GIFTIFY, INC.

GIFTIFY, INC. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the Year ended December 31, 2025 and 2024

1. Organization, Basis of Presentation, and Summary of Significant Accounting Policies

Giftify, Inc. (the “Company” or “Giftify”), through its wholly owned subsidiary, Restaurant.com, Inc., has been in the business of connecting digital consumers, businesses, and communities with dining and merchant deals throughout the United States.

In May 2025, the Company acquired Takeout7 Inc (“Takeout7”, see Note 2). 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, in early 2026.

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

On August 6, 2024, The Nasdaq Stock Market (“Nasdaq”) granted the Company’s application for listing on the Nasdaq.

In December 2023, the Company acquired CardCash Exchange Inc (“CardCash”, see Note 2). CardCash was founded in 2013 and purchases merchant gift cards, reselling them at a markup.

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. 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 depends on its ability to raise additional debt or equity capital to fund its business activities and 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.

Basis of Presentation and Principles of Consolidation

The accompanying consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and include the financial statements of the Company’s wholly-owned operating subsidiaries. Intercompany balances and transactions have been eliminated in consolidation.

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 appropriate, adjusts them. Significant estimates include assumptions used to value inventories at the net realizable value, assets acquired in business combinations, goodwill and other long-term assets, stock-based compensation, accruals for potential liabilities, and 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 its 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

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 6% and 3% of net sales for the year ended December 31, 2025 and 2024, respectively.

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 years ended December 31, 2025 and 2024:

Cost of Sales

Cost of sales consists primarily of the cost to purchase merchant gift cards, transaction fees, and costs.

Cash and Cash Equivalents

The Company considers all highly liquid investments with maturities of three months or less when purchased to be cash and/or cash equivalents.

***Accounts Receivable ***

The Company’s trade accounts receivable are recorded at the amounts billed to customers and presented on the balance sheet, net of any allowance for estimated credit losses, if required. The allowance is determined by a variety of factors, including the age of the receivables, current economic conditions, historical losses, and other information management obtains regarding the financial condition of customers. Receivables are charged off when they are deemed uncollectible. As of December 31, 2025 and 2024, the Company hadno allowance for credit losses.

Inventories

Inventories consist of merchant gift cards on hand that are available for sale. Inventories are stated at the lower of cost or net realizable value, with cost determined on a first-in, first-out basis. Adjustments, if required, reduce inventory to its net realizable value, reflecting estimated excess, obsolescence, or impairment balances. Factors influencing these adjustments include changes in customer demand, rapid technological changes, and merchant bankruptcy. As of December 31, 2025, and 2024,the Company recorded a reserve for slow-moving inventory of $15,000 and $40,000, respectively.

Property and Equipment

Property and equipment are recorded at cost less accumulated depreciation and amortization.

The Company accounts for capitalized software and website development costs to develop software programs to be used solely to meet the Company’s internal needs in accordance with ASC 350-40. Costs incurred during the application development stage for software programs used solely to meet internal needs are capitalized. Capitalized website development costs are included in property and equipment, net. All ordinary maintenance costs are expensed as incurred. Amortization of capitalized software costs is excluded from cost of sales and included in amortization expense in the Statements of Operations.

Depreciation and amortization are computed using the straight-line method over the estimated useful lives of the related assets. The Company provides for depreciation, as follows:

Expenditures for additions and improvements that extend the useful lives of property and equipment are capitalized. Expenditures for maintenance and repair costs are charged to expense as incurred.

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.

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 ofthree years.

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. There wasno impairment of intangible assets in any of the periods presented.

