GIFTIFY, INC. 10-K

ITEM 1. BUSINESS As used in this Annual Report, the terms “we,” “us,” “our,” and the “Company” refer to Giftify, Inc., a Delaware corporation, and its consolidated subsidiaries. Giftify owns and operates Restaurant.com, a pioneer in the restaurant deal space and the nation’s largest restaurant-focused digital deals brand. Our profile fundamentally changed with the acquisition of CardCash Exchange, Inc. (“CardCash”) in December 2023. CardCash buys merchant gift cards from the general public and distributors at a discount and then resells them at a markup. CardCash’s core service offering includes the buying and selling of gift cards from over 1,100 retailers, including Target, Home Depot, Starbucks, and TJ Maxx, among others. The acquisition and integration of CardCash have changed our financial position, market profile, and brand focus, and have also expanded our short-term search for additional business opportunities, both internal and external. We believe the CardCash acquisition added valuable attributes, including (1) CardCash’s brand awareness and acceptance from the consumer, and (2) experienced management. ● Brand awareness – CardCash has been in business since 2009, and we believe this history, along with a strong marketing push across multiple channels, has led to strong consumer awareness and acceptance. ● Experienced management – As part of the CardCash acquisition, members of the executive leadership team of CardCash have joined us. Elliot Bohm, President of CardCash prior to the merger with Giftify, remains as President of CardCash following the closing of the merger and has joined the Board of Directors of Giftify. Marc Ackerman, Chief Operating Officer of CardCash prior to the merger with Giftify, continues to serve as Chief Operating Officer of CardCash following the merger’s closing. 3 Acquisitions 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 issued and outstanding equity of Takeout7 for $609,000, consisting of the issuance of 350,000 shares of the Company’s common stock. In early 2026, Takeout7 and its operations were merged into our subsidiary, Restaurant.com. On December 29, 2023, the Company completed the acquisition of CardCash. The Company acquired all of the issued and outstanding equity interests of CardCash from CardCash’s stockholders for $26,682,000, made up of 6,108,007 shares of Giftify’s common stock with a fair value of $24,432,000 or $4.00 per share, $750,000 in cash, and the issuance of notes payable for $1,500,000. Our Business We have two principal divisions, Business-to-Consumer (B2C) and Business-to-Business (B2B), for both CardCash and Restaurant.com. CardCash CardCash is a leading gift card exchange platform that facilitates the purchase and sale of unused gift cards at discounted rates for consumers and businesses. The Company’s mission is to provide a seamless marketplace for individuals seeking to maximize the value of their gift cards and to offer businesses innovative solutions to leverage this market. CardCash’s core service offering includes the buying and selling of gift cards from over 1,100 retailers, such as Target, Home Depot, Starbucks and TJ Maxx, among others. By connecting buyers and sellers, CardCash enables consumers to unlock value from unused gift cards and save significant amounts on their purchases. CardCash purchases unused gift cards at a discount to their face value and resells them to discerning shoppers nationwide at a discount to face value. 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. In addition to its consumer-focused operations, CardCash provides white-label solutions for brands, allowing them to integrate gift card exchange capabilities into their own platforms. Major retailers such as Amazon, Best Buy, CVS, and Dell have leveraged these solutions to enhance their customer offerings and drive additional revenue from gift cards without compromising product value. By fostering a mutually beneficial ecosystem, CardCash enables consumers and businesses to trade unwanted gift cards, and merchants benefit as unused cards are converted into revenue. Furthermore, CardCash facilitates B2B exchanges, enabling companies to efficiently manage surplus gift card inventory and procure gift cards in bulk for various business needs. This service not only benefits businesses but also contributes to a thriving gift card market projected to reach $400 billion by 2026. Moreover, CardCash is committed to social responsibility through partnerships with charitable organizations. Initiatives such as the collaboration with Charity On Top on fundraising efforts during natural disasters showcase CardCash’s dedication to giving back to the community. Partnerships with reputable institutions such as St. Jude’s Research Hospital demonstrate CardCash’s commitment to supporting critical causes and making a positive impact. 