UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(Mark One)
For
the quarterly period ended
OR
For the transition period from ___________ to ____________
Commission
File Number
(Exact name of registrant as specified in its charter)
(State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification No.) |
(Address of principal executive offices)
(ZIP Code)
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
| The
|
Indicate
by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days.
Indicate
by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule
405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or such shorter period that the registrant was
required to submit such files).
Indicate by check mark whether the registrant is a large, accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer | ☐ | Accelerated filer | ☐ | |
| ☒ | Smaller reporting company | |||
| Emerging growth company |
If
an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying
with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act
Indicate
by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: There were shares of common stock outstanding as of October 30, 2026.
TABLE OF CONTENTS
| i |
CAUTIONARY NOTE CONCERNING FORWARD-LOOKING STATEMENTS
Certain statements and information in this Quarterly Report on Form 10-Q for the quarter ended September 30, 2026 (the “Quarterly Report”) may constitute “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and the Private Securities Litigation Reform Act of 1995. All statements, other than statements of historical facts, which address activities, events, or developments that we expect or anticipate will or may occur in the future, including such things as future capital expenditures, growth, product development, sales, business strategy, geopolitical conflicts, and other similar matters are forward-looking statements. In some cases, you can identify forward-looking statements by terminology such as “may,” “will,” “should,” “expect,” “plan,” “anticipate,” “believe,” “estimate,” “predict,” “potential,” or “continue,” or other comparable terminology. These forward-looking statements are based largely on our current expectations and assumptions and are subject to a number of risks and uncertainties, many of which are beyond our control. These statements are subject to many risks, uncertainties, and other important factors that could cause actual future results to differ materially from those expressed in the forward-looking statements including, but not limited to, general economic uncertainty in key global markets and a worsening of global economic conditions or low levels of economic growth; the effects of steps that we could take to reduce operating costs; our inability to sustain profitable sales growth, or reduce our costs to maintain competitive prices for our services and products; circumstances or developments that may make us unable to implement or realize the anticipated benefits, or that may increase the costs, of our current and planned business initiatives; and those factors detailed by us in our public filings with the Securities and Exchange Commission (the “SEC”), including in Item 1A, Risk Factors, in our Annual Report on Form 10-K for the year ended December 31, 2025. In light of these risks and uncertainties, all of the forward-looking statements made herein are qualified by these cautionary statements and there can be no assurance that the actual results or developments anticipated by us will be realized. We undertake no obligation to update or revise any of the forward-looking statements contained herein.
| ii |
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
GIFTIFY, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
| As of | ||||||||
September 30, 2026 | December 31, 2025 | |||||||
| (Unaudited) | ||||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents (includes restricted cash of $ | $ | $ | ||||||
| Accounts receivable | ||||||||
| Inventories, net | ||||||||
| Prepaid expenses and other current assets | ||||||||
| Total current assets | ||||||||
| Property and equipment, net | ||||||||
| Operating lease right-of-use asset, net | ||||||||
| Deposits | ||||||||
| Intangible assets, net | ||||||||
| Goodwill | ||||||||
| Total assets | $ | $ | ||||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | $ | ||||||
| Accrued expenses | ||||||||
| Customer deposits | ||||||||
| Deferred revenue | ||||||||
| Secured revolving line of credit | ||||||||
| Convertible promissory note | ||||||||
| Notes payable, current portion | ||||||||
| Operating lease liability, current portion | ||||||||
| Total current liabilities | ||||||||
| Notes payable, net of current portion | ||||||||
| Deferred income taxes | ||||||||
| Operating lease liability, net of current portion | ||||||||
| Total liabilities | ||||||||
| Commitments and contingencies (Note 12) | ||||||||
| Stockholders’ equity: | ||||||||
| Preferred stock, $par value, shares authorized; | ||||||||
| Common stock, $ par value, shares authorized; and shares issued and outstanding at September 30, 2026 and December 31, 2025, respectively | ||||||||
| Additional paid-in capital | ||||||||
| Common stock issuable, and shares, respectively | ||||||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Total stockholders’ equity | ||||||||
| Total liabilities and stockholders’ equity | $ | $ | ||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
| F-1 |
GIFTIFY, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
For the Three and Nine Months Ended September 30, 2026 and 2025
(Unaudited)
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| Net Sales | $ | $ | $ | $ | ||||||||||||
| Cost of sales | ||||||||||||||||
| Gross profit | ||||||||||||||||
| Operating expenses | ||||||||||||||||
| Selling, general and administrative expenses | ||||||||||||||||
| Amortization of capitalized software costs | ||||||||||||||||
| Amortization of intangible assets | ||||||||||||||||
| Total operating expenses | ||||||||||||||||
| Loss from operations | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Other income (expenses) | ||||||||||||||||
| Interest income | ||||||||||||||||
| Interest expense | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Other income | ||||||||||||||||
| Total other income (expenses) | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Net loss before income taxes | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Income tax benefit | ||||||||||||||||
| Net loss | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Net loss per share – basic and diluted | $ | ) | $ | ) | $ | ) | $ | ) | ||||||||
| Weighted average common shares outstanding – basic and diluted | ||||||||||||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
| F-2 |
GIFTIFY, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(Unaudited)
For the Three Months Ended September 30, 2026
| Common Stock | Common Stock Issuable | Additional Paid-In | Accumulated | Total Stockholders’ | ||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Capital | Deficit | Equity | ||||||||||||||||||||||
| Balance, June 30, 2026 | $ | $ | $ | $ | ( | ) | $ | |||||||||||||||||||||
| Fair value of vested options | - | - | ||||||||||||||||||||||||||
| Fair value of vested restricted stock | - | |||||||||||||||||||||||||||
| Fair value of common stock issued for services | - | |||||||||||||||||||||||||||
| Issuance of common stock for cash in private placement, net | - | |||||||||||||||||||||||||||
| Net loss | - | - | ( | ) | ( | ) | ||||||||||||||||||||||
| Balance, September 30, 2026 (Unaudited) | $ | $ | $ | $ | ( | ) | $ | |||||||||||||||||||||
For the Nine Months Ended September 30, 2026
| Common Stock | Common Stock Issuable | Additional Paid-In | Accumulated | Total Stockholders’ | ||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Capital | Deficit | Equity | ||||||||||||||||||||||
| Balance, December 31, 2025 | $ | $ | $ | $ | ( | ) | $ | |||||||||||||||||||||
| Fair value of vested options | - | - | ||||||||||||||||||||||||||
| Fair value of vested restricted stock | - | |||||||||||||||||||||||||||
| Fair value of common stock issued for services | - | |||||||||||||||||||||||||||
| Issuance of common stock for cash under at-the-market sale agreement, net | - | |||||||||||||||||||||||||||
| Issuance of common stock for cash in private placement, net | - | |||||||||||||||||||||||||||
| Net loss | - | - | ( | ) | ( | ) | ||||||||||||||||||||||
| Balance, September 30, 2026 (Unaudited) | $ | $ | $ | $ | ( | ) | $ | |||||||||||||||||||||
| F-3 |
For the Three Months Ended September 30, 2025
| Common Stock | Common Stock Issuable | Additional Paid-In | Accumulated | Total Stockholders’ | ||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Capital | Deficit | Equity | ||||||||||||||||||||||
| Balance, June 30, 2025 | $ | $ | $ | $ | ( | ) | $ | |||||||||||||||||||||
| Fair value of vested options | - | - | ||||||||||||||||||||||||||
| Fair value of vested restricted stock | - | |||||||||||||||||||||||||||
| Fair value of common stock issued for services | - | |||||||||||||||||||||||||||
| Issuance of common stock for cash under at-the-market sale agreement, net | - | |||||||||||||||||||||||||||
| Issuance of common stock for cash under private placement | - | |||||||||||||||||||||||||||
| Net loss | - | - | ( | ) | ( | ) | ||||||||||||||||||||||
| Balance, September 30, 2025 (Unaudited) | $ | $ | $ | $ | ( | ) | $ | |||||||||||||||||||||
For the Nine Months Ended September 30, 2025
| Common Stock | Common Stock Issuable | Additional Paid-In | Accumulated | Total Stockholders’ | ||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Capital | Deficit | Equity | ||||||||||||||||||||||
| Balance, December 31, 2024 | $ | $ | $ | $ | ( | ) | $ | |||||||||||||||||||||
| Fair value of vested options | - | - | ||||||||||||||||||||||||||
| Fair value of vested restricted stock | - | |||||||||||||||||||||||||||
| Fair value of common stock issued for services | - | |||||||||||||||||||||||||||
| Fair value of common stock issued for vendor settlement | ||||||||||||||||||||||||||||
| Issuance of common stock for cash under at-the-market sale agreement, net | - | |||||||||||||||||||||||||||
| Fair value of shares issued on acquisition | - | |||||||||||||||||||||||||||
| Issuance of common stock for cash under stock purchase agreement, net | ||||||||||||||||||||||||||||
| Issuance of common stock for cash under public placement | - | |||||||||||||||||||||||||||
| Issuance of common stock for cash under private placement | - | |||||||||||||||||||||||||||
| Net loss | - | - | ( | ) | ( | ) | ||||||||||||||||||||||
| Balance, September 30, 2025 (Unaudited) | $ | $ | $ | $ | ( | ) | $ | |||||||||||||||||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
| F-4 |
GIFTIFY, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
| Nine Months Ended September 30, | ||||||||
