Financial Performance - For the three months ended September 30, 2024, net sales were $23,210,850, an increase of approximately $3,003,331, or 14.9%, compared to $20,207,519 for the same period in 2023[130]. - The gross margin for the three months ended September 30, 2024, was 12.9%, slightly up from 12.8% in the prior year period[130]. - Cost of sales increased to $20,220,237 for the three months ended September 30, 2024, compared to $17,629,985 for the same period in 2023, with cost of sales as a percentage of sales at 87.1%[132]. - Selling, general and administrative expenses rose to $5,908,603 for the three months ended September 30, 2024, an increase of $3,308,447 from $2,600,156 in the prior year[134]. - The company incurred a loss from operations of $3,780,199 for the three months ended September 30, 2024, compared to a loss of $365,607 for the same period in 2023[137]. - The net loss for the three months ended September 30, 2024, was $4,061,152, compared to a net loss of $556,582 for the same period in 2023[139]. - For the nine months ended September 30, 2024, net sales were $64,753,246, a decrease of approximately $707,658, or 1.1%, from $65,460,904 in the same period in 2023, despite an increase in gross margin from 12.4% to 14.7%[144]. - The company incurred a loss from operations of $14,206,047 for the nine months ended September 30, 2024, compared to a loss of $1,158,731 for the same period in 2023[153]. - The net loss for the nine months ended September 30, 2024, was $14,996,518, compared to a net loss of $1,673,617 for the same period in 2023[156]. - Modified EBITDA for the nine months ended September 30, 2024, was $(1,684,289), compared to $(129,775) for the same period in 2023[159]. Expenses and Costs - Cost of sales decreased to $55,244,862 for the nine months ended September 30, 2024, compared to $57,352,182 in the prior year, resulting in a cost of sales percentage of 85.3% versus 87.6%[146]. - Selling, general and administrative expenses rose to $20,954,914 for the nine months ended September 30, 2024, an increase of $12,716,417 from $8,238,497 in the same period in 2023, primarily due to stock-based compensation[150]. - Other expenses amounted to $280,953 for the three months ended September 30, 2024, compared to $191,326 for the same period in 2023[138]. - Stock-based compensation expense recorded during the nine months ended September 30, 2024, was $9,762,242, significantly impacting overall expenses[150]. Cash Flow and Financing - The company has a working capital deficit of $2,182,182 as of September 30, 2024, with cash available for operations at $3,090,980[123]. - Cash used in operating activities for the nine months ended September 30, 2024 was approximately $2,362,948, compared to $220,267 for the same period in 2023[176][178]. - Cash used for investing activities for the nine months ended September 30, 2024 was $674,646, similar to $675,000 for the same period in 2023[180]. - Cash provided by financing activities for the nine months ended September 30, 2024 was $2,028,837, significantly higher than $634,926 for the same period in 2023[181][182]. - The outstanding line of credit balance at September 30, 2024 was $4,234,149, down from $6,737,385 at December 31, 2023[183]. - The company entered into an At-the-Market Issuance Sales Agreement to sell shares of common stock with an aggregate offering price of up to $30,000,000[171]. - The company has a remaining convertible note payable of $20,000, with accrued interest of $22,238, convertible at $1.50 per share[184]. - The company issued two-year promissory notes totaling $1,500,000 as partial consideration for the acquisition of CardCash, with an aggregate principal balance outstanding of $1,500,000 as of September 30, 2024[186]. - The company received a total of $150,000 and $350,000 from the SBA under the Covid-19 Economic Injury Disaster Loan (EIDL) Program, with a principal balance outstanding of $664,500 as of September 30, 2024[190]. - The company anticipates its cash balance will last until at least June 2025, but faces uncertainty in securing additional financing[172][173]. Acquisition and Business Operations - The acquisition of CardCash Exchange, Inc. was completed for a total consideration of $26,682,000, including 6,108,007 shares of common stock valued at $24,432,000[109]. - The B2C division accounted for 45% of gross revenue, while the B2B division accounted for 55% for the fiscal year ended December 31, 2023[117][119]. - The company focuses on improving gross margin by assessing the quality of purchased gift card brands, which has allowed for increased sales prices to customers[144]. - The company expects selling, general and administrative expenses to increase in future periods due to the addition of personnel and higher operational costs associated with being a public company[149]. - As of September 30, 2024, the company had cash of $3,090,980 and a working capital deficit of $2,182,182, raising substantial doubt about its ability to continue as a going concern[170].
RDE Inc(RSTN) - 2024 Q3 - Quarterly Report