Goodwill

Goodwill represents the excess of the purchase price in a business combination over the value assigned to the net tangible and identifiable intangible assets of the business acquired. As of December 31, 2025 and 2024, the Company had $20,007,670 of goodwill. Under ASC 350 Intangibles-Goodwill and Other, goodwill and other intangible assets with indefinite lives are not amortized, but instead are tested for impairment annually, or whenever events or circumstances indicate a potential impairment. The Company’s impairment testing is performed annually at December 31. In accordance with ASC 350, we first assess qualitative factors to determine whether it is necessary to perform the quantitative goodwill impairment test. If, after assessing the totality of events or circumstances, we determine that it is more likely than not (i.e., greater than 50% likelihood) that the fair value of the reporting unit is less than its carrying amount, then the quantitative test is required. The quantitative goodwill impairment test requires us to estimate the fair value of the reporting unit, using an income approach and a market approach, and compare it with its carrying amount. If the fair value of the reporting unit exceeds the carrying value of the net assets, goodwill is not impaired. If the fair value of the reporting unit is less than the carrying value, the difference is recorded as an impairment loss up to the amount of goodwill. There was no goodwill impairment in any of the periods presented.

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. No impairment indicators were identified as of December 31, 2025 and 2024.

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 a lease if it conveys the right to control the use of the identified asset for a period 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”) 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 at 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 the general and administrative line in the Company’s consolidated statements of operations.

Income Taxes

The Company uses an asset and liability approach for accounting and reporting for income taxes that allows recognition and measurement of deferred tax assets based upon the likelihood of realization of tax benefits in future years. Under the asset and liability approach, deferred taxes are provided for the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. A valuation allowance is provided for deferred tax assets if it is more likely than not that these items will either expire before the Company is able to realize their benefits, or that future deductibility is uncertain. The Company’s policy is to recognize interest and/or penalties related to income tax matters in income tax expense.

Advertising

The Company expenses advertising costs as incurred and recorded $1,112,327 and $892,994 for the years ended December 31, 2025, and 2024, respectively, in selling, general and administrative expenses in the Statements of Operations.

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.

The Company values its equity awards using the Black-Scholes-Merton (“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.

Earnings (Loss) Per Share

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 and warrants, 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 and warrants outstanding were anti-dilutive.

At December 31, 2025 and 2024, the Company excluded the outstanding convertible debt and securities summarized below, which entitle the holders thereof to acquire shares of common stock, from its calculation of earnings per share, as their effect would have been anti-dilutive.

The issuable and potentially issuable shares as summarized above. These potentially issuable common shares would have been anti-dilutive because the Company had a net loss for the years ended December 31, 2025 and 2024, as 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’s 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 receivables, deposits to credit card processor, prepaid expense and other current assets, accounts payable, accrued expenses, notes payable, and other liabilities) are considered to be representative of their respective fair values due to the short-term nature of those instruments.

Concentrations

Net sales and gross profit. During the year ended December 31, 2025, the Company sold one merchant’s gift cards that accounted for 12% of net sales and 22% of gross profit. During the year ended December 31, 2024, the Company sold two merchants’ gift cards that accounted for 10% and 10% of net sales and approximately 7% and 7% of gross profit. No other sale of merchant gift cards exceeded 10% of net sales or gross profit in either period.

Purchases from vendors. During the year ended December 31, 2025, the Company’s three largest vendors accounted for approximately 23%,20% and 13% of all purchases. During the year ended December 31, 2024, the Company’s largest vendor accounted for approximately 18% of all purchases. No vendor accounted for more than 10% of all purchases in either period.

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.

The Company maintains balances at financial institutions that, at times, exceeds the federally insured limit. The Company has not experienced a loss on this account.

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.

Reclassifications

Certain prior-year amounts have been reclassified to align with the current-period presentation. Merchant receipts (i.e., credit card processors) amounting to $726,965, which were previously presented as a component of accounts receivable at December 31, 2024, have been reclassified as a component of cash and cash equivalents to conform to current year presentation. This reclassification did not affect the reported results of operations. For the year ended December 31, 2024, the cash flows used in operating activities in the consolidated statements of cash flows were revised to $3,407,539 from $2,551,870, and cash and cash equivalents at the end of the period were revised to $4,301,842 from $3,574,876.

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.

2. Acquisitions

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 $609,000, made up of the issuance of 350,000 shares of the Company’s common stock.

The Company utilized the acquisition method of accounting for the acquisition in accordance with ASC 805,Business Combinations, and allocated the purchase price to Takout7’s tangible assets, identifiable intangible assets, and assumed liabilities at their estimated fair values as of the date of acquisition.

