# Giftify, Inc.: Form 10-Q for the period ended Mar 31, 2025

- Company: [Giftify, Inc.](/companies/gift.md) (CIK 1760233)
- Form: 10-Q
- Filed: 2025-05-13
- Accepted by EDGAR: May 13, 2025, 08:45 ET
- Period: 2025-03-31
- Accession: 0001641172-25-009850
- Inline XBRL: yes
- Main document: https://www.sec.gov/Archives/edgar/data/1760233/000164117225009850/form10-q.htm
- All documents and exhibits: https://www.sec.gov/Archives/edgar/data/1760233/000164117225009850/

## Figures reported in this filing

Standardized XBRL line items for the period ended 2025-03-31.

| Line item | Period | Value | XBRL concept |
| --- | --- | ---: | --- |
| Revenue | 3 months, 2025-01-01 to 2025-03-31 | $22.3m | us-gaap:RevenueFromContractWithCustomerExcludingAssessedTax |
| Cost of revenue | 3 months, 2025-01-01 to 2025-03-31 | $18.7m | us-gaap:CostOfRevenue |
| Gross profit | 3 months, 2025-01-01 to 2025-03-31 | $3.6m | us-gaap:GrossProfit |
| Selling, general and administrative | 3 months, 2025-01-01 to 2025-03-31 | $6.0m | us-gaap:SellingGeneralAndAdministrativeExpense |
| Operating income | 3 months, 2025-01-01 to 2025-03-31 | −$3.2m | us-gaap:OperatingIncomeLoss |
| Income tax | 3 months, 2025-01-01 to 2025-03-31 | −$159.9k | us-gaap:IncomeTaxExpenseBenefit |
| Net income | 3 months, 2025-01-01 to 2025-03-31 | −$3.2m | us-gaap:NetIncomeLoss |
| Diluted EPS | 3 months, 2025-01-01 to 2025-03-31 | −$0.11 | us-gaap:EarningsPerShareDiluted |
| Basic EPS | 3 months, 2025-01-01 to 2025-03-31 | −$0.11 | us-gaap:EarningsPerShareBasic |
| Diluted shares (weighted) | 3 months, 2025-01-01 to 2025-03-31 | 28,354,277 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Operating cash flow | 3 months, 2025-01-01 to 2025-03-31 | −$1.4m | us-gaap:NetCashProvidedByUsedInOperatingActivities |
| Cash and equivalents | at 2025-03-31 | $2.1m | us-gaap:CashAndCashEquivalentsAtCarryingValue |
| Current assets | at 2025-03-31 | $7.8m | us-gaap:AssetsCurrent |
| Total assets | at 2025-03-31 | $33.9m | us-gaap:Assets |
| Current liabilities | at 2025-03-31 | $9.9m | us-gaap:LiabilitiesCurrent |
| Total liabilities | at 2025-03-31 | $12.6m | us-gaap:Liabilities |
| Shareholders' equity | at 2025-03-31 | $21.3m | us-gaap:StockholdersEquity |

## Management's discussion and analysis

As filed, 33,300 characters.

Management’s Discussion and Analysis of Financial Condition and Results of Operations is designed to provide a reader of the financial statements with a narrative report on our financial condition, results of operations, and liquidity. This discussion and analysis should be read in conjunction with the attached unaudited Condensed Consolidated Financial Statements and notes thereto and our Annual Report on Form 10-K for the year ended December 31, 2024, including the audited Consolidated Financial Statements and notes thereto. The following discussion contains 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 the cautionary language at the beginning of this Quarterly Report regarding forward-looking statements.

### Background

On September 4, 2024, our Board of Directors approved and, by written consent dated September 5, 2024, the holders of a majority of our common stock approved an amendment to our Certificate of Incorporation to change our name from RDE, Inc. to Giftify, Inc. The change to Giftify, Inc. became effective on October 28, 2024. All references to RDE, Inc. have been changed to Giftify, Inc.

On August 6, 2024, The Nasdaq Stock Market granted our application for listing on the Nasdaq.

On August 18, 2023, we entered into an agreement and plan of merger to acquire CardCash Exchange Inc (“CardCash”). On December 29, 2023, the merger was completed and has been accounted for as a business combination using the acquisition method of accounting. CardCash was formed in 2013 and purchases merchant gift cards and resells them at a markup.

On March 1, 2020, we acquired the assets of Restaurant.com, Inc., a pioneer in the restaurant deal space and the nation’s largest restaurant-focused digital deals brand.