4 Among its offerings, CardCash Incentives provides new gift cards for over 300 brands at discounted rates, helping businesses drive employee engagement and customer loyalty through customized gift card solutions. The recent introduction of the CardCash uChoose platform further enhances the Company’s portfolio by enabling businesses to offer gift cards from a wide selection of brands to recipients. Overall, CardCash’s multifaceted approach to the gift card market, coupled with its focus on innovation and social impact, positions the Company as a key player in the industry with a strategic vision for continued growth and success. CardCash Growth Plans CardCash intends to grow its current four business channels, bulk to bulk, bulk to retail, retail to bulk, and retail to retail, to take advantage of the projected expansion by 2026 of the global market for gift cards to $400 billion (see “Business - Pending Acquisition – CardCash Exchange, Inc.”) as follows: ● Increase Access to Strategic Partnerships and Expanded Data . CardCash intends to transition from operating its own online platform for both consumers and repeat high-volume gift card sellers to operating exchanges. CardCash currently operates approximately 25 branded exchanges. CardCash is focusing on three business growth concepts: Branded Exchange for Retailer Partnerships CardCash intends to increase the number of gift card exchanges on partner websites to send traffic to CardCash.com. CardCash launched its first branded exchange partnership with CVS Pharmacy in 2012 and saw increased spending from both new and existing customers. In 2017, CardCash and Amazon launched a branded exchange, which has since become CardCash’s most successful partnership to date. In 2023, Mastercard and Amazon led all CardCash-branded exchanges with $1,800,000 and $1,900,000 in revenue, respectively. CardCash Checkout CardCash is developing technology that enables retailers to accept any gift card, anywhere, at any time, reducing combined interchange fees for businesses, increasing customer value, and increasing average purchase amount. CardCash profits by selling the card on the secondary market. The transaction originates at checkout, and the card’s absence on CardCash’s website continues to route through the network. CardCash Giving The purpose of this concept is to allow consumers to pay for their retail purchases with gift cards and to have the charity of their choice receive a donation, thereby increasing the appeal of using CardCash at checkout. CardCash has developed this donation platform to allow customers to use the power of their shopping to support the charity of their choice. CardCash has an existing partnership with St. Jude Children’s Research Hospital that allows customers to spend gift cards anywhere they want while donating to cutting-edge medical research. The giving platform works by (i) CardCash negotiating 5% - 20% discounts on the gift cards, (ii) splitting that discount 70/30 with the charity, and (iii) giving the retailer a tax write-off of 70%. Through CardCash’s platform, consumers can, for example, help families pay down student loan debt and contribute to research on childhood illnesses and to awareness and improved heart health. ● Increase Marketing Efforts . CardCash intends to increase its marketing to retailers and consumers to accelerate gift card sales. ● Increase Profit Margins . CardCash intends to shift its cost structure to enable it to process 4-5X its current gift card volume at a very slight increase in costs. CardCash believes that more efficient use of machine-learning transaction processing, combined with richer data from a strategic subset, can enable it to scale its model to meet the needs of the gift card market. CardCash is seeking a strategic investment and collaboration, in addition to what it receives from its merger with Giftify, to deliver data synergies and higher margins through more reliable processing. While the bulk-to-bulk channel is expected to represent the largest contributor of CardCash’s sales in the years to come, the other three channels are projected to grow at a faster rate and account for an aggregate 50% of sales over the next two years. CardCash expects to drive top-line growth by adding new branded exchange partnerships, which are expected to attract more users and increase demand for other services. CardCash currently has a 16.8% gross margin for its four revenue streams combined. CardCash anticipates that its gross margins will increase by approximately 8% over the next two years, driven by retail-sourced inventory and retail sales. CardCash focuses on maximizing inventory sourced through checkout and branded exchange initiatives to drive significant volume in the secondary market and achieve higher gross margins. 5 Restaurant.com Business to Customer Division Our B2C division accounted for approximately 15% of gross revenue in our fiscal year ended December 31, 2025. To our database of 6.2 million customers, we sell: ● Discounted certificates for 10,000 restaurants. The certificates range from $5 to $100 and never expire. ● Discount Dining Passes, which provide discounts at 170,000 restaurants and other retailers. These passes provide multiple uses for six months. ● “Specials by Restaurant.com” which bundle Restaurant.com certificates with a variety of other entertainment options, including theatre, movies, wine and travel. Customers have favored these bundled offerings (“Specials”), generating significantly higher revenue per customer than purchasing our other products. The average order value for these Specials sales is nearly five times that of a certificate purchase. We believe that our relationships with small businesses present a significant revenue opportunity through such cross-promotions. Restaurant.com Business to Business Division Our B2B division accounted for approximately 85% of gross revenue for the fiscal year ended December 31, 2025. 