GIFTIFY, INC. 10-K/A

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Unless otherwise indicated or the context otherwise requires, references in this section to “the Company,” “Giftify” “we,” “us,” “our” and other similar terms refer to Giftify, Inc. and its subsidiaries and references to “CardCash” refer to the Company, formerly known as CardCash Acquisition Corp., prior to the Merger (as defined below). The following discussion and analysis of the financial condition and results of operations of Giftify should be read together with our consolidated financial statements and related notes included elsewhere in this Annual Report on Form 10-K. In addition to historical information, the following discussion and analysis contains forward-looking statements. Our actual results may differ significantly from those projected in such forward-looking statements. Factors that might cause future results to differ materially from those projected in such forward-looking statements include, but are not limited to, those discussed in the sections entitled “Risk Factors” and “Cautionary Note Regarding Forward-Looking Statements.” All figures are presented in thousands, except percentages, rates and unless otherwise noted. References to “Notes” are notes included in our audited consolidated financial statements appearing elsewhere in this Annual Report on Form 10-K. 30 Background On September 4, 2024, our Board of Directors approved and, by written consent dated September 5, 2024, the holders of a majority of our common stock approved an amendment to our Certificate of Incorporation to change our name from RDE, Inc. to Giftify, Inc. The change to Giftify, Inc. became effective on October 28, 2024. All references to RDE, Inc. have been changed to Giftify, Inc. On August 6, 2024, The Nasdaq Stock Market granted our application for listing on the Nasdaq. On May 29, 2025, the Company acquired Takeout7 Inc. Takeout7 is a restaurant technology company offering comprehensive online ordering solutions through its TakeOut7 platform and AI-powered digital marketing services through its Platr platform. The acquisition of Takeout7 expands the Company’s technology offerings to include end-to-end solutions for independent restaurants. In early 2026, Takeout7 and its operations were merged into our subsidiary, Restaurant.com, Inc. On August 18, 2023, we entered into an agreement and plan of merger to acquire CardCash Exchange Inc (“CardCash”). On December 29, 2023, the merger was completed and accounted for as a business combination under the acquisition method. CardCash was formed in 2013 and purchases merchant gift cards and resells them at a markup. On March 1, 2020, we acquired the assets of Restaurant.com, Inc., a pioneer in the restaurant deal space and the nation’s largest restaurant-focused digital deals brand. Business Overview We have two principal divisions, B2C and B2B, for both CardCash and for Restaurant.com. CardCash CardCash is a leading gift card exchange platform that facilitates the purchase and sale of unwanted gift cards at discounted rates for consumers and businesses. The Company’s mission is to provide a seamless marketplace for individuals looking to maximize the value of their gift cards while also offering businesses innovative solutions to leverage this market. CardCash’s core service offering includes buying and selling gift cards from over 1,100 retailers, including Target, Home Depot, Starbucks, and TJ Maxx. By connecting buyers and sellers, CardCash enables consumers to unlock value from unused gift cards and save significant amounts on their purchases. CardCash purchases unwanted gift cards at a discount to their face value and resells them at a discount to discerning shoppers nationwide. This avenue not only allows individuals to redeem unwanted gift cards for cash but also enables them to make cost-effective purchases with discounted gift cards. With advanced fraud-prevention technology, FraudFix, CardCash ensures the security and integrity of all transactions on its platform. This commitment to trust and reliability has contributed to its success in saving consumers over $100 million since its inception. Restaurant.com Restaurant.com is a pioneer in the restaurant deal space and the nation’s largest restaurant-focused digital deals brand. We derive our revenue from transactions in which we sell discount certificates for restaurants on behalf of third-party restaurants. Founded in 1999, we connect digital consumers, businesses, and communities offering dining and merchant deal options nationwide at over 182,500 restaurants and retailers to over 7.8 million customers. Our 10,000 core restaurants and 170,000 Dining Discount Pass restaurants and retailers extend nationwide. Our top three B2C markets are New York, Chicago and Los Angeles. 31 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. Specials generated over 5% of our past year’s B2C revenue from 60% of the B2C orders for the fiscal year ended December 31, 2023. 