### Business Overview

We have two principal divisions, B2C and B2B, for both CardCash and for Restaurant.com.

#### CardCash

CardCash operates as a leading gift card exchange platform, facilitating the purchase and sale of unwanted gift cards at discounted rates for both consumers and businesses. The Company’s mission is to provide a seamless marketplace for individuals looking to maximize the value of their gift cards while also offering businesses innovative solutions to leverage this market.

CardCash’s core service offering includes the buying and selling of gift cards from over 1,100 retailers, such as Target, Home Depot, Starbucks and TJ Maxx, among others. By connecting buyers and sellers, CardCash enables consumers to unlock value from unused gift cards and save significant amounts on their purchases.

CardCash purchases unwanted gift cards at a value lower than their face worth and subsequently retails them at a discounted rate to discerning shoppers nationwide. This avenue not only allows individuals to obtain cash for their unneeded gift cards but also enables them to make cost-effective purchases through discounted gift cards.

With advanced fraud prevention technology, known as FraudFix, CardCash ensures the security and integrity of all transactions conducted on its platform. This commitment to trust and reliability has contributed to its success in saving consumers over $100 million since its inception.

#### Restaurant.com

Restaurant.com is a pioneer in the restaurant deal space and the nation’s largest restaurant-focused digital deals brand. We derive our revenue from transactions in which we sell discount certificates for restaurants on behalf of third-party restaurants. Founded in 1999, we connect digital consumers, businesses, and communities offering dining and merchant deal options nationwide at over 182,500 restaurants and retailers to 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.com Business to Customer Division

To our 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 six months.
- “Specials by Restaurant.com” which bundle Restaurant.com certificates with a variety of other entertainment options, including theatre, movies, wine and travel. Customers have favored these bundled offering (“Specials”), generating significantly greater revenue per customer when compared to purchasing our other products. The average order value for these Specials sales is nearly five times a certificate purchase

#### Restaurant.com Business to Business Division

We sell 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.com Other Business

We also generate revenue through third-party offers and display ad revenue. This comprises a de minimis portion of our gross revenue.

#### Restaurant.com Attractive Customer Demographics

We intend to grow and leverage our customer database of 6.2 million which we believe is of value to merchants for a variety of services and products.

In March 2020, the World Health Organization declared COVID-19 a global pandemic. This contagious disease outbreak, adversely affected work forces, economies and financial markets globally. The outbreak has negatively impacted our revenues as a result of the temporary closures of restaurants throughout the United States where our discount certificates and Discount Dining Passes were accepted and where dining was being restricted to outdoor locations or to capacity constraints for indoor dining. Our revenues from purchase of our discount certificates in 2020, 2021 and 2022 declined since they could only be redeemed when dining in the restaurants and also were not accepted for payment by third-party platforms that facilitated ordering and delivery of food on-demand. As the COVID-19 pandemic has abated, our revenues improved in fiscal 2023.

### Inflation

Global inflation also increased during 2021 and in 2022. The Russia and Ukraine conflict and other geopolitical conflicts, as well as related international response, have exacerbated inflationary pressures, including causing increases in the price for goods and services and global supply chain disruptions, which have resulted and may continue to result in shortages in food products, materials and services. Such shortages have resulted and may continue to result in inflationary cost increases for labor, fuel, food products, materials and services, and could continue to cause costs to increase as well as result in the scarcity of certain materials. We cannot predict any future trends in the rate of inflation or other negative economic factors or associated increases in our operating costs and how that may impact our business. To the extent we and the restaurant customers we service are unable to recover higher operating costs resulting from inflation or otherwise mitigate the impact of such costs on our and their business, our revenues and gross profit could decrease, and our financial condition and results of operations could be adversely affected.

### Going Concern

The Company has a history of reporting net losses. At March 31, 2025, the Company had cash of $2,121,814 available to fund its operations, including expansion plans, and to service its debt, and a negative working capital of $2,075,999.

Our consolidated financial statements have been presented on the basis that it will continue as a going concern, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business. We have experienced operating losses and negative operating cash flows during 2024 and 2023. We have financed our working capital requirements through borrowings from various sources and the sale of our equity securities.