| 2026 | 2025 | |||||||
| (Unaudited) | (Unaudited) | |||||||
| CASH FLOWS FROM OPERATING ACTIVITIES | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Adjustments to reconcile net loss to net cash provided by operating activities | ||||||||
| Fair value of vested stock options | ||||||||
| Fair value of vested restricted common stock | ||||||||
| Fair value of common stock issued for services | ||||||||
| Loss on fair value of common stock issued for settlement of vendor | ||||||||
| Change in inventory reserve | ( | ) | ||||||
| Amortization of capitalized software costs | ||||||||
| Right-of-use assets | ||||||||
| Amortization of intangible assets | ||||||||
| Amortization of debt discount | ||||||||
| Accrued interest | ||||||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts receivable | ||||||||
| Inventories | ||||||||
| Prepaid expenses and other current assets | ( | ) | ( | ) | ||||
| Deposits | ( | ) | ||||||
| Accounts payable | ||||||||
| Accrued expenses | ( | ) | ( | ) | ||||
| Customer deposits | ( | ) | ||||||
| Deferred revenue | ( | ) | ||||||
| Deferred taxes | ( | ) | ( | ) | ||||
| Operating lease liability | ( | ) | ( | ) | ||||
| Net cash provided by (used in) operating activities | ( | ) | ( | ) | ||||
| CASH FLOWS FROM INVESTING ACTIVITIES | ||||||||
| Cash received on acquisition | ||||||||
| Net cash provided by (used in) investing activities | ||||||||
| CASH FLOWS FROM FINANCING ACTIVITIES | ||||||||
| Proceeds from line of credit | ||||||||
| Repayment of line of credit | ( | ) | ( | ) | ||||
| Proceeds from note payable | ||||||||
| Repayment of notes payable | ( | ) | ( | ) | ||||
| Repayment of notes payable – related party | ( | ) | ||||||
| Proceeds from sale of common stock, net of expenses, under an at-the-market sale agreement | ||||||||
| Proceeds from sale of common stock, net of expenses, under stock purchase agreement | ||||||||
| Proceeds from public offering of common stock | ||||||||
| Proceeds from private placement of common stock | ||||||||
| Net cash provided by financing activities | ||||||||
| Net increase (decrease) in cash and cash equivalents | ( | ) | ||||||
| Cash and cash equivalents beginning of period | ||||||||
| Cash and cash equivalents end of period | $ | $ | ||||||
| SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION | ||||||||
| Interest paid | $ | $ | ||||||
| Taxes paid | $ | $ | ||||||
| NON-CASH INVESTING AND FINANCING ACTIVITIES | ||||||||
| Common shares issued for acquisition | $ | $ | ||||||
| Common shares issued for trade accounts payable | $ | $ | ||||||
| Accounts receivable from acquisition | $ | $ | ||||||
| Deposits from acquisition | $ | $ | ||||||
| Accounts payable from acquisition | $ | $ | ||||||
| Accrued expenses from acquisition | $ | $ | ||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
| F-5 |
GIFTIFY, INC. AND SUBSIDIARIES
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For the Three and Nine Months Ended September 30, 2026 and 2025
(Unaudited)
1. Organization and Basis of Presentation
Giftify, Inc. (the “Company” or “Giftify”), through its wholly owned subsidiaries, CardCash Exchange, Inc. and Restaurant.com, Inc., connects consumers with exclusive deals and supports business growth through strategic partnerships.
In May 2025, the Company acquired Takeout7, Inc. (“Takeout7”, see Note 11). 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 Takeout7 expands the Company’s technology offerings to include end-to-end solutions for independent restaurants. Takeout7 and its operations were merged into our subsidiary, Restaurant.com, Inc. in early 2026.
The accompanying unaudited condensed consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”) pursuant to the applicable rules and regulations of the Securities and Exchange Commission (“SEC”) for interim financial information. The unaudited condensed consolidated financial statements have been prepared on the same basis as the Company’s annual financial statements for the year ended December 31, 2025, and, in the opinion of management, reflect all adjustments, which consist of normal recurring adjustments, considered necessary for a fair presentation of the periods presented. The results of operations for the interim periods presented are not necessarily indicative of the results of operations to be expected for the full fiscal year ending December 31, 2026. These unaudited condensed consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements and accompanying notes included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2025, as filed with the SEC. The condensed consolidated balance sheet as of December 31, 2025 was derived from the audited consolidated financial statements as of that date, but does not include all disclosures, including notes, required by GAAP.
The unaudited condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries, CardCash Exchange, Inc. and Restaurant.com, Inc. All intercompany balances and transactions have been eliminated in consolidation.
Substantial Doubt about the Company’s Ability to Continue as a Going Concern
The accompanying financial statements have been prepared under the assumption that the Company will continue as a going concern. In accordance with the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 205-40, Going Concern, the Company’s management has evaluated whether there are conditions or events that raise substantial doubt about its ability to continue as a going concern within one year after the date the accompanying financial statements were issued. Giftify and CardCash have a history of reporting net losses and negative operating cash flows. These factors raise substantial doubt about the Company’s ability to continue as a going concern within one year of the date that the financial statements are issued. In addition, the Company’s independent registered public accounting firm, in its report on the Company’s consolidated financial statements for the year ended December 31, 2025, expressed substantial doubt about the Company’s ability to continue as a going concern. The financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.
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. The Company has financed its working capital requirements through borrowings from various sources and the sale of its equity securities.
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. 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.
| F-6 |
2. Significant Accounting Policies
Use of Estimates
The preparation of the Company’s financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires management to make certain estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses, and the disclosure of contingent assets and liabilities. Actual results could differ from those estimates. On an ongoing basis, management reviews its estimates and if deemed appropriate, those estimates are adjusted. Significant estimates include those related to assumptions used in valuing inventories at net realizable value, assumptions used in valuing assets acquired in business acquisitions, impairment testing of goodwill and other long-term assets, assumptions used in valuing stock-based compensation, accruals for potential liabilities, and assumptions used in the determination of the Company’s liquidity.
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 generates revenue from the sale of discount certificates for third-party restaurants, online restaurant ordering fees, and monthly subscription fees for its restaurant marketing platform. Lastly, the Company recognizes revenue from the sale of Restaurant.com promotional gift cards (revenue recognized based on the Company’s historical redemption rates of its promotional gift cards), the sale of travel, vacation, and merchandise on behalf of third-party merchants (revenue reported on a net basis equal to the purchase price received from the customer less a portion of the purchase price paid by the Company to its merchant partners), and advertising revenue for third-party partners, such as Google Ads, wherein third-party website(s) and/or product(s) are shown or incorporated in the Company’s platform or website (revenue recognized when it is determinable, which is generally upon receipt of a statement and/or proceeds from the third-party partners).
Certain customers may receive incentives, which are accounted for as variable consideration. Provisions for sales returns are recognized in the period in which the sales are recorded, based on the Company’s prior experience and current trends. These revenue reductions are established by the Company based on management’s best estimates at the time of sale, using historical trends, and are adjusted to reflect known changes in the factors that impact such reserves and allowances and the terms of customer agreements.
Amounts billed and due from the Company’s customers are classified as accounts receivable on the balance sheet. Amounts received in advance from customers are recorded as deferred revenue on the balance sheet until the performance obligations have been satisfied. The Company has elected to apply the practical expedient to not assess contracts for significant financing components because the period between the receipt of advance payment and the Company’s transfer of services to the customer is less than one year.
It is necessary to determine whether the Company is acting as a principal or an agent in revenue-generating arrangements.
Principal vs. Agent Considerations
| ● | Principal: In a principal transaction, the Company controls the specified good or service before transferring it to the customer. This means the Company is primarily responsible for fulfilling the obligation directly to the customer, bears inventory risk, including the risk of fraud/invalid card (if applicable), and has discretion in setting the price. In such cases, revenue is recognized on a gross basis. This means recording the total amount of consideration received from the customer as revenue, with a corresponding cost for any amount paid to other parties involved in providing the goods or services. | |
| ● | Agent: As an agent, the Company does not control discounted gift cards; its role is to arrange for its distributors to deliver them to our customers. In these instances, revenue is recognized on a net basis. This reflects only the fee or commission the Company retains from the transaction. |
| F-7 |
Impact of Gross vs. Net Recognition on Financial Performance
Determining
whether the Company is a principal or an agent has a significant impact on reported revenue and gross profit percentages. For example,
when the Company uses its inventory of previously purchased discounted gift cards to fulfill a customer sale, revenue is recognized on
a gross basis because the Company acts as principal, takes control of the gift cards, and bears the inventory risk before reselling them.
