GIFTIFY, INC. 10-K

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA INDEX TO FINANCIAL STATEMENTS Financial Statements of RDE, Inc. Report of Independent Registered Public Accounting Firm for RDE, Inc. (PCAOB Firm ID: 572 ) F-1 Consolidated Balance Sheets as of December 31, 2022 and December 31, 2021 F-2 Consolidated Statements of Operations for the year ended December 31, 2022 and 2021 F-3 Consolidated Statements of Stockholders’ Deficiency for the year ended December 31, 2022 and 2021 F-4 Consolidated Statements of Cash Flows for the year ended December 31, 2022 and 2021 F-5 Notes to the Consolidated Financial Statements F-6 37 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Board of Directors and Stockholders RDE, Inc. Arlington Heights, Illinois Opinion on the Consolidated Financial Statements We have audited the accompanying consolidated balance sheets of RDE, Inc. and subsidiaries (the “Company”) as of December 31, 2022 and 2021, and the related consolidated statements of operations, stockholders’ deficiency and cash flows for the years then ended, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Company as of December 31, 2022 and 2021, and the results of its consolidated operations and its consolidated cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America. Going Concern The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1 to the consolidated financial statements, the Company has incurred recurring operating losses and negative operating cash flows since inception and has a stockholders’ deficiency at December 31, 2022. These matters raise substantial doubt about the Company’s ability to continue as a going concern. Management’s plans in regard to these matters are also described in Note 1 to the consolidated financial statements. These consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty. Basis for Opinion These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission (the “SEC”) and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of the Company’s internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. We have served as the Company’s auditor since 2017. /s/ Weinberg & Company, P.A . Los Angeles, California March 7, 2023 F- 1 RDE, INC. AND SUBSIDIARY CONSOLIDATED BALANCE SHEETS December 31, December 31, 2022 2021 ASSETS Current assets: Cash $ 1,122,958 $ 1,930,325 Accounts receivable 209,808 118,100 Deposits with credit card processor 87,237 87,237 Prepaid expenses and other current assets 102,193 153,374 Total current assets 1,522,196 2,289,036 Operating lease right of use asset, net 52,608 219,739 Total assets $ 1,574,804 $ 2,508,775 LIABILITIES AND STOCKHOLDERS’ DEFICIENCY Current liabilities: Accounts payable $ 1,206,615 $ 976,605 Accrued expenses 516,882 704,715 Deferred revenue 217,311 230,405 Government assistance notes payable, current portion 15,217 11,115 Operating lease liability, current portion 59,328 110,499 Convertible debt assumed upon reverse merger, including accrued interest of $ 17,887 and $ 11,537 at December 31, 2022 and December 31, 2021, respectively 37,137 31,537 Acquisition notes payable, current portion, including accrued interest of $ 251,507 at December 31, 2022 1,798,478 - Total current liabilities 3,850,968 2,064,876 Operating lease liability, net of current portion - 111,597 Acquisition notes payable, including accrued interest of $ 687 and $ 162,300 at December 31, 2022 and December 31, 2021, respectively 81,494 1,662,300 Government assistance notes payable, including accrued interest of $ 45,541 and $ 25,321 at December 31, 2022 and December 31, 2021, respectively, net of current portion 691,359 1,689,741 Total liabilities 4,623,821 5,528,514 Commitments and Contingencies - - Stockholders’ deficiency: Preferred stock, $ 0.001 par value, 10,000,000 shares authorized; none issued and outstanding - Common stock, $ 0.001 par value, 750,000,000 shares authorized; 14,152,378 and 12,879,428 shares issued and outstanding at December 31, 2022 and December 31, 2021, respectively 14,153 12,880 Additional paid-in-capital 58,123,246 56,875,273 Common stock issuable, 383,343 shares 383,343 383,343 Accumulated deficit ( 61,569,759 ) ( 60,291,235 ) Total stockholders’ deficiency ( 3,049,017 ) ( 3,019,739 ) Total liabilities and stockholders’ deficiency $ 1,574,804 $ 2,508,775 The accompanying notes are integral part of these consolidated financial statements. F- 2 RDE, INC. AND SUBSIDIARY CONSOLIDATED STATEMENTS OF OPERATIONS 2022 2021 Years ended December 31, 2022 2021 Revenues $ 4,444,595 $ 3,323,509 Operating expenses: Costs of revenues 825,242 394,023 Selling, general and administrative expenses 5,462,690 7,243,151 Amortization of intangible assets 184,795 624,000 Write-off of impaired intangible assets 258,714 570,030 Total operating expenses 6,731,441 8,831,204 Loss from operations ( 2,286,846 ) ( 5,507,695 ) Other income (expense): Interest expense ( 114,813 ) ( 124,293 ) Financing costs - ( 7,500 ) Gain on legal settlement 69,000 - Gain on vendor settlement 28,600 - Gain from forgiveness of government assistance note payable 1,025,535 648,265 Total other (income) expense, net 1,008,322 516,472 Net loss $ ( 1,278,524 ) $ ( 4,991,223 ) Net loss per share – basic and diluted $ ( 0.09 ) $ ( 0.41 ) Weighted average common shares outstanding – basic and diluted 13,774,292 12,277,922 The accompanying notes are integral part of these consolidated financial statements. F- 3 RDE, INC. AND SUBSIDIARY CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ DEFICIENCY Years Ended December 31, 2022 and 2021 Shares Amount Shares Amount Shares Amount Capital Deficit Deficiency Preferred Stock Common Stock Common Stock Issuable Additional Paid-In Accumulated Total Stockholders’ Shares Amount Shares Amount Shares Amount Capital Deficit Deficiency Balance, December 31, 2020 - $ - 11,217,324 $ 11,218 383,343 $ 383,343 $ 52,300,092 $ ( 55,300,012 ) $ ( 2,605,359 ) Fair value of vested options 437,877 437,877 Issuance of common stock for service - - 845,758 846 - - 2,163,154 2,164,000 Issuance of common stock for note payable extension 3,000 3 7,497 7,500 Issuance of common stock for legal settlement 8,000 8 8,992 9,000 Proceeds from issuance of common stock, net of offering costs - - 805,346 805 - - 1,957,661 1,958,466 Net loss - - - - - - - ( 4,991,223 ) ( 4,991,223 ) Balance, December 31, 2021 - - 12,879,428 12,880 383,343 383,343 56,875,273 ( 60,291,235 ) ( 3,019,739 ) Balance - - 12,879,428 12,880 383,343 383,343 56,875,273 ( 60,291,235 ) ( 3,019,739 ) Fair value of vested options - - 156,718 156,718 Issuance of common stock to directors for services - - 240,000 240 - - 219,760 220,000 Fair value of vested restricted stock units for employees 83,833 84 55,536 55,620 Issuance of common stock for services - - 223,117 223 - - 230,285 230,508 Issuance of common stock for vendor balance - - 26,000 26 36,374 36,400 Issuance of common stock for cash - - 100,000 100 - - 249,900 250,000 Issuance of common stock for GameIQ acquisition - - 600,000 600 - - 299,400 300,000 Net loss - - - - - - - ( 1,278,524 ) ( 1,278,524 ) Balance, December 31, 2022 - $ - 14,152,378 $ 14,153 383,343 $ 383,343 $ 58,123,246 $ ( 61,569,759 ) $ ( 3,049,017 ) Balance - $ - 14,152,378 $ 14,153 383,343 $ 383,343 $ 58,123,246 $ ( 61,569,759 ) $ ( 3,049,017 ) The accompanying notes are integral part of these consolidated financial statements. F- 4 RDE, INC. AND SUBSIDIARY CONSOLIDATED STATEMENTS OF CASH FLOWS 2022 2021 Years Ended December 31, 2022 2021 CASH FLOWS FROM OPERATING ACTIVITIES Net loss $ ( 1,278,524 ) $ ( 4,991,223 ) Adjustments to reconcile net loss to net cash used in operating activities Amortization of intangible assets 184,795 624,000 Impairment of intangible assets 258,714 570,030 Financing costs - 7,500 Fair value of vested options 156,718 437,877 Fair value of vested restricted stock units to employees 55,620 - Fair value of vested restricted stock units to directors 220,000 - Fair value of common stock issued for services 230,508 2,164,000 Gain from vendor settlement ( 28,600 ) - Gain on legal settlement ( 69,000 ) - Gain from forgiveness of government assistance note payable ( 1,025,535 ) ( 648,265 ) Change in right of use assets 113,332 112,876 Changes in operating assets and liabilities: Accounts receivable ( 91,708 ) 179,307 Prepaid expenses and other current assets 51,181 ( 35,178 ) Accounts payable 295,009 ( 240 ) Accrued expenses ( 118,833 ) 183,028 Deferred revenue ( 13,094 ) 230,405 Accrued interest payable 114,815 84,547 Accrued payroll and advances – related party - ( 78,000 ) Operating lease liability ( 108,969 ) ( 100,855 ) Net cash used in operating activities ( 1,053,571 ) ( 1,260,191 ) CASH