As a result, management has concluded that there is substantial doubt about our ability to continue as a going concern. The Company’s independent registered public accounting firm, in its report on the Company’s consolidated financial statements for the year ended December 31, 2024, has also expressed substantial doubt about the Company’s ability to continue as a going concern. The Company’s consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

The Company’s ability to continue as a going concern is dependent upon its ability to raise additional debt or equity capital to fund its business activities and to ultimately achieve sustainable operating revenues and profitability.

As market conditions present uncertainty as to the Company’s ability to secure additional funds, there can be no assurances that the Company will be able to secure additional financing on acceptable terms, as and when necessary to continue to conduct operations. There is also significant uncertainty as to the effect that the coronavirus may have on the Company’s business plans and the amount and type of financing available to the Company in the future.

If the Company is unable to obtain the cash resources necessary to satisfy the Company’s ongoing cash requirements, the Company could be required to scale back its business activities or to discontinue its operations entirely.

### Results of Operations – Three Months Ended March 31, 2025, Compared to Three Months Ended March 31, 2024

### GIFTIFY, INC. AND SUBSDIARIES (FKA RDE, INC.)

### CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

*(Unaudited)*

*(Unaudited)*

|  | Three Months Ended March 31, 2025 | 2024 |
| --- | ---: | ---: |
| **Net Sales** | $22,277,013 | $21,521,894 |
| Cost of sales | 18,695,377 | 18,264,618 |
| Gross profit | 3,581,636 | 3,257,276 |
| **Operating Expenses** |  |  |
| Selling, general and administrative expenses | 6,043,841 | 5,214,041 |
| Amortization of capitalized software costs | 161,543 | 378,737 |
| Amortization of intangible assets | 543,917 | 607,917 |
| Total operating expenses | 6,749,301 | 6,200,695 |
| Loss from operations | (3,167,665) | (2,943,419) |
| **Other income (expense):** |  |  |
| Interest expense | (209,571) | (247,301) |
| Total other income (expense), net | (209,571) | (247,301) |
| Net loss before income taxes | (3,377,236) | (3,190,720) |
| Income tax (expense) benefit | 159,904 | - |
| **Net loss** | $(3,217,332) | $(3,190,720) |

### Net Sales

|  | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 |
| --- | ---: | ---: |
| CardCash | $21,867,114 | $21,160,007 |
| Restaurant.com | 409,899 | 361,887 |
| Net Sales | $22,277,013 | $21,521,894 |

#### CardCash

Net sales for the three months ended March 31, 2025 and 2024, were $21,867,114 and $21,160,007, respectively. During the current year period, we focused on improving our gross margin. We assessed the quality of our purchased gift card brands, allowing us to increase the sales price to our customers, resulting in a gross margin of 14.7%, as compared to a gross margin of 13.8% in the prior year period, which generated an increase in gross profit as compared to the prior year period.

#### Restaurant.com

Net Sales for the three months ended March 31, 2025 and 2024, were $409,899 and $361,886, respectively.

### Cost of Sales

|  | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2025 |
| --- | ---: | ---: |
| CardCash | $18,659,017 | $18,237,448 |
| Restaurant.com | 36,360 | 27,170 |
| Cost of Sales | $18,695,377 | $18,264,618 |

#### CardCash

Cost of sales consists primarily of the cost to purchase merchant gift cards. Cost of sales for the three months ended March 31, 2025 and 2024, were $18,659,017 and $18,237,448, respectively. Gross profit increased $ $285,850, or 9.8%, as compared to the prior year period. Our gross margin, as a percentage of sales, were 14.7% and 13.8%, for the three months ended March 31, 2025 and 2024, respectively.

#### Restaurant.com

Cost of sales for the three months ended March 31, 2025 and 2024, were $36,360 and $27,170, respectively.

### Operating Expenses

|  | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 |
| --- | ---: | ---: |
| Selling, general and administrative expenses | $6,043,841 | $5,214,041 |
| Amortization of capitalized software costs | 161,543 | 378,737 |
| Amortization of intangible assets | 543,917 | 607,917 |
| Operating expenses | $6,749,301 | $6,200,695 |

Selling, general and administrative expenses consist of costs incurred to identify, communicate with and evaluate potential customers and related business opportunities, and compensation to officers and directors, as well as legal and other professional fees, lease expense, and other general corporate expenses. Management expects selling, general and administrative expenses to increase in future periods as the Company 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 $6,043,841 for the three months ended March 31, 2025, as compared to $5,214,041 for the three months ended March 31, 2024, an increase of $829,800. The increase was from increased stock-based compensation expense of $481,628 during the three months ended March 31, 2025, increased payroll and benefit expenses, and general changes in our business and operations.