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 our gross revenue in our 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; ● convert to paperless billing and auto-bill payment. ● motivate specific customer behavior, such as free home repair estimates and test drives for auto dealers; ● renew subscriptions and memberships; and ● address customer service issues. Restaurant.com Other Business We also generate revenue from third-party offers and display ads. This comprises a de minimis portion of our gross revenue. Restaurant.com Attractive Customer Demographics We intend to grow and leverage our 6.2 million customer database, which we believe is valuable to merchants for a variety of services and products. In March 2020, the World Health Organization declared COVID-19 a global pandemic. This contagious disease outbreak adversely affected workforces, economies, and financial markets globally. The outbreak has negatively impacted our revenues due to temporary restaurant closures across the United States, where our discount certificates and Discount Dining Passes were accepted, and where dining was restricted to outdoor locations or to capacity limits for indoor dining. Our revenues from the purchase of our discount certificates in 2020, 2021, and 2022 declined since they could only be redeemed when dining in the restaurants and also were not accepted for payment by third-party platforms that facilitated ordering and delivery of food on demand. As the COVID-19 pandemic has abated, our revenues improved in fiscal 2023. 32 How We Measure Our Business We use operating metrics to assess our business’s progress and make strategic decisions. Certain financial metrics are reported in accordance with GAAP, and others are non-GAAP financial measures. As our business evolves, we may update the key financial and operating metrics we use to measure our performance. For further information and reconciliations to the most applicable financial measures under GAAP, refer to our discussion under the Non-GAAP Financial Measures section. Operating Metrics ● Gross billings are the total dollar value of customer purchases of goods and services. Gross billings are presented net of customer refunds and order discounts. A significant portion of our revenue consists of sales of discounted merchant gift cards, in which we collect the transaction price from the customer and remit a portion to the third-party suppliers who will provide the related goods or services. For these transactions, gross billings differ from Net Sales reported in our Consolidated Statements of Operations, which is presented net of the merchant’s share of the transaction price. Gross billings are an indicator of our growth and business performance, as they measure the dollar volume of transactions generated through our marketplaces. Tracking gross billings also allows us to monitor the percentage of gross billings we retain after merchant payments. A reconciliation of our net sales (as reported) to our gross billings for the years ended December 31, 2025 and 2024 were as follows: Year Ended December 31, 2025 2024 Change % Net sales (as reported) $ 83,181,716 $ 88,934,036 -6.5 % Company costs of Agent Transactions (see discussion below) 71,525,684 32,755,278 118.4 % Gross billings $ 154,707,400 $ 121,689,314 27.1 % Inflation The Russia and Ukraine conflict and other geopolitical conflicts, as well as related international response, have exacerbated inflationary pressures, including causing increases in the price for goods and services and global supply chain disruptions, which have resulted and may continue to result in shortages in food products, materials and services. Such shortages have resulted and may continue to result in inflationary cost increases for labor, fuel, food products, materials and services, and could continue to cause costs to increase as well as result in the scarcity of certain materials. We cannot predict future trends in inflation or other negative economic factors, or the associated changes in our operating costs, and how these may impact our business. To the extent we and the restaurant customers we service are unable to recover higher operating costs resulting from inflation or otherwise mitigate the impact of such costs on our and their business, our revenues and gross profit could decrease, and our financial condition and results of operations could be adversely affected. Going Concern The Company has a history of reporting net losses. As of December 31, 2025, the Company had $3,654,944 in cash available to fund its operations, including expansion plans, and to service its debt, and working capital of $249,223. Our consolidated financial statements have been presented on the basis that it will continue as a going concern, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business. We incurred operating losses and negative operating cash flows in 2025 and 2024. We have financed our working capital requirements through borrowings from various sources and the sale of our equity securities. As a result, management has concluded, and our independent registered public accounting firm has agreed with our conclusion that there is a substantial doubt regarding our ability to continue as a going concern for a period of at least 12 months beyond the filing of this Annual Report on Form 10-K. The report of our independent registered public accounting firm on our financial statements for the year ended December 31, 2025, includes an explanatory paragraph regarding the existence of substantial doubt about our ability to continue as a going concern. The Company’s consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty. The Company’s ability to continue as a going concern depends on its ability to raise additional debt or equity capital to fund its business activities and ultimately achieve sustainable operating revenues and profitability. As market conditions present uncertainty as to the Company’s ability to secure additional funds, there can be no assurances that the Company will be able to secure additional financing on acceptable terms, as and when necessary to continue to conduct operations. There is also significant uncertainty as to the effect that the coronavirus may have on the Company’s business plans and the amount and type of financing available to the Company in the future. If the Company is unable to obtain the cash resources necessary to satisfy the Company’s ongoing cash requirements, the Company could be required to scale back its business activities or to discontinue its operations entirely. 