Quarterly Report for Quarter Ending June 30, 2025 (Form 10-Q)

Management's Discussion and Analysis of Financial Condition and Results of Operations

Management's Discussion and Analysis of Financial Condition and Results of Operations is designed to provide a reader of the financial statements with a narrative report on our financial condition, results of operations, and liquidity. This discussion and analysis should be read in conjunction with the attached unaudited Condensed Consolidated Financial Statements and notes thereto and our Annual Report on Form 10-K for the year ended December 31, 2024, including the audited Consolidated Financial Statements and notes thereto. The following discussion contains forward-looking statements that involve risks and uncertainties, such as statements of our plans, objectives, expectations, and intentions. Our actual results could differ materially from those discussed in the forward-looking statements. Please also see the cautionary language at the beginning of this Quarterly Report regarding forward-looking statements.

Background

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

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

On May 29, 2025, we acquired Takeout7, Inc ("Takeout7"). Takeout7 is a restaurant technology company offering comprehensive online ordering solutions through its TakeOut7 platform and AI-powered digital marketing services through its Platr platform. The acquisition of Takeou7 expands our technology offerings to include end-to-end solutions for independent restaurants.

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

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

Business Overview

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

CardCash

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

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

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

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

Restaurant.com

Restaurant.com is a pioneer in the restaurant deal space and the nation's largest restaurant-focused digital deals brand. We derive our revenue from transactions in which we sell discount certificates for restaurants on behalf of third-party restaurants. Founded in 1999, we connect digital consumers, businesses, and communities offering dining and merchant deal options nationwide at over 182,500 restaurants and retailers to over 7.8 million customers. Our 10,000 core restaurants and 170,000 Dining Discount Pass restaurants and retailers extend nationwide. Our top three B2C markets are New York, Chicago and Los Angeles.

Restaurant.com Business to Customer Division

To our database of 6.2 million customers, we sell:

● Discounted certificates for 10,000 restaurants. The certificates range from $5 to $100 and never expire.

● Discount Dining Passes, which provide discounts at 170,000 restaurants and other retailers. These passes provide multiple uses for six months.

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

Restaurant.com Business to Business Division

We sell certificates and Discount Dining Passes to corporations and marketers, which use them to:

	●	generate new customers;
	●	increase sales at the point of sale;
	●	reward points/customer loyalty;
	●	convert to paperless billing and auto-bill payment;
	●	motivate specific customer behavior such as free home repair estimates and test drives for auto dealers;
	●	renew subscriptions and memberships; and
	●	address customer service issues.

Restaurant.com Other Business

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

Restaurant.com Attractive Customer Demographics

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

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

How We Measure Our Business

We use operating metrics to assess the progress of our business and make strategic decisions. Certain of the financial metrics are reported in accordance with GAAP and certain of those metrics are considered non-GAAP financial measures. As our business evolves, we may make changes to the key financial and operating metrics that we use to measure our business. For further information and reconciliations to the most applicable financial measures under GAAP, refer to our discussion under the Non-GAAP Financial Measures section.

Operating Metrics

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Gross billings are the total dollar value of customer purchases of goods and services. Gross billings are presented net of customer refunds and order discounts. A significant portion of our revenue transactions are comprised of sales of discounted merchant gift cards in which we collect the transaction price from the customer and remit a portion of the transaction price to the third-party suppliers who will provide the related goods or services. For these transactions, gross billings differ from Net Sales reported in our Condensed Consolidated Statements of Operations, which is presented net of the merchant's share of the transaction price. Gross billings are an indicator of our growth and business performance as it measures the dollar volume of transactions generated through our marketplaces. Tracking gross billings also allows us to monitor the percentage of gross billings that we are able to retain after payments to merchants.

Our gross billings for the three and six months ended June 30, 2025 and 2024 were as follows:

		Three Months Ended June 30,												Six Months Ended June 30,
		2025				2024				Change %				2025				2024				Change %
Gross billings		$	36,072,063			$	29,287,369				23.2	%		$	73,091,528			$	59,319,954				23.2	%

Inflation

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

Going Concern

The Company has a history of reporting net losses. At June 30, 2025, the Company had cash of $3,257,427 available to fund its operations, including expansion plans, and to service its debt, and a negative working capital of $1,710,474.

