UNITEDSTATES
SECURITIESAND EXCHANGE COMMISSION
Washington,D.C. 20549
FORM
(MarkOne)
Forthe quarterly period ended
OR
Forthe transition period from ___________ to ____________
CommissionFile Number
(Exactname of registrant as specified in its charter)
| (State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
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(ZIPCode)
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Securitiesregistered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
| The |
Indicateby check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities ExchangeAct of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2)has been subject to such filing requirements for the past 90 days.
Indicateby check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or such shorter period that the registrant wasrequired to submit such files).
Indicateby check mark whether the registrant is a large, accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reportingcompany, or an emerging growth company. See the definitions of “large, accelerated filer,” “accelerated filer,”“smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large, accelerated filer | ☐ | Accelerated filer | ☐ | |
| ☒ | Smaller reporting company | |||
| Emerging growth company |
Ifan emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complyingwith any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act
Indicateby check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No
Indicatethe number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: There were shares of common stock outstanding as of August 6, 2025.
TABLEOF CONTENTS
| i |
CAUTIONARYNOTE CONCERNING FORWARD-LOOKING STATEMENTS
Certainstatements and information in this Quarterly Report on Form 10-Q for the quarter ended June 30, 2025 (the “Quarterly Report”)may constitute “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended (the“Securities Act”), Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and thePrivate Securities Litigation Reform Act of 1995. All statements, other than statements of historical facts, which address activities,events, or developments that we expect or anticipate will or may occur in the future, including such things as future capital expenditures,growth, product development, sales, business strategy, statements related to any further expected effects on our business from the coronavirus(“COVID-19”) pandemic, inflation, the Russia-Ukraine conflict, and other similar matters are forward-looking statements.In some cases, you can identify forward-looking statements by terminology such as “may,” “will,” “should,”“expect,” “plan,” “anticipate,” “believe,” “estimate,” “predict,”“potential,” or “continue,” or other comparable terminology. These forward-looking statements are based largelyon our current expectations and assumptions and are subject to a number of risks and uncertainties, many of which are beyond our control.These statements are subject to many risks, uncertainties, and other important factors that could cause actual future results to differmaterially from those expressed in the forward-looking statements including, but not limited to, the continued duration and scope ofthe COVID-19 pandemic and any impact on the demand for our products; our ability to obtain needed raw materials and components from oursuppliers; additional actions governments, businesses, and individuals take in response to the pandemic, including mandatory businessclosures and restrictions on onsite commercial interactions; the impact of the pandemic and actions taken in response to the pandemicon global and regional economies and economic activity; the pace of recovery when the COVID-19 pandemic subsides; general economic uncertaintyin key global markets and a worsening of global economic conditions or low levels of economic growth; the effects of steps that we couldtake to reduce operating costs; our inability to sustain profitable sales growth, or reduce our costs to maintain competitive pricesfor our products; circumstances or developments that may make us unable to implement or realize the anticipated benefits, or that mayincrease the costs, of our current and planned business initiatives; and those factors detailed by us in our public filings with theSecurities and Exchange Commission (the “SEC”), including in Item 1A, Risk Factors, in our Annual Report on Form 10-K forthe year ended December 31, 2024. In light of these risks and uncertainties, all of the forward-looking statements made herein are qualifiedby these cautionary statements and there can be no assurance that the actual results or developments anticipated by us will be realized.We undertake no obligation to update or revise any of the forward-looking statements contained herein.
| ii |
PARTI. FINANCIAL INFORMATION
Item1. Financial Statements
GIFTIFY,INC. AND SUBSIDIARIES
CONDENSEDCONSOLIDATED BALANCE SHEETS
| As of | ||||||||
June 30, 2025 | December 31, 2024 | |||||||
| (Unaudited) | ||||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents (includes restricted cash of $ | $ | $ | ||||||
| Accounts receivable | ||||||||
| Inventories | ||||||||
| Prepaid expenses and other current assets | ||||||||
| Total current assets | ||||||||
| Property and equipment, net | ||||||||
| Operating lease right of use asset, net | ||||||||
| Deposits | ||||||||
| Intangible assets, net | ||||||||
| Goodwill | ||||||||
| Total assets | $ | $ | ||||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | $ | ||||||
| Accrued expenses | ||||||||
| Customer deposits | ||||||||
| Deferred revenue | ||||||||
| Secured revolving line of credit | ||||||||
| Convertible promissory notes | ||||||||
| Secured notes payable — related party, net of debt discount of $ | ||||||||
| Notes payable, current portion, net of debt discount of $ | ||||||||
| Operating lease liability, current portion | ||||||||
| Total current liabilities | ||||||||
| Notes payable, net of current portion | ||||||||
| Deferred income taxes | ||||||||
| Operating lease liability, net of current portion | ||||||||
| Total liabilities | ||||||||
| Commitments and contingencies | ||||||||
| Stockholders’ equity: | ||||||||
| Preferred stock, $ par value, shares authorized; | ||||||||
| Common stock, $ par value, shares authorized; and shares issued and outstanding at June 30, 2025 and December 31, 2024, respectively | ||||||||
| Additional paid-in-capital | ||||||||
| Common stock issuable, and shares, respectively | ||||||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Total stockholders’ equity | ||||||||
| Total liabilities and stockholders’ equity | $ | $ | ||||||
Theaccompanying notes are an integral part of these consolidated financial statements.
| F-1 |
GIFTIFY,INC. AND SUBSDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
Forthe Three and Six Months Ended June 30, 2025 and 2024
(Unaudited)
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
| 2025 | 2024 | 2025 | 2024 | |||||||||||||
| Net Sales | $ | $ | $ | $ | ||||||||||||
| Cost of sales | ||||||||||||||||
| Gross profit | ||||||||||||||||
| Operating expenses | ||||||||||||||||
| Selling, general and administrative expenses | ||||||||||||||||
| Amortization of capitalized software costs | ||||||||||||||||
| Amortization of intangible assets | ||||||||||||||||
| Total operating expenses | ||||||||||||||||
| Loss from operations | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Other income (expenses) | ||||||||||||||||
| Interest income | ||||||||||||||||
| Interest expense | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Total other income (expenses) | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Net loss before income taxes | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Income tax benefit | ||||||||||||||||
| Net loss | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Net earnings/(loss) per share – basic and diluted | $ | ) | $ | ) | $ | ) | $ | ) | ||||||||
| Weighted average common shares outstanding – basic and diluted | ||||||||||||||||
Theaccompanying notes are an integral part of these consolidated financial statements.
| F-2 |
GIFTIFY,INC. AND SUBSIDIARIES
CONDENSEDCONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
Forthe Three Months Ended June 30, 2025
| Common Stock | Common Stock Issuable | Additional Paid-In | Accumulated | Total Stockholders’ | ||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Capital | Deficit | Equity | ||||||||||||||||||||||
| Balance, March 31, 2025 | $ | $ | $ | $ | ( | ) | $ | |||||||||||||||||||||
| Fair value of vested options | - | - | ||||||||||||||||||||||||||
| Fair value of vested restricted stock | - | |||||||||||||||||||||||||||
| Fair value of common stock issued for services | - | |||||||||||||||||||||||||||
| Issuance of common stock for cash under at-the-market sale agreement, net | - | |||||||||||||||||||||||||||
| Fair value of shares issued on acquisition | - | |||||||||||||||||||||||||||
| Issuance of common stock for cash under private placement | - | |||||||||||||||||||||||||||
| Net loss | - | - | ( | ) | ( | ) | ||||||||||||||||||||||
| Balance, June 30, 2025 (Unaudited) | $ | $ | $ | $ | ( | ) | $ | |||||||||||||||||||||
Forthe Six Months Ended June 30, 2025
| Common Stock | Common Stock Issuable | Additional Paid-In | Accumulated | Total Stockholders’ | ||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Capital | Deficit | Equity | ||||||||||||||||||||||
| Balance, December 31, 2024 | $ | $ | $ | $ | ( | ) | $ | |||||||||||||||||||||
| Fair value of vested options | - | - | ||||||||||||||||||||||||||
| Fair value of vested restricted stock | - | |||||||||||||||||||||||||||
| Fair value of common stock issued for services | - | |||||||||||||||||||||||||||
| Fair value of common stock issued for vendor settlement | ||||||||||||||||||||||||||||
| Issuance of common stock for cash under at-the-market sale agreement, net | - | |||||||||||||||||||||||||||
| Fair value of shares issued on acquisition | - | |||||||||||||||||||||||||||
| Issuance of common stock for cash under stock purchase agreement, net | ||||||||||||||||||||||||||||
| Issuance of common stock for cash under public placement | - | |||||||||||||||||||||||||||
| Issuance of common stock for cash under private placement | - | |||||||||||||||||||||||||||
| Net loss | - | - | ( | ) | ( | ) | ||||||||||||||||||||||
| Balance, June 30, 2025 (Unaudited) | $ | $ | $ | $ | ( | ) | $ | |||||||||||||||||||||
| F-3 |
Forthe Three Months Ended June 30, 2024
| Common Stock | Common Stock Issuable | Additional Paid-In | Accumulated | Total Stockholders’ | ||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Capital | Deficit | Equity | ||||||||||||||||||||||
| Balance, March 31, 2024 | $ | $ | $ | $ | ( | ) | $ | |||||||||||||||||||||
| Fair value of vested options | - | - | ||||||||||||||||||||||||||
| Fair value of vested restricted stock | - | |||||||||||||||||||||||||||
| Common shares issued | ( | ) | ( | ) | ||||||||||||||||||||||||
| Issuance of common stock for cash | - | |||||||||||||||||||||||||||
| Net loss | - | - | ( | ) | ( | ) | ||||||||||||||||||||||
| Balance, June 30, 2024 (Unaudited) | $ | $ | $ | $ | ( | ) | $ | |||||||||||||||||||||
Forthe Six Months Ended June 30, 2024
| Common Stock | Common Stock Issuable | Additional Paid-In | Accumulated | Total Stockholders’ | ||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Capital | Deficit | Equity | ||||||||||||||||||||||
| Balance, December 31, 2023 | $ | $ | $ | $ | ( | ) | $ | |||||||||||||||||||||
| Fair value of vested options | - | - | ||||||||||||||||||||||||||
| Fair value of vested restricted stock | - | |||||||||||||||||||||||||||
| Issuance of common stock for services | - | |||||||||||||||||||||||||||
| Common shares issued on cashless exercise of stock options | ( | ) | ||||||||||||||||||||||||||
| Common shares issued | ( | ) | ( | ) | ||||||||||||||||||||||||
| Issuance of common stock for cash | - | |||||||||||||||||||||||||||
| Net loss | - | - | ( | ) | ( | ) | ||||||||||||||||||||||
| Balance, June 30, 2024 (Unaudited) | $ | $ | $ | $ | ( | ) | $ | |||||||||||||||||||||
| F-4 |
GIFTIFY,INC. AND SUBSDIARIES
CONDENSEDCONSOLIDATED STATEMENTS OF CASH FLOWS
Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | |||||||
| (Unaudited) | (Unaudited) | |||||||
| CASH FLOWS FROM OPERATING ACTIVITIES | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Adjustments to reconcile net loss to net cash provided by operating activities | ||||||||
| Fair value of vested stock options | ||||||||
| Fair value of vested restricted common stock | ||||||||
| Fair value of common stock issued for services | ||||||||
| Loss on fair value of common stock issued for settlement of vendor | ||||||||
| Depreciation of capitalized software costs | ||||||||
| Amortization of intangible assets | ||||||||
| Amortization of debt discount | ||||||||
| Accrued interest | ( | ) | ||||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts receivable | ||||||||
| Inventories | ( | ) | ||||||
| Prepaid expenses and other current assets | ( | ) | ( | ) | ||||
| Right of use assets | ||||||||
| Accounts payable | ( | ) | ( | ) | ||||
| Accrued expenses | ( | ) | ||||||
| Customer deposits | ( | ) | ||||||
| Deferred revenue | ( | ) | ||||||
| Deferred taxes | ( | ) | ||||||
| Operating lease liability | ( | ) | ( | ) | ||||
| Net cash provided by (used in) operating activities | ( | ) | ||||||
| CASH FLOWS FROM INVESTING ACTIVITIES | ||||||||
| Cash received on acquisition | ||||||||
| Capital expenditures | ( | ) | ||||||
| Net cash provided by (used in) investing activities | ( | ) | ||||||
| CASH FLOWS FROM FINANCING ACTIVITIES | ||||||||
| Proceeds from line of credit | ||||||||
| Repayment of line of credit | ( | ) | ( | ) | ||||
| Proceeds from note payable | ||||||||
| Repayment of notes payable | ( | ) | ||||||
| Repayment of notes payable – related party | ( | ) | ||||||
| Proceeds from sale of common stock, net of expenses, under at-the-market sale agreement | ||||||||
| Proceeds from sale of common stock, net of expenses, under stock purchase agreement | ||||||||
| Proceeds from public offering of common stock | ||||||||
| Proceeds from private offering of common stock | ||||||||
| Repayment of acquisition obligation | ( | ) | ||||||
| Proceeds from private placement of common stock | ||||||||
| Net cash provided by (used in) financing activities | ( | ) | ||||||
| Net increase (decrease) in cash and cash equivalents | ( | ) | ( | ) | ||||
| Cash and cash equivalents beginning of period | ||||||||
| Cash and cash equivalents end of period | $ | $ | ||||||
| SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION | ||||||||
| Interest paid | $ | $ | ||||||
| Taxes paid | $ | $ | ||||||
| NON-CASH INVESTING AND FINANCING ACTIVITIES | ||||||||
| Common shares issued for acquisition | $ | $ | ||||||
| Common shares issued for trade accounts payable | $ | $ | ||||||
| Accounts receivable from acquisition | $ | $ | ||||||
| Deposits from acquisition | $ | $ | ||||||
| Accounts payable from acquisition | $ | $ | ||||||
| Accrued expenses from acquisition | $ | $ | ||||||
| Operating lease right-of-use assets obtained in exchange for new operating lease liabilities | $ | $ | ||||||
Theaccompanying notes are an integral part of these condensed consolidated financial statements.