As of December 31, 2025, management has not yet finalized the purchase price allocation. In accordance with ASC 805, the Company made a provisional allocation of the purchase price for Takeout7 based on the estimated fair values of the assets acquired and liabilities assumed. The fair values of the assets acquired, as set forth below, are considered provisional and subject to adjustment as additional information is obtained through the purchase price measurement period (a period of up to one year from the closing date). Any prospective adjustments through the purchase price measurement period would change the fair value allocation as of the acquisition date.

The following table summarizes the provisional 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:

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.

CardCash, Inc.

On December 29, 2023, the Company completed the acquisition of CardCash for $26,682,000, using the acquisition method of accounting. In accordance with ASC 805, the Company made an allocation of the purchase price for CardCash based on the fair value 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 CardCash on the date of acquisition:

3. Property and Equipment, Net

Property and equipment, net consisted of the following:

Depreciation expense for the year ended December 31, 2025 and 2024 was $646,173 and $1,472,974, respectively.

4. Goodwill and Intangible Assets

Goodwill and intangible assets consist of the following:

On December 29, 2023, in relation to the acquisition of CardCash, the Company recorded goodwill of $20,007,670.

During the twelve months ended December 31, 2024, the Company recorded an amortization expense of $2,431,668, leaving a remaining intangible asset balance of $4,268,332 at December 31, 2024. During the year ended December 31, 2025, in connection with the acquisition of Takeout7 (see Note 2), the Company recorded intangible assets of $491,163 and recorded an amortization expense of $2,271,673, leaving a remaining intangible asset balance of $2,487,822 at December 31, 2025.

Identifiable intangibles are amortized over their estimated remaining useful lives, which are as follows:

Estimated amortization expense for the Company is as follows:

**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 $1,449,983 as of December 31, 2024. During the year ended December 31, 2025, the Company made payments of $316,612 against its operating lease liability, resulting in a lease liability of $1,133,371 as of December 31, 2025, of which the current portion was $358,861 and the long-term portion was $774,510.

During the year ended December 31, 2025, and 2024, lease costs totaled approximately $453,918 and $362,659, respectively, and were recorded as part of selling, general, and administrative expenses in the accompanying consolidated statements of operations.

As of December 31, 2025, the weighted average remaining lease term for operating leases is 3.11 years, and the weighted average discount rate is 8.00%.

Maturities of the Company’s operating lease liabilities are as follows as of December 31, 2025:

6. Secured Revolving Line of Credit

The outstanding line of credit consists of the following at December 31, 2025 and December 31, 2024:

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 $10,000,000, payable on demand, secured by the Company’s inventory, with interest based on the Wall Street Journal (“WSJ”) prime rate plus 3%, limited to a floor of 6.5%.

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 $7,000,000. The Amended Note amends and restates the November 2020 Note (see above). The Amended Note does not constitute a novation or extinguishment of the November 2020 Note.

Interest on the Amended Note is based on the WSJ prime rate plus 3%, with a floor of 6.5%. The Note is collateralized by a blanket lien on the assets of CardCash. Advances under the Note may be measured against a percentage of eligible accounts and eligible inventory as defined. The amount advanced as a loan under the Note may not exceed an amount which is the lesser of: (i) $7,000,000 and the sum of (a) 100% of Eligible Credit Card Receivables (as defined), plus 100% of the Product Costs for Eligible Inventory (as defined), provided however, that the Product Costs for Eligible Inventory consisting of Prepaid Inventory shall not exceed $750,000. In addition, if CardCash terminates the Note prior to December 31, 2025, it must pay an Exit Fee of 0.50% of $7,000,000, together with all unpaid Loan Fees and Maintenance Fees due under the Agreement. The Amended Note decreased the required minimum cash collateral balance from $1,250,000 to $1,000,000.