This differs from arrangements in which the Company’s role is solely to act as an agent, arranging for our supplier to deliver
discounted gift cards directly to our customer. In these arrangements, the Company carries no inventory risk, and revenue is recognized
on a net basis, representing the commission earned on the transaction. Agent transactions represent approximately
Significant Judgments and Estimates
Deciding whether the Company is a principal or an agent requires significant judgment and analysis. This is particularly true when evaluating factors such as responsibility for fulfilling the customer promise, 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.
In the following table, revenue is disaggregated by our divisions and type of revenue for the three and nine months ended September 30, 2026 and 2025:
| Sales Channels | CardCash Gift Cards | Restaurant.com Gift Cards and Coupons | Advertising | Total | ||||||||||||
| Three Months Ended September 30, 2026 | ||||||||||||||||
| Business to consumer (B2C) | $ | $ | $ | $ | ||||||||||||
| Business to business (B2B) | ||||||||||||||||
| Total | $ | $ | $ | $ | ||||||||||||
| Three Months Ended September 30, 2025 | ||||||||||||||||
| Business to consumer (B2C) | $ | $ | $ | $ | ||||||||||||
| Business to business (B2B) | ||||||||||||||||
| Total | $ | $ | $ | $ | ||||||||||||
| Nine Months Ended September 30, 2026 | ||||||||||||||||
| Business to consumer (B2C) | $ | $ | $ | $ | ||||||||||||
| Business to business (B2B) | ||||||||||||||||
| Total | $ | $ | $ | $ | ||||||||||||
| Nine Months Ended September 30, 2025 | ||||||||||||||||
| Business to consumer (B2C) | $ | $ | $ | $ | ||||||||||||
| Business to business (B2B) | ||||||||||||||||
| Total | $ | $ | $ | $ | ||||||||||||
| F-8 |
Cost of Sales
Cost of sales consists primarily of the cost to purchase merchant gift cards, and transaction fees and costs.
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.
Intangible Assets
The
Company has certain intangible assets that were initially recorded at their fair value at the time of acquisition. The finite-lived intangible
assets consist of customer relationships, trade name, and developed technology. Intangible assets with finite useful lives are amortized
using the straight-line method over their estimated useful life of
The Company reviews all finite-lived intangible assets for impairment when circumstances indicate that their carrying values may not be recoverable. If the carrying value of an asset group is not recoverable, the Company recognizes an impairment loss for the excess carrying value over the fair value in our consolidated statements of operations.
Goodwill
Goodwill represents the excess of the purchase price over the fair value assigned to the net tangible and identifiable
intangible assets of the business acquired. Goodwill of $
During the three months ended September 30, 2026, the Company’s stock price declined. Based on the September 30, 2026, closing price, the Company’s market capitalization was below the carrying amount of its stockholders’ equity. However, based on the average closing price for the ten trading days ended September 30, 2026, the Company’s market capitalization was above the carrying amount of its stockholders’ equity. After assessing this decline, in conjunction with the going concern conditions described in Note 1, management concluded that a quantitative impairment test was not required at September 30, 2026, and no impairment of goodwill was recognized.
If the Company’s stock price does not recover, or if the Company does not achieve its projected results, it is reasonably possible that the Company will recognize a goodwill impairment charge, which could be material, in a future period, including in connection with its annual impairment test as of December 31, 2026.
Long-Lived Assets
The
Company evaluates long-lived assets, other than goodwill and indefinite-lived intangible assets, for impairment whenever events or changes
in circumstances (“triggering events”) indicate that their net book value may not be recoverable. The measurement of possible
impairment is based upon the ability to recover the carrying value of the asset through the expected future undiscounted cash flows from
the use of the asset and its eventual disposition. An impairment loss, equal to the difference between the asset’s fair value and
its carrying value, is recognized when the estimated future undiscounted cash flows are less than its carrying amount.
Leases
The Company leases certain corporate office space under lease agreements. The Company determines whether a contract contains a lease at contract inception. A contract is or contains a lease if the contract conveys the right to control the use of the identified asset for a period of time in exchange for consideration. Control is determined based on the right to obtain all of the economic benefits from use of the identified asset and the right to direct the use of the identified asset. Operating lease right-of-use assets (“ROU”) for operating leases represent the right to use an underlying asset for the lease term, and operating lease liabilities represent the obligation to make lease payments. Lease liabilities are recognized based on the present value of the future minimum lease payments over the lease term at the commencement date. Operating lease expense is recognized on a straight-line basis over the lease term and is included in selling, general and administrative expenses in the Company’s consolidated statements of operations. Leases with an initial term of 12 months or less are not included on the balance sheets.
| F-9 |
Advertising
The
Company expenses advertising costs as incurred and amounted to $
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.
The Company values its equity awards using the Black-Scholes option-pricing model, and accounts for forfeitures when they occur. Use of the Black-Scholes option pricing model requires the input of subjective assumptions, including expected volatility, expected term, and a risk-free interest rate. The expected volatility is based on the historical volatility of the Company’s common stock, calculated utilizing a look-back period approximately equal to the contractual life of the stock option being granted. The expected life of the stock option is calculated as the mid-point between the vesting period and the contractual term (the “simplified method”). The risk-free interest rate is estimated using comparable published federal funds rates.
Stock-based compensation expense is recognized and recorded as part of selling, general and administrative expenses.
Basic earnings (loss) per share is computed using the weighted average number of common shares issued and outstanding during the period. Diluted earnings (loss) per share is computed using the weighted average number of common shares and the dilutive effect of contingent shares outstanding during the period. Potentially dilutive contingent shares, which primarily consist of convertible notes and stock issuable upon the exercise of stock options, have been excluded from the calculation of diluted loss per share because their effect is anti-dilutive.
Loss per common share is computed by dividing net loss by the weighted average number of shares of common stock issued and outstanding during the respective periods. Basic and diluted loss per common share was the same for all periods presented because all convertible notes and stock issuable upon the exercise of stock options outstanding were anti-dilutive.
| September 30, 2026 | September 30, 2025 | |||||||
| Convertible notes payable | ||||||||
| Common stock issuable | ||||||||
| Common stock options | ||||||||
| Total | ||||||||
| F-10 |
The potentially issuable common shares summarized above would have been anti-dilutive because the Company had a net loss for the periods ended September 30, 2026 and 2025, such common stock equivalents would have been excluded from the calculation of net loss per share.
Fair Value of Financial Instruments
Fair value of financial and non-financial assets and liabilities is defined as an exit price, which is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The three-tier hierarchy for inputs used to measure fair value, which prioritizes the inputs to valuation techniques used to measure fair value, is as follows:
Level 1 – quoted prices (unadjusted) in active markets for identical assets or liabilities.
Level 2 – quoted prices for similar assets and liabilities in active markets or inputs that are observable for the asset or liability, either directly or indirectly through market corroboration, for substantially the full term of the financial instrument.
Level 3 – unobservable inputs based on the Company’s assumptions used to measure assets and liabilities at fair value.
A financial asset or liability classification within the hierarchy is determined based on the lowest level input that is significant to the fair value measurement. The assessment of the significance of a particular input to the fair value measurement requires judgment and may affect the valuation of the assets and liabilities being measured and their placement within the fair value hierarchy.
The carrying value of the Company’s financial instruments (consisting of cash, accounts receivable, deposits to credit card processors, prepaid expense and other current assets, accounts payable, accrued expenses, notes payable, and other liabilities) is considered to be representative of their respective fair values due to the short-term nature of those instruments.
Concentrations
Cash.
The Company’s cash balances on deposit with banks are guaranteed by the Federal Deposit Insurance Corporation (“FDIC”)
up to $
Net
sales. During the three months ended September 30, 2026, the Company sold three merchant gift cards that accounted for
Gross
profit. During the three months ended September 30, 2026, the Company sold two merchant gift cards that accounted for approximately
Purchases
from vendors. During the nine months ended September 30, 2026, the Company’s three largest vendors accounted for
approximately
| F-11 |
Concentration of Credit Risk
Financial instruments, which potentially subject the Company to concentrations of credit risk, consist principally of trade accounts receivable and cash. The credit risk exposure surrounding trade accounts receivable is limited as these amounts represent the timing difference between payments being settled by credit card processors and the cash being provided to the Company.
Segment Information
The Company’s Chief Executive Officer (“CEO”) is our chief operating decision maker (“CODM”) and evaluates performance and makes operating decisions regarding resource allocation based on financial data presented on a consolidated basis. Because our CODM evaluates financial performance on a consolidated basis, the Company has determined that it operates as a single reportable segment, comprising the consolidated financial results of Giftify, Inc.