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; ● 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 customer database of 6.2 million, which we believe is of value to merchants for a variety of services and products. Marketing We primarily use marketing to acquire and retain high-quality merchants and customers and promote awareness of our marketplaces. We use a variety of marketing channels to raise customer awareness of our offerings, including search engines, email, affiliate partnerships, and social media. 6 Search engines. Customers can access our offerings indirectly through third-party search engines. We use search engine optimization and search engine marketing to increase the visibility of our offerings in web search results. Email. We communicate our offerings via email to customers based on their location and personal preferences. A customer who interacts with an email is directed to our website and mobile applications to learn more about the deal and to make a purchase. Social. We publish content across various social networks and tailor our marketing to each platform’s format. Our website and mobile applications enable consumers to share our offerings with their personal social networks. We also promote our offerings using display advertising on websites. Offline. We use offline marketing channels, such as print, to build brand awareness. Distribution We distribute our deals directly through email, our websites, mobile apps, and social networks. We also utilize various affiliate partnerships to display and promote our deals on their websites, such as with AMAC, Groupon, MemberHub and others. We also use various customer loyalty and reward programs to build brand loyalty, generate traffic to the website and provide business clients with the opportunity to offer incentives to their customers to receive discounts and Discount Dining Passes. When customers complete qualifying actions, such as providing a referral to a new subscriber or participating in promotional offers, we grant them credits that can be redeemed for future awards, such as free or discounted services or goods. Email. The emails for restaurant discount certificates include one headline, a full description of the deal, and a sampling of dining deals available in the customer’s market. The emails for Specials by Restaurant.com feature travel, entertainment, and wine deals, as well as other product offers. Websites. Visitors are prompted to register as a customer when they first make a purchase on our websites and thereafter use the website as a portal to redeem discount certificates for restaurants, complementary entertainment, travel offerings, and consumer products. Mobile Applications. Consumers also access our deals through our mobile applications, available at no additional cost on iPhone and Android. We launched our first mobile application in 2012 and our applications have been downloaded over 6.0 million times since then. These applications enable consumers to browse, purchase, manage and redeem deals on their mobile devices. Social Networks. We publish our daily deals across various social networks, tailoring our marketing to each platform’s format. Our website and mobile application interfaces enable our consumers to share our offerings to their personal social networks. Operations Our business operations are divided into the following core functions to address the needs of our merchants and customers. Marketing. Our marketing department is responsible for managing the Restaurant.com brand, the B2C discount certificate and Specials offerings, creating the promotional calendar, all creative assets used in our marketing channels, such as the website, email, and affiliate partnerships, including imagery and editorial content, negotiation with affiliate and merchant partners, revenue management, company analytics, and B2B marketing and brand assets. We have an agreement with Commission Junction for a monthly payment of $1,500 to $3,500 that generates potential leads with companies that earn a commission by promoting our discount deals on their websites, for which they receive between 3% to 15% of the revenue we receive from a customer’s purchase of a discount certificate. Customer Service Representatives. Our customer service representatives can be reached via email 24 hours a day, seven days a week. The customer service team also works with our information technology team to improve the customer experience on the website and mobile applications based on customer feedback. 7 Technology. We employ technology to improve the experience we offer to customers and merchants, increase the rate at which our customers purchase and enhance the efficiency of our business operations. A component of our strategy is to continue developing and refining our technology. We devote a substantial portion of our resources to developing new technologies and features and improving our core technologies. Our information technology team is focused on the design and development of new features and products, maintenance of our websites and development and maintenance of our internal operations systems. Competition CardCash CardCash faces competition from several firms but believes it has key attributes that give it a competitive advantage in the market for unused gift cards. The following chart summarizes the principal differences between CardCash and its competitors: Other Players Ability to dictate pricing Immediate transaction No-fee transactions Bulk seller/buyer services Branded exchange partnerships Industry Leading Fraud prevention technology Business model Principal-based Marketplace Various Although CardCash