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What changed in GIFTIFY, INC.'s 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of GIFTIFY, INC.'s 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+216 added−220 removedSource: 10-K (2025-03-31) vs 10-K (2024-04-09)

Top changes in GIFTIFY, INC.'s 2024 10-K

216 paragraphs added · 220 removed · 170 edited across 6 sections

Item 1. Business

Business — how the company describes what it does

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Biggest changeAmong the companies that focus on the dining and savings category and certain of the subcategories in which we participate are the following: ● discount (e.g., Groupon.com, Entertainment.com); ● ratings and reviews communities (Zagat.com, TripAdvisor); ● restaurant listings (Yelp, Zomato and OpenTable); ● food content (Food Network, Food.com and Epicurious); ● eCommerce (Groupon, TravelZoo and Woot); and ● takeout and delivery (DoorDash.com, GrubHub.com UberEats.com and Delivery.com). 6 We believe the principal competitive factors in our market include the following: ● breadth of customer base and number of restaurants featured; ● ability to deliver a high volume of relevant deals to consumers; ● ability to produce high purchase rates for deals among customers; ● ability to generate positive return on investment for merchants; and ● strength and recognition of our brand.
Biggest changeAmong the companies that focus on the dining and savings category and certain of the subcategories in which we participate are the following: ● discount (e.g., Groupon.com, Entertainment.com); ● ratings and reviews communities (Zagat.com, TripAdvisor); 8 ● restaurant listings (Yelp, Zomato and OpenTable); ● food content (Food Network, Food.com and Epicurious); ● eCommerce (Groupon, TravelZoo and Woot); and ● takeout and delivery (DoorDash.com, GrubHub.com UberEats.com and Delivery.com).
The acquisition and integration of the CardCash has changed our financial position, market profile and brand focus, and has also expanded our search for additional business opportunities in the short-term, both internal and external.
The acquisition and integration of CardCash has changed our financial position, market profile and brand focus, and has also expanded our search for additional business opportunities in the short-term, both internal and external.
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.
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. 6 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.
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. 4 ● 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.
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.
Complying with these various laws could cause us to incur substantial costs or require us to change our business practices in a manner adverse to our business. Various federal laws, such as the Bank Secrecy Act and the USA PATRIOT Act, impose certain anti-money laundering requirements on companies that are financial institutions or that provide financial products and services.
Complying with these various laws could cause us to incur substantial costs or require us to change our business practices in a manner adverse to our business. 10 Various federal laws, such as the Bank Secrecy Act and the USA PATRIOT Act, impose certain anti-money laundering requirements on companies that are financial institutions or that provide financial products and services.
Although we do not believe we are a financial institution or otherwise subject to these laws and regulations, it is possible that the Company could be considered a financial institution or provider of financial products. 8 Intellectual Property We protect our intellectual property rights by relying on federal, state and common law rights, as well as contractual restrictions.
Although we do not believe we are a financial institution or otherwise subject to these laws and regulations, it is possible that the Company could be considered a financial institution or provider of financial products. Intellectual Property We protect our intellectual property rights by relying on federal, state and common law rights, as well as contractual restrictions.
The emails for discount certificates for restaurants contain one headline deal with a full description of the deal and a sampling of dining deals which are available within a customer’s market. The emails for Specials by Restaurant.com include featured travel, entertainment and wine deals in addition to various other product deals. 5 Websites.
The emails for discount certificates for restaurants contain one headline deal with a full description of the deal and a sampling of dining deals which are available within a customer’s market. The emails for Specials by Restaurant.com include featured travel, entertainment and wine deals in addition to various other product deals. Websites.
ITEM 1. BUSINESS As used in this Annual Report, the terms “we,” “us,” “our,” and the “Company” refer to RDE, Inc., a Delaware corporation, and its consolidated subsidiaries. RDE, Inc. owns and operates Restaurant.com, a pioneer in the restaurant deal space and the nation’s largest restaurant-focused digital deals brand. Our profile fundamentally changed with the acquisition of CardCash Exchange, Inc.
ITEM 1. BUSINESS As used in this Annual Report, the terms “we,” “us,” “our,” and the “Company” refer to Giftify, Inc., a Delaware corporation, and its consolidated subsidiaries. Giftify owns and operates Restaurant.com, a pioneer in the restaurant deal space and the nation’s largest restaurant-focused digital deals brand. Our profile fundamentally changed with the acquisition of CardCash Exchange, Inc.
Jude’s Research Hospital demonstrate CardCash’s commitment to supporting critical causes and making a positive impact. 2 Among its offerings, CardCash Incentives provides new gift cards for over 300 brands at discounted rates, catering to businesses seeking employee engagement and customer loyalty through customized gift card solutions.
Jude’s Research Hospital demonstrate CardCash’s commitment to supporting critical causes and making a positive impact. 4 Among its offerings, CardCash Incentives provides new gift cards for over 300 brands at discounted rates, catering to businesses seeking employee engagement and customer loyalty through customized gift card solutions.
CardCash expects to drive top-line growth by adding new branded exchange partnerships that in turn are expected to generate more users and increase demand for other services. CardCash currently has a 13.3% gross margin for its four revenue streams combined.
CardCash expects to drive top-line growth by adding new branded exchange partnerships that in turn are expected to generate more users and increase demand for other services. CardCash currently has a 13.0% gross margin for its four revenue streams combined.
CardCash is seeking a strategic investment and collaboration, in addition to what it receives by its merger with RDE, to bring data synergy and higher margins from more reliable processing.
CardCash is seeking a strategic investment and collaboration, in addition to what it receives by its merger with Giftify, to bring data synergy and higher margins from more reliable processing.
Merger with CardCash Exchange, Inc. On December 29, 2023, RDE, Inc. completed the acquisition of CardCash Exchange, Inc. (“CardCash”). The acquisition was made pursuant to a plan of merger agreement dated August 18, 2023, between RDE, and Elliott Bohn, in his capacity as stockholder representative for CardCash’s stockholders.
On December 29, 2023, Giftify, Inc. completed the acquisition of CardCash Exchange, Inc. (“CardCash”). The acquisition was made pursuant to a plan of merger agreement dated August 18, 2023, between Giftify, Inc., and Elliott Bohn, in his capacity as stockholder representative for CardCash’s stockholders.
We believe the CardCash acquisition added valuable attributes, including (1) CardCash’s brand awareness and acceptance from the consumer; and (2) experienced management. ● Brand awareness – CardCash was initially formed approximately 15 years ago, and we believe this history, along with strong marketing push along multiple front have led to strong consumer awareness and acceptance. ● Experienced management – As part of the CardCash acquisition, member of the executive leadership team of CardCash have joined us.
We believe the CardCash acquisition added valuable attributes, including (1) CardCash’s brand awareness and acceptance from the consumer; and (2) experienced management. ● Brand awareness – CardCash was initially formed approximately 15 years ago, and we believe this history, along with strong marketing push along multiple fronts have led to strong consumer awareness and acceptance. ● Experienced management – As part of the CardCash acquisition, members of the executive leadership team of CardCash have joined us.
Furthermore, CardCash facilitates Business-to-Business (B2B) exchanges, enabling companies to efficiently manage surplus gift card inventory and procure gift cards in bulk for various business needs. This service not only benefits businesses but also contributes to a thriving gift card market projected to reach $1.4 trillion by 2026. Moreover, CardCash is committed to social responsibility through partnerships with charitable organizations.
Furthermore, CardCash facilitates Business-to-Business (B2B) exchanges, enabling companies to efficiently manage surplus gift card inventory and procure gift cards in bulk for various business needs. This service not only benefits businesses but also contributes to a thriving gift card market projected to reach $400 billion by 2026. Moreover, CardCash is committed to social responsibility through partnerships with charitable organizations.
We believe we compete favorably on several of the factors described above and plan to increase our standing in each of these categories. As of December 31, 2023, our customer base was 6.2 million and during 2023 we featured deals at over 184,000 restaurants and merchants.
We believe we compete favorably on several of the factors described above and plan to increase our standing in each of these categories. As of December 31, 2024, our customer base was 5.4 million and during 2024 we featured deals at over 184,000 restaurants and merchants.
Specifically, similar to “emerging growth companies”, “smaller reporting companies” are able to provide simplified executive compensation disclosures in their filings; are exempt from the provisions of Section 404(b) of the Sarbanes-Oxley Act (“SOX”) requiring that independent registered public accounting firms provide an attestation report on the effectiveness of internal control over financial reporting; and have certain other decreased disclosure obligations in their SEC filings, including, among other things, only being required to provide two years of audited financial statements in annual reports.
As a “smaller reporting company”, we are able to provide simplified executive compensation disclosures in our SEC filings; are exempt from the provisions of Section 404(b) of the Sarbanes-Oxley Act (“SOX”) requiring that independent registered public accounting firms provide an attestation report on the effectiveness of internal control over financial reporting; and have certain other decreased disclosure obligations in their SEC filings, including, among other things, only being required to provide two years of audited financial statements in annual reports.
CardCash Growth Plans CardCash intends to grow its current four business channels, bulk to bulk, bulk to retail, retail to bulk and retail to retail, to take advantage of the projected expansion by 2026 of the global market for gift cards to $1.4 trillion (see ““Business - Pending Acquisition – CardCash Exchange, Inc.”) as follows: ● Increase Access to Strategic Partnerships and Expanded Data .
CardCash Growth Plans CardCash intends to grow its current four business channels, bulk to bulk, bulk to retail, retail to bulk and retail to retail, to take advantage of the projected expansion by 2026 of the global market for gift cards to $400 billion (see “Business - Pending Acquisition – CardCash Exchange, Inc.”) as follows: ● Increase Access to Strategic Partnerships and Expanded Data .
Notwithstanding the above, we are also currently a “smaller reporting company”, meaning that we are not an investment company, an asset-backed issuer, or a majority-owned subsidiary of a parent company that is not a smaller reporting company and have a public float of less than $75 million and annual revenues of less than $50 million during the most recently completed fiscal year.
Smaller Reporting Company We are currently a “smaller reporting company”, meaning that we are not an investment company, an asset-backed issuer, or a majority-owned subsidiary of a parent company that is not a smaller reporting company and have a public float of less than $250 million during the most recently completed fiscal year.
Our customer service representatives can be reached via email 24 hours a day, seven days a week. The customer service team also works with our information technology team to improve the customer experience on the website and mobile applications based on customer feedback. As of December 2023, we employed four customer representatives. Technology.
Our customer service representatives can be reached via email 24 hours a day, seven days a week. The customer service team also works with our information technology team to improve the customer experience on the website and mobile applications based on customer feedback. Technology.
The CARD Act, as well as the laws of most states, contain provisions governing product terms and conditions of gift cards, gift certificates, stored value or pre-paid cards or coupons (“gift cards”), such as provisions prohibiting or limiting the use of expiration dates on gift cards or the amount of fees charged in connection with gift cards or requiring specific disclosures on or in connection with gift cards.
Accordingly, adverse legal or regulatory developments could substantially harm our business. 9 The CARD Act, as well as the laws of most states, contain provisions governing product terms and conditions of gift cards, gift certificates, stored value or pre-paid cards or coupons (“gift cards”), such as provisions prohibiting or limiting the use of expiration dates on gift cards or the amount of fees charged in connection with gift cards or requiring specific disclosures on or in connection with gift cards.
The Company acquired all of the issued and outstanding equity interests of CardCash from CardCash’s stockholders for $26,682,000, made up of 6,108,007 shares of RDE’s common stock with a fair value of $24,432,000 or $4.00 per share, $750,000 in cash (including $250,000 advanced in October 2023), and the issuance of notes payable for $1,500,000. 1 Our Business We have two principal divisions, B2C and B2B, for both CardCash and for Restaurant.com.
The Company acquired all of the issued and outstanding equity interests of CardCash from CardCash’s stockholders for $26,682,000, made up of 6,108,007 shares of Giftify’s common stock with a fair value of $24,432,000 or $4.00 per share, $750,000 in cash (including $250,000 advanced in October 2023), and the issuance of notes payable for $1,500,000.