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

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

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

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

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

Revenue Recognition

We recognize revenue in accordance with FASB ASC 606, Revenue from Contracts with Customers. Based on the Company's business model, it is sometimes necessary to determine whether we are acting as a principal or an agent in revenue-generating arrangements.

Deciding whether the Company is a principal or an agent requires significant judgment and analysis. This is particularly true when evaluating factors like responsibility for fulfilling the promise to the customer, inventory risk, and pricing discretion. Changes in the assessment of these indicators could materially impact reported revenue and related metrics. The Company continuously evaluates our judgments and estimates to ensure accurate revenue recognition in accordance with ASC 606.

The following table reconciles the recording of the Company's gross vs. net transactions to the Company's reported net sales.

		Three Months Ended June 30,								Six Months Ended June 30,
		2025				2024				2025				2024
Gross revenue (Principal Transactions)		$	19,807,049			$	19,389,457			$	42,038,372			$	40,346,020
Net revenue (Agent Transactions)			1,093,682				631,045				2,139,372				1,196,376
Net Sales		$	20,900,731			$	20,020,502			$	43,177,744			$	41,452,396

The increase in net revenue recognized as agent increased $462,637, or 73%, during the three months ended June 30, 2025, as compared to the prior year period. For the six months ended June 30, 2025, net revenue recognized as agent increased $942,996, or 79%, as compared to the prior year period. The increase over the previous year was due to the sale of gift cards related to cruise line operators, fluctuations in the types of gift cards sold, and changes in the number of customer orders in which the Company acted as an agent.

Management believes that presenting gross proceeds collected from customers and amounts paid to principals provides useful information to investors about the scale of the Company's operations in these agency arrangements.

Results of Operations - Three Months Ended June 30, 2025, Compared to Three Months Ended June 30, 2024

Operating Metrics

Our gross billings for the three months ended June 30, 2025 and 2024 were as follows:

		Three Months Ended June 30,
		2025				2024				Change %
Gross billings		$	36,072,063			$	29,287,369				23.2	%

Gross billings increased 23.2% during the three months ended June 30, 2025, as compared to the prior year period. A significant portion of our revenue transactions are comprised of sales of discounted merchant gift cards in which we collect the transaction price from the customer and remit a portion of the transaction price to the third-party suppliers who will provide the related goods or services. For these transactions, gross billings differ from Net Sales reported in our Condensed Consolidated Statements of Operations, which is presented net of the merchant's share of the transaction price

Financial Results

GIFTIFY, INC. AND SUBSDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

		Three Months Ended June 30,
		2025				2024
		(Unaudited)				(Unaudited)
Net Sales		$	20,900,731			$	20,020,502
Cost of sales			17,045,106				16,760,007
Gross profit			3,855,625				3,260,495
Operating Expenses
Selling, general and administrative expenses			5,714,543				9,832,270
Amortization of capitalized software costs			161,544				302,737
Amortization of intangible assets			557,062				607,917
Total operating expenses			6,433,149				10,742,924
Loss from operations			(2,577,524	)			(7,482,429	)
Other income (expense):
Interest expense, net			(141,597	)			(262,217	)
Total other income (expense), net			(141,597	)			(262,217	)
Net loss before income taxes			(2,719,121	)			(7,744,646	)
Income tax benefit			129,312				-
Net loss		$	(2,589,809	)		$	(7,744,646	)

The following is a discussion of our results of operations.

Net Sales

Net sales for the three months ended June 30, 2025 and 2024, were $20,900,731 and $20,020,502, respectively, an increase of 4.4%. Merchant gift card sales accounted for approximately 98% and 98% of our net sales for the three months ended June 30, 2025 and 2024, respectively.

Cost of Sales

Cost of sales consists primarily of the cost to purchase merchant gift cards. Cost of sales for the three months ended June 30, 2025 and 2024, were $17,045,106 and $16,760,007, respectively. Gross profit increased $595,130, or 18.3%, as compared to the prior year period. Our gross margin, as a percentage of net sales, were 18.4% and 16.3%, for the three months ended June 30, 2025 and 2024, respectively. Our gross margin was positively impacted by the increase in net revenue (agent transactions), as described above, as compared to the prior year period.