FLOWS FROM INVESTING ACTIVITIES Cash acquired on GameIQ acquisition 12,805 - Net cash provided by investing activities 12,805 - CASH FLOWS FROM FINANCING ACTIVITIES Repayment of acquisition notes payable ( 13,136 ) - Repayment of notes payable – government assistance loans ( 3,465 ) - Repayment of bridge note payable - ( 303,147 ) Repayment of convertible notes payable - ( 400,000 ) Repayment of acquisition obligation - ( 40,914 ) Proceeds from notes payable – government assistance loans - 1,375,535 Proceeds from offering 250,000 1,958,466 Net cash provided by financing activities 233,399 2,589,940 Net increase (decrease) in cash and cash equivalents ( 807,367 ) 1,329,749 Cash and cash equivalents beginning of period 1,930,325 600,576 Cash and cash equivalents end of period $ 1,122,958 $ 1,930,325 SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION Interest paid $ 6,070 $ 39,746 Taxes paid $ - $ - SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES: Acquired software and technology from acquisition of GameIQ $ 443,509 $ - Fair value of common shares issued on acquisition of GameIQ $ 300,000 $ - Notes payable issued from acquisition of GameIQ $ 140,914 $ - Government assistance notes payable and accrued interest assumed on acquisition of GameIQ $ 15,400 $ - Fair value of common shares issued in settlement of vendor payable $ 36,400 $ - Termination of operating lease right of use asset and lease liability $ 53,799 $ - The accompanying notes are integral part of these consolidated financial statements. F- 5 RDE, INC. AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Years Ended December 31, 2022 and 2021 1. Organization and Basis of Presentation On March 1, 2020, RDE, Inc. (“RDE”) (formerly known as uBid Holdings, Inc.), a Delaware corporation, including its wholly-owned Delaware operating subsidiary, Restaurant.com, Inc. (collectively, the “Company”), completed an asset purchase agreement with Restaurant.com, Inc., an unrelated Delaware corporation, which was an entity engaged in the business of online marketing for participating restaurants throughout the United States (see Note 3). Accordingly, commencing March 1, 2020, the Company, through Restaurant.com, Inc., has been in the business of connecting digital consumers, businesses and communities with dining and merchant deal options throughout the United States. Unless the context indicates otherwise, “Restaurant.com” refers to the Company’s wholly-owned Delaware operating subsidiary. On September 25, 2020, the Company changed its name from uBid Holdings, Inc. to RDE, Inc. and the Company’s trading symbol was changed from UBID to RSTN to reflect the Company’s new name and new focus on the Restaurant.com business. COVID-19 Considerations In March 2020, the World Health Organization declared that the rapidly spreading COVID-19 outbreak was a global pandemic (the “COVID-19 pandemic”). In response to the COVID-19 pandemic, many governments around the world have implemented, and continue to implement, a variety of measures to reduce the spread of COVID19, including travel restrictions and bans, instructions to residents to practice social distancing, quarantine advisories, shelter-in-place orders and required closures of non-essential businesses. These government mandates have forced many of the customers on whom the Company’s business relies, including restaurants and hotels and other accommodation providers, to seek government support in order to continue operating, to curtail drastically their service offerings or to cease operations entirely. Further, these measures have materially adversely affected, and may further adversely affect, consumer sentiment and discretionary spending patterns, economies and financial markets, and the Company’s workforce, operations and customers. The COVID-19 pandemic and the resulting economic conditions and government orders have resulted in a material decrease in consumer spending and an unprecedented decline in restaurants activities, travel and accommodation activities and consumer demand for related services. The Company’s financial results and prospects are dependent on the sale of these services. The Company’s operations have been significantly and negatively impacted. Due to the uncertain and rapidly evolving nature of current conditions around the world, the Company is unable to predict accurately the impact that the COVID-19 pandemic will have on its business going forward. With the spread of COVID-19 to other regions, such as Europe and the United States, the Company expects the COVID-19 pandemic and its effects to continue to have a significant adverse impact on its business for the duration of the pandemic and during the subsequent economic recovery, which could be an extended period of time. Going Concern During the year ended December 31, 2022, the Company incurred a net loss of $ 1,278,524 , utilized cash in operations of $ 1,053,571 , and had a stockholders’ deficiency of $ 3,049,017 as of December 31, 2022. At December 31, 2022, the Company had cash of $ 1,122,958 available to fund its operations, including expansion plans, and to service its debt. The Company anticipates its cash balance will last until approximately November 2023. The Company’s consolidated financial statements have been presented on the basis that it will continue as a going concern, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business. The Company has experienced operating losses and negative operating cash flows during 2022 and 2021. The Company has financed its working capital requirements through borrowings from various sources and the sale of its equity securities. F- 6 The Company’s operations have been significantly and negatively impacted by the COVID-19 pandemic. Due to the uncertain and rapidly evolving nature of current conditions around the world, the Company is unable to predict accurately the impact that the COVID-19 pandemic will have on its business going forward. The Company expects the COVID-19 pandemic and its effects to continue to have a significant adverse impact on its business for the duration of the pandemic and during the subsequent economic recovery, which could be for an extended period of time. As a result, management has concluded that there is substantial doubt about the Company’s ability to continue as a going concern. The Company’s consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty. The Company’s ability to continue as a going concern is dependent upon its ability to raise additional debt or equity capital to fund its business activities and to ultimately achieve sustainable operating revenues and profitability. As market conditions present uncertainty as to the Company’s ability to secure additional funds, there can be no assurances that the Company will be able to secure additional financing on acceptable terms, as and when necessary to continue to conduct operations. There is also significant uncertainty as to the effect that the coronavirus may have on the Company’s business plans and the amount and type of financing available to the Company in the future. If the Company is unable to obtain the cash resources necessary to satisfy the Company’s ongoing cash requirements, the Company could be required to scale back its business activities or to discontinue its operations entirely. 2. Summary of Significant Accounting Policies Principles of Consolidation The accompanying consolidated financial statements of the Company have been prepared in accordance with United States generally accepted accounting principles (“GAAP”) and include the financial statements of the Company’s wholly-owned operating subsidiary. Intercompany balances and transactions have been eliminated in consolidation. Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of expenses during the reporting period. Some of those judgments can be subjective and complex, and therefore, actual results could differ materially from those estimates under different assumptions or conditions. Management bases its estimates on historical experience and on various assumptions that are believed to be reasonable in relation to the financial statements taken as a whole under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Management regularly evaluates the key factors and assumptions used to develop the estimates utilizing currently available information, changes in facts and circumstances, historical experience and reasonable assumptions. After such evaluations, if deemed appropriate, those estimates are adjusted accordingly. Actual results could differ from those estimates. Significant estimates include those related to assumptions used in accruals for potential liabilities, valuing equity instruments issued for services, impairment of goodwill and finite-lived intangible assets, and the realization of deferred tax assets. Stock-Based Compensation The Company periodically issues share-based awards to employees and non-employees and consultants for services rendered. Stock options vest and expire according to terms established at the issuance date of each grant. Stock grants are measured at the grant date fair value. Stock-based compensation cost is measured at fair value on the grant date and is generally recognized as a charge to operations ratably over the requisite service, or vesting, period. The Company values its equity awards using the Black-Scholes option-pricing model, and accounts for forfeitures when they occur. Use of the Black-Scholes option pricing model requires the input of subjective assumptions, including expected volatility, expected term, and a risk-free interest rate. The expected volatility is based on the historical volatility of the Company’s common stock, calculated utilizing a look-back period approximately equal to the contractual life of the stock option being granted. The expected life of the stock option is calculated as the mid-point between the vesting period and the contractual term (the “simplified method”). The risk-free interest rate is estimated using comparable published federal funds rates. F- 7 Fair Value of Financial Instruments The authoritative guidance with respect to fair value established a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three levels and requires that assets and liabilities carried at fair value be classified and disclosed in one of three categories, as presented below. Disclosure as to transfers in and out of Levels 1 and 2, and activity in Level 3 fair value measurements, is also required. Fair value of a financial instrument is defined as the amount at which the instrument could be exchanged in a current transaction between willing parties. The three levels of the fair value hierarchy are as follows: Level 1 Valuations based on unadjusted quoted prices in active markets for identical assets or liabilities that the entity has the ability to access. Level 2 Valuations based on quoted prices for similar assets or liabilities, quoted prices in markets that are not active, or other inputs that are observable or can be corroborated by observable data for substantially the full term of the assets or liabilities. Level 3 Valuations based on inputs that are unobservable, supported by little or no market activity and that are significant to the fair value of the assets or liabilities. The carrying value of the Company’s financial instruments (consisting of cash, accounts receivables, deposits to credit card processor, prepaid expense and other current assets, accounts payable, accrued expenses, notes payable, and other liabilities) are considered to be representative of their respective fair values due to the short-term nature of those instruments. Acquisitions and Business Combinations The Company allocates the fair value of purchase consideration to the tangible assets acquired, liabilities assumed, and separately identified intangible assets acquired based on their estimated fair values. The excess of the fair value of purchase consideration over the fair values of these identifiable assets and liabilities is recorded as goodwill. Such valuations require management to make significant estimates and assumptions, especially with respect to intangible assets. Significant estimates in valuing certain intangible assets include, but are not limited to, future expected cash flows from, acquired technology, trademarks and trade names, useful lives, and discount rates. Management’s estimates of fair value are based upon assumptions believed to be reasonable, but which are inherently uncertain and unpredictable and, as a result, actual results may differ from estimates. During the measurement period, which can be up to one year from the acquisition date, the Company may record adjustments to the assets acquired and liabilities assumed, with the corresponding offset to goodwill. Upon the conclusion of the measurement period, any subsequent adjustments are recorded in the consolidated statements of operations. Goodwill The Company reviews the recoverability of the carrying value of goodwill at least annually at fiscal year-end, or whenever events or circumstances indicate a potential impairment. Recoverability of goodwill is determined by comparing the fair value of Company’s reporting unit to the carrying value of the underlying net assets in the reporting units. If the fair value of a reporting unit is determined to be less than the carrying value of its net assets, goodwill is deemed impaired, and an impairment loss is recognized to the extent that the carrying value of goodwill exceeds the difference between the fair value of the reporting unit and the fair value of its other assets and liabilities. Goodwill was recorded in 2021 as a result of the March 1, 2020 Restaurant.com, Inc. transaction. At December 31, 2021, management conducted an evaluation of the recoverability of the carrying value of goodwill and determined that it had been impaired, which resulted in a charge to operations of $ 334,000 at such date. F- 8 Intangible Assets with Finite Useful Lives The Company had certain finite-lived intangible assets that were initially recorded at their fair value at the time of acquisition. These intangible assets consisted of intellectual property, customer relationships, and capitalized software development costs. Intangible assets with finite useful lives were being amortized using an accelerated method over their respective estimated useful lives. The Company review’s all finite-lived intangible assets for impairment at least annually at fiscal year-end, or whenever events or circumstances indicate that their carrying values may not be recoverable. If the carrying value of an asset group is not recoverable, the Company recognizes an impairment loss for the excess carrying value over the fair value in its consolidated statements of operations. The intangible assets were recorded as a result of the January 2022 and March 2020 GameIQ and Restaurant.com, Inc. transactions, respectively. At December 31, 2022 and 2021, management conducted an evaluation of the recoverability of the carrying value of finite-lived intangible assets and determined that they had been impaired, which resulted in a charge to operations of $ 258,714 and $ 236,030 , accordingly. Revenue Recognition Revenue is recognized when, or as, control of a promised product transfers to a customer, in an amount that reflects the consideration to which the Company expects to be entitled in exchange for transferring those products. Revenue excludes taxes that have been assessed by governmental authorities and that are directly imposed on revenue-producing transactions between the Company and its customers, including sales and use taxes. Revenue recognition is evaluated through the following five-step process: (1) identification of the agreement with a customer; (2) identification of the performance obligations in the agreement; (3) determination of the transaction price; (4) allocation of the transaction price to the performance obligations in the agreement; and, (5) recognition of revenue when or as a performance obligation is satisfied. The Company operates online websites that sell discounted restaurant coupons, travel and vacation packages, and other merchandise across a wide range of product categories, including, but not limited to, computer products, consumer electronics, apparel, housewares, watches, jewelry, travel, sporting goods, automobiles, home improvement products, and collectibles. In addition, the Company also generates revenues based upon the number of times a third-party website(s) or products(s) are accessed or viewed by consumers from the Company’s website or platform. Sale of Restaurant Coupons The Company derives its revenue from transactions in which it sells discount certificates for restaurants on behalf of third-party restaurants. Approximately 9 to 13 days each month the Company emails its customers offers for restaurant discounts based on location and personal preferences. Consumers also access deals offered by the Company directly through the Company’s websites and mobile applications. A typical restaurant discount deal might offer a $ 25 discount that can be used toward a $ 50 purchase at a restaurant. The Company recognizes revenue on a gross basis upon sale and collection of the restaurant coupons from customers. The Company has no further commitment or obligation to