Acquisition and Mergers - Giftify, Inc. acquired CardCash Exchange, Inc. for $26,682,000, consisting of 6,108,007 shares of common stock valued at $24,432,000, $750,000 in cash, and $1,500,000 in notes payable[19] - The Company completed the merger with CardCash Exchange Inc on December 29, 2023, enhancing its position in the gift card exchange market[188] - The Company completed the merger with CardCash on December 29, 2023, marking a significant strategic expansion[209] Financial Performance - For the year ended December 31, 2024, the Company reported net sales of $88,934,036, a significant increase from $484,860 in the prior period[211] - The gross profit for the year ended December 31, 2024 was $13,144,781, compared to $66,510 for the Predecessor period, reflecting a gross margin improvement[211] - The Company incurred a net loss of $18,832,080 for the year ended December 31, 2024, compared to a net loss of $5,020,000 in the Predecessor period[211] - CardCash sales for the year ended December 31, 2024 were $86,991,638, slightly down from $87,146,804 in the previous year, indicating a focus on improving gross margin[214] - The gross margin for CardCash improved to 13.0% in the current year from 12.0% in the prior year, contributing to increased gross profit[214] - Total operating expenses for the Successor period were $31,520,507, compared to $5,086,510 for the Predecessor period, highlighting increased operational costs post-acquisition[211] - Interest expense for the year was $1,002,354, a decrease from $2,890,466 in the Predecessor period, indicating improved financing conditions[211] - The Company recognized a gain on forgiveness of debt amounting to $5,876,000 in the Predecessor period, which positively impacted net loss figures[211] Market Opportunities and Growth - The global gift card market is projected to reach $400 billion by 2026, presenting significant growth opportunities for CardCash[27] - CardCash's business channels are projected to grow at a faster rate, with the bulk-to-bulk channel expected to be the largest contributor to sales in the coming years[35] - CardCash plans to increase marketing efforts to retailers and consumers to accelerate gift card sales and enhance brand visibility[35] - The company intends to leverage its customer database for cross-promotional opportunities, which presents significant revenue potential[199] Customer Base and Revenue Generation - The B2C division of Restaurant.com accounted for approximately 50% of gross revenue in the fiscal year ended December 31, 2024, with a customer database of 6.2 million[36] - As of December 31, 2024, the customer base was 5.4 million, featuring deals at over 184,000 restaurants and merchants[59] - CardCash's "Specials by Restaurant.com" generated over 5% of B2C revenue from 60% of B2C orders, with an average order value nearly five times that of standard certificate purchases[37] - CardCash's branded exchange partnerships with major retailers like Amazon and CVS generated revenues of $1,800,000 and $1,900,000 respectively in 2023[32] Operational Challenges and Risks - The independent registered public accounting firm expressed substantial doubt about the company's ability to continue as a going concern due to recurring losses from operations[76] - The company faces competition from larger, established companies with greater financial and technical resources, which may impact its market position[60] - The company is subject to evolving foreign and domestic laws and regulations that could adversely affect its business operations[61] - The company faces significant risks to achieving profitability, including expense management, government regulations, and competition[77] - The implementation of the CARD Act may impose additional liabilities on CardCash, potentially increasing the estimated liability for unredeemed discount certificates and adversely affecting net income[81] - The company may incur significant losses from fraud and counterfeit certificates, which could adversely affect its revenue and business operations[95] - The current economic uncertainty, including the impact of the COVID-19 pandemic, may hinder the ability of restaurants and merchants to forecast business activities, potentially leading to decreased revenue for the company[101] - Global inflation has increased, resulting in higher operating costs, particularly in employee wages, which could adversely affect the company's financial condition and results of operations[103] Employee and Corporate Governance - The company employs 42 full-time employees, with no representation by a labor union, and considers employee relations to be good[74] - The company has a registered trademark for "CardCash," renewed in 2022 for an additional ten-year term[68] - The company relies on a combination of trade secrets, copyrights, trademarks, and patents to protect its intellectual property[69] - The Board of Directors oversees the cybersecurity program, with the Audit Committee managing quarterly assessments of cybersecurity risks[165] Cybersecurity and Data Protection - CardCash's FraudFix technology enhances transaction security, contributing to its competitive advantage in the gift card market[24] - The company has implemented a cybersecurity risk management program to mitigate risks associated with data security threats[161] - The company utilizes third-party consultants to assist in identifying and assessing cybersecurity risks, including security testing and risk assessments[162] - The company has experienced threats to its data and systems but has not been materially affected in terms of business strategy or financial condition[164] Strategic Focus and Future Plans - The company plans to continue focusing on enhancing the quality of purchased gift card brands to further improve sales and gross margins in the future[214] - A key strategy is to attract and retain high-quality merchants, particularly restaurants, to increase profitability and diversify offerings[141] - The company aims to enhance mobile adoption and improve booking capabilities to align with customer preferences for mobile device usage[140] Stock and Capital Structure - The company is subject to "Penny Stock" regulations, with its common stock priced below $5.00 per share, which may limit trading activity and investor access[142] - There is a risk of dilution of ownership interests due to potential future issuance of additional shares or convertible securities[153] - Approximately 20% of the company's outstanding shares are controlled by insiders, which may adversely affect stockholder influence and stock price[154] - The need for additional capital may arise if significant revenues are not generated, which could dilute current stockholders' ownership[131] - The company has financed its working capital through borrowings and equity securities sales, but there is substantial doubt about its ability to secure additional financing[205]
RDE, Inc.(GIFT) - 2024 Q4 - Annual Report