RiskOn International(ROI) - 2024 Q3 - Quarterly Report

PART I – FINANCIAL INFORMATION Financial Statements The unaudited condensed consolidated financial statements detail the company's financial position, operational results, and cash flows for the period ended December 31, 2023 Condensed Consolidated Balance Sheets The company's balance sheet shows total assets of $17.0 million and a shareholders' deficit of $(13.6) million, reflecting significant liquidity challenges Condensed Consolidated Balance Sheet Highlights (Unaudited) | Account | Dec 31, 2023 ($) | Mar 31, 2023 ($) | | :--- | :--- | :--- | | Total Current Assets | 9,826,738 | 11,815,400 | | Total Assets | 16,961,002 | 23,775,517 | | Total Current Liabilities | 29,059,982 | 37,192,139 | | Total Liabilities | 30,520,765 | 37,719,641 | | Total Shareholders' Deficit | (13,559,763) | (13,944,124) | - Cash and cash equivalents increased to $101,487 from $65,838[13] - Derivative liabilities significantly decreased to $1.4 million from $19.9 million, primarily due to changes in fair value[13] Condensed Consolidated Statements of Operations The company reported a net loss of $(15.0) million for Q3 2023, a sharp decline from a net income of $2.6 million in the prior-year period Statement of Operations Summary (Unaudited) | Metric | Three Months Ended Dec 31, 2023 ($) | Three Months Ended Dec 31, 2022 ($) | | :--- | :--- | :--- | | Total Revenue | 240,356 | - | | Gross Loss | (1,817,668) | - | | Operating Loss | (10,238,512) | (1,454,507) | | Net (Loss) Income to Common Shareholders | (14,991,881) | 2,649,585 | | Net (Loss) Income Per Share | (3.37) | 2.55 | Nine-Month Performance Summary (Unaudited) | Metric | Nine Months Ended Dec 31, 2023 ($) | Nine Months Ended Dec 31, 2022 ($) | | :--- | :--- | :--- | | Total Revenue | 304,706 | - | | Gross Loss | (1,868,040) | - | | Operating Loss | (28,666,000) | (3,551,885) | | Net (Loss) Income to Common Shareholders | (23,564,185) | (30,873,703) | - A significant factor in the quarterly results was a $(4.3) million total other expense in Q3 2023, compared to a $6.2 million other income in Q3 2022[16] Condensed Consolidated Statement of Changes in Shareholders' Deficit The shareholders' deficit slightly decreased to $(13.6) million due to share issuances for financing and conversions, offset by a substantial net loss - The number of common shares outstanding increased from 1,383,832 to 10,734,744 due to financing activities and conversions[17] - The accumulated deficit grew from $(208.7) million to $(232.2) million during the nine-month period[17] Condensed Consolidated Statements of Cash Flows The company used $(20.6) million in operating activities, funded by $20.9 million from financing activities, resulting in a minimal net cash increase Cash Flow Summary (Nine Months Ended Dec 31, 2023) | Cash Flow Activity | Amount ($) | | :--- | :--- | | Net Cash Used in Operating Activities | (20,557,278) | | Net Cash Used in Investing Activities | (322,050) | | Net Cash Provided by Financing Activities | 20,914,977 | | Net Increase in Cash | 35,649 | - Financing activities included $13.3 million in proceeds from the former parent, $5.4 million from a convertible note, and $2.7 million from stock sales[20] Notes to Condensed Consolidated Financial Statements The notes detail a corporate rebranding, strategic shift, subsidiary bankruptcy, and significant doubt about the company's ability to continue as a going concern - The company changed its name from BitNile Metaverse Inc. to RiskOn International, Inc. on November 1, 2023[24] - Subsidiary Agora Digital Holdings, Inc. filed for Chapter 7 bankruptcy on November 1, 2023, and is treated as a discontinued operation[31] - Management has substantial doubt about the company's ability to continue as a going concern due to significant losses and a working capital deficit[32][33] - The company is facing delisting from Nasdaq due to non-compliance with minimum shareholders' equity, bid price, and voting rights rules[121][122] - In November 2023, the company issued Series D preferred stock to Ault Alliance, Inc. (AAI) to settle $15.1 million in cash advances[85] Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses its corporate transformation, new business ventures, soaring operating losses, critical liquidity issues, and ongoing Nasdaq compliance challenges Overview and Business Strategy The company rebranded to RiskOn International and shifted its strategy to focus on the BitNile.com metaverse, RiskOn360 conferences, and GuyCare health clinics - The company's strategy revolves around creating a seamless platform (BitNile.com) for