Recent Accounting Pronouncements
In November 2024, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses, which includes amendments that require disclosure in the notes to financial statements of specified information about certain costs and expenses, including purchases of inventory; employee compensation; and depreciation, amortization and depletion expenses for each caption on the income statement where such expenses are included. The amendments are effective for the Company’s annual periods beginning January 1, 2027, with early adoption permitted, and should be applied either prospectively or retrospectively. The Company is evaluating this ASU to determine its impact on the Company’s disclosures.
Other recent accounting pronouncements issued by the FASB, its Emerging Issues Task Force, the American Institute of Certified Public Accountants, and the Securities and Exchange Commission did not or are not believed by management to have a material impact on the Company’s present or future financial statements.
3. Property and Equipment, Net
Property and equipment, net consisted of the following:
September 30, 2026 | December 31, 2025 | |||||||
| Website development costs | $ | $ | ||||||
| Leasehold improvements | ||||||||
| Property and equipment, gross | ||||||||
| Accumulated depreciation | ( | ) | ( | ) | ||||
| Property and equipment, net | $ | $ | ||||||
Amortization
of capitalized software costs for the nine months ended September 30, 2026 and 2025 was $
| F-12 |
4. Goodwill and Intangible Assets
Goodwill and intangible assets consist of the following:
September 30, 2026 | December 31, 2025 | |||||||
| Goodwill | $ | $ | ||||||
| Intangible Assets | ||||||||
| Customer relationships | $ | $ | ||||||
| Trade name | ||||||||
| Developed technology | ||||||||
| Intangible assets, gross | ||||||||
| Accumulated amortization | ( | ) | ( | ) | ||||
| Intangible assets, net | $ | $ | ||||||
On
December 29, 2023, in relation to the acquisition of CardCash, the Company recorded goodwill of $
The
Company’s intangible asset balance was $
Identifiable intangibles are amortized over their estimated remaining useful lives, which are as follows:
| Description | Weighted Average Useful Life (in years) | |||
| Customer relationships | ||||
| Trademarks, trade names and service marks | ||||
| Developed technology | ||||
Estimated amortization expense for the Company is as follows:
| 2026 (remaining) | $ | |||
| 2027 | ||||
| 2028 | ||||
| $ |
5. Leases
The Company leases its office facilities under noncancelable operating lease agreements. The Company has leases for office facilities in Woodbridge, New Jersey and Schaumburg, Illinois. The operating lease agreement for the Woodbridge, New Jersey location was renewed in April 2024 for a 60-month period ending in April 2029.
The
Company’s operating lease liability balance was $
During
the nine months ended September 30, 2026 and 2025, lease costs totaled approximately $
As
of September 30, 2026, the weighted average remaining lease term for operating leases is
| F-13 |
Maturities of the Company’s operating lease liabilities are as follows as of September 30, 2026:
As of September 30, 2026 | ||||
| 2026 (remaining) | $ | |||
| 2027 | ||||
| 2028 | ||||
| 2029 | ||||
| Thereafter | ||||
| Total | ||||
| Less: Imputed interest | ( | ) | ||
| Total operating lease liability | $ | |||
6. Secured Revolving Line of Credit
The outstanding line of credit consists of the following at September 30, 2026 and December 31, 2025:
September 30, 2026 | December 31, 2025 | |||||||
| Line of credit | $ | $ | ||||||
In
November 2020, CardCash entered into an Amended and Restated Promissory Note (the “November 2020 Note”) with Pathward, National
Association (“Pathward”) for a revolving line of credit of up to $
On
April 23, 2025, CardCash entered into the Second Amended and Restated Promissory Note (the “Amended Note”) with Pathward
and reduced the revolving line of credit to $
Interest
on the Amended Note is based on the WSJ prime rate plus
At
September 30, 2026 and December 31, 2025, Pathward requires a deposit of $
7. Convertible Promissory Note
Convertible promissory note consists of the following at September 30, 2026 and December 31, 2025:
September 30, 2026 | December 31, 2025 | |||||||
| Convertible promissory note | $ | $ | ||||||
| Accrued interest | ||||||||
| Total principal and accrued interest (all current) | $ | $ | ||||||
| F-14 |
On
November 5, 2018, the Company completed the acquisition of Incumaker, Inc. and assumed certain outstanding convertible notes payable.
At December 31, 2025, 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, 2025, the principal balance of $
8. Notes Payable
Notes payable consist of the following at September 30, 2026 and December 31, 2025:
September 30, 2026 | December 31, 2025 | |||||||
| Economic Injury Disaster Loans (EIDL) note payable | $ | $ | ||||||
| Accrued interest | ||||||||
| Total principal and accrued interest | ||||||||
| Less current portion | ( | ) | ( | ) | ||||
| Non-current portion | $ | $ | ||||||
Economic Injury Disaster Loans (EIDL)
On
June 17, 2020, the Company received $
The
loans bear interest at
9. Stockholders’ Equity
Common Stock Transactions
Nine Months Ended September 30, 2026
Issuance of Common Stock on At-the-Market Issuance Sales Agreement
During
the nine months ended September 30, 2026, the Company sold shares of Common Stock and received net proceeds of $
Issuance of Common Stock on Private Offering
During
the nine months ended September 30, 2026, the Company received net proceeds of $
| F-15 |
Common Shares Issued on Vesting of Restricted Stock
During the nine months ended September 30, 2026, the Company issued shares on vesting of restricted common stock to its directors and executives.
Common Stock Issued for Services
During
the nine months ended September 30, 2026, the Company issued shares of common stock with a fair value of $
Common Stock Issuable
At
September 30, 2026, shares of common stock with an aggregate value of $
Nine Months Ended September 30, 2025
Common Shares Issued on Vesting of Restricted Stock
During the nine months ended September 30, 2025, the Company issued shares on vesting of restricted common stock to its directors and executives.
Common Stock Issued for Services
During
the nine months ended September 30, 2025, the Company issued shares of common stock with a fair value of $
Issuance of Common Stock for Settlement of Vendor Balance
During
the nine months ended September 30, 2025, the Company issued shares of common stock with a fair value of $
Issuance of Common Stock on At-the-Market Issuance Sales Agreement
During
the nine months ended September 30, 2025, the Company sold shares of Common Stock and received proceeds, net of expenses, of
$
Issuance of Common Stock on Acquisition
During
the nine months ended September 30, 2025, the Company issued shares of common stock with a fair value of $
Issuance of Common Stock on Stock Purchase Agreement
On
December 16, 2024, the Company entered into a Strata Purchase Agreement (“SPA”) and a Securities Purchase Agreement with
ClearThink Capital Partners, LLC (“ClearThink Capital”).
During
the nine months ended September 30, 2025, the Company received net proceeds of $
On February 4, 2025, the Company exercised its right to terminate the SPA effective by mutual agreement of the parties.
| F-16 |
Issuance of Common Stock on Public Offering
On
January 15, 2025, the Company entered into a Placement Agency Agreement with Craft Capital Management LLC (“Craft Capital”),
as placement agent, to issue and sell shares of the Company’s common stock at a purchase price of $ per share. The
shares were offered by the Company pursuant to its shelf registration statement on Form S-3 (File No. 333-282322), that was declared
effective by the Securities and Exchange Commission on October 15, 2024, on a best efforts basis (the “Offering”). The offer
and sale of the shares in the Offering are described in the Company’s prospectus constituting a part of the registration statement,
as supplemented by a final prospectus supplement dated January 15, 2025. On January 16, 2025, the Company closed the Offering. The Company
sold shares for total gross proceeds of $
Issuance of Common Stock on Private Offering
During
the nine months ended September 30, 2025, the Company received net proceeds of $
Common Stock Issuable
At
September 30, 2025, shares of common stock with an aggregate value of $
10. Share-Based Compensation
Summary of Restricted Common Stock
Unvested Shares | Issuable Shares | Fair Value at Date of Issuance | Weighted Average Grant Date Fair Value | |||||||||||||
| Balance, December 31, 2025 | $ | |||||||||||||||
| Granted | ||||||||||||||||
| Vested | ( | ) | ||||||||||||||
| Forfeited | ||||||||||||||||
| Issued | ( | ) | ( | ) | ||||||||||||
| Balance, September 30, 2026 | $ | $ | ||||||||||||||
On February 2, 2026, the Company granted shares of restricted common stock, consisting of shares to its Chief Executive Officer, shares in the aggregate to its directors, and shares in the aggregate to its other executives. These shares had an aggregate grant-date fair value of $, or $ per share, and vest monthly over a 36-month period.