believes it competes favorably on the factors described above, it anticipates that larger, more established companies may compete directly with it on a principal-based model, and such competitors could have greater financial, technical, marketing, and other resources than it does. These competitors may invest more in research and development, run more extensive marketing campaigns, and adopt more aggressive pricing policies, which may reduce the number of potential consumers and retailers that form the basis of CardCash’s revenue base. Restaurant.com We have a substantial number of competing groups buying sites. These competitors offer substantially the same or similar product offerings as us. Among the companies that focus on the dining and savings category and certain of the subcategories in which we participate are the following: ● discount (e.g., Groupon.com, Entertainment.com); ● ratings and reviews communities (Zagat.com, TripAdvisor); ● restaurant listings (Yelp, Zomato and OpenTable); ● food content (Food Network, Food.com and Epicurious); ● eCommerce (Groupon, TravelZoo and Woot); and ● takeout and delivery (DoorDash.com, GrubHub.com UberEats.com and Delivery.com). We believe the principal competitive factors in our market include the following: ● breadth of customer base and number of restaurants featured; 8 ● ability to deliver a high volume of relevant deals to consumers; ● ability to produce high purchase rates for deals among customers; ● ability to generate positive return on investment for merchants; and ● strength and recognition of our brand. We believe we compete favorably across several of the factors described above and plan to improve our standing in each category. As of December 31, 2025, our customer base was 5.4 million, and in 2025, we featured deals at more than 184,000 restaurants and merchants. Although we believe we compete favorably on the factors described above, we anticipate that larger, more established companies may directly compete with us as we continue to demonstrate the viability of a local e-commerce business model. Many of our current and potential competitors have longer operating histories, significantly greater financial, technical, marketing, and other resources, and larger customer bases than we do. These factors may allow our competitors to benefit from their existing customer or subscriber base, operate at lower acquisition costs, or respond more quickly than we can to new or emerging technologies and changes in customer requirements. These competitors may engage in more extensive research and development efforts, undertake more far-reaching marketing campaigns and adopt more aggressive pricing policies, which may allow them to build a larger subscriber base or to monetize that subscriber base more effectively than us. Our competitors may develop products or services similar to ours or achieve greater market acceptance than ours. In addition, although we do not believe that merchant payment terms are a principal competitive factor in our market, they may become such a factor, and we may be unable to compete fairly on such terms. Regulation We are subject to numerous foreign and domestic laws and regulations that affect companies conducting business online, many of which are still evolving and could be interpreted in ways that harm our business. In the United States and abroad, laws governing the liability of online service providers for the activities of their users and other third parties are being tested in several cases. These regulations and laws may involve taxation, tariffs, subscriber privacy, data protection, content, copyrights, distribution, electronic contracts and other communications, consumer protection, the provision of online payment services, and the characteristics and quality of services. It is not clear how existing laws governing issues such as property ownership, sales and other taxes, libel, and personal privacy apply to the internet, as the vast majority of these laws were adopted prior to the advent of the internet and do not contemplate or address the unique issues raised by the internet or e-commerce. In addition, governments in one or more countries may seek to censor content on our websites or attempt to block access to them entirely. Accordingly, adverse legal or regulatory developments could substantially harm our business. The CARD Act, as well as the laws of most states, contain provisions governing product terms and conditions of gift cards, gift certificates, stored value or pre-paid cards or coupons (“gift cards”), such as provisions prohibiting or limiting the use of expiration dates on gift cards or the amount of fees charged in connection with gift cards or requiring specific disclosures on or in connection with gift cards. Discount certificates and Discount Dining Passes generally are included within the definition of “gift cards” in many of these laws. In addition, certain foreign jurisdictions have laws governing disclosure and product terms and conditions, including restrictions on expiration dates and fees that may apply to discount certificates and Discount Dining Passes. However, the CARD Act, as well as a number of states and certain foreign jurisdictions, also have exemptions from the operation of these provisions or otherwise modify the application part of a promotion or promotional program. If discount certificates and Discount Dining Passes are subject to the CARD Act, and are not included in the exemption for