third-party restaurants or the coupon purchasers upon the sale of restaurant coupons and no amounts are due to the third-party restaurants for these sales. Sale of restaurant coupons are generally non-refundable. On an infrequent case-by-case basis, the Company will accept customer’s request to transfer a restaurant coupon from one third-party restaurant to another (for example, upon the closure of a restaurant). Promotional Gift Card Revenue The Company sells Restaurant.com promotional gift cards which can only be used to redeem for restaurant coupons offered by the Company on its website. Based on the Company’s historical redemption rates of its promotional gift cards, a portion of the sale of gift card revenue is recorded as deferred revenue liability at the time of sale and recognized as revenue in future periods based on historical redemption trend rates, but no longer than 24 months from the date of sale. The Company continues to review historical promotional gift card redemption information and considers any changes in redemption patterns to assess when revenue is realized. Future redemption rates may be different than our historical experience and subject to inherent uncertainty. If actual redemption activity differs significantly from our historical experience, our deferred revenue and results of operations could be materially impacted. F- 9 Sale of Travel, Vacation and Merchandise The Company also derives revenue from transactions in which it sells complementary entertainment and travel offerings and consumer products on behalf of third-party merchants. Additional deals include discounted pricing at theaters, movies or other merchants. Customers purchase restaurant deals from the Company and redeem them with the Company’s merchant partners. Approximately 9 to 13 days each month the Company emails its customers offers for discounted experiences and products based on location and personal preferences. Consumers also access the Company’s deals directly through the Company’s websites and mobile applications. Those discounted experiences and products generally involve a customer’s purchase of a voucher through one of the Company’s websites that can be redeemed with a third-party merchant for services or goods (or for discounts on services and goods). Revenue from those transactions is reported on a net basis and equals the purchase price received from the customer for the voucher less an agreed upon portion of the purchase price paid by the Company to its partners. Advertising Revenues The Company also has agreements with selected third-party partners, such as Google Ads, wherein third-party website(s) and/or product(s) are shown or incorporated in the Company’s platform or website. The Company generates revenues based upon the number of times the third-party website(s) or product(s) are accessed or viewed by consumers from the Company’s platform or website. Revenue is recognized when its determinable, which is generally upon receipt of a statement and/or proceeds from the third-party partners. For the years ended December 31, 2022 and 2021, disaggregated revenue by the Company’s divisions and type of revenue is presented below. Schedule of Disaggregation of Revenue Sales Channels Restaurant Coupons Sale of Travel, Vacation and Merchandise Advertising Total Year Ended December 31, 2022 Business to consumer (B2C) $ 704,586 $ 363,281 $ 198,519 $ 1,266,386 Business to business (B2B) 3,148,377 - - 3,148,377 Other 29,832 - - 29,832 Total $ 3,882,795 $ 363,281 $ 198,519 $ 4,444,595 Year Ended December 31, 2021 Business to consumer (B2C) $ 867,465 $ 375,261 $ 182,503 $ 1,425,229 Business to business (B2B) 1,861,795 - - 1,861,795 Other 36,485 - - 36,485 Total $ 2,765,745 $ 375,261 $ 182,503 $ 3,323,509 Costs of Revenues Costs of revenues represents the costs incurred to generate Restaurant.com revenues and consists primarily of transaction fees and costs. F- 10 Advertising Costs The Company has marketing relationship agreements with various online companies such as portal networks, contextual sites, search engines and affiliate partners. Advertising costs are generally charged to the Company monthly per vendor agreements, which typically are based on visitors and/or registrations delivered to the site or at a set fee. Agreements do not provide for guaranteed renewal and may be terminated by the Company without cause. Such advertising costs are charged to expense as incurred and included in selling, general and administrative expenses in the statements of operations. During the years ended December 31, 2022 and 2021, advertising costs were $ 485,531 and $ 601,941 , respectively. Accounts Receivable Trade accounts receivable are recorded at the invoiced amount and do not bear interest. The Company maintains an allowance for doubtful accounts to reflect the Company’s best estimate of the amount of probable credit losses in its existing accounts receivable as a result of the inability of its customers to make required payments for products. Accounts with known financial issues are first reviewed and specific estimates with respect to their collectability are recorded. The remaining accounts receivable balances are then grouped into categories by the number of days the balance is past due, and the estimated loss is calculated as a percentage of the total category based upon past history. Account balances are charged off against the allowance when it is probable that the receivable will not be recovered. There was no allowance for doubtful accounts recognized as of December 31, 2022 and 2021. Earnings (Loss) Per Share Basic earnings (loss) per share is computed using the weighted average number of common shares issued and outstanding during the period. Diluted earnings (loss) per share is computed using the weighted average number of common shares and the dilutive effect of contingent shares outstanding during the period. Potentially dilutive contingent shares, which primarily consist of convertible notes and stock issuable upon the exercise of stock options and warrants, have been excluded from the calculation of diluted loss per share because their effect is anti-dilutive. Loss per common share is computed by dividing net loss by the weighted average number of shares of common stock issued and outstanding during the respective periods. Basic and diluted loss per common share was the same for all periods presented because all convertible notes and stock issuable upon the exercise of stock options and warrants outstanding were anti-dilutive. At December 31, 2022 and 2021, the Company excluded the outstanding convertible debt and securities summarized below, which entitle the holders thereof to acquire shares of common stock, from its calculation of earnings per share, as their effect would have been anti-dilutive. Schedule of Anti- dilutive Securities Excluded from Computation of Earning Loss Per Share December 31, 2022 2021 Convertible notes payable 24,758 19,286 Common stock issuable 383,343 383,343 Common stock warrants - 20,667 Common stock options 648,116 187,116 Total 1,056,217 610,412 The issuable and potentially issuable shares as summarized above do not include any shares that may be issuable upon the conversion of an unsecured promissory note in the principal amount of $1,500,000 that matures on March 1, 2023 (see Note 7), as such promissory note is convertible at the option of the Company into common shares at a price to be determined on the date of conversion. These potentially issuable common shares would have been anti-dilutive because the Company had a net loss for the years ended December 31, 2022 and 2021, and thus such shares would have been excluded from the calculation of net loss per share. F- 11 Income Taxes The Company accounts for income taxes under an asset and liability approach for financial accounting and reporting for income taxes. Accordingly, the Company recognizes deferred tax assets and liabilities for the expected impact of differences between the financial statements and the tax basis of assets and liabilities. The Company records a valuation allowance to reduce its deferred tax assets to the amount that is more likely than not to be realized. In the event the Company was to determine that it would be able to realize its deferred tax assets in the future in excess of its recorded amount, an adjustment to the deferred tax assets would be credited to operations in the period such determination was made. Alternatively, should the Company determine that it would not be able to realize all or part of its deferred tax assets in the future, an adjustment to the deferred tax assets would be charged to operations in the period such