Rhino Digital, Inc. Publishes Audited 2024 Financials, Reveals Significant Developments and Merger Activity

Key Financial Highlights for 2024

• Net Loss Deepened: Rhino Digital, Inc. reported a net loss of \$16.34 million for the year ended December 31, 2024, compared to a net loss of \$6.19 million in 2023. Basic and diluted loss per share was \$(1.88) in 2024 (versus \$(9.86) in 2023), reflecting a significant increase in shares outstanding.
• Negative Cash Flow and Shareholders’ Deficit: The company had negative cash flows from operations (\$2.28 million outflow in 2024), a working capital deficit of \$9.5 million, and an accumulated deficit of \$32.1 million as of December 31, 2024.
• Going Concern Warning: The independent auditor emphasized material uncertainty about the company’s ability to continue as a going concern, citing recurring losses, negative cash flow, and substantial working capital and accumulated deficits. The company’s future is dependent on successful financing or a turnaround in operations.
• Balance Sheet Expansion: Total assets increased to \$2.87 million at year-end 2024 (up from \$1.06 million at 2023 year-end), driven mainly by the addition of \$1.99 million in bitcoin investments. Cash and cash equivalents decreased to \$781,000 at year-end 2024.
• Explosive Growth in Liabilities: Total liabilities surged to \$12.3 million (from \$4.39 million the year prior), largely due to a substantial increase in derivative liabilities (from \$2.02 million to \$8.18 million) and new convertible debt issuances. Shareholders’ deficit widened sharply to \$9.41 million.
• Significant Non-Cash Expenses and Gains: The company recorded several large non-cash items, including a \$7.84 million loss on modification of related-party notes, \$3.94 million loss on fair value of derivatives, and an unrealized gain of \$793,000 on bitcoin holdings.
• Impairment and Settlements: In 2023, the company recognized a \$1.06 million impairment related to its Wallex, Inc. acquisition. In 2024, it realized a \$50,000 gain on settlement of related payables and \$1.16 million in gains from settlement/redemption of related-party notes.

Merger and Corporate Restructuring Updates (2025)

• Reverse Merger and Recapitalization: On August 19, 2025, Rhino Digital completed a reverse merger with Phoenix Plus Corp. The merger terms included:
  • Conversion of each share of Rhino common stock into two shares of the public company.
  • Conversion of Rhino Series A Preferred Stock into 200,000 shares of new Series A Preferred Stock with substantially identical terms (including super-voting rights and priority dividends).
  • All Rhino convertible notes converted into common shares at pre-set conversion prices (\$0.18 or \$0.25).
  • All options to purchase Rhino shares converted into options for the public company at equivalent terms.
  • Cancellation of over 6.2 million shares previously owned by selling shareholders, reducing public float and potentially increasing per-share value.
• Change in Management Control: The sole officer and director of Phoenix Plus resigned, and Rhino’s CEO, Lyle Hauser, became CEO, president, secretary, and director of the merged entity. This consolidates control under Rhino’s existing leadership.
• Issuance of Super-Voting Preferred Stock: 200,000 Series A Preferred shares (owned by The Vantage Group, controlled by Lyle Hauser) now confer 51% of total voting power, a \$3.00 stated value, and a 4.44x conversion ratio into common stock. These shares also have priority in liquidation and dividends.
• New Financing Rounds: Throughout 2025 and early 2026, the company raised significant capital through private placements, selling common shares at \$0.50 and \$1.00 per share, indicating strong investor interest and potentially supporting liquidity and operations.
• Convertible Debenture Backed by Bitcoin: On December 30, 2025, the company borrowed 10 Bitcoins via an 18% secured convertible debenture, with an obligation to repay 12.5 Bitcoins in one year. The loan is secured by the company’s Bitcoin holdings and is convertible into common stock at \$0.36 per share, adding both leverage and potential dilution risk.
• Significant Option Exercises: In September 2025, a holder exercised 1,000,000 options on a cashless basis, converting to 1,889,231 shares (post-exchange ratio), which may affect the float and share price dynamics.

Other Notable Corporate Developments

• Bitcoin Investment: The company purchased approximately 21.4 Bitcoins for \$1.2 million in 2024, recognizing an unrealized gain of \$793,000 by year-end as Bitcoin prices appreciated. Bitcoin is a material part of the balance sheet and exposes the company to cryptocurrency price volatility.
• Expansion in Stock-Based Compensation: In 2024, the company issued over 5 million options and significant equity awards to consultants and management, including 1 million options granted to CEO Lyle Hauser. These non-cash compensation awards are dilutive to existing shareholders.
• Related Party Transactions: The company has extensive related party dealings, including forgiven salaries, dividends, and note conversions involving the CEO and his affiliates. These actions reduced liabilities but highlight a high degree of insider participation and influence.
• Convertible Notes and Derivative Liabilities: New convertible notes issued in 2024 and 2025 are deeply “in the money,” resulting in large derivative liabilities on the balance sheet. These can create significant future dilution and accounting volatility based on share price movements.
• Impairment of Acquired Assets: The company wrote off the \$1.06 million purchase price of the Wallex, Inc. customer list in 2023, as delays in software deployment prevented revenue generation. Subsequently, a \$50,000 settlement extinguished the acquisition liability, resulting in a gain.
• Operating Leases and International Expansion: In October 2024, the company leased a facility in El Salvador for 18 months at \$6,000/month, supporting international operations and future growth ambitions.
• Tax Attributes: The company has approximately \$5.54 million in net operating loss carryforwards, but maintains a full valuation allowance against deferred tax assets, reflecting uncertainty about future profitability.
• Reverse Stock Split: On April 5, 2024, Rhino Digital enacted a 36-to-1 reverse stock split, dramatically reducing the number of shares outstanding and potentially increasing the share price, but also highlighting the company’s restructuring efforts.

Risks and Considerations for Shareholders

• Substantial Doubt About Going Concern: The auditor’s opinion points to a material risk that the company may not be able to continue operations without additional financing or a significant improvement in operating results.
• Highly Dilutive Capital Structure: The company’s heavy reliance on convertible notes, large option and warrant grants, and significant preferred stock with super-voting rights may lead to ongoing dilution for common shareholders.
• Cryptocurrency Exposure: With a major portion of the company’s assets in Bitcoin, the company’s balance sheet and earnings are exposed to extreme volatility in cryptocurrency markets, which can materially affect reported results and share value.
• Insider Control and Related Party Transactions: The CEO and his affiliates hold super-voting preferred shares and have participated in major debt and equity transactions, giving them effective control over the company’s direction.
• Recent and Ongoing Capital Raises: The company’s ability to attract new capital at increasing prices (from \$0.50 to \$1.00 per share) may support liquidity and investment in growth, but the impact on per-share value will depend on how efficiently new funds are deployed.
• Potential for Share Price Movement: The combination of a reverse merger, reverse stock split, multiple new equity issuances, and ongoing recapitalization efforts are all events likely to be highly price sensitive and could drive significant volatility in Rhino Digital’s share price.

Conclusion

Rhino Digital, Inc. is undergoing substantial restructuring and recapitalization, with a focus on Bitcoin-related financial services and aggressive capital raising. While the company’s financial condition is precarious, recent financing, merger activity, and expansion into new markets could represent a turning point if managed successfully. However, substantial risks remain, including ongoing losses, dilution, and the volatility of its Bitcoin holdings.

Disclaimer: This article is for informational purposes only and does not constitute investment advice. Investors should conduct their own due diligence and consult with professional advisors before making any investment decisions. Rhino Digital, Inc. is a high-risk, speculative investment with significant uncertainties regarding its financial condition, operations, and future prospects.

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