*Amortization of capitalized software costs.*

Amortization expenses are primarily attributed to the Company’s capitalized software development costs. Amortization expenses were $161,543 during the three months ended March 31, 2025, as compared to $378,737 during the three months ended March 31, 2024.

#### Amortization of intangible assets.

Amortization expenses are primarily attributable to the Company’s amortization of intangible assets with finite lives. Amortization expenses were $543,917 during the three months ended March 31, 2025, as compared to amortization expenses of $607,917 during the three months ended March 31 2024.

### Loss from Operations

For the three months ended March 31, 2025, we incurred a loss from operations of $ 3,167,665, as compared to a loss from operations of $2,943,419 for the three months ended March 31, 2024. The increase in loss from operations was due to our increased gross profit offset by increased stock-based compensation expense, and operating costs, as discussed above.

### Other Expenses

For the three months ended March 31, 2025, we incurred interest expense of $209,571, as compared to interest expense of $247,301 for the three months ended March 31, 2024. The decrease in interest expense was due to our decreased debt balances.

### Income Tax Benefit

For the three months ended March 31, 2025, we realized an income tax benefit of $159,904 as compared to an income tax benefit of $0 for the three months ended March 31, 2024.

### Net Loss

We realized a net loss of $3,217,332 for the three months ended March 31, 2025, as compared to a net loss of $3,190,720 for the three months ended March 31, 2024. The increase in net loss was due to our increased gross profit, decreased interest expense, and income tax benefit, offset by increased stock-based compensation expense and operating costs, as discussed above.

### Modified EBITDA

In addition to our GAAP results, we present Modified EBITDA as a supplemental measure of our performance. However, Modified EBITDA is not a recognized measurement under GAAP and should not be considered as an alternative to net income, income from operations or any other performance 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 fair value of common stock issued for services.

Management considers our core operating performance to be that which our managers can affect in any particular period through their management of the resources that affect our underlying revenue and profit generating operations during that period. Non-GAAP adjustments to our results prepared in accordance with GAAP are itemized below. You are encouraged to evaluate these adjustments and the reasons we consider them appropriate for supplemental analysis. In evaluating Modified EBITDA, you should be aware that in the future we may incur expenses that are the same as or similar to some of the adjustments in this presentation. Our presentation of Modified EBITDA should not be construed as an inference that our future results will be unaffected by unusual or non-recurring items.

Set forth below is a reconciliation of net loss to Modified EBITDA for the three months ended March 31, 2025 and 2024 (unaudited):

|  | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 |
| --- | ---: | ---: |
| Net Loss | $(3,217,332) | $(3,190,720) |
| Modified EBITDA adjustments: |  |  |
| Income taxes | (159,904) | - |
| Interest expense | 209,571 | 247,301 |
| Amortization of intangible assets | 543,917 | 607,917 |
| Amortization of capitalized software costs | 161,543 | 378,737 |
| Loss on fair value of stock issued on vendor settlement | 33,750 | - |
| Stock option and other noncash compensation | 1,802,135 | 1,298,876 |
| Total Modified EBITDA adjustments | 2,591,012 | 2,532,831 |
| Mofified EBITDA | $(626,320) | $(657,889) |

We present Modified EBITDA because we believe it assists investors and analysts in comparing our performance across reporting periods on a consistent basis by excluding items that we do not believe are indicative of our core operating performance. In addition, we use Modified EBITDA in developing our internal budgets, forecasts and strategic plan; in analyzing the effectiveness of our business strategies in evaluating potential acquisitions; making compensation decisions; and in communications with our board of directors concerning our financial performance. 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.

### Critical Accounting Policies and Estimates

The following discussion and analysis of financial condition and results of operations is based upon the Company’s consolidated financial statements for the years ended December 31, 2024 and 2023 presented elsewhere in this report, which have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”). Certain accounting policies and estimates are particularly important to the understanding of the Company’s financial position and results of operations and require the application of significant judgment by management or can be materially affected by changes from period to period in economic factors or conditions that are outside of the Company’s control. As a result, these issues are subject to an inherent degree of uncertainty. In applying these 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.

### Revenue Recognition

The Company recognizes revenue in accordance with FASB ASC 606, *Revenue from Contracts with Customers.*

The Company buys merchant gift cards from the general public and distributors at a discount and then resells them at a markup. The Company also derives revenue from the sale of discount certificates for restaurants on behalf of third-party restaurants.

