at each reporting period.
Current report
Changes in the fair value of warrant liabilities for the three and nine months ended September 30, 2024 was a gain of $2.2 million and $7.5 million, respectively, compared to a loss of $7.8 million for the three and nine months ended September 30, 2023. The gain for the three and nine months ended September 30, 2024 was due to a decrease in fair value of the warrant liabilities from December 31, 2023 through September 30, 2024.
Current report
Income Tax Benefit (Expense)
Current report
On October 24, 2024, the Company closed a private investment in public equity transaction (“PIPE”) pursuant to a Securities Purchase Agreement (“PIPE Purchase Agreement”) dated October 22, 2024, for the purchase of $5.35 million of Class A common stock at $2.70 per share with three investors: (i) an affiliate of a PSQH board member, (ii), a party related to a PSQH board member and executive officer, and (ii) an unaffiliated accredited investor (the “Purchasers”) (see Note 17 for additional information).
Current report
Our Board of Directors and executive team have outlined a plan to improve the Company’s cash position which involves a variety of cash management initiatives. These initiatives include reduction and reallocation of resources to more profitable segments of the business and reducing corporate operating expenses. The reduction of resources included a staff reduction of 35% performed in October 2024, which resulted in expected future savings of $11.0 million, along with terminating or reducing contractor and consulting agreements. Additionally, the plan considers further options such as completing a capital raise, entering into a revolving line of credit agreement, and refining inventory purchase timing which will reduce excess stock levels.
Current report
Comparison of the Nine Months Ended September 30, 2024 and 2023
Current report
Net cash used by investing activities for the nine months ended September 30, 2024 was $0.9 million as compared to $1.9 million the nine months ended September 30, 2023. Cash used by investing activities for the nine months ended September 30, 2024 primarily related to $2.8 million of software development costs offset by $1.7 million net loans held for investment.
Removed paragraphs (14)
Previous report
For the three and six months ended June 30, 2024, GMV was $13.3 million and $30.2 million, respectively, which represented an approximate change of (7)% and 16%, respectively, as compared to the same period in 2023. Overall, the increase for the six months ended June 30, 2024 in GMV was primarily driven by the expansion of our active merchant base and increases in active consumers. The increase in GMV for the six months ended June 30, 2024 also reflected increased consumer demand for our bank originated products. During the three months ended June 30, 2024, our GMV decline mirrored broader industry trends, with National Shooting Sports Foundation (NSSF) reporting-adjusted National Instant Criminal Background Check System (NICS) data showing a 7% drop in background checks, indicating softer market conditions. Despite this, Credova increased its share of overall sales with key retailers, achieving record-high conversion rates among first-time applicants.
Previous report
In the fourth quarter of 2024, EveryLife will be expanding to South Korea in partnership with the largest retailer in South Korea, as well as a number of the largest Christian churches in South Korea.
Previous report
Other Income, Net
Previous report
Other income, net primarily relates to dividend income earned on the money market account for the three and six months ended June 30, 2024, and Employee Retention Tax Credit (“ERTC”) and the Research and Development Tax Credit (“R&D Tax Credit”) for the three and six months ended June 30, 2023.
Previous report
General and administrative expense increased by $13.3 million, or 166%, for the six months ended June 30, 2024 compared to the six months ended June 30, 2023 The increase was due to a $10.7 million increase in staffing-related costs, including $5.9 million of share-based compensation expense, and $4.9 million increase in other administrative expenses, which include accounting, legal, and other administrative services. This is partially offset by a decrease in IPO transaction costs of $2.3 million.
Previous report
Research and development expense increased by $0.7 million, or 258%, for the three months ended June 30, 2024 compared to the three months ended June 30, 2023. The increase was due to an increase in staffing-related costs in our product and engineering teams including $0.4 million of share-based compensation expense, as well as costs related to computer software, hardware, and other administrative expenses.
Previous report
Research and development expense increased by $1.6 million, or 305%, for the six months ended June 30, 2024 compared to the six months ended June 30, 2023. The increase was due to an increase in staffing-related costs in our product and engineering teams, including $0.7 million of share-based compensation expense, as well as costs related to computer software, hardware, and other administrative expenses.