virtual experiences and digital economies[154] - RiskOn360 is a global conference series for entrepreneurs, focusing on in-person training and practical application[158][160] Recent Developments Key recent activities include a reverse stock split, securing new financing, divesting a subsidiary, and appealing a pending Nasdaq delisting determination - Executed a 1-for-30 reverse stock split in May 2023 and increased authorized common shares to 500 million[162] - Entered into a $100 million ELOC Purchase Agreement with Arena, effective October 30, 2023[165] - Subsidiary Agora and its unit Bitstream filed for Chapter 7 bankruptcy on November 1, 2023[165] - Received multiple non-compliance notices from Nasdaq and has appealed a delisting determination, with a hearing scheduled for February 29, 2024[163] Consolidated Results of Continuing Operations Operating losses from continuing operations surged due to costs from the new RiskOn360 conference and a significant increase in SG&A expenses Three-Month Results of Continuing Operations (YoY) | Metric | Q3 2023 ($) | Q3 2022 ($) | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Gross Loss | (1,817,668) | - | (1,817,668) | 100% | | Total Operating Expenses | 8,420,844 | 1,454,507 | 6,966,337 | 479% | | Operating Loss | (10,238,512) | (1,454,507) | (8,784,005) | 604% | | (Loss) from Continuing Ops | (14,555,254) | 4,754,014 | (19,309,268) | 406% | Nine-Month Results of Continuing Operations (YoY) | Metric | Nine Months 2023 ($) | Nine Months 2022 ($) | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Gross Loss | (1,868,040) | - | (1,868,040) | 100% | | Total Operating Expenses | 26,797,960 | 3,551,885 | 23,246,075 | 654% | | Operating Loss | (28,666,000) | (3,551,885) | (25,114,115) | 707% | | (Loss) from Continuing Ops | (15,780,508) | 5,384,144 | (21,164,652) | 393% | Liquidity and Capital Resources The company's critical liquidity position, with minimal cash on hand, raises substantial doubt about its ability to continue as a going concern - As of December 31, 2023, the company had only $101,487 in cash and cash equivalents[186] - Management has concluded there is substantial doubt about the company's ability to continue as a going concern[186] - For the nine months ended Dec 31, 2023, net cash used in operating activities of continuing operations was approximately $29 million[183] - The company raised capital through $5 million in convertible notes, $1 million in term notes, and $1 million from the ELOC agreement during the fiscal year[186] Quantitative and Qualitative Disclosures About Market Risk This section is not applicable to the company's current operations and financial condition - Not applicable[191] Controls and Procedures Management concluded that disclosure controls and procedures were not effective as of December 31, 2023, due to persistent material weaknesses - The principal executive and financial officers concluded that the company's internal control over financial reporting was not effective as of December 31, 2023[193] - Identified material weaknesses include insufficient segregation of duties, lack of formal review procedures, and insufficient documentation[194][200] - Planned remediation includes hiring qualified personnel, engaging external advisors, and enhancing policies and procedures[194] PART II – OTHER INFORMATION Legal Proceedings There were no material developments in previously disclosed legal proceedings during the reporting period - There were no material developments in the legal proceedings disclosed in the Annual Report on Form 10-K for the year ended March 31, 2023[202] Risk Factors There are no updates or changes to the risk factors previously disclosed in the company's annual and quarterly reports - No updates or changes to the risk factors set forth in the Annual Report on Form 10-K for the year ended March 31, 2023[203] Unregistered Sales of Equity Securities, Use of Proceeds, and Issuer Purchases of Equity Securities The company reported no activity in this category for the period - None[204] Defaults Upon Senior Securities The company reported no defaults upon senior securities for the period - None[205] Mine Safety Disclosures This item is not applicable to the company - Not applicable[206] Other Information The company reported no other information for the period - None[207] Exhibits This section lists exhibits filed with the Form 10-Q, including governance documents, agreements, and required officer certifications - Key exhibits include Certificates of Designation for Preferred Stock, a Securities Purchase Agreement, and CEO/CFO certifications[209]