RDE, Inc.(GIFT) - 2025 Q2 - Quarterly Report

Report Overview Filing Information Giftify, Inc. filed its Quarterly Report on Form 10-Q for the period ended June 30, 2025, as a non-accelerated, smaller reporting, and emerging growth company - Giftify, Inc. is filing its Quarterly Report on Form 10-Q for the period ended June 30, 2025[1] - As of August 6, 2025, 30,542,165 shares of common stock were outstanding[5] Filer Status | Filer Status | Value | | :------------- | :---- | | Large, accelerated filer | No | | Accelerated filer | No | | Non-accelerated filer | Yes | | Smaller reporting company | Yes | | Emerging growth company | Yes | Cautionary Note Concerning Forward-Looking Statements This section cautions that forward-looking statements are subject to risks like pandemics, inflation, and supply chain disruptions, with no obligation to update - The report contains forward-looking statements regarding future activities, events, and business strategy[8] - These statements are subject to risks including the COVID-19 pandemic, inflation, geopolitical conflicts, and raw material availability[8] - Actual results may differ materially, and the company does not undertake to update or revise these statements[8] PART I - FINANCIAL INFORMATION Item 1. Condensed Financial Statements This section presents Giftify, Inc.'s unaudited condensed consolidated financial statements, showing reduced net loss and improved operating cash flow Condensed Consolidated Balance Sheet Highlights | Metric | June 30, 2025 (Unaudited) | December 31, 2024 | | :-------------------------------- | :------------------------ | :------------------ | | Total assets | $31,502,630 | $35,483,716 | | Total liabilities | $9,933,476 | $14,721,380 | | Total stockholders' equity | $21,569,154 | $20,762,336 | Condensed Consolidated Statements of Operations Highlights | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net Sales | $20,900,731 | $20,020,502 | $43,177,744 | $41,542,396 | | Gross profit | $3,855,625 | $3,260,495 | $7,437,261 | $6,517,771 | | Loss from operations | $(2,577,524) | $(7,482,429) | $(5,745,189) | $(10,425,848) | | Net loss | $(2,589,809) | $(7,744,646) | $(5,807,141) | $(10,935,366) | | Net earnings/(loss) per share – basic and diluted | $(0.09) | $(0.30) | $(0.20) | $(0.43) | Condensed Consolidated Statements of Cash Flows Highlights (Six Months Ended) | Metric | June 30, 2025 | June 30, 2024 | | :------------------------------------ | :------------ | :------------ | | Net cash provided by (used in) operating activities | $289,951 | $(3,074,200) | | Net cash provided by (used in) investing activities | $109,543 | $(449,646) | | Net cash provided (used in) by financing activities | $(1,443,909) | $3,354,563 | | Net increase (decrease) in cash and cash equivalents | $(1,044,415) | $(169,283) | Condensed Consolidated Balance Sheets Condensed Consolidated Statements of Operations Condensed Consolidated Statements of Changes in Stockholders' Equity Condensed Consolidated Statements of Cash Flows Notes to Condensed Consolidated Financial Statements 1. Organization and Basis of Presentation Giftify, Inc. operates through Restaurant.com and CardCash, recently acquiring Takeout7, but faces substantial doubt about its going concern ability - Giftify, Inc. operates through subsidiaries Restaurant.com, Inc. and CardCash Exchange Inc. (acquired December 2023)[26][27][29] - The company acquired Takeout7 Inc. in May 2025, expanding into online ordering and AI-powered digital marketing for restaurants[28] - Management concluded substantial doubt exists about the company's ability to continue as a going concern due to historical net losses and negative operating cash flows[33] 2. Significant Accounting Policies This section details significant accounting policies, including revenue recognition (principal vs. agent) and intangible assets, noting the company operates as a single segment - Revenue recognition under FASB ASC 606 requires significant judgment to determine principal versus agent roles, impacting reported revenue[37][41][42][43][44] - Goodwill and indefinite-lived intangible assets are tested for impairment annually, with no indicators identified as of June 30, 2025[51] - The company operates as a single