Previous report
Other Income, net
Previous report
Income Tax Expense
Previous report
The Company’s Board of Directors and executive team have outlined a plan to improve the Company’s cash position by gaining access to additional capital through various strategic initiatives. These initiatives may include reallocation of resources to more profitable segments of the business, completing a private placement equity raise, entering into a revolving line of credit agreement and refinement of inventory purchase timing which will reduce excess stock levels. The Company has obtained a support letter from a board member and his affiliates, which provides that if the Company fails to (i) raise sufficient capital through rounds of financings, or (ii) secure sufficient operating cash to fund its operating expenses, the board member and his affiliates, subject to such further conditions, and in a form to be mutually determined, would provide the Company funding and financial support necessary to pay for its operating expenses so the Company is able to continue to operate in its normal course of business through August 2025.
Previous report
Comparison of the Six Months Ended June 30, 2024 and 2023
Previous report
Net cash provided by investing activities for the six months ended June 30, 2024 was $0.05 million. The increase as compared to prior year was primarily due to $10 million of purchases of short-term investments that didn’t occur in the current year.
Previous report
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
Reworded paragraphs (30)
Previous wording
On March 13, 2024, we entered into a note purchase agreement for a 9.75% private placement convertible note for $10,000,000 invested by a board member and his affiliates. Terms for the note were priced based on notes exchanged as part of the Credova transaction. Our stockholders have approved the issuance of the underlying shares as part of our annual stockholder meeting in April 2024 and the funds were received May 3, 2024.
Current wording
On March 13, 2024, we entered into a note purchase agreement for a 9.75% private placement convertible note for $10.0 million invested by a board member and his affiliates. Terms for the note were priced based on notes exchanged as part of the Credova transaction. Our stockholders have approved the issuance of the underlying shares as part of our annual stockholder meeting in April 2024 and the funds were received May 3, 2024.
Previous wording
In August 2024, the Company entered into an agreement for a $10.0 million convertible note in a private placement with a board member and affiliates. The note has identical terms to the notes offered in March 2024.
Current wording
In August 2024, the Company entered into an agreement for a $10.0 million convertible note in a private placement with a board member and affiliates. Funds were received August 29, 2024. The note has identical terms to the notes offered in March 2024.
Previous wording
The acquisition of Credova was accounted for as a business combination using the acquisition method pursuant to FASB ASC Topic 805. As the acquirer for accounting purposes, the Company had estimated assets acquired and liabilities assumed as of the acquisition date, with the excess of the purchase price over the fair value of net assets acquired recognized as goodwill.
Current wording
The acquisition of Credova was accounted for as a business combination using the acquisition method pursuant to ASC 805, Business Combinations("ASC 805"). As the acquirer for accounting purposes, the Company had estimated assets acquired and liabilities assumed as of the acquisition date, with the excess of the purchase price over the fair value of net assets acquired recognized as goodwill.
Previous wording
For the three and six months ended June 30, 2024, our top five merchants and platform partners represented approximately 42% and 41% of total GMV, respectively, as compared to 49% for the three months ended June 30, 2023 and 51% for the six months ended June 30, 2023. GMV attributable to our largest merchant during both the three months and six months ended June 30, 2024 represented 16 % and 16%, respectively, of total GMV, compared to 20% and 18% for the same period in 2023.
Current wording
For the three and nine months ended September 30, 2024, our top five merchants and platform partners represented approximately 43% and 42% of total GMV, respectively, as compared to 46% for the three months ended September 30, 2023 and 52% for the nine months ended September 30, 2023. GMV attributable to our largest merchant during both the three months and nine months ended September 30, 2024 represented 16 % and 16%, respectively, of total GMV, compared to 20% and 18% for the same period in 2023. The shift in volume from our top five merchants demonstrates healthy diversification in our merchant portfolio and highlights our success in broadening our revenue base.