At December 31, 2025 and 2024, the Amended Note requires a deposit of $1,000,000 and $1,250,000, respectively, which is included in cash and cash equivalents in the accompanying consolidated balance sheets. At December 31, 2025 and 2024, the average interest rate was approximately 10.5% and 12%, respectively. As of December 31, 2025, the Company complied with customary debt covenants. At December 31, 2025 and December 31, 2024, there was $3,212,935 and $3,805,080 outstanding under the November 2020 Note.

7. Convertible Promissory Note

Convertible promissory note consist of the following at December 31, 2025 and 2024:

On November 5, 2018, the Company completed the acquisition of Incumaker, Inc. and assumed certain outstanding convertible notes payable. At December 31, 2024, there was one remaining assumed convertible note payable outstanding that matured July 2017. The Company continues to be unsuccessful in reaching the Note holder to remit payment in full. At December 31, 2024, the principal balance of $20,000 and accrued interest of $23,137 are convertible at $1.50 per share into 28,758 shares of the Company’s common stock. At December 31, 2025, the principal balance of $20,000 and accrued interest of $26,137 are convertible at $1.50 per share into 30,758 shares of the Company’s common stock.

**8. Secured Notes Payable – Related Party **

Secured notes payable to a related party consist of the following at December 31, 2025 and 2024:

On September 20, 2024, the Company entered into a secured promissory note with Spars Capital Group LLC (“Spars Capital”) in the principal amount of $2,000,000, bearing annual interest at 11.5%, with a maturity date of January 20, 2025. As of December 31, 2024, the notes payable had an aggregate principal balance outstanding of $2,000,000, a debt discount balance of $4,000, and accrued interest payable of $64,274. During the year ended December 31, 2025, the Company paid the Note, including accrued interest, and the Note was retired. The Note was secured by a blanket lien on the Company’s assets, subordinated only to the line of credit (see Note 6). Spars Capital is owned by a family trust affiliated with Elliot Bohm, the President of CardCash and a member of the Company’s Board of Directors.

9. Notes Payable

Notes payable consist of the following at December 31, 2025 and 2024:

CardCash Acquisition Notes Payable

On December 29, 2023, the Company issued two-year promissory notes totaling $1,500,000 as partial consideration for the acquisition of CardCash (see Note 2). $750,000 is payable on December 29, 2024, bearing simple annual interest of 5%, and $750,000 is to be paid upon the earlier of (a) the completion of a firm commitment underwriting the Company’s initial public offering to allow the Company to become listed on the Nasdaq Capital Market or (b)December 29, 2025. As of December 31, 2024, the notes payable had an aggregate principal balance outstanding of $1,500,000 and accrued interest payable of $75,000. During the year ended December 31, 2025, the Company paid the Notes and accrued interest in full, and the Notes were retired.

Real World Digital Assets Note Payable

On February 19, 2025, the Company entered into a secured promissory note with Real World Digital Assets LLC (“Real World”) in the principal amount of $1,000,000, bearing annual interest at 11.5%, with a maturity date of December 31, 2025. The Note has an origination fee and expenses totaling $15,000, which were recorded as a debt discount and are being amortized over the term of the Note. The Note may be prepaid without penalty. The note is secured by a blanket lien on Giftify’s assets under a security agreement and is subordinated only to Pathward’s line of credit (see Note 6). Proceeds from the note were used to pay the remaining balance owed on the secured promissory note with Spars Capital (See Note 8). During the year ended December 31, 2025, the Company paid the Note and accrued interest in full, and the Note was retired.

GameIQ Acquisition Note Payable

On February 1, 2022, the Company issued two notes payable in connection with the purchase of GameIQ: one for $78,813 and another for $62,101. In accordance with Notes, the Company promised to pay the principal together with interest at 1% upon the earlier of (i) nine equal biannual installments, with the first installment due on October 1, 2022, and the final payment due February 1, 2025 (the “Maturity Date”).

As of December 31, 2024, the notes payable had an aggregate principal balance outstanding of $75,928 and accrued interest payable of $1,646. During the year ended December 31, 2025, the Company paid the Notes and accrued interest in full, and the Notes were retired.