promotional programs, it is possible that the purchase value, which is the amount equal to the price paid for the discount certificates and Discount Dining Passes, or the promotional value, which is the add-on value of the discount certificate and Discount Pass in excess of the price paid, or both, may not expire before the later of (i) five years after the date on which the discount certificate or Discount Pass was issued; (ii) their stated expiration date (if any), unless discount certificates and Discount Dining Passes come within an exemption in the CARD Act for promotional programs; or (iii) a later date provided by applicable state law. In addition, regardless of whether an exemption for discount certificates and Discount Dining Passes applies under the CARD Act, in those states that prohibit or otherwise restrict expiration dates on gift cards that are defined to include discount certificates and Discount Dining Passes and that do not have exemptions that apply to the purchase value or the promotional value, or both, of discount certificates and Discount Dining Passes, the discount certificates and Discount Dining Passes may be required to be honored for the full offer value (the total of purchase value and promotional value) until redeemed. Our terms of use and agreements with our merchants require merchants to continue honoring unredeemed discount certificates and Discount Dining Passes that have passed the stated expiration date of the promotional value of the discount Certificate and Discount Pass, to the extent required by applicable law. While we are attempting to comply with exemptions for promotional programs available under these laws so that our discount certificates’ and Discount Dining Passes’ promotional value can expire on the date stated on the certificate and Discount Pass, we continue to require that merchants with whom we partner honor discount certificates and Discount Dining Passes under the provisions of all laws applicable to discount certificates and Discount Dining Passes, including laws that prohibit expiration. 9 In addition, some states treat gift cards as unclaimed or abandoned property under their unclaimed property laws, which require companies to remit the unredeemed balance to the government after a specified period (generally between one and five years) and impose reporting and recordkeeping obligations. We do not remit any amounts relating to unredeemed discount certificates and Discount Dining Passes based upon our assessment of applicable laws. The analysis of the potential application of the unclaimed and abandoned property laws to discount certificates and Discount Dining Passes is complex, involving an analysis of constitutional and statutory provisions and factual issues, including our relationship with customers and merchants and our role as it relates to the issuance and delivery of our discount certificates and Discount Pass. Many states have passed laws requiring notification to customers when there is a security breach of personal data. There are also several legislative proposals pending before the U.S. Congress, state legislatures, and foreign governments regarding data protection. In addition, data protection laws in Europe and other jurisdictions outside the United States may be more restrictive, and their interpretation and application remain uncertain. These laws may be interpreted and applied in ways that are inconsistent with our data practices. If so, in addition to potential fines, this could result in an order requiring us to change our data practices, which could adversely affect our business. Furthermore, the Digital Millennium Copyright Act limits, but does not eliminate, our liability for linking to third-party websites that include materials that infringe copyright or other rights, provided we comply with the act’s statutory requirements. Complying with these laws could incur substantial costs or require changes to our business practices that are adverse to our business. Various federal laws, such as the Bank Secrecy Act and the USA PATRIOT Act, impose certain anti-money laundering requirements on companies that are financial institutions or that provide financial products and services. For these purposes, financial institutions are broadly defined to include money services businesses such as money transmitters, check cashers, and sellers or issuers of stored value. Examples of anti-money laundering requirements imposed on financial institutions include customer identification and verification programs, record retention policies and procedures, and transaction reporting. We do not believe we are a financial institution subject to these laws and regulations, based in part on the characteristics of the discount certificates and Discount Dining Passes and our role in distributing them to customers. However, the Financial Crimes Enforcement Network, a division of the U.S. Treasury Department tasked with implementing the requirements of the Bank Secrecy Act, recently proposed amendments to the scope and requirements for parties involved in stored value or prepaid access, including a proposed expansion of the definition of financial institution to include sellers or issuers of prepaid access. If this proposal is adopted as proposed, a discount certificate and a Discount Pass may be considered financial products, and we may be a financial institution. Although we do not believe we are a financial institution or otherwise subject to these laws and regulations, the