GIFTIFY, INC.

Previous wording

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.

Current wording

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.

Previous wording

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

Current wording

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

Previous wording

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

Current wording

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.

Previous wording

Our B2C division accounted for 45% of gross revenue in our fiscal year ended December 31, 2023. To our database of 6.2 million customers, we sell:

Current wording

To our database of 6.2 million customers, we sell:

Previous wording

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

Current wording

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

Previous wording

● “Specials by Restaurant.com” which bundle Restaurant.com certificates with a variety of other entertainment options, including theatre, movies, wine and travel. Customers have favored these bundled offering (“Specials”), generating significantly greater revenue per customer when compared to purchasing our other products. The average other Company value for these Specials sales is nearly five times a certificate purchase. Specials generated over 5% of our past year’s B2C revenue from 60% of the B2C revenue of the Company for the fiscal year ended December 31, 2023. We believe that our relationships with small businesses presents a significant revenue opportunity through such cross-promotions.

Current wording

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

Previous wording

Our B2B division accounted for 55% of our gross revenue in our fiscal year ended December 31, 2023. We sell certificates and Discount Dining Passes to corporations and marketers, which use them to:

Current wording

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

Previous wording

The Company has a history of reporting net losses and negative operating cash flows. At September 30, 2024, the Company had cash of $3,090,980 available to fund its operations, including expansion plans, and to service its debt, and a working capital deficit of $2,182,182.

Current wording

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

Previous wording

Sales for the three months ended September 30, 2024, were $23,210,850, an increase of approximately $3,003,331, or 14.9%, as compared to $20,207,519 in the three months ended September 30, 2023. During the current year period, we focused on improving our gross margin. We assessed the quality of our purchased gift card brands, allowing us to increase the sales price to our customers, resulting in a gross margin of 12.9%, as compared to a gross margin of 12.8% in the prior year period.

Current wording

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

Previous wording

Costs of sales for the three months ended September 30, 2024 increased to $20,220,237, as compared to $17,629,985 during the three months ended September 30, 2023. Our cost of sales, as a percentage of sales, were 87.1% and 87.2%, respectively. The increase in our cost of sales, and the increase in our gross margin, as compared to the prior year period, is discussed above.

Current wording

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

Previous wording

Selling, general and administrative expenses were $20,954,914 for the nine months ended September 30, 2024, as compared to $8,238,497 for the nine months ended September 30, 2023, an increase of $12,716,417. The increase was from the recording of $9,762,242 of stock-based compensation expense during the nine months ended September 30, 2024. The remaining change in selling, general and administrative expenses was from general changes in our business and operations.

Current wording

Selling, general and administrative expenses were $6,043,841 for the three months ended March 31, 2025, as compared to $5,214,041 for the three months ended March 31, 2024, an increase of $829,800. The increase was from increased stock-based compensation expense of $481,628 during the three months ended March 31, 2025, increased payroll and benefit expenses, and general changes in our business and operations.

Previous wording

Amortization of capitalized software costs. Amortization expenses are primarily attributable to the Company’s capitalized software development costs. Amortization expenses were $254,292 for the three months ended September 30, 2024, as compared to $267,985 during the three months ended September 30, 2023.

Current wording

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

Previous wording

*Amortization of intangible assets.*Amortization expenses are primarily attributable to the Company’s amortization of intangible assets with finite lives. Amortization expenses were $607,917 for the three months ended September 30, 2024, as compared to $75,000 during the three months ended September 30, 2023.

Current wording

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

Previous wording

For the three months ended September 30, 2024, we incurred a loss from operations of $3,780,199, as compared to a loss from operations of $365,607 for the three months ended September 30, 2023. The increase in loss from operations was due to our increased gross profit offset by increased stock-based compensation expense, operating costs, and amortization expense, as discussed above.

Current wording

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

Previous wording

We realized a net loss of $4,061,152 for the three months ended September 30, 2024, as compared to a net loss of $556,582 for the three months ended September 30, 2023. The increase in net loss was due to our increased gross profit offset by increased stock-based compensation expense, operating costs, amortization expense, and interest expense, as discussed above.

Current wording

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

Previous wording

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

Current wording

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

Previous wording

We have a history of reporting net losses. At September 30, 2024, we had cash of $3,090,980 available to fund our operations, including expansion plans, and to service our debt, and a working capital deficit of $2,182,182. We anticipate our cash balance will last until at least June 2025. As a result, we have concluded that there is substantial doubt about the Company’s ability to continue as a going concern. Our consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Current wording

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

Previous wording

Cash used in operating activities for the nine months ended September 30, 2023 was approximately $220,267 and consisted of our net loss, adjusted for non-cash items, including amortization of intangible assets, goodwill impairment, fair value of vested stock options, and the fair value of common stock issued to executives, and routine changes in working capital and other activities.

Current wording

Cash used in operating activities for the three months ended March 31, 2025 was approximately $1,448,924 and consisted of our net loss, adjusted for non-cash items, including amortization of intangible assets, the fair value of vested stock options, common stock issued to executives, employees, and advisors, and routine changes in working capital and other activities.

Previous wording

Cash used in operating activities for the nine months ended September 30, 2024 was approximately $2,362,948 and consisted of our net loss, adjusted for non-cash items, including amortization of intangible assets, fair value of vested stock options, and the fair value of common stock issued to executives, employees, and advisors, and routine changes in working capital and other activities.