Revenue and costs of sales are recognized when control of the products transfers to our customer, which generally occurs at a point in time when the risk and title to the product transfers to the customer upon delivery to the customer. The Company’s performance obligations are satisfied at that time. The Company’s standard terms of delivery are included in its contracts of sale, order confirmation documents, and invoices. The Company recognizes revenue on a gross basis for the sales price of the merchant gift cards and discount certificates it collects.

### Share-Based Compensation

The Company periodically issues share-based awards to employees and non-employees and consultants for services rendered. Stock options vest and expire according to terms established at the issuance date of each grant. Stock grants are measured at the grant date fair value. Stock-based compensation cost is measured at fair value on the grant date and is generally recognized as a charge to operations ratably over the requisite service, or vesting, period. Recognition of compensation expense for non-employees is in the same period and manner as if the Company had paid cash for the services.

### Acquisitions and Business Combinations

The Company allocates the fair value of purchase consideration to the tangible assets acquired, liabilities assumed, and separately identified intangible assets acquired based on their estimated fair values. The excess of the fair value of purchase consideration over the fair values of these identifiable assets and liabilities is recorded as goodwill. Such valuations require management to make significant estimates and assumptions, especially with respect to intangible assets. Significant estimates in valuing certain intangible assets include, but are not limited to, future expected cash flows from, acquired technology, trademarks and trade names, useful lives, and discount rates. Management’s estimates of fair value are based upon assumptions believed to be reasonable, but which are inherently uncertain and unpredictable and, as a result, actual results may differ from estimates. During the measurement period, which can be up to one year from the acquisition date, the Company may record adjustments to the assets acquired and liabilities assumed, with the corresponding offset to goodwill. Upon the conclusion of the measurement period, any subsequent adjustments are recorded in the consolidated statements of operations.

### Recent Accounting Pronouncements

See discussion of recent accounting pronouncements in Note 1 to the accompanying financial statements.

### Liquidity and Capital Resources

The accompanying consolidated financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classifications of liabilities that may result from the outcome of the uncertainty concerning our ability to continue as a going concern.

### Going Concern

Our consolidated financial statements have been presented on the basis that it will continue as a going concern, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business. We experienced operating losses and negative operating cash flows during 2024 and 2023. We have financed our working capital requirements through borrowings from various sources and the sale of equity securities.

We have a history of reporting net losses. At March 31, 2025, we had cash of $2,121,814 available to fund our operations, including expansion plans, and to service our debt, and a negative working capital of $2,026,499. We anticipate our cash balance will last until approximately December 2025. 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 report with respect to this uncertainty that accompanies the Company’s audited consolidated financial statements as of and for the year ended December 31, 2024. The Company’s independent registered public accounting firm, in their report on the Company’s December 31, 2024 audited consolidated financial statements, has expressed substantial doubt about the Company’s ability to continue as a going concern. Our consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Our ability to continue as a going concern is dependent upon its ability to raise additional debt or equity capital to fund its business activities and to ultimately achieve sustainable operating revenues and profitability.

As market conditions present uncertainty as to our ability to secure additional funds, there can be no assurances that we will be able to secure additional financing on acceptable terms, as and when necessary, to continue to conduct operations. There is also significant uncertainty as to the amount and type of financing available to us in the future.

If we are unable to obtain the cash resources necessary to satisfy our ongoing cash requirements, we could be required to scale back its business activities or to discontinue its operations entirely.

Our consolidated statements of cash flows as discussed herein are presented below.

|  | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 |
| --- | ---: | ---: |
| Net cash used in operating activities | $(1,448,924) | $(6,636) |
| Net cash used in investing activities | - | (224,815) |
| Net cash (used in) provided by financing activities | (4,138) | 1,532,535 |
| Net increase (decrease) in cash and cash equivalents | $(1,453,062) | $1,301,084 |

7

#### Operating Activities

Cash provided by or used in operating activities primarily consists of net loss adjusted for certain non-cash items, including amortization of intangible assets, impairment of intangible assets, gain on forgiveness of government assistance notes payable, and the fair value of common stock issued for directors, employees, and service providers, and the effect of changes in working capital and other activities.

Cash used in operating activities for the three months ended March 31, 2025 was approximately $1,448,924 and consisted of our net loss, adjusted for non-cash items, 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.