determination was made. As the Company’s net operating losses in the respective jurisdictions in which it operates have yet to be utilized, all previous tax years remain open to examination by the taxing authorities in which the Company currently operates. The Company had no unrecognized tax benefits as of December 31, 2022 and does not anticipate any material amount of unrecognized tax benefits within the next 12 months. The Company accounts for uncertainties in income tax law under a comprehensive model for the financial statement recognition, measurement, presentation and disclosure of uncertain tax positions taken or expected to be taken in income tax returns as prescribed by GAAP. The tax effects of a position are recognized only if it is “more-likely-than-not” to be sustained by the taxing authority as of the reporting date. If the tax position is not considered “more-likely-than-not” to be sustained, then no benefits of the position are recognized. As of December 31, 2022, the Company had not recorded any liability for uncertain tax positions. In subsequent periods, any interest and penalties related to uncertain tax positions will be recognized as a component of income tax expense. The Company is currently delinquent with respect to certain of its U.S. federal and state income tax filings. Cash The Company’s policy is to maintain its cash balances with financial institutions with high credit ratings and in accounts insured by the Federal Deposit Insurance Corporation (the “FDIC”). The Company may periodically have cash balances in financial institutions in excess of FDIC insurance limits of $ 250,000 . The Company has not experienced any losses to date resulting from this practice. Operating Segments Management has determined that the Company has one operating segment. The Company’s reporting segment reflects the manner in which its chief operating decision maker reviews results and allocates resources. The Company’s reporting segment meets the definition of an operating segment and does not include the aggregation of multiple operating segments. In reaching such a conclusion management evaluated the Company’s reporting units by first identifying its operating segments. The Company then evaluated each operating segment to determine if it includes one or more components that constitute a business. If there are components within an operating segment that meet the definition of a business, the Company evaluates those components to determine if they must be aggregated into one or more reporting units. If applicable, when determining if it is appropriate to aggregate different operating segments, the Company determines if the segments are economically similar and, if so, the operating segments are aggregated. Recent Accounting Pronouncements In June 2016, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”) 2016-13, Credit Losses (Topic 326) – Measurement of Credit Losses on Financial Instruments (“ASC 2016-13”). ASU 2016-13 requires entities to use a forward-looking approach based on current expected credit losses to estimate credit losses on certain types of financial instruments, including trade receivables, which may result in the earlier recognition of allowance for losses. ASU 2016-13 is effective beginning January 1, 2023 and early adoption is permitted. The adoption of ASU 2016-13 is not expected to have any impact on the Company’s consolidated financial statement presentation or disclosures. F- 12 In May 2021, the FASB issued ASU 2021-04, Earnings Per Share (Topic 260), Debt — Modifications and Extinguishments (Subtopic 470-50), Compensation — Stock Compensation (Topic 718), and Derivatives and Hedging — Contracts in Entity’s Own Equity (Subtopic 815-40): Issuer’s Accounting for Certain Modifications or Exchanges of Freestanding Equity-Classified Written Call Options (“ASU 2021-04”). ASU 2021-04 provides guidance as to how an issuer should account for a modification of the terms or conditions or an exchange of a freestanding equity-classified written call option (i.e., a warrant) that remains equity classified after modification or exchange as an exchange of the original instrument for a new instrument. An issuer should measure the effect of a modification or exchange as the difference between the fair value of the modified or exchanged warrant and the fair value of that warrant immediately before modification or exchange and then apply a recognition model that comprises four categories of transactions and the corresponding accounting treatment for each category (equity issuance, debt origination, debt modification, and modifications unrelated to equity issuance and debt origination or modification). ASU 2021-04 is effective for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years. An entity should apply the guidance provided in ASU 2021-04 prospectively to modifications or exchanges occurring on or after the effective date. Early adoption is permitted, including adoption in an interim period. If an entity elects to early adopt ASU 2021-04 in an interim period, the guidance should be applied as of the beginning of the fiscal year that includes that interim period. The adoption of ASU 2021-04 is not expected to have any impact on the Company’s consolidated financial statement presentation or disclosures. In October 2021, the FASB issued ASU 2021-08, Business Combinations (Topic 805) – Accounting for Contract Assets and Contract Liabilities from Contracts with Customers (“ASU 2021-08”). ASU 2021-08 requires that an entity recognize and measure contract assets and contract liabilities acquired in a business combination as if it had originated the contracts. This is a shift from existing guidance, which required the acquirer to recognize contract assets and contract liabilities at their fair value as of the acquisition date. ASU 2021-08 is effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. An entity should apply the guidance provided by ASU 2021-08 prospectively to business combinations occurring on or after January 1, 2023. Early adoption of ASU 2021-08 is permitted, including adoption in an interim period. An entity that early adopts the guidance in an interim period should apply the amendments (1) retrospectively to all business combinations for which the acquisition date occurs on or after the beginning of the fiscal year that includes the interim period of early application and (2) prospectively to all business combinations that occur on or after the date of initial application. The adoption of ASU 2021-08 is not expected to have any impact on the Company’s consolidated financial statement presentation or disclosure. Management does not believe that any other recently issued, but not yet effective, authoritative guidance, if currently adopted, would have a material impact on the Company’s financial statement presentation or disclosures. 3. Acquisitions GameIQ On January 31, 2022, the Company, through its newly formed Delaware subsidiary, GameIQ Acquisition Corp., Inc., entered into an Agreement and Plan of Merger (the “Merger Agreement”) with GameIQ, a California corporation, that is a developer of consumer gamification technologies for retail businesses. Under the terms of the Merger Agreement, the Company agreed to issue 600,000 restricted shares of its common stock with a fair value of $ 300,000 and issued promissory notes totaling $ 140,914 , bearing interest at 1 % per annum, payable in nine equal biannual installments, with the first installment due on the nine-month anniversary of the Closing Date as that term is defined in the Merger Agreement. The Merger Agreement closed on February 28, 2022. The closing price of the Company’s common stock was $ 0.50 per share on both January 31, 2022 and February 28, 2022. The Company accounted for the acquisition as a business combination in accordance with ASC 805, Business Combinations. The Company has also determined that the acquisition does not qualify as significant acquisition under the guidance of SEC S-X Rules 3-05 and 1-02. F- 13 The following allocation of the purchase price was determined by the Company’s management. The Company determined that the entire purchase price be allocated to acquired software and technology. The following table summarizes the assets acquired, liabilities assumed and the purchase price allocation: Schedule of Fair Value of Assets Acquired and Liabilities Assumed Fair Value Consideration paid: Notes payable $ 140,914 Government assistance note payable and accrued interest (EIDL) 15,400 Common stock ( 600,000 shares of common stock at $ 0.50 per share) 300,000 Total consideration paid $ 456,314 Purchase price allocation Acquired assets (cash) $ 12,805 