On
February 1, 2025, the Company granted its Chief Executive Officer shares of the Company’s restricted stock and granted
shares of the Company’s restricted stock to other officers with an aggregate fair value of $
During the nine months ended September 30, 2026 and 2025, the Company recognized $ and $ of stock compensation expense relating to vested restricted stock. As of September 30, 2026, the aggregate amount of unvested compensation related to restricted stock was approximately $ which will be recognized as an expense as the restricted stock vests in future periods through February 2029.
| F-17 |
Summary of Stock Options
Number of Shares | Weighted- Average Exercise Price | Weighted-Average Remaining Contractual Term (Years) | Aggregate Intrinsic Value | |||||||||||||
| Balance at December 31, 2025 | $ | $ | ||||||||||||||
| Granted | ||||||||||||||||
| Exercised | ||||||||||||||||
| Forfeited and expired | ( | ) | ||||||||||||||
| Balance at September 30, 2026 | ||||||||||||||||
| Options vested and exercisable at September 30, 2026 | $ | $ | ||||||||||||||
On February 2, 2026, the Company, pursuant to the terms of its 2019 Stock Incentive Plan, granted options exercisable into shares of its common stock to its executives and employees. The stock options are exercisable at a weighted average price of $ per share with an average life to expiration of approximately nine years. The total fair value of these options at the grant date was approximately $, which was determined using a Black-Scholes option pricing model with the following average assumptions: stock price of $ per share, expected term of years, volatility of %, dividend rate of %, and weighted average risk-free interest rate of %.
On June 30, 2026, the Company, pursuant to the terms of its 2019 Stock Incentive Plan, granted options exercisable into shares of its common stock to its executives and employees. The stock options are exercisable at a weighted average price of $ per share with an average life to expiration of approximately nine years. The total fair value of these options at the grant date was approximately $, which was determined using a Black-Scholes option pricing model with the following average assumptions: stock price of $ per share, expected term of years, volatility of %, dividend rate of %, and weighted average risk-free interest rate of %.
On February 1, 2025, the Company, pursuant to the terms of its 2019 Stock Incentive Plan, granted options exercisable into shares of the Company’s common stock to its executives and employees. The stock options vest over 36 months equally. The stock options are exercisable at a weighted average price of $ per share with an average life to expiration of approximately nine years. The total fair value of these options at grant date was approximately $, which was determined using a Black-Scholes-Merton option pricing model with the following average assumptions: stock price of $ per share, expected term of years, volatility of %, dividend rate of %, and weighted average risk-free interest rate of %.
During the nine months ended September 30, 2026 and 2025, the Company recognized $ and $ of stock compensation expense relating to vested stock options. As of September 30, 2026, the aggregate amount of unvested compensation related to stock options was approximately $ which will be recognized as an expense as the options vest in future periods through June 2029.
The weighted average remaining contractual life of common stock options outstanding and exercisable at September 30, 2026, was years. Based on a fair market value of $ per share on September 30, 2026, the intrinsic value attributed to exercisable and unexercised common stock options was $ at September 30, 2026.
| F-18 |
| Exercise Prices | Options Outstanding (Shares) | Options Exercisable (Shares) | ||||||||
| $ | ||||||||||
| $ | ||||||||||
| $ | ||||||||||
| $ | ||||||||||
| $ | ||||||||||
| $ | ||||||||||
| $ | ||||||||||
11. Acquisition
Takeout7, Inc.
On
May 29, 2025, the Company completed the acquisition of Takeout7, Inc. (“Takeout7”). The acquisition was made pursuant to
an agreement and plan of merger dated May 29, 2025, between the Company and Takeout7. The Company acquired all of the issued and outstanding
equity of Takeout7 for $
The Company utilized the acquisition method of accounting for the acquisition in accordance with ASC 805, Business Combinations, and allocated the purchase price to Takeout7’s tangible assets, identifiable intangible assets, and assumed liabilities at their estimated fair values as of the date of acquisition.
In accordance with ASC 805, the Company made an allocation of the purchase price for Takeout7 based on the estimated fair values of the assets acquired and liabilities assumed. The following table summarizes the allocation of the fair value of the purchase consideration to the fair value of tangible assets, identifiable intangible assets, and assumed liabilities of Takeout7 on the date of acquisition:
| Fair Value | ||||
| Fair value of consideration: | ||||
| Common stock ( shares of common stock at $ per share) | $ | |||
| Total purchase price | $ | |||
| Allocation of the consideration to the fair value of assets acquired and liabilities assumed: | ||||
| Cash | $ | |||
| Accounts receivable | ||||
| Deposits | ||||
| Accounts payable and accrued liabilities | ( | ) | ||
| Net tangible assets | ||||
| Intangible assets: | ||||
| Developed technology | ||||
| Intangible assets | ||||
| Goodwill | ||||
| Fair value of net assets acquired | $ | |||
No unaudited pro forma statements of operations are being presented as the historical results of Takeout7 are insignificant when compared to the Company’s historical results.
| F-19 |
12. Commitments and Contingencies
From time to time the Company may be named in claims arising in the ordinary course of business. Currently, there are no such legal proceedings that are pending against the Company or that involve the Company that, in the opinion of management, could reasonably be expected to have a material adverse effect on the Company’s business or financial condition.
13. Segment Information
The
Company operates and manages its business as
The Company’s chief operating decision maker (CODM), its Chief Executive Officer, reviews financial information presented on a consolidated basis and decides how to allocate resources based on net loss. Consolidated net loss is used for evaluating financial performance. The monitoring of budgeted versus actual results is used in assessing performance of the Company and in establishing management’s compensation.
Significant segment expenses include employee compensation, stock-based compensation, merchant fees, and consulting and outside provider costs. Other operating expenses include all remaining costs necessary to operate our business and primarily include advertising, corporate compliance, and overhead expenses.
The following table presents the significant segment expenses and other segment items regularly reviewed by our CODM:
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| Net Sales | $ | $ | $ | $ | ||||||||||||
| Cost of sales | ||||||||||||||||
| Gross profit | ||||||||||||||||
| Operating expenses | ||||||||||||||||
| Employee compensation and benefits | ||||||||||||||||
| Stock-based compensation expense | ||||||||||||||||
| Merchant and bank fees | ||||||||||||||||
| Facility costs | ||||||||||||||||
| Consulting and outside provider costs | ||||||||||||||||
| Sales and marketing costs | ||||||||||||||||
| Amortization of capitalized software costs | ||||||||||||||||
| Amortization of intangible assets | ||||||||||||||||
| Other operating expenses | ||||||||||||||||
| Total operating expenses | ||||||||||||||||
| Loss from operations | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| F-20 |
Item 2. 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, 2025, 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, the Company acquired Takeout7 Inc. 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 Takeout7 expands the Company’s technology offerings to include end-to-end solutions for independent restaurants. In early 2026, Takeout7 and its operations were merged into our subsidiary, Restaurant.com, Inc.
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 accounted for as a business combination under the acquisition method. 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 is a leading gift card exchange platform that facilitates the purchase and sale of unwanted gift cards at discounted rates for 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 buying and selling gift cards from over 1,100 retailers, including Target, Home Depot, Starbucks, and TJ Maxx. 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 discount to their face value and resells them at a discount to discerning shoppers nationwide. This avenue not only allows individuals to redeem unwanted gift cards for cash but also enables them to make cost-effective purchases with discounted gift cards.
With advanced fraud-prevention technology, FraudFix, CardCash ensures the security and integrity of all transactions on its platform. This commitment to trust and reliability has contributed to its success in saving consumers over $100 million since its inception.
| 1 |
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 Consumer Division
Our B2C division accounted for approximately 3% of gross revenue in the three months ended September 30, 2026. 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 nine months.
Restaurant.com Business to Business Division
Our B2B division accounted for approximately 97% of our gross revenue in the three months ended September 30, 2026. 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 from third-party offers and display ads. This comprises a de minimis portion of our gross revenue.
Restaurant.com Attractive Customer Demographics
We intend to grow and leverage our 6.2 million customer database, which we believe is valuable to merchants for a variety of services and products.
| 2 |
How We Measure Our Business
We use operating metrics to assess our business’s progress and make strategic decisions. Certain financial metrics are reported in accordance with GAAP, and others are non-GAAP financial measures. As our business evolves, we may update the key financial and operating metrics we use to measure our performance. For further information and reconciliations to the most applicable financial measures under GAAP, refer to our discussion under the Non-GAAP Financial Measures section.
Operating Metrics
| ● | Gross billings are the total dollar value of customer purchases of goods and services. Gross billings are presented net of customer refunds and order discounts. A significant portion of our revenue consists of sales of discounted merchant gift cards, in which we collect the transaction price from the customer and remit a portion 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 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 they measure the dollar volume of transactions generated through our marketplaces. Tracking gross billings also allows us to monitor the percentage of gross billings we retain after merchant payments. |
A reconciliation of our net sales (as reported) to our gross billings for the three and nine months ended September 30, 2026 and 2025 were as follows:
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||
| 2026 | 2025 | Change % | 2026 | 2025 | Change % | |||||||||||||||||||
| Net sales (as reported) | $ | 22,323,212 | $ | 18,783,908 | 18.8 | % | $ | 65,427,640 | $ | 61,961,652 | 5.6 | % | ||||||||||||
| Company costs of Agent Transactions (see discussion below) | 23,450,720 | 20,302,632 | 15.5 | % | 70,897,741 | 49,216,416 | 44.1 | % | ||||||||||||||||
| Gross billings | $ | 45,773,932 | $ | 39,086,540 | 17.1 | % | $ | 136,325,381 | $ | 111,178,068 | 22.6 | % | ||||||||||||
Inflation
The Iran, Russia and Ukraine conflicts 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 future trends in inflation or other negative economic factors, or the associated changes in our operating costs, and how these 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. As of September 30, 2026, the Company had $3,945,212 in cash available to fund its operations, including expansion plans, and to service its debt, and working capital of $631,754.