Cash used in operating activities for the three months ended March 31, 2024 was approximately $6,636 and consisted of our net loss, adjusted for non-cash items, including amortization of intangible assets, fair value of vested stock options, and the fair value of common stock issued to executives, employees, and advisors, and routine changes in working capital and other activities.

#### Investing Activities

The Company had no cash flows from investing activities for the three months ended March 31, 2025.

Cash used for investing activities for the three months ended March 31, 2024 was $224,815, which was for capital expenditures.

#### Financing Activities

Cash used in financing activities for the three months ended March 31, 2025 was $4,138, which was from proceeds of $1,883,613 on the sale of common stock, net proceeds of $985,000 from a note payable, offset by repayment of our line of credit balance of $122,752, and repayment of our notes payable of $2,750,000.

Cash provided by financing activities for the three months ended March 31, 2024 was $1,532,535, which was from proceeds of $2,709,000 on the private sale of common stock, less partial repayment of our line of credit balance of $676,465, and payment of $500,000 on our acquisition obligation.

### Secured Revolving Line of Credit

In November 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 the Wall Street Journal Prime Rate plus 3.00%, limited to a floor of 6.5%. At March 31, 2025 and December 31, 2024, the average interest rate was 12% and 12%, respectively. As of March 31, 2025, the Company complied with customary debt covenants. At March 31, 2025 and December 31, 2024, the line of credit requires a deposit of $1,258,826, included in restricted cash.

### Convertible Debt

On November 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 continues to be unsuccessful in reaching the Note holder to remit payment in full. At December 31, 2024, the principal balance of $20,000, and accrued interest of $23,137, are convertible at $1.50 per share into 28,758 shares of the Company’s common stock. At March 31, 2025, the principal balance of $20,000, and accrued interest of $23,887, are convertible at $1.50 per share into 29,258 shares of the Company’s common stock.

### Notes Payable

#### CardCash Acquisition Notes Payable

On December 29, 2023, the Company issued two-year promissory notes totaling $1,500,000 as partial consideration for the acquisition of CardCash (see Note 3). $750,000 is payable on December 29, 2024, bearing simple annual interest of 5%, and $750,000 is to be paid upon the earlier of (a) the completion of a firm commitment underwriting the Company’s initial public offering to allow the Company to become listed on the Nasdaq Capital Market or (b) December 29, 2025. As of December 31, 2024, the notes payable had an aggregate principal balance outstanding of $1,500,000 and accrued interest payable of $75,000. During the three months ended March 31, 2025, the Company made principal payments of $750,000, leaving at March 31, 2025, an aggregate principal balance outstanding of $750,000 and accrued interest payable of $84,375.

#### Real World Digital Assets

On February 19, 2025, the Company entered into a secured promissory note with Real World Digital Assets LLC (“Real World”) in the 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 origination fee 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 prepaid without penalty. The note is collateralized by a blanket lien on the assets of Giftify under the terms of a security agreement and is subordinated only to the line of credit owed by the Company to Pathward National Association (see Note 7). Proceeds from the note were used to pay the remaining balance owed on the secured promissory note with Spars Capital (See Note 9). As of March 31, 2025, the notes payable had a principal balance outstanding of $1,000,000, a debt discount balance of $12,857, and accrued interest payable of $12,918.

#### Economic Injury Disaster Loans (EIDL)

On June 17, 2020, the Company received $150,000 of proceeds applicable to loans administered by the SBA as disaster loan assistance under the Covid-19 Economic Injury Disaster Loan (EIDL) Program. On July 14, 2021, the Company received an additional $350,000 of proceeds pursuant to the loan. On July 21, 2020, the Company received $150,000 of proceeds applicable to loans administered by the SBA as disaster loan assistance under the Covid-19 EIDL Program. On January 31, 2022, the Company assumed an additional $14,500 EIDL and accrued interest of $900 as part of the consideration paid for the acquisition of GameIQ.

The loans bear interest at 3.75% per annum, with a combined repayment of principal and interest of $3,500 per month beginning 12 months from the date of the promissory note over a period of 30 years. As of December 31, 2024, the note payable had a principal balance outstanding of $664,500 and accrued interest payable of $15,558.

As of March 31, 2025, the note payable had a principal balance outstanding of $664,500 and accrued interest payable of $8,638.

### Off-Balance Sheet Arrangements

At March 31, 2025 and December 31, 2024, the Company did not have any transactions, obligations or relationships that could be considered off-balance sheet arrangements.

## Controls and procedures

As filed, 8,782 characters.