reportable segment, with the CEO evaluating performance and allocating resources on a consolidated basis[69] Disaggregated Revenue by Division and Type (Three Months Ended June 30, 2025 vs 2024) | Sales Channels | CardCash Gift Cards (2025) | CardCash Gift Cards (2024) | Restaurant.com Gift Cards and Coupons (2025) | Restaurant.com Gift Cards and Coupons (2024) | Advertising (2025) | Advertising (2024) | Total (2025) | Total (2024) | | :--------------- | :------------------------- | :------------------------- | :------------------------------------------- | :------------------------------------------- | :----------------- | :----------------- | :----------- | :----------- | | B2C | $9,741,432 | $9,412,823 | $74,611 | $118,932 | $36,048 | $14,551 | $9,852,091 | $9,546,306 | | B2B | $10,553,218 | $10,103,749 | $495,422 | $370,447 | - | - | $11,048,640 | $10,474,196 | | Total | $20,294,650 | $19,516,572 | $570,033 | $489,379 | $36,048 | $14,551 | $20,900,731 | $20,020,502 | 3. Acquisitions Giftify completed two acquisitions: CardCash Exchange Inc. in December 2023 for $26.68 million, and Takeout7, Inc. in May 2025 for $609,000 in common stock - Acquired CardCash Exchange Inc. on December 29, 2023, for $26,682,000 in cash, notes, and common stock[73][75] - Acquired Takeout7, Inc. on May 29, 2025, for $609,000, paid via 350,000 shares of common stock[77][80] - Provisional allocation for Takeout7 includes $473,165 in intangible assets, with no goodwill initially recognized[81] CardCash Acquisition Purchase Price Allocation (December 29, 2023) | Asset/Liability | Fair Value | | :-------------------------- | :----------- | | Net tangible assets | $(25,669) | | Developed technology | $2,600,000 | | Trade name | $2,400,000 | | Customer relationships | $1,700,000 | | Goodwill | $20,007,669 | | Total purchase price | $26,682,000 | 4. Property and Equipment, Net Net property and equipment decreased from $1,089,984 at December 31, 2024, to $766,904 at June 30, 2025, primarily due to accumulated depreciation - Depreciation expense for the six months ended June 30, 2025, was $323,080, a decrease from the prior year[83] Property and Equipment, Net | Category | June 30, 2025 | December 31, 2024 | | :-------------------------- | :------------ | :---------------- | | Property and equipment, gross | $2,563,312 | $2,563,312 | | Accumulated depreciation | $(1,796,408) | $(1,473,328) | | Property and equipment, net | $766,904 | $1,089,984 | 5. Goodwill and Intangible Assets Goodwill remained constant at $20 million, while net intangible assets decreased to $3.64 million due to amortization, despite new assets from the Takeout7 acquisition - Goodwill of $20,007,669 was recorded from the CardCash acquisition on December 29, 2023[84] - During the six months ended June 30, 2025, $473,165 in intangible assets were added from Takeout7, offset by $1,100,979 in amortization expense[85] Goodwill and Intangible Assets, Net | Category | June 30, 2025 | December 31, 2024 | | :-------------------------- | :------------ | :---------------- | | Goodwill | $20,007,670 | $20,007,670 | | Intangible assets, net | $3,640,517 | $4,268,332 | Estimated Amortization Expense for Intangible Assets | Year | Amount | | :----------------- | :----------- | | 2025 (Remainder) | $1,125,190 | | 2026 | $2,291,888 | | 2027 | $157,722 | | 2028 | $65,717 | | Total | $3,640,517 | 6. Leases Operating lease liability decreased to $1,297,581 at June 30, 2025, with lease costs of $237,765 for the six months, and a weighted average term of 3.58 years - Operating lease liability decreased to $1,297,581 at June 30, 2025, from $1,449,983 at December 31, 2024[88] - Lease costs for the six months ended June 30, 2025, totaled approximately $237,765[89] - The weighted average remaining lease term is 3.58 years, with a weighted average discount rate of 8.00% as of June 30, 2025[89] 7. Secured Revolving Line of Credit The secured revolving line of credit decreased to $1,715,897 at June 30, 2025, after an amendment reduced the principal to $7 million and minimum cash collateral to $1 million - The revolving line of credit with Pathward, National Association, was amended on April 23, 2025, to a principal amount of $7,000,000[92] - The average interest rate