| F-5 |
GIFTIFY,INC. AND SUBSDIARIES
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For the Three and Six Months Ended June 30, 2025 and 2024
(Unaudited)
1.Organization and Basis of Presentation
Giftify,Inc. (the “Company” or “Giftify”) was formed in 2011. Since 2020, the Company, through its wholly-owned subsidiaryRestaurant.com, Inc., has been in the business of connecting digital consumers, businesses and communities with dining and merchant dealoptions throughout the United States.
InDecember 2023, the Company acquired CardCash Exchange Inc (“CardCash”, see Note 3). CardCash was formed in 2013 and purchasesmerchant gift cards and resells them at a markup.
InMay 2025, the Company acquired Takeout7 Inc (“Takeout7”, see Note 3). Takeout7 is a restaurant technology company offeringcomprehensive online ordering solutions through its TakeOut7 platform and AI-powered digital marketing services through its Platr platform.The acquisition of Takeout7 expands the Company’s technology offerings to include end-to-end solutions for independent restaurants.
OnSeptember 4, 2024, the Company’s Board of Directors approved and, by written consent dated September 5, 2024, the holders of amajority of our common stock approved an amendment to our Certificate of Incorporation to change the Company’s name from RDE, Inc.to Giftify, Inc. The change to Giftify, Inc. became effective on October 28, 2024. All references throughout this filing to RDE, Inc.have been changed to Giftify, Inc.
OnAugust 6, 2024, The Nasdaq Stock Market (“Nasdaq”) granted the Company’s application for listing on the Nasdaq.
Theaccompanying unaudited condensed consolidated financial statements have been prepared in conformity with accounting principles generallyaccepted in the United States of America (“GAAP”) pursuant to the applicable rules and regulations of the Securities andExchange Commission (“SEC”) for interim financial information. The unaudited condensed consolidated financial statementshave been prepared on the same basis as the Company’s annual financial statements for the year ended December 31, 2024, and, inthe opinion of management, reflect all adjustments, which consist of normal recurring adjustments, considered necessary for a fair presentationof the periods presented. The results of operations for the interim periods presented are not necessarily indicative of the results ofoperations to be expected for the full fiscal year ending December 31,2025. These unaudited condensed consolidated financial statementsshould be read in conjunction with the Company’s audited consolidated financial statements and accompanying notes included in theCompany’s Annual Report on Form 10-K for the fiscal year ended December 31, 2024, as filed with the SEC. The condensed consolidatedbalance sheet as of December 31, 2024 was derived from the audited consolidated financial statements as of that date, but does not includeall disclosures, including notes, required by GAAP.
Theunaudited condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries, Card CashExchange, Inc., Restaurant.com, Inc., and Takeout7, Inc. All intercompany balances and transactions have been eliminated in consolidation.
SubstantialDoubt about the Company’s Ability to Continue as a Going Concern
Theaccompanying financial statements have been prepared under the assumption that the Company will continue as a going concern. Inaccordance with the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”)205-40, Going Concern, the Company’s management has evaluated whether there are conditions or events that raisesubstantial doubt about its ability to continue as a going concern within one year after the date the accompanying financialstatements were issued. The Company has a history of reporting net losses and negative operating cash flows. These factors raisesubstantial doubt about the Company’s ability to continue as a going concern within one year of the date that the financialstatements are issued. In addition, the Company’s independent registered public accounting firm, in its report on theCompany’s consolidated financial statements for the year ended December 31, 2024, expressed substantial doubt about theCompany’s ability to continue as a going concern. The financial statements do not include any adjustments that might benecessary if the Company is unable to continue as a going concern.
| F-6 |
TheCompany’s ability to continue as a going concern is dependent upon its ability to raise additional debt or equity capital to fundits business activities and to ultimately achieve sustainable operating revenues and profitability. The Company has financed its workingcapital requirements through borrowings from various sources and the sale of its equity securities.
Asmarket conditions present uncertainty as to the Company’s ability to secure additional funds, there can be no assurances that theCompany will be able to secure additional financing on acceptable terms, as and when necessary to continue to conduct operations. Thereis also significant uncertainty as to the effect that the coronavirus may have on the Company’s business plans and the amount andtype of financing available to the Company in the future. If the Company is unable to obtain the cash resources necessary to satisfythe Company’s ongoing cash requirements, the Company could be required to scale back its business activities or to discontinueits operations entirely.
2.Significant Accounting Policies
Useof Estimates
Thepreparation of the Company’s financial statements in conformity with accounting principles generally accepted in the United Statesof America (“GAAP”) requires management to make certain estimates and assumptions that affect the reported amounts of assets,liabilities, revenues and expenses, and the disclosure of contingent assets and liabilities. Actual results could differ from those estimates.On an ongoing basis, management reviews its estimates and if deemed appropriate, those estimates are adjusted. Significant estimatesinclude those related to assumptions used in valuing inventories at net realizable value, assumptions used in valuing assets acquiredin business acquisitions, impairment testing of goodwill and other long-term assets, assumptions used in valuing stock-based compensation,accruals for potential liabilities, and assumptions used in the determination of the Company’s liquidity.
RevenueRecognition
The Company recognizes revenue in accordance withFASB ASC 606, Revenue from Contracts with Customers.
The Company buys merchant gift cards from the generalpublic and distributors at a discount and then resells them at a markup. The Company also generates revenue from the sale of discountcertificates for restaurants on behalf of third-party restaurants, online restaurant ordering fees, and monthly subscription fees forits restaurant marketing platform. Lastly, the Company recognizes revenue from the sale of Restaurant.com promotional gift cards (revenuerecognized based on the Company’s historical redemption rates of its promotional gift cards), the sale of travel, vacation, andmerchandise on behalf of third-party merchants (revenue reported on a net basis equal to the purchase price received from the customerless a portion of the purchase price paid by the Company to its merchant partners), and advertising revenue for 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(revenue recognized when its determinable, which is generally upon receipt of a statement and/or proceeds from the third-party partners).
Certain customers may receive incentives, which areaccounted for as variable consideration. Provisions for sales returns are recognized in the period when the sales are recorded based uponthe Company’s prior experience and current trends. These revenue reductions are established by the Company based upon management’sbest estimates at the time of sale, utilizing historical trends, and adjusted to reflect known changes in the factors that impact suchreserves and allowances, and the terms of agreements with customers.
Amounts billed and due from the Company’s customersare classified as accounts receivable on the balance sheet. Amounts received in advance from customers are recorded as deferred revenueon the balance sheet until the performance obligations have been satisfied. The Company has elected to apply the practical expedient tonot assess contracts for significant financing components because the period between the receipt of advance payment and the Company’stransfer of services to the customer is less than one year.
It is necessary to determine whether theCompany is acting as a principal or an agent in revenue-generating arrangements.
Principal vs. Agent Considerations
| · | Principal: As a principal in a transaction, the Company controls the specified good or service before transferring it to the customer. This means the Company is primarily responsible for fulfilling the promise to the customer, has inventory risk (if applicable), and has discretion in establishing the price. In such cases, revenue is recognized on a gross basis. This means recording the total amount of consideration received from the customer as revenue, with a corresponding cost for any amounts paid to other parties involved in providing the goods or services. | |
| · | Agent: As an agent, the Company does not control discounted gift cards, and its role is to arrange for its distributors to deliver discounted gift cards to our customers. In these instances, revenue is recognized on a net basis. This reflects only the fee or commission the company retains from the transaction. |
Impact of Gross vs. Net Recognitionon Financial Performance
Determiningwhether the Company is a principal or an agent has a significant impact on reported revenue and gross profit percentages. For example,when the Company’s role is solely to act as an agent by arranging for our supplier to deliver discounted gift cards directly toour customer, revenue is recognized on a net basis. In these arrangements, the Company carries no inventory risk, and revenue is recognizedon a net basis, representing the commission earned on the transaction. This differs from arrangements where the Company uses its inventoryof previously purchased discounted gift cards to fulfill a customer sale. When the Company delivers discount gift cards from its inventory,it carries the inventory risk, and revenue is recognized on a gross basis.
Significant Judgments and Estimates
Decidingwhether the Company is a principal or an agent requires significant judgment and analysis. This is particularly true when evaluating factorslike responsibility for fulfilling the promise to the customer, inventory risk, and pricing discretion. Changes in the assessment of theseindicators could materially impact reported revenue and related metrics. The Company continuously evaluates our judgments and estimatesto ensure accurate revenue recognition in accordance with ASC 606.
| F-7 |
Inthe following table, revenue is disaggregated by our divisions and type of revenue for the three and six months ended June 30, 2025 and2024:
| Sales Channels | CardCash Gift Cards | Restaurant.com Gift Cards and Coupons | Advertising | Total | ||||||||||||
| Three Months Ended June 30, 2025 | ||||||||||||||||
| Business to consumer (B2C) | $ | $ | $ | $ | ||||||||||||
| Business to business (B2B) | ||||||||||||||||
| Total | $ | $ | $ | $ | ||||||||||||
| Three Months Ended June 30, 2024 | ||||||||||||||||
| Business to consumer (B2C) | $ | $ | $ | $ | ||||||||||||
| Business to business (B2B) | ||||||||||||||||
| Total | $ | $ | $ | $ | ||||||||||||
| Six Months Ended June 30, 2025 | ||||||||||||||||
| Business to consumer (B2C) | $ | $ | $ | $ | ||||||||||||
| Business to business (B2B) | ||||||||||||||||
| Total | $ | $ | $ | $ | ||||||||||||
| Six Months Ended June 30, 2024 | ||||||||||||||||
| Business to consumer (B2C) | $ | $ | $ | $ | ||||||||||||
| Business to business (B2B) | ||||||||||||||||
| Total | $ | $ | $ | $ | ||||||||||||
Costof Sales
Costof sales consists primarily of the cost to purchase merchant gift cards, and transaction fees and costs.
BusinessCombinations
TheCompany allocates the fair value of purchase consideration to the tangible assets acquired, liabilities assumed, and separately identifiedintangible assets acquired based on their estimated fair values. The excess of the fair value of purchase consideration over the fairvalues of these identifiable assets and liabilities is recorded as goodwill. Such valuations require management to make significant estimatesand assumptions, especially with respect to intangible assets. Significant estimates in valuing certain intangible assets include, butare 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 andunpredictable and, as a result, actual results may differ from estimates. During the measurement period, which can be up to one yearfrom the acquisition date, the Company may record adjustments to the assets acquired and liabilities assumed, with the correspondingoffset to goodwill. Upon the conclusion of the measurement period, any subsequent adjustments are recorded in the consolidated statementsof operations.
| F-8 |
IntangibleAssets
TheCompany has certain intangible assets that were initially recorded at their fair value at the time of acquisition. The finite-lived intangibleassets consist of customer relationships, trade name, and developed technology. Intangible assets with finite useful lives are amortizedusing the straight-line method over their estimated useful life of
TheCompany reviews all finite-lived intangible assets for impairment when 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 overthe fair value in our consolidated statements of operations.