Previous wording
During the three months ended June 30, 2024 and 2023, our net loss was $11.2 million and $20.7 million, respectively, and during the six months ended June 30, 2024 and 2023, our net loss was $23.8 million and $27.4 million, respectively. During the three months ended June 30, 2024, our net loss decreased $9.5 million as compared to the three months ended June 30, 2023, due to the fact that in 2023 there was a $13.4 million loss for the change in fair value of the convertible promissory notes and in 2024 there was a gain of $3.1 million relating to the change in fair value of the warrant liabilities. This is offset by a $6.8 million increase in our operating loss due to the expansion of the business. During the six months ended June 30, 2024, our net loss decreased $3.6 million as compared to the six months ended June 30, 2023, due to the fact that in 2023 there was a $14.6 million loss for the change in fair value of the convertible promissory notes and in 2024 there was a gain of $5.3 million relating to the change in fair value of the warrant liabilities. This is offset by a $16.2 million increase in our operating loss due to the expansion of the business. Our expenses will likely increase in the future as we develop and launch new offerings and platform features, expand in existing and new markets, increase our sales and marketing efforts and continue to invest in our platform, as well as a result of our becoming a public company. We have not been profitable since inception. As of June 30, 2024, our accumulated deficit was $86.0 million. Since inception, we have financed our operations primarily through equity raises and operating activities.
Current wording
During the three months ended September 30, 2024 and 2023, our net loss was $13.1 million and $20.2 million, respectively, and during the nine months ended September 30, 2024 and 2023, our net loss was $36.9 million and $47.6 million, respectively. During the three months ended September 30, 2024, our net loss decreased $7.1 million as compared to the three months ended September 30, 2023, due to a gain of $2.2 million relating to the change in fair value of the warrant liabilities. This is offset by a $1.7 million increase in our operating loss due to the expansion of the business. During the nine months ended September 30, 2024, our net loss decreased $10.7 million as compared to the nine months ended September 30, 2023, due to the fact that in 2023 there was a $14.6 million loss for the change in fair value of the convertible promissory notes and in 2024 there was a gain of $7.5 million relating to the change in fair value of the warrant liabilities. This is offset by a $17.9 million increase in our operating loss due to the expansion of the business. Following the completion of the Strategic Plan to streamline the organization in October 2024, reducing staff by over 35% and focusing on the people critical to the Company’s B2B focused sales and marketing positioning going forward, our expenses will decline and operations will become more concentrated. We have not been profitable since inception. As of September 30, 2024, our accumulated deficit was $99.2 million. Since inception, we have financed our operations primarily through financing activities.
Previous wording
We expect to continue to invest substantial resources to support our growth. We anticipate that each of the following categories of operating expenses, will increase in absolute dollar amounts and decrease as a percentage of revenue for the foreseeable future, other than research and development.
Current wording
As we focus on cost-saving measures including resource reduction and reallocation, we anticipate that each of the following categories of operating expenses will decrease in absolute dollar amounts and decline as a percentage of revenue for the foreseeable future.
Previous wording
General and administrative expenses consist primarily of personnel-related expenses for our finance, legal, human resources and administrative personnel, as well as the costs of information technology, professional services, insurance, travel, and other administrative expenses. We expect to invest in our corporate organization and incur additional expenses associated with transitioning to, and operating as, a public company, including increased legal, audit, tax and accounting costs, investor relations costs, higher insurance premiums and compliance costs. As a result, we expect that general and administrative expenses will increase in absolute dollars in future periods but decline as a percentage of total revenue over time. Our inability to scale our expenses could negatively impact profitability.
Current wording
General and administrative expenses consist primarily of personnel-related expenses for our finance, legal, human resources and administrative personnel, as well as the costs of information technology, professional services, insurance, travel, and other administrative expenses. We expect to continue incurring expenses associated with operating as a public company, including legal, audit, tax and accounting costs, investor relations costs, insurance premiums and compliance costs. As a result of cost-saving measures, we expect that general and administrative expenses will decrease in absolute dollars in future periods and decline as a percentage of total revenue over time. Our inability to scale our expenses could negatively impact profitability.