In addition, it is possible that governments of one or more countries may seek to censor content available on our websites or may even attempt to completely block access to our websites. Accordingly, adverse legal or regulatory developments could substantially harm our business.
In addition, it is possible that governments of one or more countries may seek to censor content available on our websites or may even attempt to completely block access to our websites.
CardCash intends to increase its marketing to retailers and consumers to accelerate its sales of gift cards. 3 ● Increase Profit Margins . CardCash intends to shift its cost structure to allow it to process scalable volumes of 4-5X its current number of gift cards with a very slight increase in cost.
CardCash intends to shift its cost structure to allow it to process scalable volumes of 4-5X its current number of gift cards with a very slight increase in cost.
As of December 31, 2023, our information technology team consisted of five employees. Competition CardCash CardCash faces competition from a number of competitors but believes that it has key attributes that provide it with a competitive advantage in the market for unused gift cards.
Competition CardCash CardCash faces competition from a number of competitors but believes that it has key attributes that provide it with a competitive advantage in the market for unused gift cards.
We use offline marketing such as print to help build awareness of brand. Distribution We distribute our deals directly through several platforms: email, our websites, our mobile applications and social networks. We also utilize various affiliate partnerships to display and promote our deals on their websites, such as with AMAC, Groupon, MemberHub and others.
Our website and mobile applications enable consumers to share our offerings with their personal social networks. We also promote our offerings using display advertising on websites. Offline. We use offline marketing such as print to help build awareness of brand. Distribution We distribute our deals directly through several platforms: email, our websites, our mobile applications and social networks.
Elliot Bohm, President of CardCash prior to the merger with RDE, remains as President of CardCash following the closing of the merger and has joined the Board of Directors of RDE. Marc Ackerman, Chief Operating Officer of CardCash prior to the merger with RDE, continues to serve as Chief Operating Officer of CardCash following the closing of the merger.
Elliot Bohm, President of CardCash prior to the merger with Giftify, remains as President of CardCash following the closing of the merger and has joined the Board of Directors of Giftify.
Social Networks. We publish our daily deals through various social networks adapt and our marketing to the particular format of each of these social networking platforms. Our website and mobile application interfaces enable our consumers to share our offerings to their personal social networks.
Social Networks. We publish our daily deals through various social networks adapt and our marketing to the particular format of each of these social networking platforms.
We use a variety of marketing channels to make customers aware of the offerings, including search engines, email and affiliate partnerships and social media. Search engines. Customers can access our offerings indirectly through third-party search engines. We use search engine optimization and search engine marketing to increase the visibility of our offerings in web search results. Email.
Marketing We primarily use marketing to acquire and retain high-quality merchants and customers and promote awareness of our marketplaces. We use a variety of marketing channels to make customers aware of the offerings, including search engines, email and affiliate partnerships and social media. Search engines. Customers can access our offerings indirectly through third-party search engines.
Customer Service and Support Our ability to establish and maintain long term relationships with our customers and encourage repeat visits and purchases is dependent, in part, on the strength of our customer support and service operations. We have established multiple channels for communicating with our customers before and after the sale, including phone, e-mail and online support.
Customer Service and Support Our ability to establish and maintain long term relationships with our customers and encourage repeat visits and purchases is dependent, in part, on the strength of our customer support and service operations.
Employees As of December 31, 2023, we had 64 full time employees. None of our employees or personnel is represented by a labor union, and we consider our employee/personnel relations to be good. Competition for qualified personnel in our industry is intense, particularly for software development and other technical staff.
None of our employees or personnel is represented by a labor union, and we consider our employee/personnel relations to be good. Competition for qualified personnel in our industry is intense, particularly for software development and other technical staff. We believe that our future success will depend in part on our ability to attract, hire and retain qualified personnel.
Through CardCash’s platform, consumers can, for example, help families pay down student loan debt and contribute to research and awareness for childhood illnesses, improved heart health, etc. ● Increase Marketing Efforts . CardCash has spent only $807,031 in marketing its services or 0.9% of its gross revenues.
Through CardCash’s platform, consumers can, for example, help families pay down student loan debt and contribute to research and awareness for childhood illnesses, improved heart health, etc. ● Increase Marketing Efforts . CardCash intends to increase its marketing to retailers and consumers to accelerate its sales of gift cards. 5 ● Increase Profit Margins .
In addition to its consumer-focused operations, CardCash provides white-label solutions for brands, allowing them to integrate gift card exchange capabilities into their own platforms. Major retailers like Amazon, Best Buy, CVS and Dell have capitalized on these solutions to enhance their customer offerings and drive additional revenue streams through gift cards without compromising product value.
Major retailers like Amazon, Best Buy, CVS and Dell have capitalized on these solutions to enhance their customer offerings and drive additional revenue streams through gift cards without compromising product value.
We currently employ a staff of in-house customer support personnel responsible for handling customer inquiries, tracking shipments, investigating and resolving problems with merchandise and travel. Customer care representatives are available for support from 8:30 a.m. to 5 p.m., Central Time, Monday through Friday. In addition, our customer service representatives are trained to cross-sell complementary and ancillary products and services.
Customer care representatives are available for support from 8:30 a.m. to 5 p.m., Central Time, Monday through Friday. In addition, our customer service representatives are trained to cross-sell complementary and ancillary products and services. Employees As of December 31, 2024, we had 42 full time employees.
Operations Our business operations are divided into the following core functions to address the needs of our merchants and customers. Marketing.
Our website and mobile application interfaces enable our consumers to share our offerings to their personal social networks. 7 Operations Our business operations are divided into the following core functions to address the needs of our merchants and customers. Marketing.
While we are attempting to comply with exemptions for promotional programs available under these laws so that our discount certificates’ and Discount Dining Passes’ promotional value can expire on the date stated on the certificate and Discount Pass, we continue to require that merchants with whom we partner honor discount certificates and Discount Dining Passes under the provisions of all laws applicable to discount certificates and Discount Dining Passes, including laws that prohibit expiration. 7 In addition, some states also include gift cards under their unclaimed and abandoned property laws which require companies to remit to the government the value of the unredeemed balance on the gift cards after a specified period of time (generally between one and five years) and impose certain reporting and recordkeeping obligations.
While we are attempting to comply with exemptions for promotional programs available under these laws so that our discount certificates’ and Discount Dining Passes’ promotional value can expire on the date stated on the certificate and Discount Pass, we continue to require that merchants with whom we partner honor discount certificates and Discount Dining Passes under the provisions of all laws applicable to discount certificates and Discount Dining Passes, including laws that prohibit expiration.
Restaurant.com Business to Customer Division Our B2C division accounted for 45% of gross revenue in our fiscal year ended December 31, 2023. 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.
Restaurant.com Business to Customer Division Our B2C division accounted for approximately 50% of gross revenue in our fiscal year ended December 31, 2024. To our database of 6.2 million customers, we sell: ● Discounted certificates for 10,000 restaurants.
We communicate offerings through email to our customers based on their locations and personal preferences. A customer who interacts with an email is directed to our website and mobile applications to learn more about the deal and to make a purchase. Social.
A customer who interacts with an email is directed to our website and mobile applications to learn more about the deal and to make a purchase. Social. We publish offerings through various social networks and adapt our marketing to the particular format of each of these social networking platforms.
The average order value for these Specials sales is nearly five times a certificate purchase. Specials generated over 5% of our past year’s B2C revenue from 60% of the B2C orders for the fiscal year ended December 31, 2023. We believe that our relationships with small businesses presents a significant revenue opportunity through such cross-promotions.
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. Specials generated over 5% of our past year’s B2C revenue from 60% of the B2C orders for the fiscal year ended December 31, 2023.
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 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.
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.
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.
Restaurant.com Business to Business Division Our B2B division accounted for 55% of our gross revenue in our fiscal year ended December 31, 2023.
We believe that our relationships with small businesses presents a significant revenue opportunity through such cross-promotions. Restaurant.com Business to Business Division Our B2B division accounted for approximately 50% of our gross revenue in our fiscal year ended December 31, 2024.
CardCash purchases unused 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.
By connecting buyers and sellers, CardCash enables consumers to unlock value from unused gift cards and save significant amounts on their purchases. CardCash purchases unused gift cards at a value lower than their face worth and subsequently retails them at a discounted rate to discerning shoppers nationwide.
CardCash CardCash operates as a leading gift card exchange platform, facilitating the purchase and sale of unused 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.
Our Business 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 unused gift cards at discounted rates for both consumers and businesses.
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.
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.
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Of the four channels, retail-to-bulk has the highest margin at approximately 17%, while bulk-to-bulk has the lowest margins at approximately 10%. CardCash is working to improve its gross margin by switching to a more balanced and profitable sales channel breakdown. CardCash’s goal is to achieve gross margin of 15% in 2023 and 19% in 2024.
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Marc Ackerman, Chief Operating Officer of CardCash prior to the merger with Giftify, continues to serve as Chief Operating Officer of CardCash following the closing of the merger. 3 We are an “emerging growth company” (an “EGC”), as defined in the Jumpstart Our Business Startups Act of 2012.
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Marketing We primarily use marketing to acquire and retain high-quality merchants and customers and promote awareness of our marketplaces. In 2023, for Restaurant.com we spent approximately $807,000 on advertising and marketing efforts to increase our visibility and establish stronger relationships with our customers, merchants and partners.
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As an EGC, we are eligible for exemptions from various reporting requirements applicable to other public companies that are not emerging growth companies, including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act of 2002 and reduced disclosure obligations regarding executive compensation. Merger with CardCash Exchange, Inc.
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We publish offerings through various social networks and adapt our marketing to the particular format of each of these social networking platforms. Our website and mobile applications enable consumers to share our offerings with their personal social networks. We also promote our offerings using display advertising on websites. Offline.
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This commitment to trust and reliability has contributed to its success in saving consumers over $100 million since its inception. In addition to its consumer-focused operations, CardCash provides white-label solutions for brands, allowing them to integrate gift card exchange capabilities into their own platforms.
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As of December 31, 2023, our Marketing team consisted of three employees.
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We use search engine optimization and search engine marketing to increase the visibility of our offerings in web search results. Email. We communicate offerings through email to our customers based on their locations and personal preferences.
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We believe that our future success will depend in part on our ability to attract, hire and retain qualified personnel.
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We also utilize various affiliate partnerships to display and promote our deals on their websites, such as with AMAC, Groupon, MemberHub and others.
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Emerging Growth Company We are and we will remain an “emerging growth company” as defined under The Jumpstart Our Business Startups Act (the “JOBS Act”), until the earliest to occur of (i) the last day of the fiscal year during which our total annual revenues equal or exceed $1.235 billion (subject to adjustment for inflation), (ii) the last day of the fiscal year following the fifth anniversary of our initial public offering, (iii) the date on which we have, during the previous three-year period, issued more than $1 billion in non-convertible debt securities, or (iv) the date on which we are deemed a “large accelerated filer” (with at least $700 million in public float) under the Exchange Act. 9 As an “emerging growth company”, we may take advantage of specified reduced disclosure and other requirements that are otherwise applicable generally to public companies.
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We believe the principal competitive factors in our market include the following: ● breadth of customer base and number of restaurants featured; ● ability to deliver a high volume of relevant deals to consumers; ● ability to produce high purchase rates for deals among customers; ● ability to generate positive return on investment for merchants; and ● strength and recognition of our brand.
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These provisions include: ● only two years of audited financial statements in addition to any required unaudited interim financial statements with correspondingly reduced “Management’s Discussion and Analysis” disclosure; ● reduced disclosure about our executive compensation arrangements; ● no requirement that we hold non-binding advisory votes on executive compensation or golden parachute arrangements; and ● exemption from the auditor attestation requirement in the assessment of our internal control over financial reporting.