Operating Expenses

		Three Months Ended June 30, 2025				Three Months Ended June 30, 2024
Selling, general and administrative expenses		$	5,714,543			$	9,832,270
Amortization of capitalized software costs			161,544				302,737
Amortization of intangible assets			557,062				607,917
Operating expenses		$	6,433,149			$	10,742,924

Selling, general and administrative expenses consist of costs incurred to identify, communicate with and evaluate potential customers and related business opportunities, and compensation to officers and directors, as well as legal and other professional fees, lease expense, and other general corporate expenses. Management expects selling, general and administrative expenses to increase in future periods as the Company adds personnel and incurs additional costs related to its operation as a public company, including higher legal, accounting, insurance, compliance, compensation and other costs.

Selling, general and administrative expenses were $5,714,543 for the three months ended June 30, 2025, as compared to $9,832,270 for the three months ended June 30, 2024, a decrease of $4,117,724. The decrease was due to a decrease in stock-based compensation expense of $4,606,671 during the three months ended June 30, 2025, offset by increased payroll and benefit expenses, marketing and advertising costs, as well as other general expenses to support our business and operations.

Amortization of capitalized software costs

Amortization expenses are primarily attributed to the Company's capitalized software development costs. Amortization expenses were $161,544 during the three months ended June 30, 2025, as compared to $302,737 during the three months ended June 30, 2025.

Amortization of intangible assets

Amortization expenses are primarily attributable to the Company's amortization of intangible assets with finite lives. Amortization expenses were $557,062 during the three months ended June 30, 2025, as compared to amortization expenses of $607,917 during the three months ended June 30, 2024.

Loss from Operations

For the three months ended June 30, 2025, we incurred a loss from operations of $2,577,524, as compared to a loss from operations of $7,482,429 for the three months ended June 30, 2024. The decrease in loss from operations was due to our increased gross profit being offset by decreased stock-based compensation expense as discussed above.

Other Expenses

For the three months ended June 30, 2025, we incurred interest expense, net of $141,597, as compared to interest expense, net of $261,917 for the three months ended June 30, 2024. The decrease in interest expense was due to our decreased debt balances.

Income Tax Benefit

For the three months ended June 30, 2025, we realized an income tax benefit of $129,312 as compared to an income tax benefit of $0 for the three months ended June 30, 2024.

Net Loss

We realized a net loss of $2,589,809 for the three months ended June 30, 2025, as compared to a net loss of $7,744,646 for the three months ended June 30, 2024. The decrease in net loss was due to our increased gross profit, decreased stock-based compensation expense, decreased interest expense, and an income tax benefit, as discussed above.

Modified EBITDA

In addition to our GAAP results, we present Modified EBITDA as a supplemental measure of our performance. However, Modified EBITDA is not a recognized measurement under GAAP and should not be considered as an alternative to net income, income from operations or any other performance measure derived in accordance with GAAP, or as an alternative to cash flow from operating activities as a measure of liquidity. We define Modified EBITDA as net income (loss), plus interest expense, depreciation and amortization, stock-based compensation, and fair value of common stock issued for services.

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

Set forth below is a reconciliation of net loss to Modified EBITDA for the three months ended June 30, 2025 and 2024 (unaudited):

		Three Months Ended June 30, 2025				Three Months Ended June 30, 2024
Net Loss		$	(2,589,809	)		$	(7,744,646	)
Modified EBITDA adjustments:
Income taxes			(129,312	)			-
Interest expense, net			141,597				262,217
Amortization of intangible assets			557,062				608,017
Amortization of capitalized software costs			161,544				302,737
Bad debt expense			100,810				-
Stock option and other noncash compensation			1,607,872				6,214,545
Total Modified EBITDA adjustments			2,439,573				7,387,516
Modified EBITDA		$	(150,236	)		$	(357,130	)

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

	●	Modified EBITDA does not reflect our cash expenditures, or future requirements, for capital expenditures or contractual commitments;
	●	Modified EBITDA does not reflect changes in, or cash requirements for, our working capital needs;

	●	Modified EBITDA does not reflect future interest expense, or the cash requirements necessary to service interest or principal payments, on our debts; and
	●	Although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to be replaced in the future, and Modified EBITDA does not reflect any cash requirements for such replacements.