33 Revenue Recognition We recognize revenue in accordance with FASB ASC 606, Revenue from Contracts with Customers . Based on the Company’s business model, it is sometimes necessary to determine whether we are acting as a principal or an agent in revenue-generating arrangements. Deciding whether the Company is a principal or an agent requires significant judgment and analysis. This is particularly true when evaluating factors such as responsibility for fulfilling the customer promise, inventory risk, and pricing discretion. Changes in the assessment of these indicators could materially impact reported revenue and related metrics. The Company continuously evaluates our judgments and estimates to ensure accurate revenue recognition in accordance with ASC 606. The following table reconciles the recording of the Company’s gross vs. net transactions to the Company’s reported net sales. Year Ended December 31, 2025 2024 Gross revenue (Principal Transactions) $ 78,264,149 $ 86,758,876 Net revenue (Agent Transactions) 4,917,567 2,175,160 Net Sales $ 83,181,716 $ 88,934,036 The increase in net revenue recognized as agent increased $2,742,407, or 126.1%, during the year ended December 31, 2025, as compared to the prior year period. The increase over the previous year was due to the sale of cruise-line-related gift cards, fluctuations in the types of gift cards sold, and changes in the number of customer orders in which the Company acted as an agent. Results of Operations – Year Ended December 31, 2025, Compared to Year Ended December 31, 2024 Operating Metrics Our gross billings for the year ended December 31, 2025 and 2024 were as follows: Year Ended December 31, 2025 2024 Change % Gross billings $ 154,707,400 $ 121,689,314 27.1 % Gross billings increased 27.1% during the year ended December 31, 2025, as compared to the prior year period. A significant portion of our revenue comes from discounted merchant gift card sales, in which we collect the transaction price from the customer and remit a portion to third-party suppliers of the related goods or services. For these transactions, gross billings differ from the Net Sales reported in our Consolidated Statements of Operations, which reflect only the fees and commissions we retain from the sale of discounted merchant gift cards. 34 Financial Results GIFTIFY, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS Year Ended December 31, 2025 2024 Net Sales $ 83,181,716 $ 88,934,036 Cost of sales 67,686,362 75,789,255 Gross profit 15,495,354 13,144,781 Operating Expenses Selling, general and administrative expenses 22,933,052 27,615,865 Depreciation of capitalized software costs 645,375 1,472,974 Amortization of intangible assets 2,271,673 2,431,668 Total operating expenses 25,850,100 31,520,507 Loss from operations (10,354,746 ) (18,375,726 ) Other expense: Interest income 15,511 - Interest expense (604,759 ) (1,002,354 ) Financing costs (95,000 ) (131,000 ) Other income 38,540 Total other expense, net (645,708 ) (1,133,354 ) Net loss before income tax benefit (11,000,454 ) (19,509,080 Income tax benefit 508,796 677,000 Net loss $ (10,491,658 ) $ (18,832,080 ) The following is a discussion of our results of operations. Net Sales Net sales for the year ended December 31, 2025 and 2024, were $83,181,716 and $88,934,036, respectively, a decrease of 6.5%. The decrease in net sales was due to the change in the mix of agent versus principal transactions as discussed above. Merchant gift card sales accounted for approximately 97% and 98% of our net sales for the year ended December 31, 2025 and 2024, respectively. Cost of Sales Cost of sales consists primarily of the cost to purchase merchant gift cards. Cost of sales for the year ended December 31, 2025 and 2024, were $67,686,362 and $75,789,255, respectively. Gross profit increased $2,350,573, or 17.9%, as compared to the prior year period. Our gross margin, as a percentage of net sales, were 18.6% and 14.8% for the year ended December 31, 2025, and 2024, respectively. Our gross margin was positively impacted by the increase in net revenue (agent transactions) described above, compared with the prior-year period. Operating Expenses Selling, general, and administrative expenses consist of costs incurred to identify, communicate with, and evaluate potential customers and related business opportunities; compensation to officers and directors; legal and other professional fees; lease expense; and other general corporate expenses. Management expects selling, general, and administrative expenses to increase in future periods as the Company adds personnel and incurs additional costs related to its operation as a public company, including higher legal, accounting, insurance, compliance, compensation, and other costs. Selling, general and administrative expenses were $22,933,052 for the year ended December 31, 2025, as compared to $27,615,865 for the year ended December 31, 2024, a decrease of $4,682,813. The decrease was due to a $5,182,023 reduction in stock-based compensation expense during the year ended December 31, 2025, partially offset by increases in payroll and benefits expenses, marketing and advertising costs, and other general expenses to support our business. 