Acquired software and technology 443,509 Total purchase price $ 456,314 The Company estimated that the recorded intangible assets had a two-year estimated life and are subject to amortization. During the year ended December 31, 2022, the company recorded amortization expense of $ 184,795 . As of December 31, 2022, management determined there was an of impairment of its remaining intangible assets and charged its operations $ 258,714 for the write off of intangible assets. The following unaudited pro forma statements of operations present the Company’s pro forma results of operations after giving effect to the purchase of GameIQ based on the historical financial statements of the Company and GameIQ. The unaudited pro forma statements of operations for the years ended December 31, 2022 and 2021 give effect to the transaction as if it had occurred on January 1, 2021. Schedule of Pro Forma Statements of Operations 2022 2021 Years Ended December 31, 2022 2021 (Proforma, unaudited) (Proforma, unaudited) Revenues $ 4,449,166 $ 3,358,162 Operating expenses Direct cost of revenues 826,137 399,672 Selling, general and administrative expenses 5,480,156 7,536,523 Impairment of acquired software and technology 258,714 570,030 Amortization of intangible assets 221,755 845,755 Total operating expenses 6,786,762 9,351,980 Loss from operations ( 2,337,596 ) ( 5,993,818 ) Other income Other income 1,008,322 516,472 Total Other income 1,008,322 516,472 Net loss $ ( 1,329,274 ) $ ( 5,477,346 ) F- 14 Pursuant to the provisions of ASC 805, the following results of operations of GameIQ subsequent to the acquisitions are as follows: Schedule of Provisions of Operations Subsequent Acquisitions March 1, 2022 to December 31, 2022 (unaudited) Revenues $ 12,514 Direct cost of revenues ( 15,335 ) Selling, general and administrative expense ( 14,930 ) Net loss $ ( 17,752 ) These amounts were included in the accompanying Consolidated Statement of Operations. 4. Deposit with Credit Card Processor The Company utilizes a third-party processor to serve as an end-to-end processor of credit and debit card and automated clearing house (“ACH”) payment transactions that focuses on processing omni-channel (internet, mobile, and point-of-sale) transactions and recurring billings for traditional retailers, government and utility, and service providers. The Company was required to place a security deposit in order to secure the third-party services. The security deposit does not bear interest and is refundable upon termination of the agreement. The outstanding security deposit was $ 87,237 as of December 31, 2022 and December 31, 2021. 5. Right-of-Use Assets and Operating Lease Liabilities The Company leases certain corporate office spaces under an operating lease agreement. Lease assets are presented as operating lease right-of-use assets and the related liabilities are presented as lease liabilities in the Company’s consolidated balance sheets. Operating lease right-of-use (“ROU”) assets and liabilities are recognized at the commencement date based on the present value of lease payments over the lease term. ROU assets represent the Company’s right to use an underlying asset for the lease term, and lease liabilities represent the Company’s obligation to make lease payments arising from the lease. Generally, the implicit rate of interest in lease arrangements is not readily determinable and the Company utilizes its incremental borrowing rate in determining the present value of lease payments. The Company’s incremental borrowing rate is a hypothetical rate based on its understanding of what its credit rating would be. The operating lease ROU asset includes any lease payments made and excludes lease incentives. In September 2020, Restaurant.com signed a lease for its office located in Arlington Heights, Illinois. The lease has a term of 36 months and an average base rent of approximately $ 7,600 per month. The Company recorded a right-of-use asset and lease liability of $ 257,909 based upon the present value of all lease payments and a corresponding lease liability of $ 257,909 . In December 2022, the Company terminated its Arlington Heights, Illinois lease and recorded a reduction in a right-of-use asset and lease liability of $ 53,799 . Right-of-use asset activity consisted of the following during the years ended December 31, 2022 and 2021: Schedule of Right-of-use Asset Activity 2022 2021 Years Ended December 31, 2022 2021 Balance, beginning of period $ 219,739 $ 332,615 Additions - - Terminations ( 53,799 ) - Amortization ( 113,332 ) ( 112,876 ) Balance, end of period $ 52,608 $ 219,739 F- 15 Liabilities under operating lease obligations activity consisted of the following during the years ended December 31, 2022 and 2021: Schedule of Liabilities under Operating Leases Obligations Years Ended December 31, 2022 2021 Balance, beginning of period $ 222,096 $ 322,951 Additions - - Terminations ( 53,799 ) - Lease payments ( 108,969 ) ( 100,855 ) Balance, end of period 59,328 222,096 Less current portion ( 59,328 ) ( 110,499 ) Non-current portion $ - $ 111,597 Maturities of the Company’s operating lease liabilities are as follows as of December 31, 2022: Schedule of Maturities of Lease Liabilities Year Ending December 31: Amount 2023 $ 60,054 Less: Imputed interest ( 726 ) Total operating lease liability $ 59,328 6. Convertible Debt Assumed Upon Reverse Merger - Past Due Convertible debt assumed upon reverse merger consists of the following at December 31, 2022 and December 31, 2021: Schedule of Convertible Debt December 31 December 31, 2022 2021 Total principal balance $ 20,000 $ 20,000 Accrued interest 17,137 11,537 Total principal and accrued interest $ 37,137 $ 31,537 On November 5, 2018, the Company completed a merger agreement dated October 23, 2018 with Incumaker, Inc., whereby all of the shareholders of the Company exchanged their shares of common stock in exchange for shares of Incumaker, Inc. common stock. The merger was treated as a reverse merger and recapitalization of the Company for financial accounting purposes. In conjunction with the merger agreement with Incumaker, Inc., the Company assumed certain outstanding convertible notes payable. The notes payable had interest rates ranging from 8 % to 22 % per annum. At December 31, 2022 and December 31, 2021, the remaining convertible debt assumed in the transaction had a principal balance outstanding of $ 20,000 , and accrued interest payable of $ 17,137 and $ 11,537 , respectively. As of December 31, 2022, convertible debt assumed in the transaction, including accrued interest payable, was convertible at $ 1.50 per share into 24,758 shares of the Company’s common stock. 7. Acquisition Notes Payable Acquisition notes payable consists of the following at December 31, 2022 and December 31, 2021: Schedule of Acquisition Notes Payable December 31, December 31, 2022 2021 GameIQ acquisition note payable $ 127,778 $ - Restaurant.com acquisition note payable 1,500,000 1,500,000 Total principal balance 1,627,778 1,500,000 Accrued interest 252,194 162,300 Total principal and accrued interest 1,879,972 1,662,300 Less current portion ( 1,798,478 ) - Non-current portion $ 81,494 $ 1,662,300 F- 16 GameIQ Acquisition Note Payable On February 1, 2022, notes payable for the purchase of GameIQ was issued to two holders, one for $ 78,813 . and another for $ 62,101 . In accordance with Notes, RDE, Inc. promises to pay to the order of the Holders the principal amounts together with annual interest on the unpaid principal amount of 1 % computed on the basis of the actual number of days elapsed and a year of 365 days from the date of the Notes (the “Total Amount”), which shall be paid upon the earlier of (i) nine (6) equal biannual installments with the first installment due on the nine-month anniversary of February 1, 2022, and the final payment due February 1, 2025 (the “Maturity Date”). Notwithstanding any other provision of this Note, the Holders does not intend to charge, and the RDE, Inc. shall not be required to pay, any fees or charges in excess of the maximum permitted by applicable law; any payments in excess of such maximum shall be refunded to the RDE, Inc. or credited to reduce the principal hereunder. All payments received by the Holder will be applied first to costs of collection, if any, then the balance to the unpaid principal and interest. In the event of default, the notes to the holders are secured, in the manner that such payment to be made in cash or shares of the RDE, Inc.’s common stock at the election of the Holders. These Notes may be prepaid in whole or in part by the RDE, Inc. For purposes of clarity, if RDE’s payments to the Holders pursuant to (i) of the agreement, do not in the aggregate equal the Total Amount, the amount remaining owed to the Holders shall be paid to the Holders on or before the Maturity Date. During the year ended December 31, 2022, the Company made principal payments of $ 13,136 . As of December 31, 2022, the notes payable had an aggregate principal balance outstanding of $ 127,788 and accrued interest payable of $ 688 . Restaurant.com Note Payable Pursuant to the terms of the acquisition agreement with Restaurant.com, Inc. entered into on March 1, 2020, the Company executed an unsecured promissory note in the principal amount of $ 1,500,000 that matures on March 1, 2023 . The promissory note bears interest at a rate of 6 % per annum and is convertible at the option of the Company into common shares at a price to be determined on the date of conversion. As of December 31, 2022 and December 31, 2021, the note payable had a principal balance outstanding of $ 1,500,000 and accrued interest payable of $ 251,507 and $ 162,300 respectively. 