Results of Operations - Six Months Ended June 30, 2025, Compared to Six Months Ended June 30, 2024

Operating Metrics

Our gross billings for the six months ended June 30, 2025 and 2024 were as follows:

		Six Months Ended June 30,
		2025				2024				Change %
Gross billings		$	73,091,528			$	59,319,954				23.2	%

Gross billings increased 23.2% during the six months ended June 30, 2025, as compared to the prior year period. A significant portion of our revenue transactions are comprised of sales of discounted merchant gift cards in which we collect the transaction price from the customer and remit a portion of the transaction price to the third-party suppliers who provide the related goods or services. For these transactions, gross billings differ from Net Sales reported in our Condensed Consolidated Statements of Operations, which is presented net of the merchant's share of the transaction price.

Financial Results

GIFTIFY, INC. AND SUBSDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

		Six Months Ended June 30,
		2025				2024
		(Unaudited)				(Unaudited)
Net Sales		$	43,177,744			$	41,542,396
Cost of sales			35,740,483				35,024,625
Gross profit			7,437,261				6,517,771
Operating Expenses
Selling, general and administrative expenses			11,758,384				15,046,311
Amortization of capitalized software costs			323,087				681,474
Amortization of intangible assets			1,100,979				1,215,834
Total operating expenses			13,182,450				16,943,619
Loss from operations			(5,745,189	)			(10,425,848	)
Other income (expense):
Interest expense			(351,168	)			(509,518	)
Total other income (expense), net			(351,168	)			(509,518	)
Net loss before income taxes			(6,096,357	)			(10,935,366	)
Income tax (expense) benefit			289,216				-
Net loss		$	(5,807,141	)		$	(10,935,366	)

The following is a discussion of our results of operations.

Net Sales

Net sales for the six months ended June 30, 2025 and 2024, were $43,177,744 and $41,542,502, respectively, an increase of 3.9%. Merchant gift card sales accounted for approximately 98% and 98% of our net sales for the six months ended June 30, 2025 and 2024, respectively.

Cost of Sales

Cost of sales consists primarily of the cost to purchase merchant gift cards. Cost of sales for the six months ended June 30, 2025 and 2024, were $35,740,483 and $35,024,625, respectively. Gross profit increased $919,490, or 14.1%, as compared to the prior year period. Our gross margin, as a percentage of net sales, were 17.2% and 15.7%, for the six months ended June 30, 2025 and 2024, respectively. Our gross margin was positively impacted by the increase in net revenue (agent transactions), as described above, as compared to the prior year period.

Operating Expenses

		Six Months Ended June 30, 2025				Six Months Ended June 30, 2024
Selling, general and administrative expenses		$	11,758,384			$	15,046,311
Amortization of capitalized software costs			323,087				681,474
Amortization of intangible assets			1,100,979				1,215,834
Operating expenses		$	13,182,450			$	16,943,619

Selling, general and administrative expenses consist of costs incurred to identify, communicate with and evaluate potential customers and related business opportunities, and compensation to officers and directors, as well as legal and other professional fees, lease expense, and other general corporate expenses. Management expects selling, general and administrative expenses to increase in future periods as the Company adds personnel and incurs additional costs related to its operation as a public company, including higher legal, accounting, insurance, compliance, compensation and other costs.

Selling, general and administrative expenses were $11,758,384 for the six months ended June 30, 2025, as compared to $15,046,311 for the six months ended June 30, 2024, a decrease of $3,287,927. The decrease was due to a reduction in stock-based compensation expense of $4,103,413 during the six months ended June 30, 2025, offset by increased payroll and benefits expenses, marketing and advertising costs, and other general expenses to support our business.

Amortization of capitalized software costs.

Amortization expenses are primarily attributed to the Company's capitalized software development costs. Amortization expenses were $323,087 during the six months ended June 30, 2025, as compared to $681,474 during the six months ended June 30, 2024.

Amortization of intangible assets.

Amortization expenses are primarily attributable to the Company's amortization of intangible assets with finite lives. Amortization expenses were $1,100,979 during the six months ended June 30, 2025, as compared to amortization expenses of $1,215,834 during the six months ended June 30, 2025.

Loss from Operations

For the six months ended June 30, 2025, we incurred a loss from operations of $5,745,189, as compared to a loss from operations of $10,425,848 for the six months ended June 30, 2024. The decrease in loss from operations was due to our increased gross profit offset by decreased stock-based compensation expense as discussed above.