Previous wording
Sales and marketing expenses consist primarily of salaries, employee benefits, consultant fees, commissions, and direct marketing costs related to the promotion of PSQ’s platforms/solutions and certain costs related to the acquisition of both consumer and business members on the Platform. As a result, we expect that sales expenses will increase in absolute dollars in future periods as we increase marketing activities, grow our operations, and continue to build our brand awareness, but decline as a percentage of total revenue over time. Our inability to scale our expenses could negatively impact profitability.
Current wording
Sales and marketing expenses consist primarily of salaries, employee benefits, consultant fees, commissions, and direct marketing costs related to the promotion of PSQ’s platforms/solutions and certain costs related to the acquisition of both consumer and business members on the Platform. As a result, we expect that sales and marketing expenses will decrease in absolute dollars in future periods as we scale back paid marketing efforts and focus on monetizing current customer base, and decline as a percentage of total revenue over time. Our inability to scale our expenses could negatively impact profitability.
Previous wording
Changes in the fair value of earnout liabilities are recorded in the condensed consolidated statement of operations. The earn-out liabilities represent a financial instrument other than an outstanding share that embodies a conditional obligation that the issuer must or may settle by issuing a variable number of its equity shares. We record the earnout liability at its fair value at each reporting period.
Current wording
Changes in the fair value of earn-out liabilities are recorded in the condensed consolidated statement of operations. The earn-out liabilities represent a financial instrument other than an outstanding share that embodies a conditional obligation that the issuer must or may settle by issuing a variable number of its equity shares. We record the earn-out liability at its fair value at each reporting period.
Previous wording
The results of operations presented below should be reviewed in conjunction with the unaudited condensed consolidated financial statements for the three and six months ended June 30, 2024 and 2023 which can be found elsewhere in this document.
Current wording
The results of operations presented below should be reviewed in conjunction with the unaudited condensed consolidated financial statements for the three and nine months ended September 30, 2024 and 2023 which can be found elsewhere in this document.
Previous wording
The following table sets forth our condensed consolidated statement of operations for the three and six months ended June 30, 2024 and 2023, and the dollar and percentage change between the two periods:
Current wording
The following table sets forth our condensed consolidated statement of operations for the three and nine months ended September 30, 2024 and 2023, and the dollar and percentage change between the two periods:
Previous wording
Revenues, net increased by $5.5 million for the three months ended June 30, 2024 compared to the three months ended June 30, 2023. The increase was driven by the addition of B2B and product sales of $2.5 million partially offset by returns and discounts of $0.2 million, as well as an increase in the business member base and introduction of new advertising features on our platform, which resulted in an increase of advertising revenues of $0.2 million. Additionally, the Credova Merger accounted for an additional $3.0 million revenue for the three months ended June 30, 2024.
Current wording
Revenues, net increased by $4.5 million for the three months ended September 30, 2024 compared to the three months ended September 30, 2023. The increase was driven by an increase in Brands sales of $1.5 million, a decrease in Marketplace sales by $0.2 million, and the Credova Merger accounted for an additional $3.2 million in revenue for the three months ended September 30, 2024.
Previous wording
Revenues, net increased by $8.5 million for the six months ended June 30, 2024 compared to the six months ended June 30, 2023. The increase was driven by the addition of B2B and product sales of $4.8 million partially offset by returns and discounts of $0.4 million, as well as an increase in the business member base and introduction of new advertising features on our platform, which resulted in an increase of advertising revenues of $0.8 million. Additionally, the Credova Merger accounted for an additional $3.3 million revenue for the six months ended June 30, 2024.
Current wording
Revenues, net increased by $13.1 million for the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023. The increase was driven by an increase in product sales and e-commerce of $6.5 million and the Credova Merger accounted for an additional $6.6 million revenue for the nine months ended September 30, 2024.
Previous wording
Cost of revenue (exclusive of depreciation and amortization) increased by $0.1 million, or 23%, and $0.3 million, or 42%, respectively, for the three and six months ended June 30, 2024 compared to the three and six months ended June 30, 2023. The increase was mainly due to an increase in personnel expenses of $0.1 million and $0.3 million, respectively.