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 incurred operating losses and negative operating cash flows in 2025 and 2024. We have financed our working capital requirements through borrowings from various sources and the sale of our equity securities.
| 3 |
As a result, management has concluded that there is substantial doubt regarding our ability to continue as a going concern for a period of at least 12 months beyond the filing of this Quarterly Report on Form 10-Q. The report of our independent registered public accounting firm on our financial statements for the year ended December 31, 2025, includes an explanatory paragraph regarding the existence of substantial doubt about our 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 depends on its ability to raise additional debt or equity capital to fund its business activities and 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 inflationary pressure 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 such as responsibility for fulfilling the customer promise, 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 September 30, | Nine Months Ended September 30, | |||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| Gross revenue (Principal Transactions) | $ | 20,791,306 | $ | 17,452,759 | $ | 60,646,759 | $ | 58,491,130 | ||||||||
| Net revenue (Agent Transactions) | 1,531,906 | 1,331,149 | 4,780,881 | 3,470,522 | ||||||||||||
| Net Sales | $ | 22,323,212 | $ | 18,783,908 | $ | 65,427,640 | $ | 61,961,652 | ||||||||
Net revenue recognized as agent increased $200,757, or 15.1%, during the three months ended September 30, 2026, as compared to the prior year period. Net revenue recognized as agent increased $1,310,359, or 37.8%, during the nine months ended September 30, 2026, as compared to the prior year period. The increase over the prior year period was from the sale of cruise-line-related gift cards, fluctuations in the types of gift cards sold, and changes in the number of customer orders in which the Company acted as an agent.
| 4 |
Results of Operations – Three Months Ended September 30, 2026, Compared to the Three Months Ended September 30, 2025
Operating Metrics
Our gross billings for the three months ended September 30, 2026 and 2025 were as follows:
| Three Months Ended September 30, | ||||||||||||
| 2026 | 2025 | Change % | ||||||||||
| Gross billings | $ | 45,773,932 | $ | 39,086,540 | 17.1 | % | ||||||
Gross billings increased 17.1% during the three months ended September 30, 2026, as compared to the prior year period. A significant portion of our revenue comes from discounted merchant gift card sales, in which we collect the transaction price from the customer and remit a portion to third-party suppliers of the related goods or services. For these transactions, gross billings differ from the Net Sales reported in our Condensed Consolidated Statements of Operations, which reflect only the fees and commissions we retain from the sale of discounted merchant gift cards.
Financial Results
GIFTIFY, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
| Three Months Ended September 30, | ||||||||
| 2026 | 2025 | |||||||
| Net Sales | $ | 22,323,212 | $ | 18,783,908 | ||||
| Cost of sales | 17,951,295 | 15,036,367 | ||||||
| Gross profit | 4,371,917 | 3,747,541 | ||||||
| Operating expenses | ||||||||
| Selling, general and administrative expenses | 5,323,331 | 5,489,115 | ||||||
| Amortization of capitalized software costs | 78,170 | 160,745 | ||||||
| Amortization of intangible assets | 563,847 | 585,349 | ||||||
| Total operating expenses | 5,965,348 | 6,235,209 | ||||||
| Loss from operations | (1,593,431 | ) | (2,487,668 | ) | ||||
| Other income (expenses) | ||||||||
| Interest income | 4,807 | 1,811 | ||||||
| Interest expense | (120,656 | ) | (135,005 | ) | ||||
| Other income | 26,746 | 38,540 | ||||||
| Total other income (expenses) | (89,103 | ) | (94,654 | ) | ||||
| Net loss before income taxes | (1,682,534 | ) | (2,582,322 | ) | ||||
| Income tax benefit | 175,432 | 144,860 | ||||||
| Net loss | $ | (1,507,102 | ) | $ | (2,437,462 | ) | ||
The following is a discussion of our results of operations.
Net Sales
Net sales for the three months ended September 30, 2026 and 2025, were $22,323,212 and $18,783,908, respectively, an increase of 18.8%. The increase in net sales was due to the change in the mix of agent versus principal transactions as discussed above. Merchant gift card sales accounted for approximately 98% and 97% of our net sales for the three months ended September 30, 2026 and 2025, 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 September 30, 2026 and 2025 was $17,951,295 and $15,036,367, respectively. Gross profit increased $624,376, or 16.7%, as compared to the prior year period. Our gross margin, as a percentage of net sales, was 19.6% and 20.0% for the three months ended September 30, 2026 and 2025, respectively. Our gross margin was impacted by the increase in net revenue (agent transactions) described above, compared with the prior-year period.
| 5 |
Operating Expenses
Selling, general, and administrative expenses consist of costs incurred to identify, communicate with, and evaluate potential customers and related business opportunities; compensation to officers and directors; 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 for the three months ended September 30, 2026 and 2025 were $5,323,331 and $5,489,115, respectively, a decrease of $165,783. The decrease was due to a reduction in stock-based compensation expense of $624,035, offset by increased employee compensation, legal and professional fees, and other general expenses to support our business.
Amortization of capitalized software costs.
Amortization of capitalized software costs is primarily attributed to the Company’s capitalized software development costs. Amortization expenses were $78,170 and $160,745 for the three months ended September 30, 2026 and 2025, respectively.
Amortization of intangible assets.
Amortization of intangible assets is attributable to the Company’s amortization of intangible assets with finite lives. Amortization expenses were $563,847 and $585,349 for the three months ended September 30, 2026 and 2025, respectively.
Loss from Operations
We incurred a loss from operations of $1,593,431 and $2,487,668 for the three months ended September 30, 2026 and 2025, respectively. The decrease in loss from operations was due to our increased gross profit and decreased stock-based compensation expense, as discussed above.
Other Expenses, Net
Other expenses, net was $89,103 and $94,654 for the three months ended September 30, 2026 and 2025, respectively, and is comprised of interest expense, net of interest income and other income. The decrease in interest expense, net was due to our decreased debt balances.
Income Tax Benefit
Income tax benefit for the three months ended September 30, 2026 and 2025 was $175,432 and $144,860, respectively.
Net Loss
Net loss for the three months ended September 30, 2026 and 2025 was $1,507,102 and $2,437,462, respectively. The decrease in net loss was driven by higher gross profit, lower stock-based compensation expense, and lower interest expense, as discussed above.
Non-GAAP Financial Measure - Modified EBITDA
In addition to our GAAP results, we present Modified EBITDA as a supplemental performance measure. 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.
| 6 |
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 September 30, 2026 and 2025 (unaudited):
| Three Months Ended September 30, 2026 | Three Months Ended September 30, 2025 | |||||||
| Net Loss | $ | (1,507,102 | ) | $ | (2,437,462 | ) | ||
| Modified EBITDA adjustments: | ||||||||
| Income taxes | (175,432 | ) | (144,860 | ) | ||||
| Interest expense, net | 115,848 | 133,195 | ||||||
| Other income | (26,746 | ) | (38,540 | ) | ||||
| Amortization of intangible assets | 563,847 | 585,349 | ||||||
| Amortization of capitalized software costs | 78,170 | 160,745 | ||||||
| Stock option and other noncash compensation | 849,030 | 1,473,065 | ||||||
| Total Modified EBITDA adjustments | 1,404,717 | 2,168,954 | ||||||
| Modified EBITDA | $ | (102,386 | ) | $ | (268,508 | ) | ||
We present Modified EBITDA because we believe it helps investors and analysts compare our performance across reporting periods on a consistent basis by excluding items we do not believe are indicative of our core operating performance. In addition, we use Modified EBITDA to develop our internal budgets, forecasts, and strategic plan; to analyze the effectiveness of our business strategies and evaluate potential acquisitions; to make compensation decisions; and to communicate with our board of directors regarding our financial performance. Modified EBITDA has limitations as an analytical tool, which include, 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. |
| 7 |
Results of Operations – Nine Months Ended September 30, 2026, Compared to Nine Months Ended September 30, 2025
Operating Metrics
Our gross billings for the nine months ended September 30, 2026 and 2025 were as follows:
| Nine Months Ended September 30, | ||||||||||||
| 2026 | 2025 | Change % | ||||||||||
| Gross billings | $ | 136,325,381 | $ | 111,178,068 | 22.6 | % | ||||||
Gross billings increased 22.6% during the nine months ended September 30, 2026, 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 SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
| Nine Months Ended September 30, | ||||||||
| 2026 | 2025 | |||||||
| Net Sales | $ | 65,427,640 | $ | 61,961,652 | ||||
| Cost of sales | 52,406,840 | 50,776,850 | ||||||
| Gross profit | 13,020,800 | 11,184,802 | ||||||
| Operating expenses | ||||||||
| Selling, general and administrative expenses | 16,475,240 | 17,247,499 | ||||||
| Amortization of capitalized software costs | 367,907 | 483,832 | ||||||
| Amortization of intangible assets | 1,692,037 | 1,686,328 | ||||||
| Total operating expenses | 18,535,184 | 19,417,659 | ||||||
| Loss from operations | (5,514,384 | ) | (8,232,857 | ) | ||||
| Other income (expenses) | ||||||||
| Interest income | 13,388 | 3,588 | ||||||
| Interest expense | (354,096 | ) | (487,950 | ) | ||||
| Other income | 26,746 | 38,540 | ||||||
| Total other income (expenses) | (313,962 | ) | (445,822 | ) | ||||
| Net loss before income taxes | (5,828,346 | ) | (8,678,679 | ) | ||||
| Income tax benefit | 429,784 | 434,076 | ||||||
| Net loss | $ | (5,398,562 | ) | $ | (8,244,603 | ) | ||
The following is a discussion of our results of operations.