35 Amortization of capitalized software costs . Amortization expenses are primarily attributed to the Company’s capitalized software development costs. Amortization expenses were $645,375 during the year ended December 31, 2025, as compared to $1,472,974 during the year ended December 31, 2024. Amortization of intangible assets. Amortization expenses are primarily attributable to the Company’s amortization of intangible assets with finite lives. Amortization expenses were $2,271,673 during the year ended December 31, 2025, as compared to amortization expenses of $2,431,668 during the year ended December 31, 2024. Loss from Operations For the year ended December 31, 2025, we incurred a loss from operations of $10,354,746, compared with $18,375,726 for the year ended December 31, 2024. The decrease in loss from operations was due to our increased gross profit offset by decreased stock-based compensation expense, as discussed above. Other Expenses, Net For the year ended December 31, 2025, we incurred interest expense, net of $604,759, as compared to interest expense, net of $1,002,354 for the year ended December 31, 2024. The decrease in interest expense was due to our decreased debt balances. We recorded financing costs of $95,000 for the year ended December 31, 2025 as compared to $131,000 for the prior year period. Lastly, we recorded additional income of $38,540 for the year ended December 31, 2025, which did not occur in the prior year period. Income Tax Benefit For the year ended December 31, 2025, we recognized an income tax benefit of $508,796, compared with $677,000 for the year ended December 31, 2024. Net Loss We realized a net loss of $10,491,658 for the year ended December 31, 2025, as compared to a net loss of $18,832,080 for the year ended December 31, 2024. The decrease in net loss was driven by higher gross profit, lower stock-based compensation expense, and lower interest expense, as discussed above. Non-GAAP Financial Measure - Modified EBITDA In addition to our GAAP results, we present Modified EBITDA as a supplemental performance measure. However, Modified EBITDA is not a recognized measurement under GAAP and should not be considered as an alternative to net income, income from operations or any other performance measure derived in accordance with GAAP, or as an alternative to cash flow from operating activities as a measure of liquidity. We define Modified EBITDA as net income (loss), plus interest expense, depreciation and amortization, stock-based compensation, and fair value of common stock issued for services. Management considers our core operating performance to be that which our managers can affect in any particular period through their management of the resources that affect our underlying revenue and profit-generating operations during that period. Non-GAAP adjustments to our results prepared in accordance with GAAP are itemized below. You are encouraged to evaluate these adjustments and the reasons we consider them appropriate for supplemental analysis. In evaluating Modified EBITDA, you should be aware that in the future we may incur expenses that are the same as or similar to some of the adjustments in this presentation. Our presentation of Modified EBITDA should not be construed as an inference that our future results will be unaffected by unusual or non-recurring items. 36 Set forth below is a reconciliation of net loss to Modified EBITDA for the year ended December 31, 2025 and 2024 (unaudited): Year Ended December 31, 2025 Year Ended December 31, 2024 Net Loss $ (10,491,658 ) $ (18,832,080 ) Modified EBITDA adjustments: Income taxes (508,796 ) (677,000 ) Interest expense, net 604,759 1,002,354 Financing costs 95,000 131,000 Other income (38,540 ) - Amortization of intangible assets 2,271,673 2,431,668 Amortization of capitalized software costs 645,375 1,472,974 Loss on fair value of stock issued on vendor settlement 33,750 150,000 Bad debt expense 100,810 - Stock option and other noncash compensation 6,302,614 11,484,708 Total Modified EBITDA adjustments 9,506,645 15,995,704 Modified EBITDA $ (985,013 ) $ (2,836,376 ) We present Modified EBITDA because we believe it helps investors and analysts compare our performance across reporting periods on a consistent basis by excluding items we do not believe are indicative of our core operating performance. In addition, we use Modified EBITDA to develop our internal budgets, forecasts, and strategic plan; to analyze the effectiveness of our business strategies and evaluate potential acquisitions; to make compensation decisions; and to communicate with our board of directors regarding our financial performance. Modified EBITDA has limitations as an analytical tool, which include, among others, the following: ● Modified EBITDA does not reflect our cash expenditures or future requirements for capital expenditures or contractual commitments; ● Modified EBITDA does not reflect changes in, or cash requirements for, our working capital needs; ● Modified EBITDA does not reflect future interest expense, or the cash requirements necessary to service interest or principal payments, on our debts; and ● Although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to be replaced in the future, and Modified EBITDA does not reflect any cash requirements for such replacements. 