Current wording
Cost of revenue (exclusive of depreciation and amortization) increased by $0.04 million, or 7%, and $0.5 million, or 46%, respectively, for the three and nine months ended September 30, 2024 compared to the three and nine months ended September 30, 2023. The increase was mainly due to an increase in personnel expenses.
Previous wording
Cost of goods sold (exclusive of depreciation and amortization) increased by $1.4 million and $2.8 million, respectively, for the three months and six months ended June 30, 2024 compared to the three months and six months ended June 30, 2023. The increase was mainly due to the sale of products.
Current wording
Cost of goods sold (exclusive of depreciation and amortization) increased by $0.9 million, or 96% and $3.7 million, or 409%, respectively, for the three months and nine months ended September 30, 2024 compared to the three months and nine months ended September 30, 2023. The increase was mainly due to the sale of products.
Previous wording
General and administrative expense increased by $7.1 million, or 182%, for the three months ended June 30, 2024 compared to the three months ended June 30, 2023 The increase was due to a $6.0 million increase in staffing-related costs, including $3.2 million in share-based compensation expense, and $3.6 million increase in other administrative expenses, which include accounting, legal, and other administrative services. This is partially offset by a decrease in IPO transaction costs of $2.5 million.
Current wording
General and administrative expense increased by $8.0 million, or 185%, for the three months ended September 30, 2024 compared to the three months ended September 30, 2023. The increase was due to a $1.6 million increase in staffing-related costs, $3.4 million in share-based compensation expense, and $3.0 million increase in other administrative expenses, which include accounting, legal, and other administrative services.
Previous wording
Sales and marketing expense increased by $2.7 million, or 112%, for the three months ended June 30, 2024 compared to the three months ended June 30, 2023. The increase was due to $1.5 million of share-based compensation expense and $1.2 million increase in other marketing and public relation activities.
Current wording
Sales and marketing expense increased by $0.9 million, or 26%, for the three months ended September 30, 2024 compared to the three months ended September 30, 2023. The increase was due to $1 million of share-based compensation expense and $0.9 million increase in other marketing and public relation activities offset by a reduction in contractors and commissions of $1 million.
Previous wording
Sales and marketing expense increased by $6.7 million, or 218%, for the six months ended June 30, 2024 compared to the six months ended June 30, 2023. The increase was due to $3.5 million of share-based compensation expense and a $3.2 million increase in other marketing and public relation activities.
Current wording
Sales and marketing expense increased by $7.6 million, or 113%, for the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023. The increase was due to $4.5 million of share-based compensation expense and a $3.1 million increase in other marketing and public relation activities.
Previous wording
Depreciation and amortization expense increased $0.2 million or 33% and decreased by an insignificant amount, respectively, for the three and six months ended June 30, 2024 compared to the three and six months ended June 30, 2023. The decrease was primarily related to the completion of amortization of version 1.0 of the Platform and the amortization of version 2.0 of the Platform being amortized over a longer useful life.
Current wording
Depreciation and amortization expense increased $0.2 million, or 28%, for the three months ended September 30, 2024 compared to the three months ended September 30, 2023. The increase was primarily related to the amortization of version 2.0 of the Platform along with amortization of the loan receivable.
Previous wording
Other income, net changed by an insignificant amount and $0.1 million, respectively, for the three and six months ended June 30, 2024 compared to the three months and six months ended June 30, 2023, primarily due to interest income earned on the money market accounts.
Current wording
Other (expense) income, net changed by $0.2 million and $0.1 million, respectively, for the three and nine months ended September 30, 2024 compared to the three and nine months ended September 30, 2023, is primarily due to interest income earned on the money market accounts partially offset by a write-off of an other receivable.
Previous wording
Interest expense, net increased by $0.4 million and $0.5 million, respectively, for the three and six months ended June 30, 2024 compared to the three and six months ended June 30, 2023. The increase was due to the interest payable in relation to the convertible promissory notes recorded as of the reporting date.