Economic Injury Disaster Loans (EIDL)

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

The loans bear interest at 3.75% per annum, with a combined principal-and-interest repayment of $3,500 per month, beginning 12 months from the date of the promissory note, over 30 years. As of December 31, 2024, the note payable had a principal balance outstanding of $664,500 and accrued interest payable of $15,558. As of December 31, 2025, the note payable had a principal balance outstanding of $661,301 and accrued interest of $2,288.

10. Income Taxes

No federal tax provision has been provided for the years ended December 31, 2025 and 2024, due to the losses incurred during the periods. Reconciled below is the difference between the income tax rate computed by applying the U.S. federal statutory rate and the effective tax rates for the respective period:

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of the Company’s deferred tax assets as of December 31, 2025 and 2024 are summarized below.

In assessing the potential realization of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will be realized. The ultimate realization of deferred tax assets depends on the Company generating future taxable income in the periods in which those temporary differences become deductible. As of December 31, 2025 and 2024, management was unable to determine if it is more likely than not that the Company’s deferred tax assets will be realized and has therefore recorded an appropriate valuation allowance against deferred tax assets at such dates.

As of December 31, 2025, the Company has available net operating loss carry forwards for federal and state income tax purposes of approximately $35,145,000 and$18,938,000. Federal net operating losses of approximately $9,876,000 were incurred before 2018 and carry forward for 20-years. They will begin to expire, if unutilized, beginning after the year ending December 31, 2034. The remaining Federal Net Losses of approximately $25,269,000 were incurred after 2017 and carry forward indefinitely, but the deductions for these net operating loss carry forwards are limited to 80% of taxable income. The state net operating loss carry forwards, depending on the state, are from 12 to 20 years and expire in tax years ending after December 31, 2032 through 2045. The ability to utilize net operating loss carry forwards to offset future income may be limited under the Internal Revenue Code after significant ownership changes.

11. Stockholders’ Equity

Preferred Stock

The Company is authorized to issue 10,000,000 shares of preferred stock, par value $0.001 per share. As of December 31, 2025 and 2024, there wereno shares of preferred stock issued and outstanding.

Common Stock

The Company is authorized to issue a total of 750,000,000 shares of common stock, par value $0.001 per share. As of December 31, 2025 and 2024, the Company had 33,146,517 shares and 27,021,423 shares, respectively, of common stock issued and outstanding.

Common Stock Transactions

2025

Common Shares Issued on Vesting of Restricted Stock

During the year ended December 31, 2025, the Company issued 797,912 shares on vesting of restricted common stock to its employees and executives and recognized the corresponding fair value of $2,055,336.

Common Stock Issued for Services

During the year ended December 31, 2025, the Company issued 420,832 shares of common stock with a fair value of $575,713, or $1.37 per share, for service rendered.

Issuance of Common Stock for Settlement of Vendor Balance

During the year ended December 31, 2025, the Company issued 75,000 shares of common stock with a fair value of $108,750, or $1.45 per share, to settle a trade vendor balance of $75,000. The excess of the fair value of the common stock issued over the trade vendor balance was $33,750, which was recorded as a component of selling, general and administrative expenses in the accompanying consolidated statements of operations.

During the year ended December 31, 2025, the Company sold 1,283,246 shares of Common Stock and received net proceeds of $1,735,406, at an average price of $1.35 per share, under its At-the-Market Issuance Sales Agreement with Ascendiant Capital Markets, LLC.

Issuance of Common Stock on Acquisition

During the year ended December 31, 2025, the Company issued 350,000 shares of common stock with a fair value of $609,000, or $1.74 per share, in connection with an acquisition (see Note 2).

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). Under the terms of the SPA, ClearThink Capital agreed to purchase up to $10 million of Giftify’s shares of common stock based on a series of request notices, as defined, and will receive financing in an amount equal to 99% of the average of the closing prices of Giftify’s shares of common stock, as defined. No purchase of Company shares of common stock will be made by ClearThink if its beneficial ownership of Giftify common stock exceeds 9.99% of the issued and outstanding shares of Giftify common stock.

During the year ended December 31, 2025, the Company received net proceeds of $374,500 from ClearThink Capital, which purchased 387,194 shares of the Company’s common stock.