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In addition, some states also include gift cards under their unclaimed and abandoned property laws which require companies to remit to the government the value of the unredeemed balance on the gift cards after a specified period of time (generally between one and five years) and impose certain reporting and recordkeeping obligations.
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We have taken advantage of some of these reduced burdens, and thus the information we provide stockholders may be different from what you might receive from other public companies in which you hold shares.
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We have established multiple channels for communicating with our customers before and after the sale, including phone, e-mail and online support. 11 We currently employ a staff of in-house customer support personnel responsible for handling customer inquiries, tracking shipments, investigating and resolving problems with merchandise and travel.
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In addition, Section 107 of the JOBS Act also provides that an emerging growth company can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards.
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In addition, as a smaller reporting company with a public float of less than $75 million we qualify as a non-accelerated filer.
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In other words, an emerging growth company can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. Section 107 of the JOBS Act provides that our decision to opt out of the extended transition period for complying with new or revised accounting standards is irrevocable.
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A non-accelerated filer is not required to provide an auditor attestation of management’s assessment of internal control over financial reporting, which is generally required for SEC reporting companies under Sarbanes-Oxley Act Section 404(b), and, in contrast to other reporting companies, has more time to file its periodic reports.
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We are choosing to take advantage of such extended transition period, and as a result, we will not comply with new or revised accounting standards on the relevant dates on which adoption of such standards is required for non-emerging growth companies.
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In the event that we are still considered a “smaller reporting company”, at such time as we cease being an “emerging growth company”, the disclosure we will be required to provide in our SEC filings will increase but will still be less than it would be if we were not considered either an “emerging growth company” or a “smaller reporting company”.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

61 edited+5 added−20 removed188 unchanged
Biggest changeWe may in the future be required to raise capital through public or private financing or other arrangements. Such financing may not be available on acceptable terms, or at all, and our failure to raise capital when needed could harm our business.
Biggest changeCurrently, the most significant impact of inflation on us is the increase in employee wages. Our ability to raise capital in the future may be limited, and our failure to raise capital when needed could prevent us from growing. We may in the future be required to raise capital through public or private financing or other arrangements.
We believe that our ability to achieve and maintain revenue growth and profitability will depend, among other factors, on our ability to: ● acquire new customers and retain existing customers; ● attract and retain high-quality restaurants and other merchants; ● increase the number, variety, quality and relevance of discount certificates and Discount Dining Passes, including through third party business partners and technology integrations, as we attempt to expand our current platform; ● leverage other platforms to display our offerings; ● deliver a modern mobile experience and achieve additional mobile adoption to capitalize on customers’ continued shift toward mobile device usage; ● increase booking capabilities; ● increase the awareness of, and evolve, our brand to an expanded customer base; ● reduce costs and improve selling, general and administrative (SG&A) leverage; ● successfully achieve the anticipated benefits of business combinations or acquisitions, strategic investments, divestitures and restructuring activities; ● provide a superior customer service experience for our customers; ● avoid interruptions to our services, including as a result of attempted or successful cybersecurity attacks or breaches; ● respond to continuous changes in consumer and merchant use of technology; ● offset declines in email, search engine optimization (“SEO”) and other traffic channels and further diversify our traffic channels; ● react to challenges from existing and new competitors; ● respond to seasonal changes in supply and demand; and ● address challenges from existing and new laws and regulations.
We believe that our ability to achieve and maintain revenue growth and profitability will depend, among other factors, on our ability to: ● acquire new customers and retain existing customers; ● attract and retain high-quality restaurants and other merchants; ● increase the number, variety, quality and relevance of discount certificates and Discount Dining Passes, including through third party business partners and technology integrations, as we attempt to expand our current platform; ● leverage other platforms to display our offerings; 25 ● deliver a modern mobile experience and achieve additional mobile adoption to capitalize on customers’ continued shift toward mobile device usage; ● increase booking capabilities; ● increase the awareness of, and evolve, our brand to an expanded customer base; ● reduce costs and improve selling, general and administrative (SG&A) leverage; ● successfully achieve the anticipated benefits of business combinations or acquisitions, strategic investments, divestitures and restructuring activities; ● provide a superior customer service experience for our customers; ● avoid interruptions to our services, including as a result of attempted or successful cybersecurity attacks or breaches; ● respond to continuous changes in consumer and merchant use of technology; ● offset declines in email, search engine optimization (“SEO”) and other traffic channels and further diversify our traffic channels; ● react to challenges from existing and new competitors; ● respond to seasonal changes in supply and demand; and ● address challenges from existing and new laws and regulations.
We may need to raise additional funds through public or private debt or equity financings to meet various objectives including, but not limited to: ● maintaining enough working capital to run our business; ● pursuing growth opportunities, including more rapid expansion; ● acquiring complementary businesses and technologies; ● making capital improvements to improve our infrastructure; ● responding to competitive pressures; ● complying with regulatory requirements for advertising or taxation; and ● maintaining compliance with applicable laws.
We may need to raise additional funds through public or private debt or equity financings to meet various objectives including, but not limited to: ● maintaining enough working capital to run our business; ● pursuing growth opportunities, including more rapid expansion; 24 ● acquiring complementary businesses and technologies; ● making capital improvements to improve our infrastructure; ● responding to competitive pressures; ● complying with regulatory requirements for advertising or taxation; and ● maintaining compliance with applicable laws.
However, a successful challenge to our position or expansion of state laws could subject us to increased compliance costs and delay our ability to offer discount certificates and Discount Dining Passes in certain jurisdictions pending receipt of any necessary licenses or registrations. Current uncertainty in global economic conditions could adversely affect our revenue and business.
However, a successful challenge to our position or expansion of state laws could subject us to increased compliance costs and delay our ability to offer discount certificates and Discount Dining Passes in certain jurisdictions pending receipt of any necessary licenses or registrations. 18 Current uncertainty in global economic conditions could adversely affect our revenue and business.
If any of these events occurs, our net income could be materially and adversely affected. We are subject to risks associated with information disseminated through our websites and applications, including consumer data, content that is produced by our editorial staff and errors or omissions related to our product offerings.
If any of these events occurs, our net income could be materially and adversely affected. 15 We are subject to risks associated with information disseminated through our websites and applications, including consumer data, content that is produced by our editorial staff and errors or omissions related to our product offerings.
While we have taken measures to detect and reduce the risk of fraud, these measures need to be continually improved and may not be effective against new and continually evolving forms of fraud or in connection with new product offerings. If these measures do not succeed, our business will suffer. We are subject to payments-related risks.
While we have taken measures to detect and reduce the risk of fraud, these measures need to be continually improved and may not be effective against new and continually evolving forms of fraud or in connection with new product offerings. If these measures do not succeed, our business will suffer. 17 We are subject to payments-related risks.
In addition, our margins and profitability may depend on our inventory mix, geographic revenue mix, discount rates mix and merchant and third-party business partner pricing terms. Accordingly, our operating results and profitability may vary significantly from quarter to quarter. 23 If we fail to retain our existing customers or acquire new customers, our operating results and business will be harmed.
In addition, our margins and profitability may depend on our inventory mix, geographic revenue mix, discount rates mix and merchant and third-party business partner pricing terms. Accordingly, our operating results and profitability may vary significantly from quarter to quarter. If we fail to retain our existing customers or acquire new customers, our operating results and business will be harmed.
Furthermore, if our arrangements with any of these third parties are terminated, we may not find an alternate source of systems support on a timely basis or on terms as advantageous to us. We are subject to cyber security risks and risks of data loss or other security breaches.
Furthermore, if our arrangements with any of these third parties are terminated, we may not find an alternate source of systems support on a timely basis or on terms as advantageous to us. 21 We are subject to cyber security risks and risks of data loss or other security breaches.
Actual losses for which we are not insured or indemnified, or which exceed our insurance coverage or the capacity of our indemnitors or our ability to enforce our indemnity agreements, could have a material adverse effect on our business. 22 Our operating results may vary significantly from quarter to quarter.
Actual losses for which we are not insured or indemnified, or which exceed our insurance coverage or the capacity of our indemnitors or our ability to enforce our indemnity agreements, could have a material adverse effect on our business. Our operating results may vary significantly from quarter to quarter.
Further, the costs and expenses associated with defending any actions related to such additional laws and regulations and any payments of related penalties, judgments or settlements could adversely impact our profitability. The implementation of the CARD Act and similar state laws may harm our business and results of operations.
Further, the costs and expenses associated with defending any actions related to such additional laws and regulations and any payments of related penalties, judgments or settlements could adversely impact our profitability. 13 The implementation of the CARD Act and similar state laws may harm our business and results of operations.
Our failure to respond to technological change or to adequately maintain, upgrade and develop our computer network and the systems used to process customers’ orders and payments could harm our business, prospects, financial condition and results of operations. Use of social media may adversely impact our reputation.
Our failure to respond to technological change or to adequately maintain, upgrade and develop our computer network and the systems used to process customers’ orders and payments could harm our business, prospects, financial condition and results of operations. 23 Use of social media may adversely impact our reputation.
These outages and delays could reduce the level of internet usage generally as well as the level of usage of our services, which could adversely impact our business. 13 Our total number of customers may be higher than the number of our actual individual customers and may not be representative of the number of persons who are active potential customers.
These outages and delays could reduce the level of internet usage generally as well as the level of usage of our services, which could adversely impact our business. Our total number of customers may be higher than the number of our actual individual customers and may not be representative of the number of persons who are active potential customers.
The regulation of these cookies and other current online advertising practices could adversely affect our business. 12 We may suffer liability as a result of information retrieved from or transmitted over the internet and claims related to our service offerings.
The regulation of these cookies and other current online advertising practices could adversely affect our business. We may suffer liability as a result of information retrieved from or transmitted over the internet and claims related to our service offerings.
Any such loss of confidence would have a negative effect on the trading price of our stock. 25 The price of our common stock may become volatile, which could lead to losses by investors and costly securities litigation.
Any such loss of confidence would have a negative effect on the trading price of our stock. The price of our common stock may become volatile, which could lead to losses by investors and costly securities litigation.
Our restaurants and merchants could also request reimbursement, or stop using us, if they are affected by buyer fraud or other types of fraud. 14 We may incur significant losses from fraud and counterfeit certificates.
Our restaurants and merchants could also request reimbursement, or stop using us, if they are affected by buyer fraud or other types of fraud. We may incur significant losses from fraud and counterfeit certificates.
If our revenues grow more slowly than we anticipate, our gross margins fail to improve or our operating expenses exceed our expectations, our operating results will suffer. 10 If CardCash is not able to achieve profitability within the next few years, our shareholders will have experienced unnecessary dilution, and our ability to achieve our business plan could be significantly delayed or threatened.
If our revenues grow more slowly than we anticipate, our gross margins fail to improve or our operating expenses exceed our expectations, our operating results will suffer. 12 If CardCash is not able to achieve profitability within the next few years, our shareholders will have experienced unnecessary dilution, and our ability to achieve our business plan could be significantly delayed or threatened.
Our independent registered public accounting firm, in their report to our December 31, 2023, financial statements, expressed substantial doubt about our ability to continue as a going concern due to our recurring losses from operations. There can be no assurance that our future operations will result in net income.
Our independent registered public accounting firm, in their report to our December 31, 2024, financial statements, expressed substantial doubt about our ability to continue as a going concern due to our recurring losses from operations. There can be no assurance that our future operations will result in net income.
Our officers and directors beneficially own approximately 24% of our outstanding shares of common stock. Such concentrated control may adversely affect the price of our common stock. Investors who acquire common stock may have no effective voice in our management since the insiders will have the ability to influence us through this ownership position.
Our officers and directors beneficially own approximately 20% of our outstanding shares of common stock. Such concentrated control may adversely affect the price of our common stock. Investors who acquire common stock may have no effective voice in our management since the insiders will have the ability to influence us through this ownership position.
ITEM 1A. RISK FACTORS Risks Related to Our Company and Our Business There is substantial doubt about our ability to continue as a going concern. We have a history of annual net losses which may continue and which may negatively impact our ability to achieve our business objectives, and we received a going concern qualification in our 2023 audit.