Goodwill
Goodwillrepresents the excess purchase price and related costs over the value assigned to the net tangible and identifiable intangible assetsof the business acquired. Goodwill that arose from acquisition of CardCash (see Note 3) was $
Long-LivedAssets
TheCompany evaluates long-lived assets, other than goodwill and indefinite lived intangible assets, for impairment whenever events or changesin circumstances (“triggering events”) indicate that their net book value may not be recoverable. The measurement of possibleimpairment is based upon the ability to recover the carrying value of the asset through the expected future undiscounted cash flows fromthe use of the asset and its eventual disposition. An impairment loss, equal to the difference between the asset’s fair value andits carrying value, is recognized when the estimated future undiscounted cash flows are less than its carrying amount.
Leases
TheCompany leases certain corporate office space under lease agreements. The Company determines whether a contract contains a lease at contractinception. A contract is or contains a lease if the contract conveys the right to control the use of the identified asset for a periodof time in exchange for consideration. Control is determined based on the right to obtain all of the economic benefits from use of theidentified asset and the right to direct the use of the identified asset. Operating lease right-of-use assets (“ROU”) foroperating leases represent the right to use an underlying asset for the lease term, and operating lease liabilities represent the obligationto make lease payments. Lease liabilities are recognized based on the present value of the future minimum lease payments over the leaseterm at the commencement date. Operating lease expense is recognized on a straight-line basis over the lease term and is included inthe general and administrative line in the Company’s consolidated statements of operations. Leases with an initial term of 12 monthsor less are not included on the balance sheets.
Advertising
TheCompany expenses advertising costs as incurred and amounted to $
| F-9 |
TheCompany periodically issues share-based awards to employees and non-employees and consultants for services rendered. Stock options vestand 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 ratablyover the requisite service, or vesting, period. Recognition of compensation expense for non-employees is in the same period and manneras if the Company had paid cash for the services.
TheCompany values its equity awards using the Black-Scholes option-pricing model, and accounts for forfeitures when they occur. Use of theBlack-Scholes option pricing model requires the input of subjective assumptions, including expected volatility, expected term, and arisk-free interest rate. The expected volatility is based on the historical volatility of the Company’s common stock, calculatedutilizing a look-back period approximately equal to the contractual life of the stock option being granted. The expected life of thestock 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.
Stock-basedcompensation expense recognized and recorded as part of selling, general and administrative expenses.
Basicearnings (loss) per share is computed using the weighted average number of common shares issued and outstanding during the period. Dilutedearnings (loss) per share is computed using the weighted average number of common shares and the dilutive effect of contingent sharesoutstanding during the period. Potentially dilutive contingent shares, which primarily consist of convertible notes and stock issuableupon the exercise of stock options and warrants, have been excluded from the calculation of diluted loss per share because their effectis anti-dilutive.
Lossper common share is computed by dividing net loss by the weighted average number of shares of common stock issued and outstanding duringthe respective periods. Basic and diluted loss per common share was the same for all periods presented because all convertible notesand stock issuable upon the exercise of stock options and warrants outstanding were anti-dilutive.
| June 30, 2025 | June 30, 2024 | |||||||
| Convertible notes payable | ||||||||
| Common stock issuable | ||||||||
| Common stock options | ||||||||
| Total | ||||||||
Theissuable and potentially issuable shares as summarized above. These potentially issuable common shares would have been anti-dilutivebecause the Company had a net loss for the periods ended June 30, 2025 and 2024, such common stock equivalents would have been excludedfrom the calculation of net loss per share.
FairValue of Financial Instruments
Fairvalue of financial and non-financial assets and liabilities is defined as an exit price, which is the price that would be received tosell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The three-tierhierarchy for inputs used to measure fair value, which prioritizes the inputs to valuation techniques used to measure fair value, isas follows:
Level1 – quoted prices (unadjusted) in active markets for identical assets or liabilities.
| F-10 |
Level2 – quoted prices for similar assets and liabilities in active markets or inputs that are observable for the asset or liability,either directly or indirectly through market corroboration, for substantially the full term of the financial instrument.
Level3 – unobservable inputs based on the Company’s assumptions used to measure assets and liabilities at fair value.
Afinancial asset or liability classification within the hierarchy is determined based on the lowest level input that is significant tothe fair value measurement. The assessment of the significance of a particular input to the fair value measurement requires judgmentand may affect the valuation of the assets and liabilities being measured and their placement within the fair value hierarchy.
Thecarrying value of the Company’s financial instruments (consisting of cash, accounts receivables, deposits to credit card processors,prepaid expense and other current assets, accounts payable, accrued expenses, notes payable, and other liabilities) are considered tobe representative of their respective fair values due to the short-term nature of those instruments.
Concentrationof Credit Risk
Financialinstruments, which potentially subject the Company to concentrations of credit risk, consist principally of trade accounts receivableand cash. The credit risk exposure surrounding trade accounts receivable are limited as these amounts represent the timing differencebetween payments being settled by credit card processors and the cash being provided to the Company.
TheCompany maintains a balance at financial institutions, which at times exceed the federally insured limit. The Company has not experienceda loss on this account.
SegmentInformation
TheCompany’s Chief Executive Officer (“CEO”) is our chief operating decision maker (“CODM”) and evaluatesperformance and makes operating decisions about allocating resources based on financial data presented on a consolidated basis. Becauseour CODM evaluates financial performance on a consolidated basis, the Company has determined that it operates as a single reportablesegment composed of the consolidated financial results of Giftify, Inc. (see Note 2).
Reclassifications
Certainprior year amounts have been reclassified for consistency with the current period presentation. Merchant receipts (i.e., credit cardprocessors) amounting to $
RecentAccounting Pronouncements
InNovember 2024, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2024-03, Income Statement—ReportingComprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses whichincludes amendments that require disclosure in the notes to financial statements of specified information about certain costs and expenses,including purchases of inventory; employee compensation; and depreciation, amortization and depletion expenses for each caption on theincome statement where such expenses are included. The amendments are effective for the Company’s annual periods beginning January1, 2027, with early adoption permitted, and should be applied either prospectively or retrospectively. The Company is in the processof evaluating this ASU to determine its impact on the Company’s disclosures.
Otherrecent accounting pronouncements issued by the FASB, its Emerging Issues Task Force, the American Institute of Certified Public Accountants,and the Securities and Exchange Commission did not or are not believed by management to have a material impact on the Company’spresent or future financial statements.
| F-11 |
3.Acquisitions
CardCash,Inc.
OnDecember 29, 2023, the Company completed the acquisition of CardCash. The acquisition was made pursuant to an agreement and plan of mergerdated August 18, 2023, between the Company and CardCash. The Company acquired all of the issued and outstanding equity of CardCash for$
TheCompany utilized the acquisition method of accounting for the acquisition in accordance with ASC 805, Business Combinations, andallocated the purchase price to CardCash’s tangible assets, identifiable intangible assets, and assumed liabilities at their estimatedfair values as of the date of acquisition. The excess of the purchase price paid by the Company over the estimated fair value of identifiedtangible and intangible assets has been recorded as goodwill.
Inaccordance with ASC 805, the Company made an allocation of the purchase price for CardCash based on the fair value of the assets acquiredand liabilities assumed.
Thefollowing table summarizes the allocation of the fair value of the purchase consideration to the fair value of tangible assets, identifiableintangible assets, and assumed liabilities of CardCash on the date of acquisition:
| Fair Value | ||||
| Fair value of consideration: | ||||
| Cash | $ | |||
| Notes payable (see Note 10) | ||||
| Common stock ( shares of common stock at $ per share) | ||||
| Total purchase price | $ | |||
| Allocation of the consideration to the fair value of assets acquired and liabilities assumed: | ||||
| Cash | $ | |||
| Accounts receivable | ||||
| Inventories | ||||
| Prepaids, deposits, and other | ||||
| Property and equipment, net | ||||
| Accounts payable and accrued liabilities | ( | ) | ||
| Line of credit | ( | ) | ||
| Deferred tax liability | ( | ) | ||
| Net tangible assets | ( | ) | ||
| Intangible assets: | ||||
| Developed technology | ||||
| Trade name | ||||
| Customer relationships | ||||
| Net identifiable intangible assets | ||||
| Goodwill | ||||
| Fair value of net asset acquired | $ | |||
| F-12 |
Takeout7,Inc.
OnMay 29, 2025, the Company completed the acquisition of Takeout7, Inc. (“Takeout7”). The acquisition was made pursuant toan agreement and plan of merger dated May 29, 2025, between the Company and Takeout7. The Company acquired all of the issued and outstandingequity of Takeout7 for $
TheCompany utilized the acquisition method of accounting for the acquisition in accordance with ASC 805, Business Combinations, andallocated the purchase price to Takout7’s tangible assets, identifiable intangible assets, and assumed liabilities at their estimatedfair values as of the date of acquisition.
Asof June 30, 2025, management has not yet finalized its valuation analysis. In accordance with ASC 805, the Company made an initial provisionalallocation of the purchase price for Takeout7 based on the fair value of the assets acquired and liabilities assumed. The fair valuesof the assets acquired, as set forth below, are considered provisional and subject to adjustment as additional information is obtainedthrough the purchase price measurement period (a period of up to one year from the closing date). Any prospective adjustments throughthe purchase price measurement period would change the fair value allocation as of the acquisition date. The Company is still in theprocess of reviewing underlying models, assumptions and discount rates used in the valuation of provisional goodwill and intangible assets.
Thefollowing table summarizes the provisional allocation of the fair value of the purchase consideration to the fair value of tangibleassets, identifiable intangible assets, and assumed liabilities of Takeout7 on the date of acquisition:
| Fair Value (provisional) | ||||
| Fair value of consideration: | ||||
| Common stock ( shares of common stock at $ per share) | $ | |||
| Total purchase price | $ | |||
| Provisional allocation of the consideration to the fair value of assets acquired and liabilities assumed: | ||||
| Cash | $ | |||
| Accounts receivable | ||||
| Deposits | ||||
| Accounts payable and accrued liabilities | ( | ) | ||
| Net tangible assets | ||||
| Intangible assets: | ||||
| Developed technology (provisional) | ||||
| Customer relationships (provisional) | ||||
| Intangible assets (provisional) | ||||
| Goodwill | ||||
| Fair value of net asset acquired | $ | |||
Nounaudited pro forma statements of operations are being presented as the historical results of Takeout7 are insignificant when comparedto the Company’s historical results.
4.Property and Equipment, Net
Propertyand equipment, net consisted of the following:
June 30, 2025 | December 31, 2024 | |||||||
| Website development costs | $ | $ | ||||||
| Leasehold improvements | ||||||||
| Property and equipment, gross | ||||||||
| Accumulated depreciation | ( | ) | ( | ) | ||||
| Property and equipment, net | $ | $ | ||||||
| F-13 |
Depreciationexpense for the six months ended June 30, 2025 and 2024 was $
5.Goodwill and Intangible Assets
Goodwilland intangible assets consist of the following:
June 30, 2025 | December 31, 2024 | |||||||
| Goodwill | $ | $ | ||||||
June 30, 2025 | December 31, 2024 | |||||||
| Intangible Assets | ||||||||
| Customer relationships | $ | $ | ||||||
| Trade name | ||||||||
| Developed technology | ||||||||
| Intangible assets, gross | ||||||||
| Accumulated amortization | ( | ) | ( | ) | ||||
| Intangible assets, net | $ | $ | ||||||
OnDecember 29, 2023, in relation to the acquisition of CardCash (see Note 3), the Company recorded goodwill of $
OnDecember 29, 2023, in relation to the acquisition of CardCash (see Note 3), the Company recorded intangible assets of $
Identifiableintangibles are amortized over their estimated remaining useful lives, which are as follows:
| Description | Weighted Average Useful Life (in years) | |||
| Customer relationships | ||||
| Trademarks, trade names and service marks | ||||
| Developed technology | ||||
Amortizationexpense on intangible assets was as follows:
| Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | |||||||
| Amortization expense | $ | $ | ||||||
Estimatedamortization expense for the Company is as follows:
| 2025 (Remainder) | $ | |||
| 2026 | ||||
| 2027 | ||||
| 2028 | ||||
| $ |
| F-14 |
6.Leases
TheCompany leases its office facilities under noncancelable operating lease agreements. The Company has leases for office facilities inWoodbridge, New Jersey and Schaumburg, Illinois. The operating lease agreement for the Woodbridge, New Jersey location was renewed inApril 2024 for a 60-month period ending in April 2029.