Net Sales
Net sales for the nine months ended September 30, 2026 and 2025, were $65,427,640 and $61,961,652, respectively, an increase of 5.6%. Merchant gift card sales accounted for approximately 98% and 98% of our net sales for the nine months ended September 30, 2026 and 2025, respectively.
| 8 |
Cost of Sales
Cost of sales consists primarily of the cost to purchase merchant gift cards. Cost of sales for the nine months ended September 30, 2026 and 2025, was $52,406,840 and $50,776,850, respectively. Gross profit increased $1,835,998, or 16.4%, as compared to the prior year period. Our gross margin, as a percentage of net sales, was 19.9% and 18.1% for the nine months ended September 30, 2026 and 2025, 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
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 $16,475,240 for the nine months ended September 30, 2026, as compared to $17,247,499 for the nine months ended September 30, 2025, a decrease of $772,258. The decrease was due to a reduction in stock-based compensation expense of $2,137,816 during the nine months ended September 30, 2026, 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 $367,907 during the nine months ended September 30, 2026, as compared to $483,832 during the nine months ended September 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 $1,692,037 during the nine months ended September 30, 2026, as compared to amortization expenses of $1,686,328 during the nine months ended September 30, 2025.
Loss from Operations
For the nine months ended September 30, 2026, we incurred a loss from operations of $5,514,384, as compared to a loss from operations of $8,232,857 for the nine months ended September 30, 2025. The decrease in loss from operations was due to our increased gross profit and decreased stock-based compensation expense as discussed above.
Other Expenses
For the nine months ended September 30, 2026, we incurred interest expense, net of $340,708, as compared to interest expense, net of $484,362 for the nine months ended September 30, 2025. The decrease in interest expense was due to our decreased debt balances. In addition, for the nine months ended September 30, 2026, we recognized other income of $26,746, as compared to other income of $38,540, for the nine months ended September 30, 2025.
Income Tax Benefit
For the nine months ended September 30, 2026, we realized an income tax benefit of $429,784 as compared to an income tax benefit of $434,076 for the nine months ended September 30, 2025.
| 9 |
Net Loss
We realized a net loss of $5,398,562 for the nine months ended September 30, 2026, as compared to a net loss of $8,244,603 for the nine months ended September 30, 2025. 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 nine months ended September 30, 2026 and 2025 (unaudited):
| Nine Months Ended September 30, 2026 | Nine Months Ended September 30, 2025 | |||||||
| Net Loss | $ | (5,398,562 | ) | $ | (8,244,603 | ) | ||
| Modified EBITDA adjustments: | ||||||||
| Income taxes | (429,784 | ) | (434,076 | ) | ||||
| Interest expense, net | 340,707 | 487,950 | ||||||
| Other income | (26,746 | ) | (38,540 | ) | ||||
| Amortization of intangible assets | 1,692,037 | 1,686,328 | ||||||
| Amortization of capitalized software costs | 367,907 | 483,832 | ||||||
| Loss on fair value of stock issued on vendor settlement | - | 33,750 | ||||||
| Bad debt expense | - | 97,222 | ||||||
| Stock option and other noncash compensation | 2,745,256 | 4,879,170 | ||||||
| Total Modified EBITDA adjustments | 4,689,377 | 7,195,636 | ||||||
| Modified EBITDA | $ | (709,186 | ) | $ | (1,048,967 | ) | ||
| 10 |
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 include, 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. |
Liquidity and Capital Resources
As reflected in the accompanying financial statements, for the nine months ended September 30, 2026, the Company recorded a net loss of $5,398,562 and used cash in operations of $1,033,604. Cash used in operations was primarily for working capital.
Historically, we have financed our operations through existing cash balances, public and private issuance of common stock, term loans and credit lines from financial institutions.
As of the issuance date of the financial statements included in this Quarterly Report on Form 10-Q, management expects that the Company’s existing cash of $3,945,212 might be insufficient to meet its cash requirements for the 12 months following the filing of this Quarterly Report on Form 10-Q.
To alleviate any funding considerations, management periodically evaluates various funding alternatives and may seek to raise additional funds through the issuance of equity, debt securities, through arrangements with strategic partners, strategic transactions, or through obtaining credit from financial institutions. As we seek additional sources of financing, there can be no assurance that such financing will be available to us on favorable terms or at all. Our ability to obtain additional financing in the debt and equity capital markets is subject to several factors, including market and economic conditions, our performance and investor sentiment with respect to us and our industry.
We are also continuing to take actions to improve the Company’s operating performance and cash generated from operations, including product optimization, implementing strategies to increase sales, streamlining operations, negotiating equitable vendor contracts, and managing product price. However, we may be unsuccessful in executing these actions in a timely manner or at all.
If the Company is unable to raise additional capital whenever necessary or otherwise improve its operating performance or generation of cash from operations, it may be forced to decelerate or curtail certain of its operations until such time as additional capital becomes available.
| 11 |
Our consolidated statements of cash flows as discussed herein are presented below.
Nine Months Ended September 30, 2026 | Nine Months Ended September 30, 2025 | |||||||
| Net cash used in operating activities | $ | (1,033,604 | ) | $ | (496,067 | ) | ||
| Net cash provided by investing activities | - | 109,543 | ||||||
| Net cash provided by financing activities | 1,323,872 | 105,909 | ||||||
| Net increase (decrease) in cash and cash equivalents | $ | 290,268 | $ | (280,615 | ) | |||
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, and the fair value of common stock issued for directors, employees, and service providers, and the effect of changes in working capital and other activities.
Cash used in operating activities for the nine months ended September 30, 2026 was $1,033,604 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 nine months ended September 30, 2025 was $496,067 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.
Investing Activities
The Company had no investing activities for the nine months ended September 30, 2026.
Cash provided by investing activities for the nine months ended September 30, 2025 was $109,543, which was from cash received on an acquisition.
Financing Activities
Cash provided by financing activities for the nine months ended September 30, 2026 was $1,323,872, which was from aggregate proceeds of $1,423,593 on the sale of common stock, offset by repayment of our line of credit balance of $90,003, and repayment of our notes payable of $9,718.
Cash provided by financing activities for the nine months ended September 30, 2025 was $105,909, which was from proceeds of $3,058,577 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 $1,111,345, and repayment of our notes payable of $2,826,323.
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 the nine months ended September 30, 2026. 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 September 30, 2026, we had cash of $3,945,212 available to fund our operations, including expansion plans, and to service our debt, and a working capital of $631,754. We expect that our existing cash of $3,945,212 may be insufficient to meet our cash requirements for the 12 months following the filing of this Quarterly Report on Form 10-Q. 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, 2025. 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 our 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 our business activities or to discontinue our operations entirely.
| 12 |
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 three and nine months ended September 30, 2026 and 2025 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 inherently uncertain. In applying these policies, management uses its judgment to select the appropriate assumptions for 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.
Goodwill
Goodwill of $20,007,670 arose from the acquisition of CardCash and represented approximately 67% of the Company’s total assets at September 30, 2026. The Company has one reporting unit. It tests goodwill for impairment annually as of December 31, or more often if events or changes in circumstances indicate that the fair value of the reporting unit may be below its carrying amount. Because the Company’s common stock is publicly traded, management considers the Company’s market capitalization to be a key indicator of the fair value of the reporting unit.
During the three months ended September 30, 2026, the Company’s stock price declined. Based on the September 30, 2026 closing price of $0.4887, the Company’s market capitalization was approximately $17.7 million, which was below the $21.1 million carrying amount of its stockholders’ equity. However, based on the average closing price of $0.63 for the ten trading days ended September 30, 2026, the Company’s market capitalization was approximately $22.8 million, which was above that carrying amount. The Company’s market capitalization equals the carrying amount of its stockholders’ equity at a share price of approximately $0.58. Each $0.10 change in the share price changes market capitalization by approximately $3.6 million.