On February 4, 2025, the Company exercised its right to terminate the SPA by mutual agreement of the parties.

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 600,000 shares of the Company’s common stock at a purchase price of $1.00 per Share. The shares were offered by the Company pursuant to its shelf registration statement on Form S-3 (File No. 333-282322), which 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 600,000 shares for total gross proceeds of $600,000. After deducting the placement agent fee and offering expenses payable by the Company, the Company received net proceeds of $478,000.

Issuance of Common Stock on Private Offering

During the year ended December 31, 2025, the Company received net proceeds of $2,431,999 from the sale of 2,210,910 shares of common stock at $1.10 per share in a private placement.

Common Stock Issuable

At December 31, 2025,350,843 shares of common stock with an aggregate value of $350,843 have not been issued and are reflected as common stock issuable in the accompanying consolidated financial statements.

2024

Issuance of Common Stock for Services

During the year ended December 31, 2024, the Company issued 210,000 shares of common stock with a fair value of $771,500, or $3.67 per share, to consultants for services rendered.

Issuance of Common Stock for Vendor Settlement

During the year ended December 31, 2024, the Company issued 104,167 shares of common stock with a fair value of $150,000, or $1.44 per share, per settlement agreement with a vendor. The fair value of the common shares of $150,000 was recorded as a component of selling, general and administrative expenses in the consolidated statement of operations.

Sale of Common Stock on Stock Purchase Agreement

ClearThink Capital

On December 16, 2024, the Company entered into a Securities Purchase Agreement and Strata Purchase Agreement with ClearThink Capital Partners, LLC (ClearThink Capital). Under the terms of the Strata Purchase Agreement, ClearThink Capital agreed to purchase up to $10 million of Giftify’s shares of common stock (the “Purchase Shares”) based on a series of request notices limited to the lesser of $1 million or 500% of the average number of shares traded for the 10 trading days prior to the closing request date with the minimum purchase notice to be $25,000. The Company will receive financing in an amount equal to 99% of the average of the closing prices of the Company shares of common stock on the Nasdaq stock market during the Valuation Period that is defined as three business days preceding the purchase date with respect to a request notice. No purchase of Company shares of common stock will be made by ClearThink if its beneficial ownership of Giftify common stock exceeds 9.99% of the issued and outstanding shares of Giftify common stock.

As a condition of the right of the Company to commence sales of its Purchase Shares to ClearThink Capital under the Strata Purchase Agreement, the Company issued to ClearThink Capital under the terms of the Securities Purchase Agreement,100,000 restricted shares of Giftify’s common stock and an effective registration statement covering the resale of the Purchase Shares. The fair value of the 100,000 restricted shares was determined to be $131,000 and was recorded as a financing cost, a component of other expenses, in the accompanying Consolidated Statement of Operations during the year ended December 31, 2024.

Under the terms of the Securities Purchase Agreement, ClearThink Capital has agreed to purchase a total of 150,000 restricted shares of Giftify common stock in at an effective price of $1.3333 per share to be delivered to ClearThink Capital by book entry within seven calendar days following the two closing dates as follows:75,000 restricted shares of Giftify common stock on December 16, 2024, and 75,000 shares of Giftify common stock within five days after the filing of the Prospectus Supplement underlying the Strata Purchase Agreement. During the year end December 31, 2024, ClearThink purchased a total of 150,000 shares of the Company’s common stock for $200,000.

On February 4, 2025, the Company exercised its right to terminate the SPA by mutual agreement of the parties.

On October 25, 2024, the Company entered into an At-the-Market Issuance Sales Agreement with Ascendiant Capital Markets, LLC, as sales agent to sell shares of its common stock, par value $0.001 (the “Common Stock”), having an aggregate offering price of up to $30,000,000 (the “Shares”) from time to time, through an “at the market offering” (the “ATM Offering”) as defined in Rule 415 under the Securities Act of 1933, as amended (the “Securities Act”). During the year ended December 31, 2024, the Company sold 209,993 shares of Common Stock and received net proceeds of $286,063, or an average of $1.36 per share.