ITEM 1A. RISK FACTORS Risks Related to Our Company and Our Business There is substantial doubt about our ability to continue as a going concern. We have a history of annual net losses which may continue, and which may negatively impact our ability to achieve our business objectives, and we received a going concern qualification in our 2024 audit.
The trading price of our common stock is likely to be highly volatile and could fluctuate in response to factors such as: ● actual or anticipated variations in our operating results; ● announcements of developments by us or our competitors; ● regulatory actions regarding our products; ● announcements by us or our competitors of significant acquisitions, strategic partnerships, joint ventures or capital commitments; ● adoption of new accounting standards affecting our industry; ● additions or departures of key personnel; ● introduction of new products by us or our competitors; ● sales of our common stock or other securities in the open market; and ● other events or factors, many of which are beyond our control.
The trading price of our common stock is likely to be highly volatile and could fluctuate in response to factors such as: ● actual or anticipated variations in our operating results; ● announcements of developments by us or our competitors; ● regulatory actions regarding our products; ● announcements by us or our competitors of significant acquisitions, strategic partnerships, joint ventures or capital commitments; ● adoption of new accounting standards affecting our industry; ● additions or departures of key personnel; ● introduction of new products by us or our competitors; ● sales of our common stock or other securities in the open market; and ● other events or factors, many of which are beyond our control. 28 The stock market is subject to significant price and volume fluctuations.
If we are required to materially increase the estimated liability recorded in our financial statements with respect to unredeemed discount certificates and Discount Dining Passes, our net income could be materially and adversely affected. 11 If we are required to materially increase the estimated liability recorded in our financial statements with respect to unredeemed discounts and Discount Dining Passes, our net income could be materially and adversely affected.
If we are required to materially increase the estimated liability recorded in our financial statements with respect to unredeemed discount certificates and Discount Dining Passes, our net income could be materially and adversely affected.
There is limited trading activity in our common stock. Although our common stock is now trading on the OTCQB Venture Market there can be no assurance that a more active market for the common stock will develop, or if one should develop, there is no assurance that it will be sustained.
There is limited trading activity in our common stock. Although our common stock is now trading on the Nasdaq Marketplace, there can be no assurance that a more active market for the common stock will develop, or if one should develop, there is no assurance that it will be sustained.
We may be unable to project accurately the rate or timing of traffic increases or successfully upgrade our systems and infrastructure to accommodate future traffic levels on our website.
Our transaction processing systems and network infrastructure may be unable to accommodate increases in traffic in the future. We may be unable to project accurately the rate or timing of traffic increases or successfully upgrade our systems and infrastructure to accommodate future traffic levels on our website.
If a market does not develop or is not sustained it may be difficult for you to sell your common stock at the time you wish to sell them, at a price that is attractive to you, or at all. You may not be able to sell your common stock at or above the offering price per share.
If a market does not develop or is not sustained it may be difficult for you to sell your common stock at the time you wish to sell them, at a price that is attractive to you, or at all.
We depend substantially on the continued services, specialized knowledge and performance of our senior management, particularly Ketan Thakker, our President and CEO, Elliot Bohm, Chief Executive Officer of our subsidiary, CardCash, and Marc Ackerman, Chief Operating Officer of our subsidiary, CardCash, and Balazs Wallisch Chief Technology Officer at Restaurant.com. Mr.
We depend substantially on the continued services, specialized knowledge and performance of our senior management, particularly Ketan Thakker, our President and Chief Executive Officer, Steve Handy, our Chief Financial Officer, Elliot Bohm, the Chief Executive Officer of our subsidiary, CardCash, and Marc Ackerman, the Chief Operating Officer of our subsidiary, CardCash, and Balazs Wallisch, the Chief Operating Officer of our subsidiary, Restaurant.com.
Some of the other factors that could negatively affect our share price or result in fluctuations in our share price include: ● actual or anticipated variations in our periodic operating results; ● increases in market interest rates that lead purchasers of our common stock to demand a higher investment return; ● changes in earnings estimates; ● changes in market valuations of similar companies; ● actions or announcements by our competitors; ● adverse market reaction to any increased indebtedness we may incur in the future; ● additions or departures of key personnel; ● actions by stockholders; ● speculation in the media, online forums, or investment community; and ● our intentions and ability to list our common stock on the NYSE MKT and our subsequent ability to maintain such listing.
Some of the other factors that could negatively affect our share price or result in fluctuations in our share price include: ● actual or anticipated variations in our periodic operating results; ● increases in market interest rates that lead purchasers of our common stock to demand a higher investment return; ● changes in earnings estimates; ● changes in market valuations of similar companies; ● actions or announcements by our competitors; ● adverse market reaction to any increased indebtedness we may incur in the future; ● additions or departures of key personnel; ● actions by stockholders; ● speculation in the media, online forums, or investment community; and ● our intentions and ability to list our common stock on the NYSE MKT and our subsequent ability to maintain such listing. 29 As a smaller reporting company, we are subject to scaled disclosure requirements that may make it more challenging for investors to analyze our results of operations and financial prospects.
If the anticipated value of such equity-based incentive awards does not materialize, if our equity-based compensation otherwise ceases to be viewed as a valuable benefit or if our total compensation package is not viewed as competitive, our ability to attract, retain and motivate executives and key employees could be weakened. 17 The failure to successfully hire executives and key employees or the loss of any executives and key employees could have a significant impact on our operations.
If the anticipated value of such equity-based incentive awards does not materialize, if our equity-based compensation otherwise ceases to be viewed as a valuable benefit or if our total compensation package is not viewed as competitive, our ability to attract, retain and motivate executives and key employees could be weakened.
Failure to comply with such laws and regulations could result in significant penalties. 21 The 26 adoption of tax reform policies, including the enactment of legislation or regulations implementing changes in the tax treatment of companies engaged in Internet commerce or the U.S. taxation of international business activities could materially affect our financial position and results of operations.
The 26 adoption of tax reform policies, including the enactment of legislation or regulations implementing changes in the tax treatment of companies engaged in Internet commerce or the U.S. taxation of international business activities could materially affect our financial position and results of operations.
In the event that we become subject to the requirements of the Bank Secrecy Act or any other anti-money laundering law or regulation imposing obligations on us as a money services business, our regulatory compliance costs to meet these obligations would likely increase which could reduce our net income. 15 State laws regulating money transmission could be expanded to include our discount certificates and Discount Dining Passes.
In the event that we become subject to the requirements of the Bank Secrecy Act or any other anti-money laundering law or regulation imposing obligations on us as a money services business, our regulatory compliance costs to meet these obligations would likely increase which could reduce our net income.
If we are unable to attract and retain a substantial number of mobile device users to our online marketplaces and services, we may fail to capture a sufficient share of an increasingly important portion of the market for online services.
We may lose users if we are not able to continue to meet our users’ mobile and multi-screen experience expectations. If we are unable to attract and retain a substantial number of mobile device users to our online marketplaces and services, we may fail to capture a sufficient share of an increasingly important portion of the market for online services.
This may make it more difficult for Company’s shareholders to sell shares of our common stock. 24 Disclosure also has to be made about the risks of investing in penny stocks in both public offerings and in secondary trading and about the commissions payable to both the broker-dealer and the registered representative, current quotations for the securities and the rights and remedies available to an investor in cases of fraud in penny stock transactions.
Disclosure also has to be made about the risks of investing in penny stocks in both public offerings and in secondary trading and about the commissions payable to both the broker-dealer and the registered representative, current quotations for the securities and the rights and remedies available to an investor in cases of fraud in penny stock transactions.
We intend to make acquisitions that could disrupt our operations and adversely impact our business and operating results. We intend to attempt to acquire complementary e-commerce businesses and to support the transition and integration of acquired operations with our ongoing business as a part of our growth strategy.
We intend to attempt to acquire complementary e-commerce businesses and to support the transition and integration of acquired operations with our ongoing business as a part of our growth strategy.
If we are unable to acquire new customers in numbers sufficient to grow our business and offset the number of existing active customers that have ceased to make purchases, or if new customers do not make purchases at expected levels, our profitability may decrease and our operating results may be adversely affected.
If we are unable to acquire new customers in numbers sufficient to grow our business and offset the number of existing active customers that have ceased to make purchases, or if new customers do not make purchases at expected levels, our profitability may decrease and our operating results may be adversely affected. 26 Our future success depends upon our ability to attract and retain high quality merchants and third-party business partners.
Our future success depends upon our ability to attract and retain high quality merchants and third-party business partners. We must continue to attract and retain high quality restaurants and other merchants to increase profitability. A key priority of our strategy is to increase our sales and marketing efforts to attract more high-quality restaurants and other merchants.
We must continue to attract and retain high quality restaurants and other merchants to increase profitability. A key priority of our strategy is to increase our sales and marketing efforts to attract more high-quality restaurants and other merchants.
In the future, we may issue additional authorized but previously unissued equity securities, resulting in the dilution of the ownership interests of our present stockholders.
Investors may experience dilution of their ownership interests because of the future issuance of additional shares of our common stock. In the future, we may issue additional authorized but previously unissued equity securities, resulting in the dilution of the ownership interests of our present stockholders.
If we fail to present, or improperly present, our website’s information for use by natural search engine companies, or if any of these natural search engine companies determine we have violated their rules or guidelines, or if others improperly present our website’s information to these search engine companies, or if natural search engine companies make changes to their search algorithms, we may fail to achieve an optimum ranking in natural search engine listing results, or we may be penalized in a way that could harm our business, prospects, financial condition and results of operations. 18 More individuals are using mobile devices to access the internet and versions of our service developed or optimized for these devices may not gain widespread adoption by users of such devices.
If we fail to present, or improperly present, our website’s information for use by natural search engine companies, or if any of these natural search engine companies determine we have violated their rules or guidelines, or if others improperly present our website’s information to these search engine companies, or if natural search engine companies make changes to their search algorithms, we may fail to achieve an optimum ranking in natural search engine listing results, or we may be penalized in a way that could harm our business, prospects, financial condition and results of operations.
We may also elect to spend additional amounts on sponsored search or other forms of marketing from time to time to increase traffic to our website, or to take other actions to increase traffic and/or conversion, and the additional expenditures may have a material adverse effect on our financial results and business. 19 Our business depends on effective marketing, including marketing via email and social networking messaging, and we intend to increase our spending on marketing and branding, which may adversely affect our financial results.
We may also elect to spend additional amounts on sponsored search or other forms of marketing from time to time to increase traffic to our website, or to take other actions to increase traffic and/or conversion, and the additional expenditures may have a material adverse effect on our financial results and business.
Any system interruptions that result in the unavailability of our website marketplaces or reduced performance of our transaction systems would reduce our transaction volume and the attractiveness of the services that we provide to suppliers and third parties and would harm our business, prospects, financial condition and results of operations. 20 We use internally developed systems for our website and certain aspects of transaction processing, including databases used for internal analytics and order verifications.
Any system interruptions that result in the unavailability of our website marketplaces or reduced performance of our transaction systems would reduce our transaction volume and the attractiveness of the services that we provide to suppliers and third parties and would harm our business, prospects, financial condition and results of operations.
Our second amended and restated bylaws designate specific courts as the exclusive forum for certain litigation that may be initiated by our stockholders, which could limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us.
You may not be able to sell your common stock at or above the offering price per share. 27 Our second amended and restated bylaws designate specific courts as the exclusive forum for certain litigation that may be initiated by our stockholders, which could limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us.
If one or more of these individuals choose to leave our company, we may lose a significant number of supplier relationships and operating expertise which they have developed over many years and which would be difficult to replace. The loss of the services of any executive officer or other key employee could hurt our business.
These executives may elect to pursue other opportunities at any time. If one or more of these individuals choose to leave our company, we may lose a significant number of supplier relationships and operating expertise which they have developed over many years, and which would be difficult to replace.