### Evaluation of Disclosure Controls and Procedures

Disclosure controls and procedures are designed at a reasonable assurance level to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act, is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC, and that information relating to the Company is accumulated and communicated to management, including our principal officers, as appropriate to allow timely decisions regarding required disclosure. The Company’s Chief Executive and Chief Financial Officer has evaluated the effectiveness of the Company’s disclosure controls and procedures as of December 31, 2024, and have concluded that the Company’s disclosure controls and procedures were not effective as of December 31, 2024, due to the material weakness described below in the subsection titled “*Management’s Annual Report on Internal Control over Financial Reporting.*

Notwithstanding the identified material weakness, management has concluded that the Financial Statements included in this Annual Report on Form 10-K present fairly, in all material respects, the Company’s financial position, results of operations and cash flows for the periods disclosed in conformity with U.S. GAAP.

On December 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.

### Inherent Limitations on Effectiveness of Controls

Management does not expect the Company’s disclosure controls or internal control over financial reporting will prevent or detect all errors and all fraud. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the control system’s objectives will be met. The Company’s controls and procedures are designed to provide reasonable assurance that control system’s objective will be met, and the CEO and CFO have concluded that the Company’s disclosure controls and procedures are ineffective at the reasonable assurance level. The design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Further, because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that misstatements due to error or fraud will not occur or that all control issues and instances of fraud, if any, within the company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty and that breakdowns can occur because of simple errors or mistakes. Controls can also be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the controls. The design of any system of controls is based in part on certain assumptions about the likelihood of future events and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Projections of any evaluation of the effectiveness of controls in future periods are subject to risks. Over time, controls may become inadequate because of changes in conditions or deterioration in the degree of compliance with policies or procedures.

### Management’s Annual Report on Internal Control over Financial Reporting

Management is responsible for establishing and maintaining adequate internal control over financial reporting, as defined by Rule 13a-15(f) and Rule 15d-15(f) under the Exchange Act. The Company’s internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of consolidated financial statements for external purposes in 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 because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. Management conducted an assessment of the Company’s internal control over financial reporting as of December 31, 2024, based on the framework and criteria established by the Committee of Sponsoring Organizations of the Treadway Commission in Internal Control-Integrated Framework (2013) (COSO). Based on the assessment, management concluded that, as of December 31, 2024, the Company’s internal controls over financial reporting were not effective.

We identified a material weakness in our internal controls over financial reporting. A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of our financial statements will not be prevented or detected on a timely basis.

As previously reported, the material weaknesses continued to exist as of December 31, 2024, relating to the Company did not design and maintain effective controls over certain information technology (“IT”) general controls for information systems that are relevant to the preparation of its consolidated financial statements. Specifically, Company did not design and maintain effective program change management controls to ensure that access to information technology program and data changes affecting certain financial IT applications and underlying accounting records are identified, documented, tested, authorized and implemented appropriately.

### Remediation Plan for Material Weaknesses in Internal Control Over Financial Reporting

In response 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 remediation activities 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.

We believe the foregoing efforts will effectively remediate the material weaknesses described in “Management’s Report on Internal Control Over Financial Reporting.” Because the reliability of the internal control process requires repeatable execution, the successful on-going remediation of the material weaknesses will require on-going review and evidence of effectiveness prior to concluding that controls are effective

### Remediation of Previously Identified Material Weaknesses

In the year ending December 31, 2023, we had the following material weakness:

The Company did not maintain adequate segregation of duties consistent with control objectives. Specifically, certain personnel had the ability to both (i) create and post journal entries within our general ledger system and (ii) prepare and review account reconciliations.

As of 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.

Management determined 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.

There are, however, inherent limitations in all control systems and no evaluation of controls can provide absolute assurance that all deficiencies have been detected. While these actions and planned actions are subject to ongoing management evaluation and will require validation and testing of the design and operating effectiveness of internal controls over a sustained period of financial reporting cycles, we are committed to the continuous improvement and diligent review of our internal controls over financial reporting.

### Changes in Internal Control over Financial Reporting

Other than as described above, there were no changes in our internal control over financial reporting during the quarter ended March 31, 2025 that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

## Risk factors

As filed, 163 characters.

We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information under this item.

Filed May 13, 2025.
Source: SEC EDGAR, the filing index for accession 0001641172-25-009850. Last ingested by Listed: Nov 3, 2026, 08:57 ET. No prices; not investment advice.