TheCompany’s operating lease liability balance was $
Duringthe six months ended June 30, 2025 and 2024, lease costs totaled approximately $
Asof June 30, 2025, the weighted average remaining lease terms for operating lease is
Maturitiesof the Company’s operating lease liabilities are as follows as of June 30, 2025:
| As of June 30, 2025 | ||||
| 2025 (remaining) | $ | |||
| 2026 | ||||
| 2027 | ||||
| 2028 | ||||
| 2029 | ||||
| Thereafter | ||||
| Total | ||||
| Less: Imputed interest | ( | ) | ||
| Total operating lease liability | $ | |||
7.Secured Revolving Line of Credit
Theoutstanding line of credit consists of the following at June 30, 2025 and December 31, 2024:
June 30, 2025 | December 31, 2024 | |||||||
| Line of credit | $ | $ | ||||||
InNovember 2020, CardCash entered into an amended and restated promissory note for a revolving line of credit with availability of up to$
OnApril 23, 2025, CardCash Exchange, Inc. (“CardCash”), a wholly owned subsidiary of the registrant (“Giftify”),entered into a second amended and restated secured promissory note (the “Note”) with Pathward, National Association (“Pathward”)in the principal amount of $
| F-15 |
CardCashmust pay interest on the principal amount which is outstanding each month in arrears commencing on the first day of the month followingthe funding of the transaction and continuing on the first day of each month thereafter until the unpaid principal and interest are fullypaid. Any failure to pay the entire amount when due will be an event of default that will result in an interest charge at the “ExtraRate” that is defined in the Note as the Effective Rate plus
TheNote is collateralized by a blanket lien on the assets of CardCash under the terms of an Amended and Restated Loan and Security Agreementdated December 23, 2020. Under Amendment No. 2 to Amended and Restated Loan and Security Agreement (“Amendment No. 2”) executedon April 23, 2025, advances under the Note may be measured against a percentage of Eligible Accounts and Eligible Inventory as thoseterms are defined in Amendment No. 2.
AtJune 30, 2025 and December 31, 2024, the line of credit requires a deposit of $
8.Convertible Promissory Notes
Convertiblepromissory notes consists of the following at June 30, 2025 and December 31, 2024:
June 30, 2025 | December 31, 2024 | |||||||
| Incumaker, Inc. principal balance | $ | |||||||
| Accrued interest | ||||||||
| Total principal and accrued interest (all current) | $ | $ | ||||||
OnNovember 5, 2018, the Company completed the acquisition of Incumaker, Inc. and assumed certain outstanding convertible notes payable.At December 31, 2024, there was one remaining assumed convertible note payable outstanding that matured July 2017. The Company continuesto be unsuccessful in reaching the Note holder to remit payment in full. At December 31, 2024, the principal balance of $
9.Secured Notes Payable – Related Party
Securednotes payable to a related party consists of the following at June 30, 2025 and December 31, 2024:
June 30, 2025 | December 31, 2024 | |||||||
| Secured note payable – related party | $ | $ | ||||||
| Less debt discount | ( | ) | ||||||
| Total principal balance | ||||||||
| Accrued interest | ||||||||
| Total principal and accrued interest | ||||||||
| Less current portion | ( | ) | ||||||
| Non-current portion | $ | $ | ||||||
| F-16 |
OnSeptember 20, 2024, the Company entered into a secured promissory note (the “Note”) with Spars Capital Group LLC (“SparsCapital”) in the principal amount of $
10.Notes Payable
Notespayable consist of the following at June 30, 2025 and December 31, 2024:
June 30, 2025 | December 31, 2024 | |||||||
| CardCash acquisition notes payable | $ | $ | ||||||
| Real Word Digital Assets note payable | ||||||||
| GameIQ acquisition note payable | ||||||||
| Economic Injury Disaster Loans (EIDL) note payable | ||||||||
| Less debt discount | ( | ) | ||||||
| Total principal balance | ||||||||
| Accrued interest | ||||||||
| Total principal and accrued interest | ||||||||
| Less current portion | ( | ) | ( | ) | ||||
| Non-current portion | $ | $ | ||||||
CardCashAcquisition Notes Payable
OnDecember 29, 2023, the Company issued two-year promissory notes totaling $
RealWorld Digital Assets Note Payable
OnFebruary 19, 2025, the Company entered into a secured promissory note with Real World Digital Assets LLC (“Real World”) inthe principal amount of $
| F-17 |
GameIQAcquisition Note Payable
OnFebruary 1, 2022, the Company issued two notes payable for the purchase of GameIQ, one for $
Asof December 31, 2024, the notes payable had an aggregate principal balance outstanding of $
EconomicInjury Disaster Loans (EIDL)
OnJune 17, 2020, the Company received $
Theloans bear interest at
11.Stockholders’ Equity
PreferredStock
TheCompany is authorized to issue a total of shares of preferred stock, par value $ per share. As of June 30, 2025 and December31, 2024, there were shares of preferred stock issued and outstanding.
CommonStock
TheCompany is authorized to issue a total of shares of common stock, par value $ per share. As of June 30, 2025 and December31, 2024, the Company had shares and shares, respectively, of common stock issued and outstanding.
CommonStock Transactions
SixMonths Ended June 30, 2025
CommonShares Issued on Vesting of Restricted Stock
Duringthe six months ended June 30, 2025, the Company issued shares on vesting of restricted common stock to its employees and executive.
CommonStock Issued for Services
Duringthe six months ended June 30, 2025, the Company issued shares of common stock with a fair value of $
| F-18 |
Issuanceof Common Stock for Settlement of Vendor Balance
Duringthe six months ended June 30, 2025, the Company issued shares of common stock with a fair value of $
Issuanceof Common Stock on At-the-Market Issuance Sales Agreement
Duringthe six months ended June 30, 2025, the Company sold shares of Common Stock and received proceeds, net of expenses, of $
Issuanceof Common Stock on Acquisition
Duringthe six months ended June 30, 2025, the Company issued shares of common stock with a fair value of $
Issuanceof Common Stock on Stock Purchase Agreement
OnDecember 16, 2024, the Company entered into a Securities Purchase Agreement and Strata Purchase Agreement with ClearThink Capital Partners,LLC (ClearThink Capital”). Under the terms of the Strata Purchase Agreement, ClearThink Capital agreed to purchase up to $
Duringthe six months ended June 30, 2025, the Company received net proceeds of $
OnFebruary 4, 2025, the Company exercised its right to terminate the SPA effective by mutual agreement of the parties.
Issuanceof Common Stock on Public Offering
OnJanuary 15, 2025, the Company entered into a Placement Agency Agreement with Craft Capital Management LLC (“Craft Capital”),as placement agent, to issue and sell shares of the Company’s common stock at a purchase price of $ per Share. Theshares were offered by the Company pursuant to its shelf registration statement on Form S-3 (File No. 333-282322), that was declaredeffective by the Securities and Exchange Commission on October 15, 2024, on a best efforts basis (the “Offering”). The offerand sale of the shares in the Offering are described in the Company’s prospectus constituting a part of the registration statement,as supplemented by a final prospectus supplement dated January 15, 2025. OnJanuary 16, 2025, the Company closed the Offering. The Company sold shares for totalgross proceeds of $
Issuanceof Common Stock on Private Offering
Duringthe six months ended June 30, 2025, the Company received net proceeds of $
CommonStock Issuable
AtJune 30, 2025, shares of common stock with an aggregate value of $ have not been issued and are reflected as common stockissuable in the accompanying consolidated financial statements.
| F-19 |
SixMonths Ended June 30, 2024
CommonShares Issued on Vesting of Restricted Stock
Duringthe six months ended June 30, 2024, the Company issued shares on vesting of restricted common stock to its employees and executive.
Issuanceof Common Stock for Services
Duringthe six months ended June 30, 2024, the Company issued shares of common stock with a fair value of $
Issuanceof Private Placement of Common Stock
Duringthe six months ended June 30, 2024, the Company received net proceeds of $
CommonStock Issuable
AtDecember 31, 2023, shares of common stock with an aggregate value of $
12.Share-Based Compensation
Summaryof Restricted Common Stock
Unvested Shares | Issuable Shares | Fair Value at Date of Issuance | Weighted Average Grant Date Fair Value | |||||||||||||
| Balance, December 31, 2024 | $ | $ | ||||||||||||||
| Granted | ||||||||||||||||
| Vested | ( | ) | ||||||||||||||
| Forfeited | ||||||||||||||||
| Issued | ( | ) | ( | ) | ||||||||||||
| Balance, June 30, 2025 | $ | $ | ||||||||||||||
OnFebruary 1, 2025, the Company granted its Chief Executive Officer shares of the Company’s restricted stock and granted shares of the Company’s restricted stock to other officers with an aggregate fair value of $
Duringthe six months ended June 30, 2025 and 2024, the Company recognized stock compensation expense of $ and $ and issued and shares of restricted stock, respectively, based upon its vesting term of the grants. As of June 30, 2025, the unamortizedstock compensation expense amounted to $, to be expensed upon vesting in future periods through February 2028.
| F-20 |
Summaryof Stock Options
| Number of | Weighted Average | |||||||
| Options | Exercise Price | |||||||
| Stock options outstanding at December 31, 2024 | $ | |||||||
| Granted | ||||||||
| Exercised | ||||||||
| Expired or forfeited | ( | ) | ( | ) | ||||
| Stock options outstanding at June 30, 2025 | $ | |||||||
| Stock options exercisable at June 30, 2025 | $ | |||||||
OnFebruary 1, 2025, the Company, pursuant to the terms of its 2019 Stock Incentive Plan, granted options exercisable into sharesof the Company’s common stock to its executives and employees. The stock options vest over 36 months equally. The stock optionsare exercisable at a weighted average price of $ per share with an average life to expiration of approximately three years. The totalfair value of these options at grant date was approximately $, which was determined using a Black-Scholes-Merton option pricingmodel with the following average assumption: stock price of $ per share, expected term of years, volatility of , dividendrate of , and weighted average risk-free interest rate of . The expected term represents the weighted-average period of time thatshare option awards granted are expected to be outstanding giving consideration to vesting schedules and historical participant exercisebehavior; the expected volatility is based upon historical volatility of the Company’s common stock; the expected dividend yieldis based on the fact that the Company has not paid dividends in the past and does not expect to pay dividends in the future; and therisk-free interest rate is based on the U.S. Treasury yield curve in effect at the time of measurement corresponding with the expectedterm of the share option award.
Duringthe six months ended June 30, 2025 and 2024, the Company recognized $ and $ of stock compensation expense relatingto vested stock options. As of June 30, 2025, the aggregate amount of unvested compensation related to stock options was approximately$ which will be recognized as an expense as the options vest in future periods through February 2028.
Theweighted average remaining contractual life of common stock options outstanding at June 30, 2025, was years. Based on a fairmarket value of $per share on June 30, 2025, the intrinsic value attributed to exercisable but unexercised common stock options was $at June 30, 2025.
| Exercise Prices | Options Outstanding (Shares) | Options Exercisable (Shares) | |||||||
| $ | |||||||||
| $ | |||||||||
| $ | |||||||||
| $ | |||||||||
| $ | |||||||||
| $ | |||||||||
| $ | |||||||||
13.Commitments and Contingencies
Fromtime to time the Company may be named in claims arising in the ordinary course of business. Currently, there are no such legal proceedingsthat are pending against the Company or that involve the Company that, in the opinion of management, could reasonably be expected tohave a material adverse effect on the Company’s business or financial condition.
| F-21 |
14.Segment Information
TheCompany operates and manages its business as
TheCompany’s chief operating decision maker (CODM), its Chief Executive Officer, reviews financial information presented on a consolidatedbasis and decides how to allocate resources based on net loss. Consolidated net loss is used for evaluating financial performance. Themonitoring of budgeted versus actual results is used in assessing performance of the Company and in establishing management’s compensation.
Significantsegment expenses include employee compensation, stock-based compensation, merchant fees, and consulting and outside provider costs. Otheroperating expenses include all remaining costs necessary to operate our business and primarily include advertising, corporate compliance,and overhead expenses. The following table presents the significant segment expenses and other segment items regularly reviewed by ourCODM:
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
| 2025 | 2024 | 2025 | 2024 | |||||||||||||
| Net Sales | $ | $ | $ | $ | ||||||||||||
| Cost of sales | ||||||||||||||||
| Gross profit | ||||||||||||||||
| Operating expenses | ||||||||||||||||
| Employee compensation and benefits | ||||||||||||||||
| Stock-based compensation expense | ||||||||||||||||
| Merchant and bank fees | ||||||||||||||||
| Facility costs | ||||||||||||||||
| Consulting and outside provider costs | ||||||||||||||||
| Depreciation of capitalized software costs | ||||||||||||||||
| Amortization of intangible assets | ||||||||||||||||
| Other operating expenses | ||||||||||||||||
| Total operating expenses | ||||||||||||||||
| Loss from operations | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
15.Subsequent Events
Issuanceof Common Stock on At-the-Market Issuance Sales Agreement
AfterJune 30, 2025, the Company sold shares of Common Stock and received proceeds net of expensesof $
Issuanceof Common Stock on Private Offering
After June 30, 2025, the Company receivednet proceeds of $
| F-22 |
Item2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Management’sDiscussion and Analysis of Financial Condition and Results of Operations is designed to provide a reader of the financial statementswith a narrative report on our financial condition, results of operations, and liquidity. This discussion and analysis should be readin conjunction with the attached unaudited Condensed Consolidated Financial Statements and notes thereto and our Annual Report on Form10-K for the year ended December 31, 2024, including the audited Consolidated Financial Statements and notes thereto. The following discussioncontains forward-looking statements that involve risks and uncertainties, such as statements of our plans, objectives, expectations,and intentions. Our actual results could differ materially from those discussed in the forward-looking statements. Please also see thecautionary language at the beginning of this Quarterly Report regarding forward-looking statements.