37 Liquidity and Capital Resources The accompanying consolidated financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classifications of liabilities that may result from the outcome of the uncertainty concerning our ability to continue as a going concern. As reflected in the accompanying financial statements, for the year ended December 31, 2025, the Company recorded a net loss of $10,491,658 and used cash in operations of $1,590,074. Cash used in operations was primarily for working capital. As of December 31, 2025, we had a cash balance of $3,654,944. Historically, we have financed our operations through existing cash balances, public and private issuance of common stock, term loans, and credit lines from financial institutions. As of the issuance date of the financial statements included in this Annual Report on Form 10-K, management expects that the Company’s existing cash of $3,654,944 will last until December 2026. To address funding considerations, management periodically evaluates funding alternatives and may raise additional funds through equity issuances, debt securities, strategic partner arrangements, strategic transactions, or credit from financial institutions. As we seek additional financing, there is no assurance that such financing will be available to us on favorable terms, or at all. Our ability to obtain additional financing in the debt and equity capital markets is subject to several factors, including market and economic conditions, our performance, and investor sentiment regarding us and our industry. We are also continuing to take actions to improve the Company’s operating performance and cash generated from operations, including product optimization, sales growth strategies, operational streamlining, negotiating equitable vendor contracts, and managing product pricing. However, we may be unable to execute these actions in a timely manner, or at all. If the Company is unable to raise additional capital whenever necessary or otherwise improve its operating performance or generation of cash from operations, it may be forced to decelerate or curtail certain of its operations until such time as additional capital becomes available. 38 Our consolidated statements of cash flows as discussed herein are presented below. Year Ended December 31, 2025 Year Ended December 31, 2024 Net cash used in operating activities $ (1,590,074 ) $ (3,407,539 ) Net cash provided by (used in) investing activities 109,543 - Net cash provided by financing activities 833,633 2,027,009 Net increase (decrease) in cash and cash equivalents $ (646,898 ) $ (1,380,530 ) Operating Activities Cash provided by or used in operating activities primarily consists of net loss adjusted for certain non-cash items, including amortization of intangible assets, impairment of intangible assets, gain on forgiveness of government assistance notes payable, and the fair value of common stock issued for directors, employees, and service providers, and the effect of changes in working capital and other activities. Cash used in operating activities for the year ended December 31, 2025 was $1,590,074 and consisted of our net loss, adjusted for non-cash items, including amortization of intangible assets, the fair value of vested stock options, common stock issued to executives, employees, and advisors, and routine changes in working capital and other activities. Cash used in operating activities for the year ended December 31, 2024 was approximately $3,407,539 and consisted of our net loss, adjusted for non-cash items, including amortization of intangible assets, fair value of vested stock options, and the fair value of common stock issued to executives, employees, and advisors, and routine changes in working capital and other activities. Investing Activities Cash provided by investing activities for the year ended December 31, 2025 was $109,543, which was from cash received on an acquisition. We had no cash flows from investing activities for the year ended December 31, 2024. Financing Activities Cash provided by financing activities for the year ended December 31, 2025 was $833,633, which was from aggregate proceeds of $5,019,905 on the sale of common stock, net proceeds of $985,000 from a note payable, offset by repayment of our line of credit balance of $592,145, and repayment of our notes payable of $4,579,127. Cash provided by financing activities for the year ended December 31, 2024 was $2,027,009, which was from proceeds of $3,054,073 on the sale of common stock, proceeds from notes payable of $1,978,000, offset by repayment of our line of credit of $2,503,236, and payment of $500,000 on our acquisition obligation. Going Concern Our consolidated financial statements have been presented on the basis that the Company will continue as a going concern, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business. We experienced operating losses and negative operating cash flows during 2025 and 2024. We have financed our working capital requirements through borrowings from various sources and the sale of equity securities. 