The stock market in general, and the market price of our common stock will likely be subject to fluctuation, whether due to, or irrespective of, our operating results, financial condition and prospects. 26 Our financial performance, our industry’s overall performance, changing consumer preferences, technologies, government regulatory action, tax laws and market conditions in general could have a significant impact on the future market price of our common stock.
Our financial performance, our industry’s overall performance, changing consumer preferences, technologies, government regulatory action, tax laws and market conditions in general could have a significant impact on the future market price of our common stock.
In addition, the number of customers includes the total number of individuals that have completed registration through a specific date, less individuals who have unsubscribed, and should not be considered as representative of the number of persons who continue to actively consider our deals by reviewing our email offers.
In addition, the number of customers includes the total number of individuals that have completed registration through a specific date, less individuals who have unsubscribed, and should not be considered as representative of the number of persons who continue to actively consider our deals by reviewing our email offers. 16 Our business may be subject to seasonal sales fluctuations which could result in volatility or have an adverse effect on the market price of our common stock.
Additional equity financing may dilute the interests of our common stockholders, and debt financing, if available, may involve restrictive covenants and could reduce our profitability. If we cannot raise funds on acceptable terms, we may not be able to grow our business or respond to competitive pressures.
Such financing may not be available on acceptable terms, or at all, and our failure to raise capital when needed could harm our business. Additional equity financing may dilute the interests of our common stockholders, and debt financing, if available, may involve restrictive covenants and could reduce our profitability.
In addition, the application of certain laws and regulations to our discount certificates and dining cards is uncertain. These include laws and regulations such as the Credit Card Accountability Responsibility and Disclosure Act of 2009, or the CARD Act, and unclaimed and abandoned property laws.
These include laws and regulations such as the Credit Card Accountability Responsibility and Disclosure Act of 2009, or the CARD Act, and unclaimed and abandoned property laws.
The scope of such requirements continues to expand, requiring us to develop and implement new compliance systems.
The scope of such requirements continues to expand, requiring us to develop and implement new compliance systems. Failure to comply with such laws and regulations could result in significant penalties.
To obtain future revenue growth and achieve and sustain profitability, we will have to attract and retain customers on cost-effective terms. Our success depends on our ability to attract and retain customers on cost-effective terms.
Should we fail to retain or attract qualified personnel, we may not be able to compete successfully or implement our plans for expansion. 20 To obtain future revenue growth and achieve and sustain profitability, we will have to attract and retain customers on cost-effective terms. Our success depends on our ability to attract and retain customers on cost-effective terms.
The market for recruiting qualified information technology and other personnel is extremely competitive, and we may experience difficulties in attracting and retaining employees. Should we fail to retain or attract qualified personnel, we may not be able to compete successfully or implement our plans for expansion.
The market for recruiting qualified information technology and other personnel is extremely competitive, and we may experience difficulties in attracting and retaining employees.
In addition, if we are placed on “spam” lists or lists of entities that have been involved in sending unwanted, unsolicited emails, our operating results and financial condition could be substantially harmed.
In addition, if we are placed on “spam” lists or lists of entities that have been involved in sending unwanted, unsolicited emails, our operating results and financial condition could be substantially harmed. 22 We also rely on social networking messaging services for marketing purposes, and anything that limits our ability or our customers’ ability or desire to utilize social networking services could have a material adverse effect on our business.
Many states impose license and registration obligations on those companies engaged in the business of money transmission, with varying definitions of what constitutes money transmission. We do not currently believe we are a money transmitter given our role and the product terms of our discount certificates and Discount Dining Passes.
State laws regulating money transmission could be expanded to include our discount certificates and Discount Dining Passes. Many states impose license and registration obligations on those companies engaged in the business of money transmission, with varying definitions of what constitutes money transmission.
Seasonality may cause our working capital cash flow requirements to vary from quarter to quarter depending on the variability in the volume and timing of sales.
Our business, like that of our restaurants and merchants, may be subject to some degree of sales seasonality. As the growth of our business stabilizes, these seasonal fluctuations may become more evident. Seasonality may cause our working capital cash flow requirements to vary from quarter to quarter depending on the variability in the volume and timing of sales.
At December 31, 2023, the outstanding balance on our line of credit facility was $6,737,385, we had $2,294,779 outstanding in promissory notes, and $40,137 of convertible notes payable, including interest, were past due.
At December 31, 2024, the outstanding balance on our line of credit facility was $3,805,080, we had $4,392,906 outstanding in promissory notes, and $43,137 of convertible notes payable, including interest.
We depend on effective marketing and high customer traffic. We depend on email to promote our site and offerings and to generate a substantial portion of our revenue.
Our business depends on effective marketing, including marketing via email and social networking messaging, and we intend to increase our spending on marketing and branding, which may adversely affect our financial results. We depend on effective marketing and high customer traffic. We depend on email to promote our site and offerings and to generate a substantial portion of our revenue.
Moreover, a successful challenge to our position could subject us to penalties or interest on unreported and unremitted sums, and any such penalties or interest would have a further material adverse impact on our net income.
Moreover, a successful challenge to our position could subject us to penalties or interest on unreported and unremitted sums, and any such penalties or interest would have a further material adverse impact on our net income. 14 Government regulation of the internet and e-commerce is evolving, and unfavorable changes or failure by us to comply with these regulations could substantially harm our business and results of operations.
The market price of our common stock may fluctuate, and you could lose all or part of your investment. The price of our common stock may decline.
The market price of our common stock may fluctuate, and you could lose all or part of your investment. The price of our common stock may decline. The stock market in general, and the market price of our common stock will likely be subject to fluctuation, whether due to, or irrespective of, our operating results, financial condition and prospects.
Generally, brokers may be less willing to execute transactions in securities subject to the “penny stock” rules.
Generally, brokers may be less willing to execute transactions in securities subject to the “penny stock” rules. This may make it more difficult for Company’s shareholders to sell shares of our common stock.
For the year ended December 31, 2023, we recorded a loss from operations of $8,100,406 and used cash in operating activities of $541,791. At December 31, 2023, our cash and cash equivalents balance was $4,099,737.
For the year ended December 31, 2024, we recorded a net loss of $18,832,080 and used cash in operating activities of $2,551,870. At December 31, 2024, our cash and cash equivalents balance was $3,574,876.
Litigation initiated against the Company, whether or not successful, could result in substantial costs and diversion of its management’s attention and resources, which could harm our business and financial condition. Investors may experience dilution of their ownership interests because of the future issuance of additional shares of our common stock.
In the past, following periods of volatility in the market price of a company’s securities, securities class action litigation has often been initiated against such a company. Litigation initiated against the Company, whether or not successful, could result in substantial costs and diversion of its management’s attention and resources, which could harm our business and financial condition.
As a smaller reporting company, we are subject to scaled disclosure requirements that may make it more challenging for investors to analyze our results of operations and financial prospects. Currently, we are a “smaller reporting company,” as defined by Rule 12b-2 of the Exchange Act.
Currently, we are a “smaller reporting company,” as defined by Rule 12b-2 of the Exchange Act.
Mobile devices are increasingly used for e-commerce transactions. A significant and growing portion of our users access our platform through mobile devices. We may lose users if we are not able to continue to meet our users’ mobile and multi-screen experience expectations.
More individuals are using mobile devices to access the internet and versions of our service developed or optimized for these devices may not gain widespread adoption by users of such devices. Mobile devices are increasingly used for e-commerce transactions. A significant and growing portion of our users access our platform through mobile devices.
We have experienced periodic systems interruptions due to server failure and power failure, which we believe will continue to occur from time to time. Our transaction processing systems and network infrastructure may be unable to accommodate increases in traffic in the future.
We use internally developed systems for our website and certain aspects of transaction processing, including databases used for internal analytics and order verifications. We have experienced periodic systems interruptions due to server failure and power failure, which we believe will continue to occur from time to time.
In certain states, our discount certificates and Discount Dining Passes may be considered a gift card.
If we are required to materially increase the estimated liability recorded in our financial statements with respect to unredeemed discounts and Discount Dining Passes, our net income could be materially and adversely affected. In certain states, our discount certificates and Discount Dining Passes may be considered a gift card.
Removed
We have identified material weaknesses in our disclosure controls and procedures and internal control over financial reporting. Maintaining effective internal control over financial reporting and effective disclosure controls and procedures are necessary for us to produce reliable financial statements.
Added
We may be subject to additional unexpected regulation which could increase our costs or otherwise harm our business. The application of certain laws and regulations to our discount certificates and dining cards is uncertain.
Removed
We have evaluated our internal control over financial reporting and our disclosure controls and procedures and concluded that they were not effective as of December 31, 2023.
Added
We do not currently believe we are a money transmitter given our role and the product terms of our discount certificates and Discount Dining Passes.
Removed
A material weakness is defined as 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 annual or interim financial statements will not be prevented or detected on a timely basis.
Added
If we cannot raise funds on acceptable terms, we may not be able to grow our business or respond to competitive pressures. 19 We intend to make acquisitions that could disrupt our operations and adversely impact our business and operating results.
Removed
The material weaknesses identified include (i) we had inadequate segregation of duties consistent with control objectives.
Added
The loss of the services of any executive officer or other key employee could hurt our business.
Removed
Specifically, certain personnel have the ability to both (i) create and post journal entries within our general ledger system and (ii) prepare and review account reconciliations; and (ii) we did not design and maintain effective controls over certain information technology (“IT”) general controls for information systems that are relevant to the preparation of our consolidated financial statements.
Added
The failure to successfully hire executives and key employees or the loss of any executives and key employees could have a significant impact on our operations.
Removed
Specifically, we did not design and maintain effective program change management controls to ensure that information technology program and data changes affecting certain financial IT applications and underlying accounting records are identified, tested, authorized and implemented appropriately. The Company is committed to remediating its material weaknesses as promptly as possible.
Removed
Implementation of the Company’s remediation plans has commenced and is being overseen by the board. However, there can be no assurance as to when these material weaknesses will be remediated or that additional material weaknesses will not arise in the future.
Removed
Even effective internal control can provide only reasonable assurance with respect to the preparation and fair presentation of financial statements.
Removed
Any failure to remediate the material weaknesses, or the development of new material weaknesses in our internal control over financial reporting, could result in material misstatements in our financial statements, which in turn could have a material adverse effect on our financial condition and the trading price of our common stock and we could fail to meet our financial reporting obligations.
Removed
We have identified weaknesses in our internal controls, and we cannot provide assurances that these weaknesses will be effectively remediated or that additional material weaknesses will not occur in the future.
Removed
If not remediated, our failure to establish and maintain effective disclosure controls and procedures and internal control over financial reporting could result in material misstatements in our financial statements and a failure to meet our reporting and financial obligations, each of which could have a material adverse effect on our financial condition and the trading price of our common We may be subject to additional unexpected regulation which could increase our costs or otherwise harm our business.
Removed
An essential part of our success depends on restaurants remaining in business and customers wanting to dine at those restaurants. The COVID-19 outbreak caused restaurants in many states to have to close temporarily and a similar pandemic in the future could negatively impact sales and our overall liquidity.
Removed
Government regulation of the internet and e-commerce is evolving, and unfavorable changes or failure by us to comply with these regulations could substantially harm our business and results of operations.
Removed
Our business may be subject to seasonal sales fluctuations which could result in volatility or have an adverse effect on the market price of our common stock. Our business, like that of our restaurants and merchants, may be subject to some degree of sales seasonality. As the growth of our business stabilizes, these seasonal fluctuations may become more evident.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeFurther, we have processes in place to evaluate potential risks from cybersecurity threats associated with our use of third-party service providers that will have access to Company data, including a review process for such providers’ cybersecurity practices, risk assessments, contractual requirement and system monitoring.
Biggest changeFurther, we have processes in place to evaluate potential risks from cybersecurity threats associated with our use of third-party service providers that will have access to Company data, including a review process for such providers’ cybersecurity practices, risk assessments, contractual requirement and system monitoring. 30 We continue to evaluate and enhance our systems, controls, and processes where possible, including in response to actual or perceived threats specific to us or experienced by other companies.