Background
OnSeptember 4, 2024, our Board of Directors approved and, by written consent dated September 5, 2024, the holders of a majority of ourcommon stock approved an amendment to our Certificate of Incorporation to change our name from RDE, Inc. to Giftify, Inc. The changeto Giftify, Inc. became effective on October 28, 2024. All references to RDE, Inc. have been changed to Giftify, Inc.
OnAugust 6, 2024, The Nasdaq Stock Market granted our application for listing on the Nasdaq.
OnMay 29, 2025, we acquired Takeout7, Inc (“Takeout7”). Takeout7 is a restaurant technology company offering comprehensiveonline ordering solutions through its TakeOut7 platform and AI-powered digital marketing services through its Platr platform. The acquisitionof Takeou7 expands our technology offerings to include end-to-end solutions for independent restaurants.
OnAugust 18, 2023, we entered into an agreement and plan of merger to acquire CardCash Exchange Inc (“CardCash”). On December29, 2023, the merger was completed and has been accounted for as a business combination using the acquisition method of accounting. CardCashwas formed in 2013 and purchases merchant gift cards and resells them at a markup.
OnMarch 1, 2020, we acquired the assets of Restaurant.com, Inc., a pioneer in the restaurant deal space and the nation’s largestrestaurant-focused digital deals brand.
BusinessOverview
Wehave two principal divisions, B2C and B2B, for both CardCash and for Restaurant.com.
CardCash
CardCashoperates as a leading gift card exchange platform, facilitating the purchase and sale of unwanted gift cards at discounted rates forboth consumers and businesses. The Company’s mission is to provide a seamless marketplace for individuals looking to maximize thevalue of their gift cards while also offering businesses innovative solutions to leverage this market.
CardCash’score service offering includes the buying and selling of gift cards from over 1,100 retailers, such as Target, Home Depot, Starbucksand TJ Maxx, among others. By connecting buyers and sellers, CardCash enables consumers to unlock value from unused gift cards and savesignificant amounts on their purchases.
CardCashpurchases unwanted gift cards at a value lower than their face worth and subsequently retails them at a discounted rate to discerningshoppers nationwide. This avenue not only allows individuals to obtain cash for their unneeded gift cards but also enables them to makecost-effective purchases through discounted gift cards.
Withadvanced fraud prevention technology, known as FraudFix, CardCash ensures the security and integrity of all transactions conducted onits platform. This commitment to trust and reliability has contributed to its success in saving consumers over $100 million since itsinception.
| 1 |
Restaurant.com
Restaurant.comis a pioneer in the restaurant deal space and the nation’s largest restaurant-focused digital deals brand. We derive our revenuefrom transactions in which we sell discount certificates for restaurants on behalf of third-party restaurants. Founded in 1999, we connectdigital consumers, businesses, and communities offering dining and merchant deal options nationwide at over 182,500 restaurants and retailersto over 7.8 million customers. Our 10,000 core restaurants and 170,000 Dining Discount Pass restaurants and retailers extend nationwide.Our top three B2C markets are New York, Chicago and Los Angeles.
Restaurant.comBusiness to Customer Division
Toour database of 6.2 million customers, we sell:
●Discounted certificates for 10,000 restaurants. The certificates range from $5 to $100 and never expire.
●Discount Dining Passes, which provide discounts at 170,000 restaurants and other retailers. These passes provide multiple uses for sixmonths.
●“Specials by Restaurant.com” which bundle Restaurant.com certificates with a variety of other entertainment options, includingtheatre, movies, wine and travel. Customers have favored these bundled offering (“Specials”), generating significantly greaterrevenue per customer when compared to purchasing our other products. The average order value for these Specials sales is nearly fivetimes a certificate purchase.
Restaurant.comBusiness to Business Division
Wesell certificates and Discount Dining Passes to corporations and marketers, which use them to:
| ● | generate new customers; | |
| ● | increase sales at the point of sale; | |
| ● | reward points/customer loyalty; | |
| ● | convert to paperless billing and auto-bill payment; | |
| ● | motivate specific customer behavior such as free home repair estimates and test drives for auto dealers; | |
| ● | renew subscriptions and memberships; and | |
| ● | address customer service issues. |
Restaurant.comOther Business
Wealso generate revenue through third-party offers and display ad revenue. This comprises a de minimis portion of our gross revenue.
Restaurant.comAttractive Customer Demographics
Weintend to grow and leverage our customer database of 6.2 million which we believe is of value to merchants for a variety of servicesand products.
InMarch 2020, the World Health Organization declared COVID-19 a global pandemic. This contagious disease outbreak, adversely affected workforces, economies and financial markets globally. The outbreak has negatively impacted our revenues as a result of the temporary closuresof restaurants throughout the United States where our discount certificates and Discount Dining Passes were accepted and where diningwas being restricted to outdoor locations or to capacity constraints for indoor dining. Our revenues from purchase of our discount certificatesin 2020, 2021 and 2022 declined since they could only be redeemed when dining in the restaurants and also were not accepted for paymentby third-party platforms that facilitated ordering and delivery of food on-demand. As the COVID-19 pandemic has abated, our revenuesimproved in fiscal 2023.
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How We Measure Our Business
We use operating metrics to assess the progressof our business and make strategic decisions. Certain of the financial metrics are reported in accordance with GAAP and certain of thosemetrics are considered non-GAAP financial measures. As our business evolves, we may make changes to the key financial and operating metricsthat we use to measure our business. For further information and reconciliations to the most applicable financial measures under GAAP,refer to our discussion under the Non-GAAP Financial Measures section.
Operating Metrics
| · | Gross billings are the total dollar value of customer purchasesof goods and services. Gross billings are presented net of customer refunds and order discounts. A significant portion of our revenuetransactions are comprised of sales of discounted merchant gift cards in which we collect the transaction price from the customer andremit a portion of the transaction price to the third-party suppliers who will provide the related goods or services. For these transactions,gross billings differ from Net Sales reported in our Condensed Consolidated Statements of Operations, which is presented net of the merchant’sshare of the transaction price. Gross billings are an indicator of our growth and business performance as it measures the dollar volumeof transactions generated through our marketplaces. Tracking gross billings also allows us to monitor the percentage of gross billingsthat we are able to retain after payments to merchants. |
Our gross billings forthe three and six months ended June 30, 2025 and 2024 were as follows:
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||||||||||
| 2025 | 2024 | Change % | 2025 | 2024 | Change % | |||||||||||||||||||
| Gross billings | $ | 36,072,063 | $ | 29,287,369 | 23.2 | % | $ | 73,091,528 | $ | 59,319,954 | 23.2 | % | ||||||||||||
Inflation
Global inflation also increased during 2021 andin 2022. The Russia and Ukraine conflict and other geopolitical conflicts, as well as related international response, have exacerbatedinflationary pressures, including causing increases in the price for goods and services and global supply chain disruptions, which haveresulted and may continue to result in shortages in food products, materials and services. Such shortages have resulted and may continueto result in inflationary cost increases for labor, fuel, food products, materials and services, and could continue to cause costs toincrease as well as result in the scarcity of certain materials. We cannot predict any future trends in the rate of inflation or othernegative economic factors or associated changes in our operating costs and how that may impact our business. To the extent we and therestaurant customers we service are unable to recover higher operating costs resulting from inflation or otherwise mitigate the impactof such costs on our and their business, our revenues and gross profit could decrease, and our financial condition and results of operationscould be adversely affected.
GoingConcern
TheCompany has a history of reporting net losses. At June 30, 2025, the Company had cash of $3,257,427 available to fund its operations,including expansion plans, and to service its debt, and a negative working capital of $1,710,474.
Ourconsolidated financial statements have been presented on the basis that it will continue as a going concern, which contemplates the realizationof assets and satisfaction of liabilities in the normal course of business. We have experienced operating losses and negative operatingcash flows during 2024 and 2023. We have financed our working capital requirements through borrowings from various sources and the saleof our equity securities.
Asa result, management has concluded that there is substantial doubt about our ability to continue as a going concern. The Company’sindependent registered public accounting firm, in its report on the Company’s consolidated financial statements for the year endedDecember 31, 2024, has also expressed substantial doubt about the Company’s ability to continue as a going concern. The Company’sconsolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.
TheCompany’s ability to continue as a going concern is dependent upon its ability to raise additional debt or equity capital to fundits business activities and to ultimately achieve sustainable operating revenues and profitability.
Asmarket conditions present uncertainty as to the Company’s ability to secure additional funds, there can be no assurances that theCompany will be able to secure additional financing on acceptable terms, as and when necessary to continue to conduct operations. Thereis also significant uncertainty as to the effect that the coronavirus may have on the Company’s business plans and the amount andtype of financing available to the Company in the future.
Ifthe Company is unable to obtain the cash resources necessary to satisfy the Company’s ongoing cash requirements, the Company couldbe required to scale back its business activities or to discontinue its operations entirely.
Revenue Recognition
We recognize revenue in accordance with FASB ASC606, Revenue from Contracts with Customers. Based on the Company’s business model, it is sometimes necessary to determinewhether we are acting as a principal or an agent in revenue-generating arrangements.
Deciding whether the Company is a principalor an agent requires significant judgment and analysis. This is particularly true when evaluating factors like responsibility for fulfillingthe promise to the customer, inventory risk, and pricing discretion. Changes in the assessment of these indicators could materially impactreported revenue and related metrics. The Company continuously evaluates our judgments and estimates to ensure accurate revenue recognitionin accordance with ASC 606.
The following table reconcilesthe recording of the Company’s gross vs. net transactions to the Company’s reported net sales.
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
| 2025 | 2024 | 2025 | 2024 | |||||||||||||
| Gross revenue (Principal Transactions) | $ | 19,807,049 | $ | 19,389,457 | $ | 42,038,372 | $ | 40,346,020 | ||||||||
| Net revenue (Agent Transactions) | 1,093,682 | 631,045 | 2,139,372 | 1,196,376 | ||||||||||||
| Net Sales | $ | 20,900,731 | $ | 20,020,502 | $ | 43,177,744 | $ | 41,452,396 | ||||||||
The increase in net revenuerecognized as agent increased $462,637, or 73%, during the three months ended June 30, 2025, as compared to the prior year period. Forthe six months ended June 30, 2025, net revenue recognized as agent increased $942,996, or 79%, as compared to the prior year period.The increase over the previous year was due to the sale of gift cards related to cruise line operators, fluctuations in thetypes of gift cards sold, and changes in the number of customer orders in which the Company acted as an agent.
Management believesthat presenting gross proceeds collected from customers and amounts paid to principals provides useful information to investors aboutthe scale of the Company’s operations in these agency arrangements.