was 10.5% at June 30, 2025, and the minimum cash collateral balance decreased to $1,000,000[91][94] Secured Revolving Line of Credit | Metric | June 30, 2025 | December 31, 2024 | | :---------------- | :------------ | :---------------- | | Line of credit | $1,715,897 | $3,805,080 | 8. Convertible Promissory Notes Outstanding convertible promissory notes from the Incumaker acquisition total $44,637 (principal and interest), convertible into 29,758 shares at $1.50 per share - The notes are convertible at $1.50 per share into 29,758 shares of common stock as of June 30, 2025[96] Convertible Promissory Notes | Metric | June 30, 2025 | December 31, 2024 | | :-------------------------------- | :------------ | :---------------- | | Incumaker, Inc. principal balance | $20,000 | $20,000 | | Accrued interest | $24,637 | $23,137 | | Total principal and accrued interest | $44,637 | $43,137 | 9. Secured Notes Payable – Related Party The $2,000,000 secured note payable to Spars Capital Group LLC, a related party, was fully repaid during the six months ended June 30, 2025 - The $2,000,000 secured promissory note with Spars Capital Group LLC was paid in full and retired during the six months ended June 30, 2025[98] Secured Notes Payable – Related Party | Metric | June 30, 2025 | December 31, 2024 | | :-------------------------------- | :------------ | :---------------- | | Secured note payable – related party | $- | $2,000,000 | | Accrued interest | $- | $64,274 | | Total principal and accrued interest | $- | $2,060,274 | 10. Notes Payable Total notes payable increased to $2,546,168 at June 30, 2025, including a new $1 million note and remaining CardCash and EIDL balances - A new $1,000,000 secured promissory note with Real World Digital Assets LLC was entered into on February 19, 2025, at 11.5% annual interest[101] - The GameIQ acquisition note payable was fully repaid during the six months ended June 30, 2025[103] Notes Payable | Note Type | June 30, 2025 | December 31, 2024 | | :-------------------------------- | :------------ | :---------------- | | CardCash acquisition notes payable | $750,000 | $1,500,000 | | Real World Digital Assets note payable | $1,000,000 | $- | | GameIQ acquisition note payable | $- | $75,928 | | Economic Injury Disaster Loans (EIDL) note payable | $664,500 | $664,500 | | Total principal and accrued interest | $2,546,168 | $2,332,632 | 11. Stockholders' Equity Total stockholders' equity increased to $21,569,154 at June 30, 2025, driven by various common stock issuances for vesting, services, acquisitions, and offerings - During the six months ended June 30, 2025, common stock was issued for restricted stock vesting (339,582 shares), services (245,832 shares), vendor settlement (75,000 shares), at-the-market sales (968,914 shares), an acquisition (350,000 shares), a stock purchase agreement (387,194 shares), a public offering (600,000 shares), and a private placement (166,667 shares)[108][109][110][111][112][114][116][117] - The stock purchase agreement with ClearThink Capital Partners, LLC was terminated by mutual agreement on February 4, 2025[115] Common Stock Issued and Outstanding | Date | Shares Issued and Outstanding | | :----------------- | :---------------------------- | | June 30, 2025 | 30,154,612 | | December 31, 2024 | 27,021,423 | 12. Share-Based Compensation For the six months ended June 30, 2025, $1,063,918 in restricted stock and $1,962,000 in stock option compensation expense were recognized, with significant unamortized balances remaining - Recognized $1,063,918 in stock compensation expense for restricted stock and $1,962,000 for vested stock options during the six months ended June 30, 2025[124][126] Restricted Stock Activity (Six Months Ended June 30, 2025) | Metric | Shares | | :-------------------------- | :------- | | Balance, December 31, 2024 | 1,320,834 | | Granted | 450,000 | | Vested | (339,584) | | Issued | (339,584) | | Balance, June 30, 2025 | 1,431,250 | Stock Option Activity (Six Months Ended June 30, 2025) | Metric | Number of Options | | :-------------------------------- | :---------------- | | Stock options outstanding at December 31, 2024 | 4,122,830 | | Granted | 1,170,000 | | Expired or forfeited | (1,166,208) | | Stock options