In addition, we conduct application security assessments, vulnerability management, penetration testing, security audits and ongoing risk assessments as part of our risk management process. We also maintain an incident response plan to guide our processes in the event of an incident.
In addition, we conduct application security assessments, vulnerability management, penetration testing, security audits and ongoing risk assessments as part of our risk management process. We also maintain an incident response plan to guide our processes in the event of an incident. We also have a process to require corporate employees to undertake cybersecurity training and compliance programs annually.
We also have a process to require corporate employees to undertake cybersecurity training and compliance programs annually. 27 We utilize third parties and consultants to assist in the identification and assessment of risks, including to support tabletop exercises and to conduct security testing.
We utilize third parties and consultants to assist in the identification and assessment of risks , including to support tabletop exercises and to conduct security testing.
Removed
We continue to evaluate and enhance our systems, controls, and processes where possible, including in response to actual or perceived threats specific to us or experienced by other companies.

Item 2. Properties

Properties — owned and leased real estate

1 edited+0 added−0 removed1 unchanged
Biggest changeITEM 2. PROPERTIES Our principal executive offices, including Restaurant.com, are located at 1100 Woodfield Road, Suite 510, Schaumberg, IL 60173 and consists of approximately 7,850 square feet. The corresponding lease was executed in April 2023 for a term of 36 months and an average base rent of approximately $7,500 per month.
Biggest changeITEM 2. PROPERTIES Our principal executive offices, including Restaurant.com, are located at 1100 Woodfield Road, Suite 510, Schaumburg, IL 60173 and consist of approximately 7,850 square feet. The corresponding lease was executed in April 2023 for a term of 36 months and an average base rent of approximately $7,500 per month.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

7 edited+4 added−1 removed1 unchanged
Biggest changeThe decision whether to pay cash dividends on our common stock will be made by our board of directors, in their discretion, and will depend on our financial condition, results of operations, capital requirements and other factors that our board of directors considers significant.
Biggest changeThe decision whether to pay cash dividends on our common stock will be made by our board of directors, in their discretion, and will depend on our financial condition, results of operations, capital requirements and other factors that our board of directors considers significant. 32 Securities Authorized for Issuance under Equity Compensation Plans The following table provides information about the common stock that may be issued upon the exercise of options, warrants and rights under all of the Company’s existing equity compensation plans as of December 31, 2024.
Plan Number of Securities to be issued upon exercise of vested Options, Warrants and Rights Weighted Average Exercise Price of Outstanding Options, Warrants and Rights Number of Securities remaining available for issuance under equity compensation plans (excluding securities reflected in column (a)) Category (a) (b) I Equity Compensation Plans (1) Approved by Security Holders 2019 Plan 743,116 $ 4.43 39,256,884 (1) The only equity compensation plan approved by security holders is our 2019 Stock Incentive Plan.
Number of Securities to be issued upon exercise of vested Options, Warrants and Rights Weighted Average Exercise Price of Outstanding Options, Warrants and Rights Number of Securities remaining available for issuance under equity compensation plans (excluding securities reflected in column (a)) Plan Category (a) (b) I Equity Compensation Plans (1) Approved by Security Holders 2019 Plan 4,121,830 $ 4.28 35,878,170 (1) The only equity compensation plan approved by security holders is our 2019 Stock Incentive Plan.
Market Information Our common stock has been quoted on the OTC:QB under the symbol RSTN since September 25, 2020. From April 17, 2020 to September 25, 2020, our common stock was quoted on the OTC:Pink under the symbol UBID and prior thereto under the symbol QMKR.
From April 17, 2020 to September 25, 2020, our common stock was quoted on the OTC:Pink under the symbol UBID and prior thereto under the symbol QMKR.
There are 40 million authorized shares under the 2019 Stock Incentive Plan. Purchases of Equity Securities by the Issuer and Affiliated Purchasers None.
There are 40 million authorized shares under the 2019 Stock Incentive Plan. Purchases of Equity Securities by the Issuer and Affiliated Purchasers None. ITEM 6. SELECTED FINANCIAL DATA Not applicable.
High Low Year Ending December 31, 2023 October 1, 2023 through December 31, 2023 $ 4.45 $ 3.15 July 1, 2023 through September 30, 2023 $ 4.60 $ 2.97 April 1, 2023 through June 30, 2023 $ 3.70 $ 2.88 January 1, 2023 through March 31, 2023 $ 3.39 $ 1.35 Year Ending December 31, 2022 October 1, 2022 through December 31, 2022 $ 3.00 $ 1.42 July 1, 2022 through September 30, 2022 $ 3.20 $ 0.20 April 1, 2022 through June 30, 2022 $ 1.61 $ 0.40 January 1, 2022 through March 31, 2022 $ 1.10 $ 0.35 Holders As of December 31, 2023, there were 1,621 holders of record of our common stock.
High Low Year Ending December 31, 2024 October 1, 2024 through December 31, 2024 $ 2.54 $ 0.92 July 1, 2024 through September 30, 2024 $ 4.22 $ 0.50 April 1, 2024 through June 30, 2024 $ 4.27 $ 3.60 January 1, 2024 through March 31, 2024 $ 4.65 $ 3.25 Year Ending December 31, 2023 October 1, 2023 through December 31, 2023 $ 4.45 $ 3.15 July 1, 2023 through September 30, 2023 $ 4.60 $ 2.97 April 1, 2023 through June 30, 2023 $ 3.70 $ 2.88 January 1, 2023 through March 31, 2023 $ 3.39 $ 1.35 Holders As of December 31, 2024, there were 809 holders of record of our common stock.
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Recent Sales of Unregistered Securities Subsequent to December 31, 2023, the Company received net proceeds of $2,809,000 for the sale of 1,404,500 shares of common stock at $2.00 per share, as part of a private placement.
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Recent Sales of Unregistered Securities In December 2024, the Company received net proceeds of $200,000 for the sale of 150,000 shares of common stock, as part of a Securities Purchase Agreement and Strata Purchase Agreement with ClearThink Capital Partners, LLC.
The following table sets forth the high and low bid closing prices for our common stock for the periods indicated, as reported by the OTC Pink and the OTC:QB. The quotations reflect inter-dealer prices, without retail mark-up, mark-down or commission.
On October 25, 2024, Nasdaq announced that the change of the Company’s name to Giftify and its trading symbol to GIFT would be effective on October 28, 2024. The following table sets forth the high and low bid closing prices for our common stock for the periods indicated, as reported by Nasdaq and the OTC:QB.
Removed
Securities Authorized for Issuance under Equity Compensation Plans The following table provides information about the common stock that may be issued upon the exercise of options, warrants and rights under all of the Company’s existing equity compensation plans as of December 31, 2023.
Added
As a condition of the right of the Company to commence sales of its Purchase Shares to ClearThink Capital under the Strata Purchase Agreement, the Company issued to ClearThink Capital under the terms of the Securities Purchase Agreement, 100,000 restricted shares of Giftify’s common stock and an effective registration statement covering the resale of the Purchase Shares.
Added
Market Information On August 6, 2024, The Nasdaq Stock Market (“Nasdaq”) granted the Company’s application for listing on the Nasdaq. Prior to August 6, 2024, our common stock has been quoted on the OTC:QB under the symbol RSTN since September 25, 2020.
Added
On September 4, 2024, the Company’s 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.
Added
The quotations reflect inter-dealer prices, without retail mark-up, mark-down or commission.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

54 edited+27 added−16 removed35 unchanged
Biggest changeAND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS Successor Predecessor December 30, 2023 to December 31, January 1, 2023 to December 29, Year Ended December 31, 2023 2023 2022 Net Sales $ 484,860 $ 86,661,944 $ 97,008,102 Cost of sales 418,350 76,220,645 86,527,509 Gross profit 66,510 10,441,299 10,480,593 Operating Expenses Selling, general and administrative expenses 5,086,510 11,152,428 11,268,508 Amortization of capitalized software costs - 1,080,537 3,678,233 Amortization of intangible assets - 300,000 300,000 Intangibles and property and equipment 738,740 - Impairment of intangibles - 250,000 - Goodwill impairment - - 834,200 Total operating expenses 5,086,510 13,521,705 16,080,941 Loss from operations (5,020,000 ) (3,080,406 ) (5,600,348 ) Other income (expense): Interest expense - (2,890,466 ) (2,723,332 ) Gain on forgiveness of debt - 5,876,000 - Total other income (expense), net - 2,985,534 (2,723,332 ) Net loss before income taxes (5,020,000 ) (94,872 ) (8,323,680 ) Income taxes - (29,673 ) (899 ) Net loss $ (5,020,000 ) $ (124,545 ) $ (8,324,579 ) Sales Successor Predecessor December 30, 2023 to December 31, January 1, 2023 to December 29, Year Ended December 31, 2023 2023 2022 Sales $ 484,860 $ 86,661,944 $ 86,527,509 For the years ended December 31, 2023 and 2022, the Company’s operating revenues consisted of sales generated by our CardCash business.
Biggest changeAND SUBSDIARIES (FKA RDE, INC.) CONSOLIDATED STATEMENTS OF OPERATIONS Successor Predecessor Year Ended December 30, 2023 to January 1, 2023 to December 31, 2024 December 31, 2023 December 29, 2023 Net Sales $ 88,934,036 $ 484,860 $ 86,661,944 Cost of sales 75,789,255 418,350 76,220,645 Gross profit 13,144,781 66,510 10,441,299 Operating Expenses Selling, general and administrative expenses 27,615,865 5,086,510 11,152,428 Amortization of capitalized software costs 1,472,974 - 1,080,537 Amortization of intangible assets 2,431,668 - 300,000 Impairment of property and equipment - - 738,740 Impairment of intangibles - - 250,000 Total operating expenses 31,520,507 5,086,510 13,521,705 Loss from operations (18,375,726 ) (5,020,000 ) (3,080,406 ) Other income (expense): Interest expense (1,002,354 ) - (2,890,466 ) Financing costs (131,000 ) - - Gain on forgiveness of debt - - 5,876,000 Total other income (expense), net (1,133,354 ) - 2,985,534 Net loss before income taxes (19,509,080 ) (5,020,000 ) (94,872 ) Income taxes (expense) benefit 677,000 - (29,673 ) Net loss $ (18,832,080 ) $ (5,020,000 ) $ (124,545 ) Net Sales For the year ended December 31, 2023, the Company’s operating revenues consisted of sales generated by our CardCash business.
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. Stock-Based Compensation The Company periodically issues share-based awards to employees and non-employees and consultants for services rendered.
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.
The Company’s independent registered public accounting firm, in its report on the Company’s consolidated financial statements for the year ended December 31, 2023, 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 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.
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, 2023 and 2022 presented elsewhere in this report, which have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”).
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”).
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 2023 and 2022.
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.
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 2023 and 2022.
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.
The following discussion and analysis of the financial condition and results of operations of RDE should be read together with our consolidated financial statements and related notes included elsewhere in this Annual Report on Form 10-K.
The following discussion and analysis of the financial condition and results of operations of Giftify should be read together with our consolidated financial statements and related notes included elsewhere in this Annual Report on Form 10-K.
Accordingly, for the purpose of the accompanying consolidated financial statements, periods before December 29, 2023 reflect the financial position, results of operations and cash flows of Card Cash prior to the acquisition, and is referred to as the “Predecessor”.
Accordingly, for the purpose of the accompanying consolidated financial statements, periods before December 29, 2023 reflect the financial position, results of operations and cash flows of CardCash prior to the acquisition, and is referred to as the “Predecessor”.
Upon the conclusion of the measurement period, any subsequent adjustments are recorded in the consolidated statements of operations. 35 Recent Accounting Pronouncements See discussion of recent accounting pronouncements in Note 1 to the accompanying financial statements.
Upon the conclusion of the measurement period, any subsequent adjustments are recorded in the consolidated statements of operations. 42 Recent Accounting Pronouncements See discussion of recent accounting pronouncements in Note 1 to the accompanying financial statements.