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Resultsof Operations – Three Months Ended June 30, 2025, Compared to Three Months Ended June 30, 2024
Operating Metrics
Our gross billings forthe three months ended June 30, 2025 and 2024 were as follows:
| Three Months Ended June 30, | ||||||||||||
| 2025 | 2024 | Change % | ||||||||||
| Gross billings | $ | 36,072,063 | $ | 29,287,369 | 23.2 | % | ||||||
Gross billings increased23.2% during the three months ended June 30, 2025, as compared to the prior year period. A significant portion of our revenue transactionsare comprised of sales of discounted merchant gift cards in which we collect the transaction price from the customer and remit a portionof the transaction price to the third-party suppliers who will provide the related goods or services. For these transactions, gross billingsdiffer from Net Sales reported in our Condensed Consolidated Statements of Operations, which is presented net of the merchant’s shareof the transaction price
Financial Results
GIFTIFY,INC. AND SUBSDIARIES
CONDENSEDCONSOLIDATED STATEMENTS OF OPERATIONS
Three Months Ended June 30, | ||||||||
| 2025 | 2024 | |||||||
| (Unaudited) | (Unaudited) | |||||||
| Net Sales | $ | 20,900,731 | $ | 20,020,502 | ||||
| Cost of sales | 17,045,106 | 16,760,007 | ||||||
| Gross profit | 3,855,625 | 3,260,495 | ||||||
| Operating Expenses | ||||||||
| Selling, general and administrative expenses | 5,714,543 | 9,832,270 | ||||||
| Amortization of capitalized software costs | 161,544 | 302,737 | ||||||
| Amortization of intangible assets | 557,062 | 607,917 | ||||||
| Total operating expenses | 6,433,149 | 10,742,924 | ||||||
| Loss from operations | (2,577,524 | ) | (7,482,429 | ) | ||||
| Other income (expense): | ||||||||
| Interest expense, net | (141,597 | ) | (262,217 | ) | ||||
| Total other income (expense), net | (141,597 | ) | (262,217 | ) | ||||
| Net loss before income taxes | (2,719,121 | ) | (7,744,646 | ) | ||||
| Income tax benefit | 129,312 | - | ||||||
| Net loss | $ | (2,589,809 | ) | $ | (7,744,646 | ) | ||
Thefollowing is a discussion of our results of operations.
NetSales
Netsales for the three months ended June 30, 2025 and 2024, were $20,900,731 and $20,020,502, respectively, an increase of 4.4%. Merchantgift card sales accounted for approximately 98% and 98% of our net sales for the three months ended June 30, 2025 and 2024, respectively.
Costof Sales
Cost of sales consists primarily of the cost topurchase merchant gift cards. Cost of sales for the three months ended June 30, 2025 and 2024, were $17,045,106 and $16,760,007, respectively.Gross profit increased $595,130, or 18.3%, as compared to the prior year period. Our gross margin, as a percentage of net sales, were18.4% and 16.3%, for the three months ended June 30, 2025 and 2024, respectively. Our gross margin was positively impacted by the increasein net revenue (agent transactions), as described above, as compared to the prior year period.
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OperatingExpenses
Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | |||||||
| Selling, general and administrative expenses | $ | 5,714,543 | $ | 9,832,270 | ||||
| Amortization of capitalized software costs | 161,544 | 302,737 | ||||||
| Amortization of intangible assets | 557,062 | 607,917 | ||||||
| Operating expenses | $ | 6,433,149 | $ | 10,742,924 | ||||
Selling,general and administrative expenses consist of costs incurred to identify, communicate with and evaluate potential customers and relatedbusiness opportunities, and compensation to officers and directors, as well as legal and other professional fees, lease expense, andother general corporate expenses. Management expects selling, general and administrative expenses to increase in future periods as theCompany adds personnel and incurs additional costs related to its operation as a public company, including higher legal, accounting,insurance, compliance, compensation and other costs.
Selling,general and administrative expenses were $5,714,543 for the three months ended June 30, 2025, as compared to $9,832,270 for the threemonths ended June 30, 2024, a decrease of $4,117,724. The decrease was due to a decrease in stock-based compensation expense of $4,606,671during the three months ended June 30, 2025, offset by increased payroll and benefit expenses, marketing and advertising costs, as wellas other general expenses to support our business and operations.
Amortizationof capitalized software costs
Amortizationexpenses are primarily attributed to the Company’s capitalized software development costs. Amortization expenses were $161,544during the three months ended June 30, 2025, as compared to $302,737 during the three months ended June 30, 2025.
Amortizationof intangible assets
Amortizationexpenses are primarily attributable to the Company’s amortization of intangible assets with finite lives. Amortization expenseswere $557,062 during the three months ended June 30, 2025, as compared to amortization expenses of $607,917 during the three months endedJune 30, 2024.
Lossfrom Operations
Forthe three months ended June 30, 2025, we incurred a loss from operations of $2,577,524, as compared to a loss from operations of $7,482,429for the three months ended June 30, 2024. The decrease in loss from operations was due to our increased gross profit being offset bydecreased stock-based compensation expense as discussed above.
OtherExpenses
Forthe three months ended June 30, 2025, we incurred interest expense, net of $141,597, as compared to interest expense, net of $261,917for the three months ended June 30, 2024. The decrease in interest expense was due to our decreased debt balances.
IncomeTax Benefit
Forthe three months ended June 30, 2025, we realized an income tax benefit of $129,312 as compared to an income tax benefit of $0 for thethree months ended June 30, 2024.
NetLoss
Werealized a net loss of $2,589,809 for the three months ended June 30, 2025, as compared to a net loss of $7,744,646 for the three monthsended June 30, 2024. The decrease in net loss was due to our increased gross profit, decreased stock-based compensation expense, decreasedinterest expense, and an income tax benefit, as discussed above.
ModifiedEBITDA
Inaddition to our GAAP results, we present Modified EBITDA as a supplemental measure of our performance. However, Modified EBITDA is nota recognized measurement under GAAP and should not be considered as an alternative to net income, income from operations or any otherperformance measure derived in accordance with GAAP, or as an alternative to cash flow from operating activities as a measure of liquidity.We define Modified EBITDA as net income (loss), plus interest expense, depreciation and amortization, stock-based compensation, and fairvalue of common stock issued for services.
Managementconsiders our core operating performance to be that which our managers can affect in any particular period through their management ofthe resources that affect our underlying revenue and profit generating operations during that period. Non-GAAP adjustments to our resultsprepared in accordance with GAAP are itemized below. You are encouraged to evaluate these adjustments and the reasons we consider themappropriate for supplemental analysis. In evaluating Modified EBITDA, you should be aware that in the future we may incur expenses thatare the same as or similar to some of the adjustments in this presentation. Our presentation of Modified EBITDA should not be construedas an inference that our future results will be unaffected by unusual or non-recurring items.
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Setforth below is a reconciliation of net loss to Modified EBITDA for the three months ended June 30, 2025 and 2024 (unaudited):
| Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | |||||||
| Net Loss | $ | (2,589,809 | ) | $ | (7,744,646 | ) | ||
| Modified EBITDA adjustments: | ||||||||
| Income taxes | (129,312 | ) | - | |||||
| Interest expense, net | 141,597 | 262,217 | ||||||
| Amortization of intangible assets | 557,062 | 608,017 | ||||||
| Amortization of capitalized software costs | 161,544 | 302,737 | ||||||
| Bad debt expense | 100,810 | - | ||||||
| Stock option and other noncash compensation | 1,607,872 | 6,214,545 | ||||||
| Total Modified EBITDA adjustments | 2,439,573 | 7,387,516 | ||||||
| Modified EBITDA | $ | (150,236 | ) | $ | (357,130 | ) | ||
Wepresent Modified EBITDA because we believe it assists investors and analysts in comparing our performance across reporting periods ona consistent basis by excluding items that we do not believe are indicative of our core operating performance. In addition, we use ModifiedEBITDA in developing our internal budgets, forecasts and strategic plan; in analyzing the effectiveness of our business strategies inevaluating potential acquisitions; making compensation decisions; and in communications with our board of directors concerning our financialperformance. Modified EBITDA has limitations as an analytical tool, which includes, among others, the following:
| ● | Modified EBITDA does not reflect our cash expenditures, or future requirements, for capital expenditures or contractual commitments; | |
| ● | Modified EBITDA does not reflect changes in, or cash requirements for, our working capital needs; |
| ● | Modified EBITDA does not reflect future interest expense, or the cash requirements necessary to service interest or principal payments, on our debts; and | |
| ● | Although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to be replaced in the future, and Modified EBITDA does not reflect any cash requirements for such replacements. |
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Resultsof Operations – Six Months Ended June 30, 2025, Compared to Six Months Ended June 30, 2024
Operating Metrics
Our gross billings forthe six months ended June 30, 2025 and 2024 were as follows:
| Six Months Ended June 30, | ||||||||||||
| 2025 | 2024 | Change % | ||||||||||
| Gross billings | $ | 73,091,528 | $ | 59,319,954 | 23.2 | % | ||||||
Gross billings increased23.2% during the six months ended June 30, 2025, as compared to the prior year period. A significant portion of our revenue transactionsare comprised of sales of discounted merchant gift cards in which we collect the transaction price from the customer and remit a portionof the transaction price to the third-party suppliers who provide the related goods or services. For these transactions, gross billingsdiffer from Net Sales reported in our Condensed Consolidated Statements of Operations, which is presented net of the merchant’s shareof the transaction price.
Financial Results
GIFTIFY,INC. AND SUBSDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
Six Months Ended June 30, | ||||||||
| 2025 | 2024 | |||||||
| (Unaudited) | (Unaudited) | |||||||
| Net Sales | $ | 43,177,744 | $ | 41,542,396 | ||||
| Cost of sales | 35,740,483 | 35,024,625 | ||||||
| Gross profit | 7,437,261 | 6,517,771 | ||||||
| Operating Expenses | ||||||||
| Selling, general and administrative expenses | 11,758,384 | 15,046,311 | ||||||
| Amortization of capitalized software costs | 323,087 | 681,474 | ||||||
| Amortization of intangible assets | 1,100,979 | 1,215,834 | ||||||
| Total operating expenses | 13,182,450 | 16,943,619 | ||||||
| Loss from operations | (5,745,189 | ) | (10,425,848 | ) | ||||
| Other income (expense): | ||||||||
| Interest expense | (351,168 | ) | (509,518 | ) | ||||
| Total other income (expense), net | (351,168 | ) | (509,518 | ) | ||||
| Net loss before income taxes | (6,096,357 | ) | (10,935,366 | ) | ||||
| Income tax (expense) benefit | 289,216 | - | ||||||
| Net loss | $ | (5,807,141 | ) | $ | (10,935,366 | ) | ||
Thefollowing is a discussion of our results of operations.
NetSales
Netsales for the six months ended June 30, 2025 and 2024, were $43,177,744 and $41,542,502, respectively, an increase of 3.9%. Merchantgift card sales accounted for approximately 98% and 98% of our net sales for the six months ended June 30, 2025 and 2024, respectively.
Costof Sales
Cost of sales consists primarily of the cost topurchase merchant gift cards. Cost of sales for the six months ended June 30, 2025 and 2024, were $35,740,483 and $35,024,625, respectively.Gross profit increased $919,490, or 14.1%, as compared to the prior year period. Our gross margin, as a percentage of net sales, were17.2% and 15.7%, for the six months ended June 30, 2025 and 2024, respectively. Our gross margin was positively impacted by the increasein net revenue (agent transactions), as described above, as compared to the prior year period.
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OperatingExpenses
Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | |||||||
| Selling, general and administrative expenses | $ | 11,758,384 | $ | 15,046,311 | ||||
| Amortization of capitalized software costs | 323,087 | 681,474 | ||||||
| Amortization of intangible assets | 1,100,979 | 1,215,834 | ||||||
| Operating expenses | $ | 13,182,450 | $ | 16,943,619 | ||||
Selling,general and administrative expenses consist of costs incurred to identify, communicate with and evaluate potential customers and relatedbusiness opportunities, and compensation to officers and directors, as well as legal and other professional fees, lease expense, andother general corporate expenses. Management expects selling, general and administrative expenses to increase in future periods as theCompany adds personnel and incurs additional costs related to its operation as a public company, including higher legal, accounting,insurance, compliance, compensation and other costs.
Selling,general and administrative expenses were $11,758,384 for the six months ended June 30, 2025, as compared to $15,046,311 for the six monthsended June 30, 2024, a decrease of $3,287,927. The decrease was due to a reduction in stock-based compensation expense of $4,103,413during the six months ended June 30, 2025, offset by increased payroll and benefits expenses, marketing and advertising costs, and othergeneral expenses to support our business.
Amortizationof capitalized software costs.
Amortizationexpenses are primarily attributed to the Company’s capitalized software development costs. Amortization expenses were $323,087during the six months ended June 30, 2025, as compared to $681,474 during the six months ended June 30, 2024.
Amortizationof intangible assets.
Amortizationexpenses are primarily attributable to the Company’s amortization of intangible assets with finite lives. Amortization expenseswere $1,100,979 during the six months ended June 30, 2025, as compared to amortization expenses of $1,215,834 during the six months endedJune 30, 2025.
Lossfrom Operations
Forthe six months ended June 30, 2025, we incurred a loss from operations of $5,745,189, as compared to a loss from operations of $10,425,848for the six months ended June 30, 2024. The decrease in loss from operations was due to our increased gross profit offset by decreasedstock-based compensation expense as discussed above.
OtherExpenses
Forthe six months ended June 30, 2025, we incurred interest expense, net of $351,168, as compared to interest expense, net of $509,518 forthe six months ended June 30, 2024. The decrease in interest expense was due to our decreased debt balances.