Current wording

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

Previous wording

Cash used for investing activities for the nine months ended September 30, 2024 was $674,646, which was for capital expenditures.

Current wording

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

Previous wording

Cash provided by financing activities for the nine months ended September 30, 2024 was $2,028,837, which was from proceeds of $3,054,073 on the private sale of common stock, net proceeds of $1,978,000 from a note payable to a related party, offset by repayment of our line of credit balance of $2,503,236, and payment of $500,000 on our acquisition obligation.

Current wording

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

Previous wording

In November 2020, CardCash entered into an amended and restated promissory note for a revolving line of credit with availability of up to $10,000,000. The revolving line of credit is payable on demand, secured by the Company’s inventory, with interest based on the Wall Street Journal Prime Rate plus 3.00%, limited to a floor of 6.5%. At September 30, 2024 and December 31, 2023, the average interest rate was 12% and 12%, respectively. As of September 30, 2024, the Company was in compliance with customary debt covenants.

Current wording

In November 2020, CardCash entered into an amended and restated promissory note for a revolving line of credit with availability of up to $10,000,000. The revolving line of credit is payable on demand, secured by the Company’s inventory, with interest based on the Wall Street Journal Prime Rate plus 3.00%, limited to a floor of 6.5%. At March 31, 2025 and December 31, 2024, the average interest rate was 12% and 12%, respectively. As of March 31, 2025, the Company complied with customary debt covenants. At March 31, 2025 and December 31, 2024, the line of credit requires a deposit of $1,258,826, included in restricted cash.

Previous wording

On November 5, 2018, the Company completed the acquisition of Incumaker, Inc. and assumed certain outstanding convertible notes payable. At December 31, 2023, there was one remaining assumed convertible note payable outstanding that matured July 2017, and is past due. At September 30, 2024, the principal balance of $20,000, and accrued interest of $22,238, are convertible at $1.50 per share into 28,258 shares of the Company’s common stock.

Current wording

On November 5, 2018, the Company completed the acquisition of Incumaker, Inc. and assumed certain outstanding convertible notes payable. At December 31, 2024, there was one remaining assumed convertible note payable outstanding that matured July 2017. The Company continues to be unsuccessful in reaching the Note holder to remit payment in full. At December 31, 2024, the principal balance of $20,000, and accrued interest of $23,137, are convertible at $1.50 per share into 28,758 shares of the Company’s common stock. At March 31, 2025, the principal balance of $20,000, and accrued interest of $23,887, are convertible at $1.50 per share into 29,258 shares of the Company’s common stock.

Previous wording

On December 29, 2023, the Company issued two-year promissory notes totaling $1,500,000 as partial consideration for the acquisition of CardCash (see Note 3). $500,000 is payable on December 29, 2025, bearing simple annual interest of 5%, and $1,000,000 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, 2024. As of December 31, 2023, the notes payable had an aggregate principal balance outstanding of $1,500,000. As of September 30, 2024, the notes payable had an aggregate principal balance outstanding of $1,500,000 and accrued interest payable of $56,250.

Current wording

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

Previous wording

On September 20, 2024, the Company entered into a secured promissory note (the “Note”) with Spars Capital Group LLC (“Spars Capital”) in the principal amount of $2,000,000 bearing annual interest of 11.5% that has a maturity date of January 20, 2025. The Note has an origination fee and expenses of $22,000, which was recorded as a debt discount and is being amortized over the term of the Note and may be prepaid without penalty. The Note is collateralized by a blanket lien on the assets ofthe Company under the terms of a Security Agreement and is subordinated only to the line of credit (see Note 7). The Note and Security Agreement are subject to additional customary terms and conditions. Spars Capital is owned by a family trust affiliated with Elliot Bohm, a member of the Board of Directors ofthe Company and the President of CardCash Exchange, Inc., a subsidiary of Giftify. As of September 30, 2024, the notes payable had an aggregate principal balance outstanding of $2,000,000, a debt discount balance of $20,300, and accrued interest payable of $6,932.

Current wording

On February 19, 2025, the Company entered into a secured promissory note with Real World Digital Assets LLC (“Real World”) in the principal amount of $1,000,000 bearing annual interest of 11.5% that has a maturity date of December 31, 2025. The Note has an origination fee and expenses of $15,000, which were recorded as a debt discount and are being amortized over the term of the Note and may be prepaid without penalty. The note is collateralized by a blanket lien on the assets of Giftify under the terms of a security agreement and is subordinated only to the line of credit owed by the Company to Pathward National Association (see Note 7). Proceeds from the note were used to pay the remaining balance owed on the secured promissory note with Spars Capital (See Note 9). As of March 31, 2025, the notes payable had a principal balance outstanding of $1,000,000, a debt discount balance of $12,857, and accrued interest payable of $12,918.

Previous wording

The loans bear interest at 3.75% per annum, with a combined repayment of principal and interest of $3,500 per month beginning 12 months from the date of the promissory note over a period of 30 years. As of December 31, 2023, the note payable had a principal balance outstanding of $664,500 and accrued interest payable of $27,259. As of September 30, 2024, the note payable had a principal balance outstanding of $664,500 and accrued interest payable of $16,010.

Current wording

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