39 We have a history of reporting net losses. As of December 31, 2025, we had $3,654,944 in cash available to fund our operations, including expansion plans, and to service our debt, and working capital of $249,223. We anticipate our cash balance will last until December 2026. As a result, management has concluded, and our independent registered public accounting firm has agreed with our conclusion that there is a substantial doubt regarding our ability to continue as a going concern for a period of at least 12 months beyond the filing of this Annual Report on Form 10-K. The report of our independent registered public accounting firm on our financial statements for the year ended December 31, 2025, includes an explanatory paragraph regarding the existence of substantial doubt about our ability to continue as a going concern. Our consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty. Our ability to continue as a going concern depends on our ability to raise additional debt or equity capital to fund our business activities and ultimately achieve sustainable operating revenues and profitability. As market conditions present uncertainty as to our ability to secure additional funds, there can be no assurances that we will be able to secure additional financing on acceptable terms, as and when necessary, to continue to conduct operations. There is also significant uncertainty as to the amount and type of financing available to us in the future. If we are unable to secure the cash resources necessary to meet our ongoing cash requirements, we may be required to scale back our business activities or discontinue operations entirely. Critical Accounting Policies and Estimates The following discussion and analysis of financial condition and results of operations is based upon the Company’s consolidated financial statements for the years ended December 31, 2025 and 2024 presented elsewhere in this report, which have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”). Certain accounting policies and estimates are particularly important to the understanding of the Company’s financial position and results of operations and require the application of significant judgment by management or can be materially affected by changes from period to period in economic factors or conditions that are outside of the Company’s control. As a result, these issues are inherently uncertain. In applying these policies, management uses its judgment to select the appropriate assumptions for certain estimates. Those estimates are based on the Company’s historical operations, the future business plans and the projected financial results, the terms of existing contracts, trends in the industry, and information available from other outside sources. Revenue Recognition The Company recognizes revenue in accordance with FASB ASC 606, Revenue from Contracts with Customers . The Company buys merchant gift cards from the general public and distributors at a discount and then resells them at a markup. The Company also derives revenue from the sale of discount certificates for third-party restaurants. Revenue and costs of sales are recognized when control of the products transfers to our customer, which generally occurs when the risk and title to the products transfer to the customer upon delivery. The Company’s performance obligations are satisfied at that time. The Company’s standard terms of delivery are included in its contracts of sale, order confirmation documents, and invoices. The Company recognizes revenue on a gross basis for the sales price of the merchant gift cards and discount certificates it collects. Share-Based Compensation The Company periodically issues share-based awards to employees, 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. 40 Acquisitions and Business Combinations The Company allocates the fair value of the purchase consideration to the tangible assets acquired, the liabilities assumed, and the separately identifiable intangible assets acquired, based on their estimated fair values. The excess of the fair value of purchase consideration over the fair values of these identifiable assets and liabilities is recorded as goodwill. Such valuations require management to make significant estimates and assumptions, particularly regarding intangible assets. Significant estimates in valuing certain intangible assets include, but are not limited to, future expected cash flows from acquired technology, trademarks, and trade names, useful lives, and discount rates. Management’s estimates of fair value are based upon assumptions believed to be reasonable, but which are inherently uncertain and unpredictable, and, as a result, actual results may differ from estimates. During the measurement period, which can be up to one year from the acquisition date, the Company may record adjustments to the assets acquired and liabilities assumed, with the corresponding offset to goodwill. Upon the conclusion of the measurement period, any subsequent adjustments are recorded in the consolidated statements of operations. Recent Accounting Pronouncements See discussion of recent accounting pronouncements in Note 1 to the accompanying financial statements. Off-Balance Sheet Arrangements At December 31, 2025 and December 31, 2024, the Company did not have any transactions, obligations or relationships that could be considered off-balance sheet arrangements. Item 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK As a smaller reporting company, the Company is not required to provide the information required by this Item 7A. 41