8. Government Assistance Notes Payable Government Assistance Notes Payable consists of the following at December 31, 2022, and December 31, 2021: Schedule of Notes Payable December 31, December 31, 2022 2021 Paycheck Protection Loan $ - $ 1,025,535 Economic Injury/Disaster Loans 661,035 650,000 Total principal balance 661,035 1,675,535 Accrued interest 45,541 25,321 Total principal and accrued interest 706,576 1,700,856 Less current portion ( 15,217 ) ( 11,115 ) Non-current portion $ 691,359 $ 1,689,741 Paycheck Protection Note Payable On March 22, 2021, the Company received loan proceeds of $ 1,025,535 pursuant to the Paycheck Protection Program (2nd draw). The note payable was scheduled to mature in March 2026 , bears interest at the rate of 1 % per annum, and is subject to the terms and conditions applicable to loans administered by the SBA under the CARES Act. The loan and accrued interest payable are forgivable provided the Company uses the loan proceeds for eligible purposes, including payroll, benefits, rent and utilities, and maintains its payroll levels. F- 17 Effective February 28, 2022, the Company received formal notice that the note payable, including accrued interest of $ 9,743 , was forgiven. As a result, the gain from the forgiveness of the government assistance notes payable aggregating $ 1,025,535 was recognized in the statement of operations during the year ended December 31, 2022. Economic Injury Disaster Loans (EIDL): On June 17, 2020, the Company received $ 150,000 of proceeds applicable to loans administered by the SBA as disaster loan assistance under the Covid-19 Economic Injury Disaster Loan (EIDL) Program. On July 14, 2021, the Company received an additional $ 350,000 of proceeds pursuant to the loan. On July 21, 2020, the Company received $ 150,000 of proceeds applicable to loans administered by the SBA as disaster loan assistance under the Covid-19 EIDL Program. On January 31, 2022, the Company assumed an additional $ 14,500 EIDL, and accrued interest of $ 900 , as part of the consideration paid for the acquisition of GameIQ (see Note 3). 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. During the year ended December 31, 2022, the Company made principal payments of $ 3,465 . As of December 31, 2022, and December 31, 2021, the note payable had a principal balance outstanding of $ 661,035 and accrued interest payable of $ 45,541 and $ 25,321 respectively. 9. Stockholders’ Deficiency Preferred Stock The Company is authorized to issue a total of 10,000,000 shares of preferred stock, par value $ 0.001 per share. As of December 31, 2022 and 2021, there were no shares of preferred stock issued and outstanding. Common Stock The Company is authorized to issue a total of 750,000,000 shares of common stock, par value $ 0.001 per share. As of December 31, 2022 and 2021, the Company had 14,152,378 shares and 12,879,428 shares, respectively, of common stock issued, issuable and outstanding. Common Stock Transactions Issuance of Common Stock to Directors During the year ended December 31, 2022, the Company granted 720,000 of shares to members of the Company’s Board of Directors with a fair value of $ 360,000 or $ 0.50 per share. The shares vest over a two-year period from grant date. During the year ended December 31, 2022, the Company issued 240,000 of these shares of common stock with a fair value of $ 220,000 based upon its vesting term. As of December 31, 2022, the aggregate amount of unvested compensation related to this common stock was approximately $ 140,000 which will be recognized as an expense as the common shares vest in future periods through February 28, 2024. Issuance of Restricted Stock to Employees During the year ended December 31, 2022, the Company granted 150,500 shares of the Company’s restricted stock to employees with a fair value $ 75,250 or $ 0.50 per share. The share vest over a two-year period from grant date. During the year ended December 31, 2022, the Company issued 83,833 of these shares of restricted stock with a fair value of $ 55,620 based upon its vesting term. As of December 31, 2022, the aggregate amount of unvested compensation related to the restricted stock was approximately $ 19,630 which will be recognized as an expense as the restricted shares vest in future periods through February 28, 2024. F- 18 Issuance of Common Stock for Services During the year ended December 31, 2022, the Company issued 223,117 shares of common stock with an aggregate value of $ 230,508 to consultants for services rendered. During the year ended December 31, 2021, the Company issued 845,758 shares of common stock with an aggregate fair value of $ 2,164,000 to consultants for services rendered. Issuance of Common Stock for Acquisition of GameIQ During the year ended December 31, 2022, the Company issued 600,000 shares of common stock with a fair value of $ 300,000 , or $ 0.50 per share, as partial consideration paid on the acquisition of GameIQ (see Note 3). Issuance of Common Stock for Cash During the year ended December 31, 2022, the Company received proceeds of $ 250,000 , from the sale of 100,000 shares of common stock at a price of $ 2.50 per share. During the year ended December 31, 2021, the Company received proceeds of $ 1,958,466 , net of offering costs of $ 21,686 , from the sale of 805,346 shares of common stock at an average price of $ 2.46 per share. Issuance of Common Stock for Settlement of Vendor Balance During the year ended December 31, 2022, the Company issued 26,000 shares of common stock valued at $ 36,400 to extinguishment a vendor payable balance of $ 65,000 , and recorded a gain on vendor settlement of $ 28,600 , which was included in other income in the statement of operations during the year ended December 31, 2022. Issuance of Common Stock for Note Payable Extension During the year ended December 31, 2021, the Company issued 3,000 shares of common stock valued at $ 7,500 to a noteholder as an extension fee. Issuance of Common Stock for Legal Settlement During the year ended December 31, 2021, the Company issued 8,000 shares of common stock with an aggregate fair value of $ 9,000 in a legal settlement. Common Stock Warrants A summary of common stock warrant activity for the years ended December 31, 2022 and 2021 is presented below. Summary of Stock Warrants Number of Shares Weighted Average Exercise Price Warrants outstanding at December 31, 2020 54,000 $ 8.07 Issued - - Exercised - - Expired ( 33,333 ) 7.50 Warrants outstanding at December 31, 2021 20,667 9.00 Issued - - Exercised - - Expired ( 20,667 ) 9.50 Warrants outstanding at December 31, 2022 - $ - At December 31, 2022, the Company had no outstanding exercisable warrants. F- 19 10. Stock-Based Compensation The Company issues common stock and stock options as incentive compensation to directors and as compensation for the services of employees, contractors and consultants of the Company. The fair value of a stock option award is calculated on the grant date using the Black-Scholes option-pricing model. The risk-free interest rate is based on the U.S. Treasury yield curve in effect as of the grant date. The expected dividend yield assumption is based on the Company’s expectation of dividend payouts and is assumed to be zero. The expected volatility is based on the historical volatility of the Company’s common stock, calculated utilizing a look-back period approximately equal to the contractual life of the stock option being granted. The expected life of the stock option is calculated as the mid-point between the vesting period and the contractual term (the “simplified method”). The fair market value of the