Current wording
Interest expense, net increased by $0.7 million and $1.2 million, respectively, for the three and nine months ended September 30, 2024 compared to the three and nine months ended September 30, 2023. The increase was due to the interest payable in relation to the convertible promissory notes recorded as of the reporting date, along with interest paid on the Revolving Line of Credit.
Previous wording
Income tax expense increased by an insignificant amount for the three and six months ended June 30, 2024 compared to the three and six months ended June 30, 2023.
Current wording
Income tax expense increased by an insignificant amount for the three and nine months ended September 30, 2024 compared to the three and nine months ended September 30, 2023.
Previous wording
Historically, our primary sources of liquidity have been funds from financing activities. We have reported net losses of $23.8 million and $27.4 million for the six months ended June 30, 2024 and 2023, respectively, and had negative cash flows from operations of $17.2 million and $10.0 million for the six months ended June 30, 2024 and 2023, respectively. As of June 30, 2024 and December 31, 2023, we had aggregate unrestricted cash and cash equivalents, of $7.6 million and $16.4 million and net working capital of $7.8 million and $17.2 million, respectively.
Current wording
Historically, our primary sources of liquidity have been funds from financing activities. We have reported net losses of $36.9 million and $47.6 million for the nine months ended September 30, 2024 and 2023, respectively, and had negative cash flows from operations of $27.1 million and $18.4 million for the nine months ended September 30, 2024 and 2023, respectively. As of September 30, 2024 and December 31, 2023, the Company had aggregate unrestricted cash and cash equivalents, of $4.7 million and $16.4 million and net working capital of $7.5 million and $17.2 million, respectively.
Previous wording
We believe that as a result of resource reallocation initiatives, additional insider investments, inventory management and line of credit financing, along with its existing cash and cash equivalents and committed affiliated support, that we will be able to fund operations and capital needs for the next year from the date these condensed consolidated financial statements were available to be issued.
Current wording
We believe that, as a result of these initiatives, along with our existing cash and cash equivalents and the cash flow from the Brands and Financial Technology segments, the Company will be able to fund operations and capital needs for the next year from the date these condensed consolidated financial statements were available to be issued.
Previous wording
Our future capital requirements will depend on many factors including our revenue growth rate, the timing and extent of spending to support further sales and marketing and research and development efforts. In order to finance these opportunities, we may need to raise additional financing. While there can be no assurances, we may need to pursue issuances of additional equity raises and debt rounds of financing. If additional financing is required from outside sources, we may not be able to raise it on terms acceptable to us or at all. If we are unable to raise additional capital when desired, our business, results of operations and financial condition would be materially and adversely affected.
Current wording
Our future capital requirements will depend on many factors including our revenue growth rate, the timing and extent of spending to support further sales and marketing and research and development efforts. In order to finance these opportunities, we may need to raise additional financing. While there can be no assurances, the Company may need to pursue issuances of additional equity raises and debt rounds of financing. If additional financing is required from outside sources, we may not be able to raise it on terms acceptable to the Company or at all. If we are unable to raise additional capital when desired, our business, results of operations and financial condition would be materially and adversely affected.
Previous wording
Net cash used in operating activities for the six months ended June 30, 2024 was $16.9 million compared to $10.0 million used in operating activities during the six months ended June 30, 2023. The increase in cash used in operating activities was due to an overall increase in operating expenses, resulting in an increased operating loss of $16.2 million. This was partially offset by an increase in non-cash expenses for share based compensation of $11.1 million. Also offsetting this was a decrease in cash provided by operating assets and liabilities of $1.9 million.
Current wording
Net cash used in operating activities for the nine months ended September 30, 2024 was $27.1 million compared to $18.4 million used in operating activities during the nine months ended September 30, 2023. The increase in cash used in operating activities was due to an overall increase in operating expenses, resulting in an increased operating loss of $17.9 million. This was partially offset by an increase in non-cash expenses for share based compensation and change in fair value warrant liabilities of $14.8 million and $15.3 million, respectively. Also offsetting this was a decrease in cash provided by operating assets and liabilities of $5.8 million.