Issuance of Common Stock on Private Sales

During the year ended December 31, 2024, the Company received net proceeds of $3,021,523 from the sale of 1,539,500 shares of common stock at $1.96 per share, as part of a private placement.

12. Share-Based Compensation

Summary of Restricted Common Stock

The following table summarizes restricted stock activity during the year ended December 31, 2025:

On March 1, 2024, the Company granted its Chief Executive Officer 200,000 shares of the Company’s restricted stock and 225,000 shares of the Company’s restricted stock to other officers and employees with an aggregate fair value of $1,793,500 or $4.22 per share. The restricted stock grant vest 33% on the grant date, and 33% on each subsequent anniversary date.

On February 1, 2025, the Company granted its Chief Executive Officer 250,000 shares of the Company’s restricted stock and granted 200,000 shares of the Company’s restricted stock to two other officers with an aggregate fair value of $405,000 or $0.90 per share. The restricted stock grant vests monthly over 36 months.

During the years ended December 31, 2025 and 2024, the Company recognized stock-based compensation expense of $2,055,336 and $2,681,848, respectively, and issued 797,917 and 241,666 shares of restricted stock based on the vesting terms of the grants, respectively. As of December 31, 2025, the unamortized stock compensation expense for restricted stock amounted to $2,880,889, to be expensed upon vesting in future periods through February 2028.

Summary of Stock Options

The Company issues common stock and stock options as incentive compensation to directors and as compensation for the services of employees, contractors, and consultants of the Company.

The fair value of a stock option award is calculated on the grant date using the Black-Scholes option-pricing model. The fair market value of the common stock is determined by reference to the quoted market price of the common stock on the grant date. The expected term represents the weighted-average period of time that share option awards granted are expected to be outstanding giving consideration to vesting schedules and historical participant exercise behavior; the expected volatility is based upon historical volatility of the Company’s common stock; the expected dividend yield is based on the fact that the Company has not paid dividends in the past and does not expect to pay dividends in the future; and the risk-free interest rate is based on the U.S. Treasury yield curve in effect at the time of measurement corresponding with the expected term of the share option award.

A summary of stock option activity is presented below:

On April 1, 2024, the Company, pursuant to the terms of its 2019 Stock Incentive Plan, granted options exercisable into 3,405,500 shares of the Company’s common stock to be issued to its executives and employees. The 3,405,500 stock options had an exercise price of $4.01 per share, with 33% vesting on April 1, 2024, and 33% on each subsequent anniversary date. The stock options are exercisable at a weighted average price of $4.01 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 $13,500,000, which was determined using a Black-Scholes option pricing model with the following average assumption: stock price of $4.01 per share, expected term of 6.00 years, volatility of 220%, dividend rate of 0%, and weighted average risk-free interest rate of 4.33%.

On February 1, 2025, the Company, pursuant to the terms of its 2019 Stock Incentive Plan, granted options exercisable into 1,170,000 shares of the Company’s common stock to its executives and employees. The stock options vest equally over 36 months. The stock options are exercisable at a weighted average price of $0.92 per share with an average life to expiration of approximately three years. The total fair value of these options at grant date was approximately $1,073,000, which was determined using a Black-Scholes option pricing model with the following average assumption: stock price of $0.92 per share, expected term of 6.00 years, volatility of 241%, dividend rate of 0%, and weighted average risk-free interest rate of 4.45%.

During the year ended December 31, 2025 and December 31, 2024, the Company recognized $3,671,565 and $8,031,290 of stock compensation expense relating to vested stock options, respectively. As of December 31, 2025, the aggregate amount of unvested compensation related to stock options was approximately $1,109,667 which will be recognized as an expense as the options vest in future periods through February 2028.

The weighted average remaining contractual life of common stock options outstanding and exercisable at December 31, 2025 was 8.16 years. Based on a fair market value of $1.03 per share on December 31, 2025, the intrinsic value attributed to exercisable but unexercised common stock options was $178,975 at December 31, 2025.