IncomeTax Benefit
Forthe six months ended June 30, 2025, we realized an income tax benefit of $286,216 as compared to an income tax benefit of $0 for thesix months ended June 30, 2024.
NetLoss
Werealized a net loss of $5,807,141 for the six months ended June 30, 2025, as compared to a net loss of $10,935,366 for the six monthsended June 30, 2024. The decrease in net loss was due to our increased gross profit, decreased stock-based compensation expense, decreasedinterest expense, an income tax benefit, as discussed above.
ModifiedEBITDA
Inaddition to our GAAP results, we present Modified EBITDA as a supplemental measure of our performance. However, Modified EBITDA is nota recognized measurement under GAAP and should not be considered as an alternative to net income, income from operations or any otherperformance measure derived in accordance with GAAP, or as an alternative to cash flow from operating activities as a measure of liquidity.We define Modified EBITDA as net income (loss), plus interest expense, depreciation and amortization, stock-based compensation, and fairvalue of common stock issued for services.
Managementconsiders our core operating performance to be that which our managers can affect in any particular period through their management ofthe resources that affect our underlying revenue and profit generating operations during that period. Non-GAAP adjustments to our resultsprepared in accordance with GAAP are itemized below. You are encouraged to evaluate these adjustments and the reasons we consider themappropriate for supplemental analysis. In evaluating Modified EBITDA, you should be aware that in the future we may incur expenses thatare the same as or similar to some of the adjustments in this presentation. Our presentation of Modified EBITDA should not be construedas an inference that our future results will be unaffected by unusual or non-recurring items.
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Setforth below is a reconciliation of net loss to Modified EBITDA for the six months ended June 30, 2025 and 2024 (unaudited):
| Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | |||||||
| Net Loss | $ | (5,807,141 | ) | $ | (10,935,366 | ) | ||
| Modified EBITDA adjustments: | ||||||||
| Income taxes | (289,216 | ) | - | |||||
| Interest expense, net | 351,167 | 509,518 | ||||||
| Amortization of intangible assets | 1,100,979 | 1,215,834 | ||||||
| Amortization of capitalized software costs | 323,087 | 681,474 | ||||||
| Loss on fair value of stock issued on vendor settlement | 33,750 | - | ||||||
| Bad debt expense | 100,810 | - | ||||||
| Stock option and other noncash compensation | 3,410,007 | 7,513,421 | ||||||
| Total Modified EBITDA adjustments | 5,030,584 | 9,920,247 | ||||||
| Modified EBITDA | $ | (776,557 | ) | $ | (1,015,119 | ) | ||
Wepresent Modified EBITDA because we believe it assists investors and analysts in comparing our performance across reporting periods ona consistent basis by excluding items that we do not believe are indicative of our core operating performance. In addition, we use ModifiedEBITDA in developing our internal budgets, forecasts and strategic plan; in analyzing the effectiveness of our business strategies inevaluating potential acquisitions; making compensation decisions; and in communications with our board of directors concerning our financialperformance. Modified EBITDA has limitations as an analytical tool, which includes, among others, the following:
| ● | Modified EBITDA does not reflect our cash expenditures, or future requirements, for capital expenditures or contractual commitments; | |
| ● | Modified EBITDA does not reflect changes in, or cash requirements for, our working capital needs; |
| ● | Modified EBITDA does not reflect future interest expense, or the cash requirements necessary to service interest or principal payments, on our debts; and | |
| ● | Although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to be replaced in the future, and Modified EBITDA does not reflect any cash requirements for such replacements. |
CriticalAccounting Policies and Estimates
Thefollowing discussion and analysis of financial condition and results of operations is based upon the Company’s consolidated financialstatements for the years ended December 31, 2024 and 2023 presented elsewhere in this report, which have been prepared in conformitywith accounting principles generally accepted in the United States of America (“GAAP”). Certain accounting policies and estimatesare particularly important to the understanding of the Company’s financial position and results of operations and require the applicationof significant judgment by management or can be materially affected by changes from period to period in economic factors or conditionsthat are outside of the Company’s control. As a result, these issues are subject to an inherent degree of uncertainty. In applyingthese policies, management uses its judgment to determine the appropriate assumptions to be used in the determination of certain estimates.Those estimates are based on the Company’s historical operations, the future business plans and the projected financial results,the terms of existing contracts, trends in the industry, and information available from other outside sources.
RevenueRecognition
TheCompany recognizes revenue in accordance with FASB ASC 606, Revenue from Contracts with Customers.
TheCompany buys merchant gift cards from the general public and distributors at a discount and then resells them at a markup. The Companyalso derives revenue from the sale of discount certificates for restaurants on behalf of third-party restaurants.
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Revenueand costs of sales are recognized when control of the products transfers to our customer, which generally occurs at a point in time whenthe risk and title to the product transfers to the customer upon delivery to the customer. The Company’s performance obligationsare satisfied at that time. The Company’s standard terms of delivery are included in its contracts of sale, order confirmationdocuments, and invoices. The Company recognizes revenue on a gross basis for the sales price of the merchant gift cards and discountcertificates it collects.
Share-BasedCompensation
TheCompany periodically issues share-based awards to employees and non-employees and consultants for services rendered. Stock options vestand 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 ratablyover the requisite service, or vesting, period. Recognition of compensation expense for non-employees is in the same period and manneras if the Company had paid cash for the services.
Acquisitionsand Business Combinations
TheCompany allocates the fair value of purchase consideration to the tangible assets acquired, liabilities assumed, and separately identifiedintangible assets acquired based on their estimated fair values. The excess of the fair value of purchase consideration over the fairvalues of these identifiable assets and liabilities is recorded as goodwill. Such valuations require management to make significant estimatesand assumptions, especially with respect to intangible assets. Significant estimates in valuing certain intangible assets include, butare 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 andunpredictable and, as a result, actual results may differ from estimates. During the measurement period, which can be up to one yearfrom the acquisition date, the Company may record adjustments to the assets acquired and liabilities assumed, with the correspondingoffset to goodwill. Upon the conclusion of the measurement period, any subsequent adjustments are recorded in the consolidated statementsof operations.
RecentAccounting Pronouncements
Seediscussion of recent accounting pronouncements in Note 1 to the accompanying financial statements.
Liquidityand Capital Resources
Theaccompanying consolidated financial statements do not include any adjustments to reflect the possible future effects on the recoverabilityand classification of assets or the amounts and classifications of liabilities that may result from the outcome of the uncertainty concerningour ability to continue as a going concern.
GoingConcern
Ourconsolidated financial statements have been presented on the basis that it will continue as a going concern, which contemplates the realizationof assets and satisfaction of liabilities in the normal course of business. We experienced operating losses and negative operating cashflows during 2024 and 2023. We have financed our working capital requirements through borrowings from various sources and the sale ofequity securities.
Wehave a history of reporting net losses. At June 30, 2025, we had cash of $3,257,427 available to fund our operations, including expansionplans, and to service our debt, and a negative working capital of $1,710,474. We anticipate our cash balance will last until December2025. As a result, we have concluded that there is substantial doubt about the Company’s ability to continue as a going concern.In addition, the Company’s independent registered public accounting firm has included an explanatory paragraph in their reportwith respect to this uncertainty that accompanies the Company’s audited consolidated financial statements as of and for the yearended December 31, 2024. The Company’s independent registered public accounting firm, in their report on the Company’s December31, 2024 audited consolidated financial statements, has expressed substantial doubt about the Company’s ability to continue asa going concern. Our consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.
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Ourability to continue as a going concern is dependent upon its ability to raise additional debt or equity capital to fund its businessactivities and to ultimately achieve sustainable operating revenues and profitability.
Asmarket conditions present uncertainty as to our ability to secure additional funds, there can be no assurances that we will be able tosecure additional financing on acceptable terms, as and when necessary, to continue to conduct operations. There is also significantuncertainty as to the amount and type of financing available to us in the future.
Ifwe are unable to obtain the cash resources necessary to satisfy our ongoing cash requirements, we could be required to scale back itsbusiness activities or to discontinue its operations entirely.
Ourconsolidated statements of cash flows as discussed herein are presented below.
Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | |||||||
| Net cash provided by (used in) operating activities | $ | 289,951 | $ | (3,074,200 | ) | |||
| Net cash provided by (used in) investing activities | 109,543 | (449,646 | ) | |||||
| Net cash provided (used in) by financing activities | (1,443,909 | ) | 3,354,563 | |||||
| Net increase (decrease) in cash and cash equivalents | $ | (1,044,415 | ) | $ | (169,283 | ) | ||
OperatingActivities
Cashprovided by or used in operating activities primarily consists of net loss adjusted for certain non-cash items, including amortizationof intangible assets, impairment of intangible assets, gain on forgiveness of government assistance notes payable, and the fair valueof common stock issued for directors, employees, and service providers, and the effect of changes in working capital and other activities.
Cashprovided by operating activities for the six months ended June 30, 2025 was $289,951 and consisted of our net loss, adjusted for non-cashitems, including amortization of intangible assets, the fair value of vested stock options, common stock issued to executives, employees,and advisors, and routine changes in working capital and other activities.
Cashused in operating activities for the six months ended June 30, 2024 was approximately $3,074,200 and consisted of our net loss, adjustedfor non-cash items, including amortization of intangible assets, fair value of vested stock options, and the fair value of common stockissued to executives, employees, and advisors, and routine changes in working capital and other activities.
InvestingActivities
Cashused provided by investing activities for the six months ended June 30, 2025 was $109,543, which was from cash received on an acquisition.
Cashused for investing activities for the six months ended June 30, 2024 was $449,646, which was for capital expenditures for software developmentcosts.
FinancingActivities
Cashused in financing activities for the six months ended June 30, 2025 was $1,443,909, which was from proceeds of $2,486,202 on the saleof common stock, net proceeds of $985,000 from a note payable, offset by repayment of our line of credit balance of $2,089,183, and repaymentof our notes payable of $2,825,928.
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Cashprovided by financing activities for the six months ended June 30, 2024 was $3,354,563, which was from proceeds of $2,921,500 on thesale of common stock, proceeds from our line of credit balance of $933,063, offset by the payment of $500,000 on our acquisition obligation.
SecuredRevolving Line of Credit
InNovember 2020, CardCash entered into an amended and restated promissory note for a revolving line of credit with availability of up to$10,000,000. The revolving line of credit is payable on demand, secured by the Company’s inventory, with interest based on theWall Street Journal Prime Rate plus 3.00%, limited to a floor of 6.5%. At June 30, 2025 and December 31, 2024, the average interest ratewas 12% and 12%, respectively. As of June 30, 2025, the Company complied with customary debt covenants. At June 30, 2025, the line ofcredit requires a deposit of $1,000,000, which is included as restricted cash in cash and cash equivalents.
ConvertiblePromissory Notes
OnNovember 5, 2018, the Company completed the acquisition of Incumaker, Inc. and assumed certain outstanding convertible notes payable.At December 31, 2024, there was one remaining assumed convertible note payable outstanding that matured July 2017. The Company continuesto be unsuccessful in reaching the Note holder to remit payment in full. At December 31, 2024, the principal balance of $20,000, andaccrued interest of $23,137, are convertible at $1.50 per share into 28,758 shares of the Company’s common stock. At June 30, 2025,the principal balance of $20,000, and accrued interest of $24,637, are convertible at $1.50 per share into 29,758 shares of the Company’scommon stock.
NotesPayable
RealWorld Digital Assets
OnFebruary 19, 2025, the Company entered into a secured promissory note with Real World Digital Assets LLC (“Real World”) inthe principal amount of $1,000,000 bearing annual interest of 11.5% that has a maturity date of December 31, 2025. The Note has an originationfee and expenses of $15,000, which were recorded as a debt discount and are being amortized over the term of the Note and may be prepaidwithout penalty. The note is collateralized by a blanket lien on the assets of Giftify under the terms of a security agreement and issubordinated only to the line of credit owed by the Company to Pathward National Association (see Note 7). Proceeds from the note wereused to pay the remaining balance owed on the secured promissory note with Spars Capital (See Note 9). Asof June 30, 2025, the notes payable had a principal balance outstanding of $1,000,000, a debt discount balance of $8,571, and accruedinterest payable of $41,589.
EconomicInjury Disaster Loans (EIDL)
OnJune 17, 2020, the Company received $150,000 of proceeds applicable to loans administered by the SBA as disaster loan assistance underthe Covid-19 Economic Injury Disaster Loan (EIDL) Program. On July 14, 2021, the Company received an additional $350,000 of proceedspursuant to the loan. On July 21, 2020, the Company received $150,000 of proceeds applicable to loans administered by the SBA as disasterloan assistance under the Covid-19 EIDL Program. On January 31, 2022, the Company assumed an additional $14,500 EIDL and accrued interestof $900 as part of the consideration paid for the acquisition of GameIQ.