Previous wording
Net Cash Provided by (Used in) Investing Activities
Current wording
Net Cash Used in Investing Activities
Previous wording
Net cash provided by financing activities for the six months ended June 30, 2024 was $8.2 million as compared to $25.1 million for the six months ended June 30, 2023. Cash provided by financing activities for the months ended June 30, 2024 primarily related to proceeds from the issuance of the convertible note payable of $10.0 million offset by repayments on the line of credit of $1.8 million, compared to $22.5 million of proceeds received for convertible notes payable and $2.6 million of proceeds from the issuance of common stock for the six months ended June 30, 2023.
Current wording
Net cash provided by financing activities for the nine months ended September 30, 2024 was $17.3 million as compared to $43.2 million for the nine months ended September 30, 2023. Cash provided by financing activities for the nine months ended September 30, 2024 primarily related to proceeds from the issuance of the convertible note payable of $20.0 million offset by repayments on the line of credit of $2.2 million, compared to $22.5 million of proceeds received for convertible notes payable, $18.1 million of proceeds from the reverse recapitalization, and $2.6 million of proceeds from the issuance of common stock for the nine months ended September 30, 2023.
Previous wording
The preparation of our consolidated financial statements in conformity with GAAP requires us to make estimates and judgments that affect the amounts reported in those consolidated financial statements and accompanying notes. Although we believe that the estimates we use are reasonable, due to the inherent uncertainty involved in making those estimates, actual results reported in future periods could differ from those estimates. Our significant accounting policies are described in Note 3 to our Unaudited Condensed Consolidated Financial Statements for the three-month and six-month period ended June 30, 2024 included elsewhere in this report. Our critical accounting policies are described below.
Current wording
The preparation of our consolidated financial statements in conformity with GAAP requires us to make estimates and judgments that affect the amounts reported in those consolidated financial statements and accompanying notes. Although we believe that the estimates we use are reasonable, due to the inherent uncertainty involved in making those estimates, actual results reported in future periods could differ from those estimates. Our significant accounting policies are described in Note 3 to our Unaudited Condensed Consolidated Financial Statements for the three-month and nine-month period ended September 30, 2024 included elsewhere in this report. Our critical accounting policies are described below.
Previous wording
The Company capitalizes costs related to the development of its internal accounting software and certain projects for internal use in accordance with ASC 350 -Intangibles - Goodwill and Other. The Company capitalizes costs to develop its mobile application and website when preliminary development efforts are successfully completed, management has authorized and committed project funding, and it is probable that the project will be completed, and the software will be used as intended. Costs incurred during the preliminary planning and evaluation stage of the project and during the post implementation operational stage, including maintenance, are expensed as incurred. Costs incurred for enhancements that are expected to result in additional functionality are capitalized and expensed over the estimated useful life of the upgrades on a per project basis. Amortization is computed on an individual product basis over the estimated economic life of the product using the straight-line method.
Current wording
The Company capitalizes costs related to the development of its internal accounting software and certain projects for internal use in accordance with ASC 350-40, Internal-Use Software ("ASC 350-40"). The Company capitalizes costs to develop its mobile application and website when preliminary development efforts are successfully completed, management has authorized and committed project funding, and it is probable that the project will be completed, and the software will be used as intended. Costs incurred during the preliminary planning and evaluation stage of the project and during the post implementation operational stage, including maintenance, are expensed as incurred. Costs incurred for enhancements that are expected to result in additional functionality are capitalized and expensed over the estimated useful life of the upgrades on a per project basis. Amortization is computed on an individual product basis over the estimated economic life of the product using the straight-line method.
Rearranged current paragraphs (4)
Current report — wording carried from elsewhere
•Gross Merchandise Volume (“GMV”) of Financial Technology Segment.
Current report — wording carried from elsewhere
Change in Fair Value of Convertible Promissory Notes
Current report — wording carried from elsewhere
Change in Fair Value of Earn-out Liabilities
Current report — wording carried from elsewhere
Change in Fair Value of Warrant Liabilities