The exercise prices of common stock options outstanding and exercisable at December 31, 2025 are as follows:

13. 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.

Employment Agreements

Ketan Thakker

Effective July 1, 2023, Giftify entered into a new employment agreement with Ketan Thakker, its Chairman, President and Chief Executive Officer, pursuant to which Mr. Thakker’s annual salary is $250,000, increasing to $400,000 on July 1, 2024. In addition, Mr. Thakker may be entitled to receive, at the discretion of our Board, a cash bonus based on the performance goals of our Company.

In the event of a change of control of our company, Mr. Thakker may terminate his employment within six months after such event and will be entitled to continue to be paid pursuant to the terms of his employment agreement.

Steve Handy

Effective August 21, 2024, Giftify entered into a new employment agreement with Steve Handy, its Chief Financial Officer, pursuant to which Mr. Handy’s annual salary is $250,000, increasing at 5% annually. In addition, Mr. Handy is to receive a minimum annual cash bonus of $25,000.

Elliot Bohm and Marc Ackerman

Effective on December 29, 2023, the Company entered into an Employment Agreements with Elliot Bohm and Mark Ackerman. Mr. Bohm was the President of CardCash and Mr. Ackerman was the Chief Operating Officer of CardCash prior to the acquisition by Giftify and will remain in those positions following the acquisition. Bohm also joined the Board of Directors of Giftify.

Under the terms of the four-year agreements, Mr. Bohm and Mr. Ackerman shall each receive an annual base salary of $375,000 and a one-time award of 1,250,000 restricted shares of Giftify’s common stock with an aggregate fair value of $10 million,50% vesting immediately and 50% vesting over 4 years. In addition, Mr. Bohm and Mr. Ackerman shall receive a minimum annual bonus of $100,000, payable in cash, stock, or both, on terms mutually acceptable to the Board and Mr. Bohm and Mr. Ackerman.

If Mr. Bohn’s or Mr. Ackerman’s employment is terminated by the Company without cause, as defined under their employment agreements, Mr. Bohn or Mr. Ackerman will be entitled to (a) twelve months’ base salary, (b) Earned but Unpaid Amounts, as defined, (c) all vested equity awards shall be retained and all unvested equity awards shall be accelerated and be deemed vested and (d) other benefits, as defined, for health, life, disability and similar employee benefit plans will continue, as defined.

Mr. Bohm and Mr. Ackerman also entered into a confidentiality and non-competition agreement in conjunction with their employment agreement, which contains covenants restricting them from engaging in any activities competitive with our business during the term of the employment agreement and one year thereafter, and prohibiting them from disclosing confidential information regarding our company at any time.

**14. Segment information **

The Company operates and manages its business asone reportable and operating segment concentrating on the sale of gift cards and discount certificates to our customers. The measure of segment assets is reported on the balance sheet as total consolidated assets. The Company derives revenue primarily in the United States of America and manages its business activities on a consolidated basis.

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 the 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:

15. Subsequent Events

Subsequent to December 31, 2025, the Company sold 25,795 shares of Common Stock and received net proceeds of $27,551, or an average of $1.10 per share, under its At-the-Market Issuance Sales Agreement with Ascendiant Capital Markets, LLC.

Issuance of Common Stock on Private Offering

Subsequent to December 31, 2025, the Company received net proceeds of $510,000 from the sale of 470,000 shares of common stock at an average price of $1.09 per share in a private placement.

Stock Based Compensation

On February 2, 2026, the Company, pursuant to the terms of its 2019 Stock Incentive Plan, granted 1,400,000 restricted shares of common stock and options exercisable into 765,000 shares of the Company’s common stock to its executives and employees.

The restricted shares of common stock and stock options vest equally over 36 months. The stock options are exercisable at a weighted average price of $1.04 per share with an average life to expiration of approximately six years. The total fair value of these options at the grant date was approximately $791,000, which was determined using a Black-Scholes option pricing model with the following average assumption: stock price of $1.04 per share, expected term of 6.00 years, volatility of 218%, dividend rate of 0%, and weighted average risk-free interest rate of 3.74%.