Other Expenses

For the six months ended June 30, 2025, we incurred interest expense, net of $351,168, as compared to interest expense, net of $509,518 for the six months ended June 30, 2024. The decrease in interest expense was due to our decreased debt balances.

Income Tax Benefit

For the six months ended June 30, 2025, we realized an income tax benefit of $286,216 as compared to an income tax benefit of $0 for the six months ended June 30, 2024.

Net Loss

We realized a net loss of $5,807,141 for the six months ended June 30, 2025, as compared to a net loss of $10,935,366 for the six months ended June 30, 2024. The decrease in net loss was due to our increased gross profit, decreased stock-based compensation expense, decreased interest expense, an income tax benefit, as discussed above.

Modified EBITDA

In addition to our GAAP results, we present Modified EBITDA as a supplemental measure of our performance. However, Modified EBITDA is not a recognized measurement under GAAP and should not be considered as an alternative to net income, income from operations or any other performance measure derived in accordance with GAAP, or as an alternative to cash flow from operating activities as a measure of liquidity. We define Modified EBITDA as net income (loss), plus interest expense, depreciation and amortization, stock-based compensation, and fair value of common stock issued for services.

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

Set forth below is a reconciliation of net loss to Modified EBITDA for the six months ended June 30, 2025 and 2024 (unaudited):

		Six Months Ended June 30, 2025				Six Months Ended June 30, 2024
Net Loss		$	(5,807,141	)		$	(10,935,366	)
Modified EBITDA adjustments:
Income taxes			(289,216	)			-
Interest expense, net			351,167				509,518
Amortization of intangible assets			1,100,979				1,215,834
Amortization of capitalized software costs			323,087				681,474
Loss on fair value of stock issued on vendor settlement			33,750				-
Bad debt expense			100,810				-
Stock option and other noncash compensation			3,410,007				7,513,421
Total Modified EBITDA adjustments			5,030,584				9,920,247
Modified EBITDA		$	(776,557	)		$	(1,015,119	)

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

	●	Modified EBITDA does not reflect our cash expenditures, or future requirements, for capital expenditures or contractual commitments;
	●	Modified EBITDA does not reflect changes in, or cash requirements for, our working capital needs;

	●	Modified EBITDA does not reflect future interest expense, or the cash requirements necessary to service interest or principal payments, on our debts; and
	●	Although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to be replaced in the future, and Modified EBITDA does not reflect any cash requirements for such replacements.

Critical Accounting Policies and Estimates

The following discussion and analysis of financial condition and results of operations is based upon the Company's consolidated financial statements for the years ended December 31, 2024 and 2023 presented elsewhere in this report, which have been prepared in conformity with accounting principles generally accepted in the United States of America ("GAAP"). Certain accounting policies and estimates are particularly important to the understanding of the Company's financial position and results of operations and require the application of significant judgment by management or can be materially affected by changes from period to period in economic factors or conditions that are outside of the Company's control. As a result, these issues are subject to an inherent degree of uncertainty. In applying these policies, management uses its judgment to determine the appropriate assumptions to be used in the determination of certain estimates. Those estimates are based on the Company's historical operations, the future business plans and the projected financial results, the terms of existing contracts, trends in the industry, and information available from other outside sources.

Revenue Recognition

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

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

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

Share-Based Compensation

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

Acquisitions and Business Combinations

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

Recent Accounting Pronouncements

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

Liquidity and Capital Resources

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

Going Concern

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

We have a history of reporting net losses. At June 30, 2025, we had cash of $3,257,427 available to fund our operations, including expansion plans, and to service our debt, and a negative working capital of $1,710,474. We anticipate our cash balance will last until December 2025. As a result, we have concluded that there is substantial doubt about the Company's ability to continue as a going concern. In addition, the Company's independent registered public accounting firm has included an explanatory paragraph in their report with respect to this uncertainty that accompanies the Company's audited consolidated financial statements as of and for the year ended December 31, 2024. The Company's independent registered public accounting firm, in their report on the Company's December 31, 2024 audited consolidated financial statements, has expressed substantial doubt about the Company's ability to continue as a going concern. Our consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

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

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

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

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

		Six Months Ended June 30, 2025				Six Months Ended June 30, 2024
Net cash provided by (used in) operating activities		$	289,951			$	(3,074,200	)
Net cash provided by (used in) investing activities			109,543				(449,646	)
Net cash provided (used in) by financing activities			(1,443,909	)			3,354,563
Net increase (decrease) in cash and cash equivalents		$	(1,044,415	)		$	(169,283	)

Operating Activities

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

Cash provided by operating activities for the six months ended June 30, 2025 was $289,951 and consisted of our net loss, adjusted for non-cash items, including amortization of intangible assets, the fair value of vested stock options, common stock issued to executives, employees, and advisors, and routine changes in working capital and other activities.