common stock is determined by reference to the quoted market price of the common stock on the grant date. For stock options requiring an assessment of value during the year ended December 31, 2022, the fair value of each stock option award was estimated using the Black-Scholes option-pricing model with the following assumptions: Schedule of Valuation Assumption of Stock Option Risk-free interest rate 1.81 % Expected dividend yield 0 % Expected volatility 270.00 % Expected life 4.5 years For stock options requiring an assessment of value during the year ended December 31, 2021, the fair value of each stock option award was estimated using the Black-Scholes option-pricing model with the following assumptions: Risk-free interest rate 0.89 % Expected dividend yield 0 % Expected volatility 309.92 % to 366.13 % Expected life 3 to 5 years On February 28, 2022, the Company, pursuant to the terms of its 2019 Stock Incentive Plan, approved options with a fair value of $ 243,000 , exercisable into 461,000 shares to be issued to its employees. Of the 461,000 stock options issued, 60,000 stock options had an exercise price of $ 1.00 per share, with vesting of 33 % on date of issuance, and then 33 % on each subsequent anniversary date. The remaining 400,000 stock options had an exercise price of $ 1.50 per share, with 160,000 stock options vesting on March 1, 2022, and 10,000 stock options vesting each month thereafter beginning on April 1, 2022. On January 27, 2021, the Company, the Company entered into an Advisory Agreement for consultation and advice with respect to procuring restaurants/chefs for the Restaurant.com business platform and other services and product deals. In connection with the agreement, the Company granted fully-vested stock options to purchase 100,000 shares of the Company’s common stock, exercisable for a period of three years from the date of grant at $ 3.50 per share. The fair value of these stock options, as calculated pursuant to the Black-Scholes option-pricing model, was determined to be $ 287,883 ($ 2.88 per share), which was charged to operations on that date. On March 15, 2021, the Company entered into an Advisory Agreement for service on the Company’s Advisor Board for a term of approximately two years . In connection with the agreement, the Company granted stock options to purchase 50,000 shares of the Company’s common stock, vesting 25,000 shares on the grant date and 25,000 shares on June 15, 2021, exercisable for a period of five years from the date of grant at $ 2.50 per share. The fair value of these stock options, as calculated pursuant to the Black-Scholes option-pricing model, was determined to be $ 149,994 ($ 3.00 per share), of which $ 74,997 was attributable to the stock options fully-vested on March 21, 2021 and was therefore charged to operations on that date. The remaining unvested portion of the fair value of the stock options was charged to operations ratably from March 16, 2021 through June 15, 2021. During the year ended December 31, 2021, the Company recorded a charge to operations of $ 149,994 , with respect to these stock options. F- 20 A summary of stock option activity for the years ended December 31, 2022 and 2021 is presented below: Summary of Stock Option Activity Weighted Number Average of Exercise Options Price Stock options outstanding at December 31, 2020 37,116 50.93 Granted 150,000 2.83 Exercised - - Expired or forfeited - - Stock options outstanding at December 31, 2021 187,116 12.38 Granted 461,000 1.43 Exercised - - Expired or forfeited - - Stock options outstanding at December 31, 2022 648,116 $ 4.59 Stock options exercisable at December 31, 2022 472,291 $ 5.77 During the year ended December 31, 2022 and 2021, the Company recognized $ 156,718 and $ 437,877 of compensation expense relating to vested stock options. As of December 31, 2022, the aggregate amount of unvested compensation related to stock options was approximately $ 86,303 which will be recognized as an expense as the options vest in future periods through February 28, 2024. The weighted average remaining contractual life of common stock options outstanding and exercisable at December 31, 2022 was 6.32 years. Based on a fair market value of $ 1.42 per share on December 31, 2022, the intrinsic value attributed to exercisable but unexercised common stock options was $ 36,995 at December 31, 2022. The exercise prices of common stock options outstanding and exercisable at December 31, 2022 are as follows: Schedule of Options Summarized by Exercise Price Exercise Prices Options Outstanding (Shares) Options Exercisable (Shares) $ 1.00 61,000 35,179 $ 1.05 32,000 32,000 $ 1.50 400,000 250,000 $ 2.50 50,000 50,000 $ 3.00 100,000 100,000 $ 363.17 5,116 5,116 648,116 472,291 11. Commitments and Contingencies Legal Proceedings From time to time the Company may be named in claims arising in the ordinary course of business. Currently, there are no such legal proceedings that are pending against the Company or that involve the Company that, in the opinion of management, could reasonably be expected to have a material adverse effect on the Company’s business or financial condition, other than the following. F- 21 On April 17, 2019, a lawsuit was filed by Dupree Productions, LLC against uBid Holdings, Inc. and Ketan Thakker (Case No. L2019000436) in the Circuit Court of DuPage County, Illinois, alleging that a Partial Equity Payment Agreement dated August 1, 2016, which was intended to compensate services in the amount of $ 60,000 in return for shares of uBid common stock, was inadequate to compensate for the alleged higher value of advertising and endorsement services of approximately $ 195,000 . The case was dismissed on the basis that there was a binding arbitration clause in the Partial Equity Payment Agreement. On February 3, 2021, the arbitrator awarded DuPree Productions $ 195,000 , and $ 24,000 in attorneys’ fees, which was included in accrued expenses in the consolidated balance sheets as of December 31, 2021. The Company filed an appeal of the arbitrator’s award. On January 28, 2022, a final settlement of $ 150,000 was reached, which was paid on May 9, 2022. Since final settlement was $ 69,000 less than the amount accrued by the Company, a gain on legal settlement of $ 69,000 was recognized in the statements of operations during the year ended December 31, 2022. 12. Income Taxes Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of the Company’s deferred tax assets as of December 31, 2022 and 2021 are summarized below. Schedule of Deferred Tax Assets and Liabilities 2022 2021 December 31, 2022 2021 Net operating loss carryforwards $ 11,779,000 $ 10,483,000 Valuation allowance ( 11,779,000 ) ( 10,483,000 ) Net deferred tax assets $ — $ — In assessing the potential realization of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will be realized. The ultimate realization of deferred tax assets is dependent upon the Company attaining future taxable income during the periods in which those temporary differences become deductible. As of December 31, 2022 and 2021, management was unable to determine if it is more likely than not that the Company’s deferred tax assets will be realized and has therefore recorded an appropriate valuation allowance against deferred tax assets at such dates. No federal tax provision has been provided for the years ended December 31, 2022 and 2021 due to the losses incurred during such periods. The reconciliation below presents the difference between the income tax rate computed by applying the U.S. federal statutory rate and the effective tax rate for the years ended December 31, 2022 and 2021. Schedule of Income Tax Effective Tax Rate 2022 2021 Years Ended December 31, 2022 2021 U. S. federal statutory tax rate ( 21.0 )% ( 21.0 )% State income taxes, net of federal tax benefit ( 6.0 )% ( 6.0 )% Tax-exempt Paycheck Protection Loan forgiveness ( 17.0 )% ( 2.7 )% Change in valuation allowance 44.0 % 29.7 % Effective tax rate 0.0 % 0.0 % At December 31, 2022, the Company has available net operating loss carryforwards for federal and state income tax purposes of approximately $ 39,700,000 federal net operating losses, if not utilized earlier, will begin to expire in the year ending December 31, 2030 , subject to Internal Revenue Service limitations, including change in ownership regulations. 13. Subsequent Events On March 1, 2023, the principal and interest balance of approximately $ 1,770,000 for the Restaurant.com acquisition note payable (see Note 7), was converted into 554,859 shares of the Company’s common stock, and the note was retired. F- 22 ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE Not applicable.