outstanding at June 30, 2025 | 4,126,622 | | Stock options exercisable at June 30, 2025 | 2,261,900 | 13. Commitments and Contingencies The company is not currently involved in any legal proceedings expected to have a material adverse effect on its business or financial condition - No material legal proceedings are pending against the company as of June 30, 2025[128] 14. Segment Information Giftify operates as a single reportable segment, with the CEO evaluating performance and allocating resources based on consolidated net loss - The company operates as a single reportable and operating segment, focusing on gift card and discount certificate sales[129] - The CEO, as CODM, reviews consolidated financial information and uses net loss to evaluate performance[130] 15. Subsequent Events Subsequent to June 30, 2025, the company sold 54,219 shares for $60,411 via an ATM agreement and 333,334 shares for $500,000 in a private placement - Subsequent to June 30, 2025, the company sold 54,219 shares of common stock for $60,411 via an At-the-Market Issuance Sales Agreement[132] - The company also received $500,000 from the sale of 333,334 shares of common stock in a private placement after June 30, 2025[133] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses Giftify's financial condition, operations, and liquidity, covering acquisitions, segments, and key metrics, while reiterating going concern doubts due to historical losses - Giftify acquired Takeout7, Inc. in May 2025, expanding its restaurant technology and AI-powered digital marketing services[136] - The company's two principal divisions are CardCash (gift card exchange) and Restaurant.com (restaurant deal certificates)[139][140][144] - Management reiterates substantial doubt about the company's ability to continue as a going concern due to historical net losses and negative working capital of $1,710,474[154][155][156][209] Gross Billings (Three and Six Months Ended June 30) | Period | 2025 | 2024 | Change % | | :----------------- | :----------- | :----------- | :------- | | Three Months Ended | $36,072,063 | $29,287,369 | 23.2% | | Six Months Ended | $73,091,528 | $59,319,954 | 23.2% | Background Business Overview How We Measure Our Business Revenue Recognition Results of Operations – Three Months Ended June 30, 2025, Compared to Three Months Ended June 30, 2024 Net sales increased by 4.4% to $20.9 million, gross profit rose by 18.3%, and net loss significantly decreased to $2.59 million for the three months ended June 30, 2025 - The decrease in selling, general and administrative expenses was primarily due to a $4,606,671 decrease in stock-based compensation expense[173] - Gross margin increased from 16.3% in 2024 to 18.4% in 2025, positively impacted by increased net revenue from agent transactions[170] Key Financial Results (Three Months Ended June 30) | Metric | 2025 | 2024 | Change | | :-------------------------------- | :----------- | :----------- | :------- | | Net Sales | $20,900,731 | $20,020,502 | +4.4% | | Gross profit | $3,855,625 | $3,260,495 | +18.3% | | Selling, general and administrative expenses | $5,714,543 | $9,832,270 | -41.9% | | Loss from operations | $(2,577,524) | $(7,482,429) | -65.6% | | Net loss | $(2,589,809) | $(7,744,646) | -66.5% | | Modified EBITDA | $(150,236) | $(357,130) | +57.9% | Results of Operations – Six Months Ended June 30, 2025, Compared to Six Months Ended June 30, 2024 Net sales increased by 3.9% to $43.18 million, gross profit grew by 14.1%, and net loss significantly decreased to $5.81 million for the six months ended June 30, 2025 - The decrease in selling, general and administrative expenses was primarily due to a $4,103,413 reduction in stock-based compensation expense[190] - Gross margin increased from 15.7% in 2024 to 17.2% in 2025, positively impacted by increased net revenue from agent transactions[187] Key Financial Results (Six Months Ended June 30) | Metric | 2025 | 2024 | Change | | :-------------------------------- | :----------- | :----------- | :------- | | Net Sales | $43,177,744 | $41,542,396 | +3.9% | | Gross profit | $7,437,261 | $6,517,771 | +14.1% | | Selling, general and administrative expenses | $11,758,384 | $15,046,311 | -21.8% | | Loss from operations | $(5,745,189) | $(10,425,848) | -45.0% | | Net loss | $(5,807,141) | $(10,935,366) | -46.9% | | Modified EBITDA | $(776,557) | $(1,015,119) | +23.5% | Critical Accounting Policies and Estimates Liquidity and Capital Resources Giftify faces substantial doubt about its going concern ability due to negative working capital, despite operating activities providing $289,951 in cash for the six months ended June 30, 2025 - The company had cash of $3,257,427 and negative working capital of $1,710,474 at June 30, 2025, raising substantial doubt about its going concern ability[209] - Cash provided by operating activities improved significantly to $289,951 in 2025 from cash used of $3,074,200 in 2024[216][217] - Financing activities used $1,443,909, primarily due to debt repayments, partially offset by common stock sales and a new note payable[219] Cash Flow Summary (Six Months Ended June 30) | Activity | 2025 | 2024 | | :------------------------------------ | :----------- | :----------- | | Net cash provided by (used in) operating activities | $289,951 | $(3,074,200) | | Net cash provided by (used in) investing activities | $109,543 | $(449,646) | | Net cash provided (used in) by financing activities | $(1,443,909) | $3,354,563 | | Net increase (decrease) in cash and cash equivalents | $(1,044,415) | $(169,283) | Item 3. Quantitative and Qualitative Disclosures About Market Risk As a smaller reporting company, Giftify, Inc. is exempt from providing quantitative and qualitative disclosures about market risk - Giftify, Inc. is exempt from providing market risk disclosures as a smaller reporting company[227][243] Item 4. Controls and Procedures Disclosure controls were ineffective as of December 31, 2024, due to a material weakness in IT general controls, though remediation efforts are ongoing - Disclosure controls and procedures were not effective as of December 31, 2024, due to a material weakness in internal controls over financial reporting[228][231] - The material weakness relates to ineffective design and maintenance of IT general controls, specifically program change management[233] - A previously identified material weakness regarding inadequate segregation of duties was remediated as of December 31, 2024[235][237][240] - Ongoing remediation efforts include designing and implementing ITGCs, enhancing documentation, and providing training[234][239] PART II – OTHER INFORMATION Item 1. Legal Proceedings Giftify, Inc. is not currently involved in any legal proceedings expected to have a material adverse effect on its business or financial condition - No material legal proceedings are pending against the company[242] Item 1A. Risk Factors As a smaller reporting company, Giftify, Inc. is exempt from providing specific risk factor disclosures under this item - Giftify, Inc. is exempt from providing risk factor information as a smaller reporting company[243] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds There were no unregistered sales of equity securities or use of proceeds to report for the period - No unregistered sales of equity securities or use of proceeds to report[244] Item 3. Defaults Upon Senior Securities There were no defaults upon senior securities to report for the period - No defaults upon senior securities to report[245] Item 4. Mine Safety Disclosures This item is not applicable to Giftify, Inc.'s operations - Mine Safety Disclosures are not applicable to the company[246] Item 5. Other Information There is no other information to report under this item - No other information to report[247] Item 6. Exhibits This section lists exhibits filed, including certifications by the Principal Executive and Financial Officers and Inline XBRL documents - Exhibits include certifications by the Principal Executive Officer and Principal Financial Officer under Sarbanes-Oxley Act Sections 302 and 1350[249][250] - The report also includes various Inline XBRL documents such as Instance, Schema, and Cover Page Interactive Data File[249] SIGNATURES Signature Block The report is duly signed on behalf of Giftify, Inc. by Ketan Thakker, President and Chief Executive Officer, on August 13, 2025 - The report was signed by Ketan Thakker, President and Chief Executive Officer, on August 13, 2025[255]