Periods beginning after December 29, 2023 reflect the financial position, results of operations and cash flows of RDE consolidated with CardCash, and is referred to as the “Successor”.
Periods beginning after December 29, 2023 reflect the financial position, results of operations and cash flows of Giftify consolidated with CardCash, and is referred to as the “Successor”.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Unless otherwise indicated or the context otherwise requires, references in this section to “the Company,” “RDE” “we,” “us,” “our” and other similar terms refer to RDE, Inc. and its subsidiaries and references to “CardCash” refer to the Company, formerly known as CardCash Acquisition Corp., prior to the Merger (as defined below).
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Unless otherwise indicated or the context otherwise requires, references in this section to “the Company,” “Giftify” “we,” “us,” “our” and other similar terms refer to Giftify, Inc. and its subsidiaries and references to “CardCash” refer to the Company, formerly known as CardCash Acquisition Corp., prior to the Merger (as defined below).
The following discussion and analysis should also be read together with the section entitled “Organization and description of business” as of December 31, 2023 (Successor) and for the period from January 1, 2023 through December 29, 2023 (Predecessor), and for the year ended December 31, 2022 (Predecessor). In addition to historical information, the following discussion and analysis contains forward-looking statements.
The following discussion and analysis should also be read together with the section entitled “Organization and description of business” as of December 31,2024 and 2023 (Successor) and for the period from January 1, 2023 through December 29, 2023 (Predecessor). In addition to historical information, the following discussion and analysis contains forward-looking statements.
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. 30 Restaurant.com Business to Customer Division Our B2C division accounted for 45% of gross revenue in our fiscal year ended December 31, 2023.
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 Our B2C division accounted for approximately 50% of gross revenue in our fiscal year ended December 31, 2024.
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.
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.
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.
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.
Cash used in operating activities for the year ended December 31, 2023 was approximately $541,791 and consisted of our net loss, adjusted for non-cash items, including amortization of intangible assets, impairment of intangible assets, fair value of vested stock options, and the fair value of common stock issued to executives, and routine changes in working capital and other activities.
Cash used in operating activities for the year ended December 31, 2023 was approximately $541,791 and consisted of our net loss, adjusted for non-cash items, including amortization of intangible assets, impairment of intangible assets, fair value of vested stock options, and the fair value of common stock issued to executives, and routine changes in working capital and other activities. 43 Investing Activities The Company had no cash flows from investing activities for the year ended December 31, 2024.
The revolving line of credit is payable on demand, with interest based on the Wall Street Journal Prime Rate plus 3.00%, limited to a floor of 6.5%. At December 31, 2023 and 2022, the average interest rate was 12% and 11%, respectively.
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 December 31, 2024 and December 31, 2023, the average interest rate was 12% and 12%, respectively.
At December 31, 2023, the principal balance of $20,000, and accrued interest of $20,137, are convertible at $1.50 per share into 26,758 shares of the Company’s common stock.
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.
Cash used for investing activities for the year ended December 31, 2022 was $1,000,479, which was for capital expenditures. Financing Activities For the year ended December 31, 2023, cash provided by financing activities was $1,462,376, which was from net proceeds received from our line of credit facility of $1,212,376, and a $250,000 working capital advance from RDE.
For the year ended December 31, 2023, cash provided by financing activities was $1,462,376, which was from net proceeds received from our line of credit facility of $1,212,376, and a $250,000 working capital advance from Giftify.
Cash used in operating activities for the year ended December 31, 2022 was approximately $102,411 and consisted of our net loss, adjusted for non-cash items, including amortization of intangible assets, goodwill impairment, fair value of vested stock options, and the fair value of common stock issued to executives, and routine changes in working capital and other activities.
Cash used in operating activities for the year ended December 31, 2024 was approximately $2,551,870 and consisted of our net loss, adjusted for non-cash items, including amortization of intangible assets, impairment of goodwill and 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.
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.
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.
During the year ended December 31, 2023, the Company determined that certain property and equipment were impaired, resulting in a charge to operations of $738,740 at December 31, 2023. No similar event occurred in the prior year period.
Amortization expenses were $300,000 during the year ended December 31, 2023. Impairment of property and equipment. During the year ended December 31, 2023, the Company determined that certain property and equipment were impaired, resulting in a charge to operations of $738,740 at December 31, 2023. No similar event occurred in the current year period.
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.
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. 35 Going Concern The Company has a history of reporting net losses.
Successor Predecessor December 30, 2023 to December 31, 2023 January 1, 2023 to December 29, 2023 Year Ended December 31, 2022 Net cash used in operating activities $ - $ (541,791 ) $ (102,411 ) Net cash used in investing activities - (900,000 ) (1,000,479 ) Net cash provided by financing activities - 1,462,376 409,331 Net increase (decrease) in cash and cash equivalents $ - $ 20,585 $ (693,559 ) 36 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.
Successor Predecessor Year Ended December 31, 2024 December 30, 2023 to December 31, 2023 January 1, 2023 to December 29, 2023 Net cash used in operating activities $ (2,551,870 ) $ - $ (541,791 ) Net cash used in investing activities - 2,038,472 (900,000 ) Net cash provided by financing activities 2,027,009 1,462,376 Net increase (decrease) in cash and cash equivalents $ (524,861 ) $ 2,037,472 $ 20,585 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.
A black-line between the Successor and Predecessor periods has been placed in the consolidated financial statements and in the tables to the notes to the consolidated financial statements to highlight the lack of comparability between these periods. Collectively, RDE (Successor) and CardCash (Predecessor) are referred to as the “Company”.
A black-line between the Successor and Predecessor periods has been placed in the consolidated financial statements and in the tables to the notes to the consolidated financial statements to highlight the lack of comparability between these periods.
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 December 31, 2023, we had cash of $4,099,737 available to fund our operations, including expansion plans, and to service our debt, and a negative working capital of $1,099,428.
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 December 31, 2024, we had cash of $3,574,876 available to fund our operations, including expansion plans, and to service our debt, and a negative working capital of $3,204,077.
Write-off of Impaired Intangible Assets During the year ended December 31, 2023, the Company determined that certain intangible assets were impaired, based on a third party valuation, resulting in a charge to operations of $250,000 at December 31, 2023. No similar event occurred in the prior year period. Impairment of Goodwill .
Impairment of intangibles During the year ended December 31, 2023, the Company determined that certain intangible assets were impaired, based on a third-party valuation, resulting in a charge to operations of $250,000 at December 31, 2023.
Investing Activities Cash used for investing activities for the year ended December 31, 2023 was $900,000, which was for capital expenditures (predecessor). Cash provided by investing activities for the year ended December 31, 2023 was $2,038,472, which was from net cash received from the acquisition of CardCash (successor).
Cash provided by investing activities for the year ended December 31, 2023 was $1,138,472, which was comprised of $2,038,472 of cash received from an acquisition, offset by $900,000 of cash used for capital expenditures.
The average order value for these Specials sales is nearly five times a certificate purchase. Specials generated over 5% of our past year’s B2C revenue from 60% of the B2C orders for the fiscal year ended December 31, 2023. We believe that our relationships with small businesses presents a significant revenue opportunity through such cross-promotions.
The average order value for these Specials sales is nearly five times a certificate purchase. Specials generated over 5% of our past year’s B2C revenue from 60% of the B2C orders for the fiscal year ended December 31, 2023.
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 12.0%, as compared to a gross margin of 10.8% in the prior year period. While our sales decreased 10.7% over the prior year period, our gross profit was consistent with the prior year period.
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 13.0%, as compared to a gross margin of 12.0% in the prior year period, which generated an increase in gross profit as compared to the prior year period.
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. $750,000 is payable on the December 29, 2025, 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 RDE’s initial public offering to allow the Company to become listed on the Nasdaq Capital Market or (b) December 29, 2024.
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 Company to Pathward National Association. 44 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 (see Note 13), 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.
Loss from Operations Successor Predecessor December 30, 2023 to December 31, January 1, 2023 to December 29, Year Ended December 31, 2023 2023 2022 Loss from operations $ (5,020,000 ) $ (3,080,406 ) $ (5,600,348 ) Predecessor For the period January 1, 2023 to December 29, 2023, we incurred a loss from operations of $3,080,406, as compared to a loss from operations of $5,600,348 for the year ended December 31, 2022.
No similar event occurred in the current year period. 39 Loss from Operations Successor Predecessor Year Ended December 31, 2024 December 30, 2023 to December 31, 2023 January 1, 2023 to December 29, 2023 Loss from operations $ (18,375,726 ) $ (5,020,000 ) $ (3,080,406 ) For the year ended December 31, 2024, we incurred a loss from operations of ($18, 375,726 ), as compared to a loss from operations of ($8,100,406) for the year ended December 31, 2023.
We anticipate our cash balance will last until approximately December 2024. As a result, we have concluded that there is 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.
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.
Other Income (Expenses) We had other income of $2,985,534 for the year ended December 31, 2023, as compared to other expenses of $2,723,332 for the year ended December 31, 2022. Other income for the year ended December 31, 2023, consisted of a gain from the forgiveness of convertible notes and promissory notes totaling $5,876,000, offset by interest expense of $2,890,466.
Other expense income for the year ended December 31, 2024, consisted of financing costs of $131,000 and interest expense of $1,002,354. Other income for the year ended December 31, 2023, consisted of a gain from the forgiveness of convertible notes and promissory notes totaling $5,876,000, offset by interest expense of $2,890,466.
As of December 31, 2023, the notes payable had an aggregate principal balance outstanding of $1,500,000. GameIQ Acquisition Note Payable On February 1, 2022, RDE issued two notes payable for the purchase of GameIQ, one for $78,813 and another for $62,101.
GameIQ Acquisition Note Payable On February 1, 2022, the Company issued two notes payable for the purchase of GameIQ, one for $78,813 and another for $62,101.
As of December 31, 2023 the Company was in compliance with customary debt covenants. 37 Convertible Debt On November 5, 2018, RDE completed the acquisition of Incumaker, Inc. and assumed certain outstanding convertible notes payable. At December 31, 2023, there was one remaining assumed convertible note payable outstanding that matured July 2017, and is past due.
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.
Amortization expenses are primarily attributable to the Company’s capitalized software development costs. Amortization expenses were $1,080,537 during the year ended December 31, 2023, as compared to $3,678,000 during the year ended December 31, 2022, a decrease of $2,597,696. Amortization of intangible assets. A mortization expenses are primarily attributable to the Company’s amortization of intangible assets with finite lives.
Amortization expenses were $1,472,974 during the year ended December 31, 2024, as compared to $1,080,537 during the year ended December 31, 2023. Amortization of intangible assets. Amortization expenses are primarily attributable to the Company’s amortization of intangible assets with finite lives. Amortization expenses were $2,431,668 during the year ended December 31, 2024.
Secured Revolving Line of Credit The outstanding line of credit balance at December 31, 2023 and December 31, 2022 was: December 31, 2023 (Successor) December 31, 2022 (Predecessor) Line of credit $ 6,737,385 $ 5,525,009 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.
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.
Off-Balance Sheet Arrangements At December 31, 2023 and December 31, 2022, the Company did not have any transactions, obligations or relationships that could be considered off-balance sheet arrangements.
As of December 31, 2024, the note payable had a principal balance outstanding of $664,500 and accrued interest payable of $15,558. Off-Balance Sheet Arrangements At December 31, 2024 and December 31, 2023, the Company did not have any transactions, obligations or relationships that could be considered off-balance sheet arrangements.
Other expense for the year ended December 31, 2022, consisted of interest expense of $2,723,332. 34 Net Loss Successor Predecessor December 30, 2023 to December 31, January 1, 2023 to December 29, Year Ended December 31, 2023 2023 2022 Net loss $ (5,020,000 ) $ (124,546 ) $ (8,324,579 ) Predecessor We realized a net loss of $124,546 for the period January 1, 2023 to December 29, 2023, as compared to a net loss of $8,324,579 for the year ended December 31, 2022.