Theloans bear interest at 3.75% per annum, with a combined repayment of principal and interest of $3,500 per month beginning 12 months fromthe date of the promissory note over a period of 30 years. As of December 31, 2024, the note payable had a principal balance outstandingof $664,500 and accrued interest payable of $15,558. As of June 30, 2025, the note payable had a principal balance outstanding of $664,500and accrued interest payable of $4,899.
Off-BalanceSheet Arrangements
AtJune 30, 2025 and December 31, 2024, the Company did not have any transactions, obligations or relationships that could be consideredoff-balance sheet arrangements.
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Item3. Quantitative and Qualitative Disclosures About Market Risk.
Asmaller reporting company is not required to provide the information required by this Item.
Item4. Controls and Procedures.
Evaluationof Disclosure Controls and Procedures
Disclosurecontrols and procedures are designed at a reasonable assurance level to ensure that information required to be disclosed in our reportsfiled or submitted under the Exchange Act, is recorded, processed, summarized and reported within the time periods specified in the rulesand forms of the SEC, and that information relating to the Company is accumulated and communicated to management, including our principalofficers, as appropriate to allow timely decisions regarding required disclosure. The Company’s Chief Executive and Chief FinancialOfficer has evaluated the effectiveness of the Company’s disclosure controls and procedures as of December 31, 2024, and have concludedthat the Company’s disclosure controls and procedures were not effective as of December 31, 2024, due to the material weaknessdescribed below in the subsection titled “Management’s Annual Report on Internal Control over Financial Reporting.
Notwithstandingthe identified material weakness, management has concluded that the Financial Statements included in this Annual Report on Form 10-Kpresent fairly, in all material respects, the Company’s financial position, results of operations and cash flows for the periodsdisclosed in conformity with U.S. GAAP.
OnDecember 29, 2023, the Company completed the acquisition of CardCash Exchange Inc (“CardCash”). As a result of the merger,the Company adopted the controls and procedures of CardCash.
InherentLimitations on Effectiveness of Controls
Managementdoes not expect the Company’s disclosure controls or internal control over financial reporting will prevent or detect all errorsand all fraud. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance thatthe control system’s objectives will be met. The Company’s controls and procedures are designed to provide reasonable assurancethat control system’s objective will be met, and the CEO and CFO have concluded that the Company’s disclosure controls andprocedures are ineffective at the reasonable assurance level. The design of a control system must reflect the fact that there are resourceconstraints, and the benefits of controls must be considered relative to their costs. Further, because of the inherent limitations inall control systems, no evaluation of controls can provide absolute assurance that misstatements due to error or fraud will not occuror that all control issues and instances of fraud, if any, within the company have been detected. These inherent limitations includethe realities that judgments in decision-making can be faulty and that breakdowns can occur because of simple errors or mistakes. Controlscan also be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of thecontrols. The design of any system of controls is based in part on certain assumptions about the likelihood of future events and therecan be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Projections ofany evaluation of the effectiveness of controls in future periods are subject to risks. Over time, controls may become inadequate becauseof changes in conditions or deterioration in the degree of compliance with policies or procedures.
Management’sAnnual Report on Internal Control over Financial Reporting
Managementis responsible for establishing and maintaining adequate internal control over financial reporting, as defined by Rule 13a-15(f) andRule 15d-15(f) under the Exchange Act. The Company’s internal control over financial reporting is designed to provide reasonableassurance regarding the reliability of financial reporting and the preparation of consolidated financial statements for external purposesin accordance with GAAP. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate becauseof changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. Management conducted an assessmentof the Company’s internal control over financial reporting as of December 31, 2024, based on the framework and criteria establishedby the Committee of Sponsoring Organizations of the Treadway Commission in Internal Control-Integrated Framework (2013) (COSO). Basedon the assessment, management concluded that, as of December 31, 2024, the Company’s internal controls over financial reportingwere not effective.
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Weidentified a material weakness in our internal controls over financial reporting. A material weakness is a deficiency, or a combinationof deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatementof our financial statements will not be prevented or detected on a timely basis.
Aspreviously reported, the material weaknesses continued to exist as of December 31, 2024, relating to the Company did not design and maintaineffective controls over certain information technology (“IT”) general controls for information systems that are relevantto the preparation of its consolidated financial statements. Specifically, Company did not design and maintain effective program changemanagement controls to ensure that access to information technology program and data changes affecting certain financial IT applicationsand underlying accounting records are identified, documented, tested, authorized and implemented appropriately.
RemediationPlan for Material Weaknesses in Internal Control Over Financial Reporting
Inresponse to the material weaknesses identified in “Management’s Reporting on Internal Control Over Financial Reporting,”we, with oversight from the Audit Committee of the Board of Directors, developed a plan to remediate the material weakness. Ongoing remediationactivities include:
| ● | Continue to design and implement ITGCs, focusing on user access controls, periodic access reviews, and change management; | |
| ● | Continue to enhance documentation and control execution, ensuring the completeness and accuracy of supporting data; and | |
| ● | Continue to provide training to our control operators. |
Webelieve the foregoing efforts will effectively remediate the material weaknesses described in “Management’s Report on InternalControl Over Financial Reporting.” Because the reliability of the internal control process requires repeatable execution, the successfulon-going remediation of the material weaknesses will require on-going review and evidence of effectiveness prior to concluding that controlsare effective
Remediationof Previously Identified Material Weaknesses
Inthe year ending December 31, 2023, we had the following material weakness:
TheCompany did not maintain adequate segregation of duties consistent with control objectives. Specifically, certain personnel had the abilityto both (i) create and post journal entries within our general ledger system and (ii) prepare and review account reconciliations.
Asof December 31, 2024, management implemented the following to address the previously identified material weakness.
| ● | hiring a Chief Financial Officer in August 2024, who has extensive experience leading public companies; | |
| ● | executing plans to remediate control deficiencies and performing a risk assessment under the COSO framework; and | |
| ● | ensuring optimal segregation of duties and levels of oversight. |
Managementdetermined these controls were in place and were effectively operating for a sufficient period of time as of December 31, 2024 and, therefore,the previously identified material weakness related to inadequate segregation of duties were remediated as of December 31, 2024.
Thereare, however, inherent limitations in all control systems and no evaluation of controls can provide absolute assurance that all deficiencieshave been detected. While these actions and planned actions are subject to ongoing management evaluation and will require validationand testing of the design and operating effectiveness of internal controls over a sustained period of financial reporting cycles, weare committed to the continuous improvement and diligent review of our internal controls over financial reporting.
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Changesin Internal Control over Financial Reporting
Otherthan as described above, there were no changes in our internal control over financial reporting during the quarter ended June 30, 2025that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
PARTII – OTHER INFORMATION
Item1. Legal Proceedings
Fromtime to time the Company may be named in claims arising in the ordinary course of business. Currently, there are no such legal proceedingsthat are pending against the Company or that involve the Company that, in the opinion of management, could reasonably be expected tohave a material adverse effect on the Company’s business or financial condition.
Item1A. Risk Factors
Weare a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the informationunder this item.
Item2. Unregistered Sales of Equity Securities and Use of Proceeds
None.
Item3. Defaults Upon Senior Securities
None.
Item4. Mine Safety Disclosures
Notapplicable.
Item5. Other Information
None.
Item6. Exhibits
Thefollowing exhibits are filed herewith as a part of this report.
| Exhibit No. | Description | |
| 31.1 | Certification by the Principal Executive Officer of Registrant pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (Rule 13a-14(a) or Rule 15d-14(a) | |
| 31.2 | Certification by the Principal Financial Officer of Registrant pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (Rule 13a-14(a) or Rule 15d-14(a) | |
| 32.1** | Section 1350 Certification of Chief Executive Officer | |
| 32.2** | Section 1350 Certification of Chief Financial Officer | |
| 101.INS† | Inline XBRL Instance Document | |
| 101.SCH† | Inline XBRL Taxonomy Extension Schema Document | |
| 101.CAL† | Inline XBRL Taxonomy Extension Calculation Linkbase Document | |
| 101.DEF† | Inline XBRL Taxonomy Extension Definition Linkbase Document | |
| 101.LAB† | Inline XBRL Taxonomy Extension Label Linkbase Document | |
| 101.PRE† | Inline XBRL Taxonomy Extension Presentation Linkbase Document | |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) |
**The certifications furnished in Exhibits 32.1 and 32.2 hereto are deemed to accompany this Quarterly Report on Form 10-Q and are notdeemed “filed” for purposes of Section 18 of the Exchange Act, or otherwise subject to the liability of that section, norshall they be deemed incorporated by reference into any filing under the Securities Act or the Exchange Act, irrespective of any generalincorporation language contained in such filing.+ Management contract or compensatory plan or arrangement.
†Filed herewith.
| 15 |
SIGNATURES
Pursuantto the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf bythe undersigned thereunto duly authorized.
| GIFTIFY, INC. | ||
| Date: August 13, 2025 | By: | /s/ Ketan Thakker |
| Ketan Thakker | ||
| President and Chief Executive Officer | ||
| 16 |
Exhibit31.1
Certificationof Chief Executive Officer
Pursuantto Rule 13a-14(a) under the Securities Exchange Act of 1934
I,Ketan Thakker, certify that:
| 1. | I have reviewed this Quarterly Report on Form 10-Q of Giftify, Inc. |
| 2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report. |
| 3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
| 4. | The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
| a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; | |
| b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; | |
| c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and | |
| d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
| 5. | The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
| a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and | |
| b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
| Date: August 13, 2025 | /s/ Ketan Thakker |
| Ketan Thakker | |
|
| Chief Executive Officer (PrincipalExecutive Officer) |
Exhibit31.2
Certificationof Chief Financial Officer
Pursuantto Rule 13a-14(a) under the Securities Exchange Act of 1934
I,Steve Handy, certify that:
| 1. | I have reviewed this Quarterly Report on Form 10-Q of Giftify, Inc. |
| 2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
| 3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
| 4. | The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
| a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; | |
| b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; | |
| c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and | |
| d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
| 5. | The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
| a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and | |
| b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
| Date: August 13, 2025 | /s/ Steve Handy |
| Steve Handy | |
| Principal Financial and Accounting Officer |
Exhibit32.1
Certificationof Chief Executive Officer
Pursuantto Section 1350 of Chapter 63 of Title 18 of the United States Code
Pursuantto U.S.C. Section 1350, as created by Section 906 of the Sarbanes-Oxley Act of 2002, the undersigned Chief Executive Officer of Giftify,Inc. (the “Company”) does hereby certify, to the best of such officer’s knowledge, that:
| 1. | The Quarterly Report on Form 10-Q of the Company for the quarterly period ended June 30, 2025 (the “Report”) fully complies with the requirements of Section 13(a) or Section 15(d), as applicable, of the Securities Exchange Act of 1934, as amended; and | |
| 2. | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
| Dated: August 13, 2025 | /s/ Ketan Thakker |
| Ketan Thakker | |
| President and Chief Executive Officer (Principal Executive Officer) |
Thecertifications set forth above are being furnished as an exhibit solely pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 andshall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, nor shallthey be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended.
Asigned original of this written statement required by Section 906, or other document authenticating, acknowledging or otherwise adoptingthe signature that appears in typed form within the electronic version of this written statement required by Section 906, has been providedto Giftify, Inc. and will be retained by Giftify, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.
Exhibit32.2
Certificationof Chief Financial Officer
Pursuantto Section 1350 of Chapter 63 of Title 18 of the United States Code
Pursuantto U.S.C. Section 1350, as created by Section 906 of the Sarbanes-Oxley Act of 2002, the undersigned Principal Financial Officer of Giftify,Inc. (the “Company”) does hereby certify, to the best of such officer’s knowledge, that:
| 1. | The Quarterly Report on Form 10-Q of the Company for the quarterly period ended June 30, 2025 (the “Report”) fully complies with the requirements of Section 13(a) or Section 15(d), as applicable, of the Securities Exchange Act of 1934, as amended; and | |
| 2. | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
| Dated: August 13, 2025 | /s/ Steve Handy |
| Steve Handy | |
Chief Financial Officer (Principal Financial and Accounting Officer) |
Thecertifications set forth above are being furnished as an exhibit solely pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 andshall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, nor shallthey be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended.
Asigned original of this written statement required by Section 906, or other document authenticating, acknowledging or otherwise adoptingthe signature that appears in typed form within the electronic version of this written statement required by Section 906, has been providedto Giftify, Inc. and will be retained by Giftify, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.