Company may be considered a financial institution or a provider of financial products. Intellectual Property We protect our intellectual property rights through federal, state, and common law, as well as contractual restrictions. We control access to our proprietary technology by entering into confidentiality and invention assignment agreements with our employees and contractors, and confidentiality agreements with third parties. CardCash purchased a patent (US 8,751,294 B2) from e2interactive relating to the processing of valuable-ascertainable items, such as gift cards, by retailers. The patent was issued on June 10, 2014, and is expected to expire on December 4, 2029. CardCash has a registered trademark for “CardCash,” first issued on June 12, 2012, and renewable every ten years. CardCash renewed the trademark in 2022 for an additional ten-year term. 10 In addition to these contractual arrangements, we also rely on a combination of trade secrets, copyrights, trademarks, service marks, trade dress, domain names and patents to protect our intellectual property. We pursue the registration of our copyrights, trademarks, service marks and domain names in the United States and in certain locations outside the United States. Our registration efforts have focused on securing protection for the following trademarks (among others): The Company owns the registered marks “RESTAURANT.COM” and “DINING DOUGH” and has submitted applications for several others. These marks are material to our business as they enable others to easily identify us as the source of the services offered under these marks and are essential to our brand identity. Circumstances beyond our control could threaten our intellectual property rights. For example, effective intellectual property protection may not be available in the United States. Also, the efforts we have taken to protect our proprietary rights may not be sufficient or effective. Any significant impairment of our intellectual property rights could harm our business or our ability to compete. Also, protecting our intellectual property rights is costly and time-consuming. Any unauthorized disclosure or use of our intellectual property could increase costs and harm our operating results. Companies in the online, social media, and other industries may hold large numbers of patents, copyrights, and trademarks and may frequently request license agreements, threaten litigation, or file suit against us for alleged infringement or other violations of intellectual property rights. We are currently subject to, and expect to face in the future, allegations that we have infringed third parties’ trademarks, copyrights, patents, and other intellectual property rights, including those of our competitors and non-practicing entities. As competition intensifies and our business grows, we will likely see more infringement claims. Customer Service and Support Our ability to establish and maintain long-term relationships with our customers and encourage repeat visits and purchases is dependent, in part, on the strength of our customer support and service operations. We have established multiple channels for communicating with our customers before and after the sale, including phone, e-mail, and online support. We currently employ a staff of in-house customer support personnel who handle customer inquiries, track shipments, investigate, and resolve issues related to merchandise and travel. Customer care representatives are available for support from 8:30 a.m. to 5 p.m., Central Time, Monday through Friday. In addition, our customer service representatives are trained to cross-sell complementary and ancillary products and services. Employees As of December 31, 2025, we had 40 full-time employees. None of our employees or personnel is represented by a labor union, and we consider our employee/personnel relations to be good. Competition for qualified personnel in our industry is intense, particularly for software development and other technical staff. We believe that our future success will depend in part on our ability to attract, hire, and retain qualified personnel. Smaller Reporting Company We are currently a “smaller reporting company”, meaning that we are not an investment company, an asset-backed issuer, or a majority-owned subsidiary of a parent company that is not a smaller reporting company and have a public float of less than $250 million during the most recently completed fiscal year. As a “smaller reporting company”, we are able to provide simplified executive compensation disclosures in our SEC filings; are exempt from the provisions of Section 404(b) of the Sarbanes-Oxley Act (“SOX”) requiring that independent registered public accounting firms provide an attestation report on the effectiveness of internal control over financial reporting; and have certain other decreased disclosure obligations in their SEC filings, including, among other things, only being required to provide two years of audited financial statements in annual reports. In addition, as a smaller reporting company with a public float of less than $75 million, we qualify as a non-accelerated filer. A non-accelerated filer is not required to provide an auditor attestation of management’s assessment of internal control over financial reporting, which is generally required for SEC reporting companies under Sarbanes-Oxley Act Section 404(b), and, in contrast to other reporting companies, has more time to file its periodic reports. 11