Cash used in operating activities for the six months ended June 30, 2024 was approximately $3,074,200 and consisted of our net loss, adjusted for non-cash items, including amortization of intangible assets, fair value of vested stock options, and the fair value of common stock issued to executives, employees, and advisors, and routine changes in working capital and other activities.

Investing Activities

Cash used provided by investing activities for the six months ended June 30, 2025 was $109,543, which was from cash received on an acquisition.

Cash used for investing activities for the six months ended June 30, 2024 was $449,646, which was for capital expenditures for software development costs.

Financing Activities

Cash used in financing activities for the six months ended June 30, 2025 was $1,443,909, which was from proceeds of $2,486,202 on the sale of common stock, net proceeds of $985,000 from a note payable, offset by repayment of our line of credit balance of $2,089,183, and repayment of our notes payable of $2,825,928.

Cash provided by financing activities for the six months ended June 30, 2024 was $3,354,563, which was from proceeds of $2,921,500 on the sale of common stock, proceeds from our line of credit balance of $933,063, offset by the payment of $500,000 on our acquisition obligation.

Secured Revolving Line of Credit

In November 2020, CardCash entered into an amended and restated promissory note for a revolving line of credit with availability of up to $10,000,000. The revolving line of credit is payable on demand, secured by the Company's inventory, with interest based on the Wall Street Journal Prime Rate plus 3.00%, limited to a floor of 6.5%. At June 30, 2025 and December 31, 2024, the average interest rate was 12% and 12%, respectively. As of June 30, 2025, the Company complied with customary debt covenants. At June 30, 2025, the line of credit requires a deposit of $1,000,000, which is included as restricted cash in cash and cash equivalents.

Convertible Promissory Notes

On November 5, 2018, the Company completed the acquisition of Incumaker, Inc. and assumed certain outstanding convertible notes payable. At December 31, 2024, there was one remaining assumed convertible note payable outstanding that matured July 2017. The Company continues to be unsuccessful in reaching the Note holder to remit payment in full. At December 31, 2024, the principal balance of $20,000, and accrued interest of $23,137, are convertible at $1.50 per share into 28,758 shares of the Company's common stock. At June 30, 2025, the principal balance of $20,000, and accrued interest of $24,637, are convertible at $1.50 per share into 29,758 shares of the Company's common stock.

Notes Payable

Real World Digital Assets

On February 19, 2025, the Company entered into a secured promissory note with Real World Digital Assets LLC ("Real World") in the principal amount of $1,000,000 bearing annual interest of 11.5% that has a maturity date of December 31, 2025. The Note has an origination fee and expenses of $15,000, which were recorded as a debt discount and are being amortized over the term of the Note and may be prepaid without penalty. The note is collateralized by a blanket lien on the assets of Giftify under the terms of a security agreement and is subordinated only to the line of credit owed by the Company to Pathward National Association (see Note 7). Proceeds from the note were used to pay the remaining balance owed on the secured promissory note with Spars Capital (See Note 9). As of June 30, 2025, the notes payable had a principal balance outstanding of $1,000,000, a debt discount balance of $8,571, and accrued interest payable of $41,589.

Economic Injury Disaster Loans (EIDL)

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

The loans bear interest at 3.75% per annum, with a combined repayment of principal and interest of $3,500 per month beginning 12 months from the date of the promissory note over a period of 30 years. As of December 31, 2024, the note payable had a principal balance outstanding of $664,500 and accrued interest payable of $15,558. As of June 30, 2025, the note payable had a principal balance outstanding of $664,500 and accrued interest payable of $4,899.

Off-Balance Sheet Arrangements

At June 30, 2025 and December 31, 2024, the Company did not have any transactions, obligations or relationships that could be considered off-balance sheet arrangements.