Net Loss Successor Predecessor Year Ended December 31, 2024 December 30, 2023 to December 31, 2023 January 1, 2023 to December 29, 2023 Net Loss $ (18,832,080 ) $ (5,020,000 ) $ (124,546 ) We realized a net loss of ($18,832,080) for the year ended December 31, 2024, as compared to a net loss of ($5,144,546) for the year ended December 31, 2023 (including Predecessor from January 1, 2023 to December 29, 2023).
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. 32 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.
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.
Going Concern The Company has a history of reporting net losses. At December 31, 2023, the Company had cash of $4,099,737 available to fund its operations, including expansion plans, and to service its debt, and a negative working capital of $1,849,427.
At December 31, 2024, the Company had cash of $3,574,876 available to fund its operations, including expansion plans, and to service its debt, and a negative working capital of $3,204,077.
Basis of Presentation On August 18, 2023, RDE, Inc. (“RDE”) entered into an agreement and plan of merger to acquire CardCash Exchange Inc (“CardCash”). On December 29, 2023, the merger was completed. RDE’s operations are not considered significant compared to the operations of CardCash before the acquisition.
On December 29, 2023, the merger was completed. Giftify’s operations are not considered significant compared to the operations of CardCash before the acquisition.
On January 31, 2022, the Company assumed an additional $14,500 EIDL, and accrued interest of $900, as part of the consideration paid for the acquisition of GameIQ (see Note 3).
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.
Restaurant.com Business to Business Division Our B2B division accounted for 55% of our gross revenue in our fiscal year ended December 31, 2023.
We believe that our relationships with small businesses presents a significant revenue opportunity through such cross-promotions. 34 Restaurant.com Business to Business Division Our B2B division accounted for approximately 50% of our gross revenue in our fiscal year ended December 31, 2023.
Successor Cost of sales for the period December 30, 2023 to December 31, 2023, were $418,350, and were related to our Successor sales discussed above. 33 Operating Expenses Selling, General and Administrative Expenses Successor Predecessor December 30, 2023 to December 31, January 1, 2023 to December 29, Year Ended December 31, 2023 2023 2022 Selling, general and administrative expenses $ 5,086,510 $ 11,152,428 $ 11,268,508 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.
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.
Predecessor Selling, general and administrative expenses were $11,152,428 for the period January 1, 2023 to December 29, 2023, as compared to $11,268,508 during the year ended December 31, 2022, an increase of $339,920. The increase was from general changes in our business and operations.
Selling, general and administrative expenses were $27,615,865 for the year ended December 31, 2024, as compared to $16,238,938 for the year ended December 31, 2023, an increase of $11,376,927. The increase was from increased stock-based compensation expense of $6,482,766 during the year ended December 31, 2024, increased payroll and benefit expenses, and general changes in our business and operations.
References to “Notes” are notes included in our audited consolidated financial statements appearing elsewhere in this Annual Report on Form 10-K. Background On March 1, 2020, we acquired the assets of Restaurant.com, Inc. Restaurant.com, Inc. is a pioneer in the restaurant deal space and the nation’s largest restaurant-focused digital deals brand.
References to “Notes” are notes included in our audited consolidated financial statements appearing elsewhere in this Annual Report on Form 10-K.
Successor Sales for the period December 30, 2023 to December 31, 2023, were $484,860. Cost of Sales Successor Predecessor December 30, 2023 to December 31, January 1, 2023 to December 29, Year Ended December 31, 2023 2023 2022 Cost of Sales $ 418,350 $ 76,220,645 $ 97,008,102 Cost of sales consists primarily of the cost to purchase merchant gift cards.
Cost of Sales Successor Predecessor Year Ended December 31, 2024 December 30, 2023 to December 31, 2023 January 1, 2023 to December 29, 2023 CardCash $ 75,654,690 $ 418,350 $ 76,220,645 Restaurant.com 134,565 - - Cost of Sales $ 75,789,255 $ 418,350 $ 76,220,645 For the year ended December 31, 2023, the Company’s cost of sales consisted of solely our CardCash business.
Our cost of sales, as a percentage of sales, were 88.0% and 89.2%, respectively. The decline in our cost of sales, and the increase in our gross margin, as compared to the prior year period, is discussed above.
Our cost of sales declined 1.3%, which generated an increase in gross margin of $829,139, or 7.9%, as compared to the prior year period. Our cost of sales, as a percentage of sales, were 87.0% and 87.9%, for the year ended December 31, 2024 and 2023, respectively. Restaurant.com Cost of sales for the year ended December 31, 2024 were $134,565.
As of December 31, 2023, the notes payable had an aggregate principal balance outstanding of $102,199 and accrued interest payable of $821. 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.
As of December 31, 2023, the notes payable had an aggregate principal balance outstanding of $102,199 and accrued interest payable of $821. As of December 31, 2024, the notes payable had an aggregate principal balance outstanding of $75,928 and accrued interest payable of $1,646.
Amortization of developed technology is excluded from cost of sales and included in amortization expense in the Statements of Operations. Predecessor Costs of sales for the period January 1, 2023 to December 29, 2023 decreased to $76,220,645, as compared to $86,527,509 during the year ended December 31, 2022.
See our Basis of Presentation discussion above. Amortization of developed technology is excluded from cost of sales and included in amortization expense in the Statements of Operations. CardCash Cost of sales consists primarily of the cost to purchase merchant gift cards. Cost of sales for the year ended December 31, 2024 and 2023, were $75,654,690 and $76,638,995, respectively.
Year ended December 31, 2023 compared to Year ended December 31, 2022 Results of Operations – Twelve months ended December 31, 2023, compared to twelve months ended December 31, 2022 RDE, INC.
Collectively, Giftify (Successor) and CardCash (Predecessor) are referred to as the “Company”. 36 Results of Operations – Year ended December 31, 2024, compared to year ended December 31, 2023 GIFTIFY, INC.
The decrease in loss from operations was due to our decreased operating costs discussed above. Predecessor For the period December 30, 2023 to December 31, 2023, we incurred a loss from operations of $5,020,000, due primarily to stock compensation of $5,000,000 and routine operating costs of $86,510 as discussed above.
The increase in loss from operations was due to our increased gross profit offset by increased stock-based compensation expense, impairment of goodwill and intangible assets, and operating costs, as discussed above. For the period January 1, 2023 to December 29, 2023, operations of Giftify were excluded. See our Basis of Presentation discussion above.
Removed
On February 28, 2022, the Company completed the acquisition of GameIQ, a California corporation, that is a developer of consumer gamification technologies for retail businesses.
Added
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.
Removed
The Company issued 600,000 restricted shares of its common stock with a fair value of $300,000, and promissory notes aggregating $140,914 and bearing interest at 1% per annum, to Balazs Wellisch, President and co-founder, and Quentin Blackford, Director, of GameIQ.
Added
All references to RDE, Inc. have been changed to Giftify, Inc. 33 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”).
Removed
Each note required repayment in nine equal biannual installments, with the first installment due on the nine-month anniversary of the closing. Balazs Wellisch became Chief Technology Officer of Restaurant.com, a subsidiary of the Company. On December 29, 2023, RDE, Inc. completed the acquisition of CardCash Exchange, Inc. (“CardCash”).
Added
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.
Removed
The acquisition was made pursuant to a plan of merger agreement dated August 18, 2023, between RDE, and Elliott Bohn, in his capacity as stockholder representative for CardCash’s stockholders.
Added
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.
Removed
The Company acquired all of the issued and outstanding equity interests of CardCash from CardCash’s stockholders for $26,682,000, made up of 6,108,007 shares of RDE’s common stock with a fair value of $24,432,000 or $4.00 per share, $750,000 in cash (including $250,000 advanced in October 2023), and the issuance of notes payable for $1,500,000.
Added
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. Basis of Presentation On August 18, 2023, Giftify, Inc. entered into an agreement and plan of merger to acquire CardCash Exchange Inc (“CardCash”).
Removed
Elliot Bohm, President of CardCash prior to the merger with RDE, remains as President of CardCash following the closing of the merger and has joined the Board of Directors of RDE as well as serving as a member of the Board of Directors of CardCash.
Added
Successor Predecessor Year Ended December 30, 2023 to January 1, 2023 to December 31, 2024 December 31, 2023 December 29, 2023 CardCash $ 86,991,638 $ 484,860 $ 86,661,944 Restaurant.com 1,942,398 - - Sales $ 88,934,036 $ 484,860 $ 86,661,944 37 CardCash Sales for the year ended December 31, 2024 and 2023, were $86,991,638 and $87,146,804, respectively.
Removed
Marc Ackerman, Chief Operating Officer of CardCash prior to the merger with RDE, continues to serve as Chief Operating Officer of CardCash following the closing of the merger. Business Overview We have two principal divisions, B2C and B2B, for both CardCash and for Restaurant.com.
Added
During the current year period, we focused on improving our gross margin.
Removed
As the COVID-19 pandemic has abated, our revenues improved in fiscal 2023. 31 Inflation Global inflation also increased during 2021 and in 2022.
Added
Restaurant.com Sales for the year ended December 31, 2024 were $1,942,399. Per our Basis of Presentation discussion above, Restaurant.com sales were not included in the prior year numbers.
Removed
Predecessor Sales for the period January 1, 2023 to December 29, 2023, were $86,661,944, a decrease of approximately $10,346,158 or 10.7%, as compared to $97,008,102 in the year ended December 31, 2022. During the current year period, we focused on improving our gross margin.
Added
Per our Basis of Presentation discussion above, Restaurant.com sales were not included in the prior year numbers.
Removed
Successor Selling, general and administrative expenses were $5,086,510 during the period December 30, 2023 to December 31, 2023. Selling, general and administrative expenses were for common shares issued per the term of executive employment agreements including $5,000,000 recognized upon the close of the Merger, and $86,510 general changes in our business and operations. Amortization of capitalized software costs .
Added
Operating Expenses Successor Predecessor Year Ended December 31, 2024 December 30, 2023 to December 31, 2023 January 1, 2023 to December 29, 2023 Selling, general and administrative expenses $ 27,615,865 $ 5,086,510 $ 11,152,428 Amortization of capitalized software costs 1,472,974 - 1,080,537 Amortization of intangible assets 2,431,668 - 300,000 Impairment of property and equipment - - 738,740 Impairment of intangibles - - 250,000 Operating expenses $ 31,520,507 $ 5,086,510 $ 13,521,705 38 Selling, general and administrative expenses .
Removed
A mortization expenses were $3 00 , 000 during the year ended December 31, 2023, as compared to $ 300,000 during the year ended December 31, 2022 . Impairment of property and equipment.
Added
For the period January 1, 2023 to December 29, 2023, selling, general and administrative expenses of Giftify were excluded. See our Basis of Presentation discussion above. Amortization of capitalized software costs . Amortization expenses are primarily attributed to the Company’s capitalized software development costs.
Removed
We test for goodwill annually or if an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying amount. During the year ended December 31, 2022, the Company determined that its goodwill was impaired, resulting in a charge to operations of $834,200 at December 31, 2022.
Added
Other Income (Expenses) Successor Predecessor Year Ended December 31, 2024 December 30, 2023 to December 31, 2023 January 1, 2023 to December 29, 2023 Interest expense $ (1,002,354 ) $ - $ (2,890,466 ) Financing costs (131,000 ) - - Gain on forgiveness of debt - - 5,876,000 Total other income (expense), net $ (1,133,354 ) $ - $ 2,985,534 We had other expenses of ($1,133,354) for the year ended December 31, 2024, as compared to other income of $2,985,534 for the year ended December 31, 2023.
Removed
No similar event occurred in the current year period.
Added
The increase in net loss was due to our increased gross profit offset by increased stock-based compensation expense, operating costs, other expenses, and decreased income taxes, as discussed above. 40 Modified EBITDA In addition to our GAAP results, we present Modified EBITDA as a supplemental measure of our performance.

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