After assessing the decline, in conjunction with the going concern conditions described in Note 1 to the condensed consolidated financial statements, management concluded that a quantitative impairment test was not required at September 30, 2026, and no impairment of goodwill was recognized. This assessment required significant judgment, including the period over which the stock price was averaged and the weight given to the Company’s operating results and outlook.
If the Company’s stock price declines below approximately $0.58 per share for a sustained period, or if the Company does not achieve its projected results, the Company may be required to recognize a goodwill impairment charge, which could be material, including in connection with its annual impairment test as of December 31, 2026.
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 generates revenue from the sale of discount certificates for third-party restaurants, online restaurant ordering fees, and monthly subscription fees for its restaurant marketing platform. Lastly, the Company recognizes revenue from the sale of Restaurant.com promotional gift cards (revenue recognized based on the Company’s historical redemption rates of its promotional gift cards), the sale of travel, vacation, and merchandise on behalf of third-party merchants (revenue reported on a net basis equal to the purchase price received from the customer less a portion of the purchase price paid by the Company to its merchant partners), and advertising revenue for third-party partners, such as Google Ads, wherein third-party website(s) and/or product(s) are shown or incorporated in the Company’s platform or website (revenue recognized when it is determinable, which is generally upon receipt of a statement and/or proceeds from the third-party partners).
Certain customers may receive incentives, which are accounted for as variable consideration. Provisions for sales returns are recognized in the period in which the sales are recorded, based on the Company’s prior experience and current trends. These revenue reductions are established by the Company based on management’s best estimates at the time of sale, using historical trends, and are adjusted to reflect known changes in the factors that impact such reserves and allowances and the terms of customer agreements.
Amounts billed and due from the Company’s customers are classified as accounts receivable on the balance sheet. Amounts received in advance from customers are recorded as deferred revenue on the balance sheet until the performance obligations have been satisfied. The Company has elected to apply the practical expedient to not assess contracts for significant financing components because the period between the receipt of advance payment and the Company’s transfer of services to the customer is less than one year.
It is necessary to determine whether the Company is acting as a principal or an agent in revenue-generating arrangements.
Principal vs. Agent Considerations
| ● | Principal: In a principal transaction, the Company controls the specified good or service before transferring it to the customer. This means the Company is primarily responsible for fulfilling the obligation directly to the customer, bears inventory risk, including the risk of fraud/invalid card (if applicable), and has discretion in setting the price. In such cases, revenue is recognized on a gross basis. This means recording the total amount of consideration received from the customer as revenue, with a corresponding cost for any amount paid to other parties involved in providing the goods or services. | |
| ● | Agent: As an agent, the Company does not control discounted gift cards; its role is to arrange for its distributors to deliver them to our customers. In these instances, revenue is recognized on a net basis. This reflects only the fee or commission the Company retains from the transaction. |
Share-Based Compensation
The Company periodically issues share-based awards to employees, non-employees, and consultants for services rendered. Stock options vest and expire according to the terms established at the grant’s issuance date. 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 an expense in the statement of operations ratably over the requisite service period or vesting period. Recognition of compensation expense for non-employees occurs in the same period and in the same manner as if the Company had paid cash for the services.
Acquisitions and Business Combinations
The Company allocates the fair value of the purchase consideration to the tangible assets acquired, the liabilities assumed, and the separately identifiable 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, particularly regarding 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.
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Recent Accounting Pronouncements
See discussion of recent accounting pronouncements in Note 2 to the accompanying financial statements.
Off-Balance Sheet Arrangements
At September 30, 2026 and December 31, 2025, the Company did not have any transactions, obligations or relationships that could be considered off-balance sheet arrangements.
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
A smaller reporting company is not required to provide the information required by this Item.
Item 4. Controls and Procedures.
Evaluation of Disclosure Controls and Procedures
The Company’s Chief Executive Officer and Chief Financial Officer evaluated the effectiveness of our “disclosure controls and procedures” (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended), as of September 30, 2026. Based on that evaluation, the Company’s Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were not effective as of September 30, 2026, due to a material weakness in internal control over financial reporting that was previously identified for the year ended December 31, 2025, and has not been fully remediated.
Notwithstanding this conclusion, in the opinion of management, including the Company’s Chief Executive Officer and Chief Financial Officer, the unaudited condensed consolidated financial statements in this Quarterly Report on Form 10-Q fairly present, in all material respects, our financial position, results of operations and cash flows as of and for the periods presented, in accordance with U.S. GAAP.
Previously Reported Material Weakness
A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of the Company’s annual or interim financial statements will not be prevented or detected on a timely basis.
As disclosed in Part II, Item 9A. “Controls and Procedures” in our Annual Report on Form 10-K for the year ended December 31, 2025, management identified a material weakness related to the Company’s information technology (“IT”) general controls. Specifically, the Company did not design and maintain effective program change management controls to ensure that IT program and data changes affecting certain financial IT applications and underlying accounting records are identified, tested, authorized and implemented appropriately.
Remediation of Previously Reported Material Weakness
In response to the material weakness identified, management, with oversight from the Audit Committee of the Board of Directors, developed a plan to remediate the material weakness. Ongoing remediation activities include:
| ● | Continue to design and implement ITGCs, focusing on user access controls, periodic access reviews, and change management; | |
| ● | Continue to enhance documentation and control execution, ensuring the completeness and accuracy of supporting data; and | |
| ● | Continue to provide training to our control operators. |
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While management believes these controls are appropriately designed, the material weakness will not be considered fully remediated until the controls have operated for a sufficient period of time and management has completed testing to conclude that the controls are operating effectively.
The Company will continue to monitor the effectiveness of its remediation efforts and will make refinements as necessary.
Inherent Limitations on Effectiveness of Controls
Management does not expect the Company’s disclosure controls or internal control over financial reporting will prevent or detect all errors and all fraud. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the control system’s objectives will be met. The Company’s controls and procedures are designed to provide reasonable assurance that the control system’s objectives will be met, and the CEO and CFO have concluded that the Company’s disclosure controls and procedures are ineffective at the reasonable assurance level. The design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Further, because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that misstatements due to error or fraud will not occur or that all control issues and instances of fraud, if any, within the Company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty and that breakdowns can occur because of simple errors or mistakes. Controls can also be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the controls. The design of any system of controls is based in part on certain assumptions about the likelihood of future events and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Projections of any evaluation of the effectiveness of controls in future periods are subject to risks. Over time, controls may become inadequate because of changes in conditions or deterioration in the degree of compliance with policies or procedures.
Changes in Internal Control over Financial Reporting
Other than as described above, there were no changes in our internal control over financial reporting during the quarter ended September 30, 2026 that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
PART II – OTHER INFORMATION
Item 1. Legal Proceedings
From time to time the Company may be named in claims arising in the ordinary course of business. Currently, there are no such legal proceedings that are pending against the Company or that involve the Company that, in the opinion of management, could reasonably be expected to have a material adverse effect on the Company’s business or financial condition.
Item 1A. Risk Factors
We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information under this item.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
None.
Item 3. Defaults Upon Senior Securities
None.
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Item 4. Mine Safety Disclosures
Not applicable.
Item 5. Other Information
None.
Item 6. Exhibits
The following exhibits are filed herewith as a part of this report.
| Exhibit No. | Description | |
| 31.1 | Certification by the Principal Executive Officer of Registrant pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (Rule 13a-14(a) or Rule 15d-14(a)) | |
| 31.2 | Certification by the Principal Financial Officer of Registrant pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (Rule 13a-14(a) or Rule 15d-14(a)) | |
| 32.1** | Section 1350 Certification of Chief Executive Officer | |
| 32.2** | Section 1350 Certification of Chief Financial Officer | |
| 101.INS† | Inline XBRL Instance Document | |
| 101.SCH† | Inline XBRL Taxonomy Extension Schema Document | |
| 101.CAL† | Inline XBRL Taxonomy Extension Calculation Linkbase Document | |
| 101.DEF† | Inline XBRL Taxonomy Extension Definition Linkbase Document | |
| 101.LAB† | Inline XBRL Taxonomy Extension Label Linkbase Document | |
| 101.PRE† | Inline XBRL Taxonomy Extension Presentation Linkbase Document | |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) |
** The certifications furnished in Exhibits 32.1 and 32.2 hereto are deemed to accompany this Quarterly Report on Form 10-Q and are not deemed “filed” for purposes of Section 18 of the Exchange Act, or otherwise subject to the liability of that section, nor shall they be deemed incorporated by reference into any filing under the Securities Act or the Exchange Act, irrespective of any general incorporation language contained in such filing.
† Filed herewith.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| GIFTIFY, INC. | ||
| Date: November 3, 2026 | By: | /s/ Ketan Thakker |
| Ketan Thakker | ||
| President and Chief Executive Officer | ||
| Date: November 3, 2026 | By: | /s/ Steve Handy |
| Steve Handy | ||
| Chief Financial Officer | ||
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