Giftify (GIFT) risk factors, FY2024 10-K

Risks Related to Our Company and Our Business

1. 01There is substantial doubt about our ability to continue as a going concern. We have a history of annual net losses which may continue, and which may negatively impact our ability to achieve our business objectives, and we received a going concern qualification in our 2024 audit
2. 02If CardCash is not able to achieve profitability within the next few years, our shareholders will have experienced unnecessary dilution, and our ability to achieve our business plan could be significantly delayed or threatened
3. 03If our restaurants and other merchants do not meet the needs and expectations of our customers, our business could suffer
4. 04We may be subject to additional unexpected regulation which could increase our costs or otherwise harm our business
5. 05The implementation of the CARD Act and similar state laws may harm our business and results of operations
6. 06If we are required to materially increase the estimated liability recorded in our financial statements with respect to unredeemed discounts and Discount Dining Passes, our net income could be materially and adversely affected
7. 07Government regulation of the internet and e-commerce is evolving, and unfavorable changes or failure by us to comply with these regulations could substantially harm our business and results of operations
8. 08Failure to comply with federal and state privacy laws and regulations, or the expansion of current or the enactment of new privacy laws or regulations, could adversely affect our business
9. 09We may suffer liability as a result of information retrieved from or transmitted over the internet and claims related to our service offerings
10. 10Our business depends on our ability to maintain and scale the network infrastructure necessary to operate our websites and applications, and any significant disruption in service on our websites or applications could result in a loss of customers or merchants
11. 11Our business depends on the development and maintenance of the internet infrastructure
12. 12Our total number of customers may be higher than the number of our actual individual customers and may not be representative of the number of persons who are active potential customers
13. 13Our business may be subject to seasonal sales fluctuations which could result in volatility or have an adverse effect on the market price of our common stock
14. 14We depend on the continued growth of online commerce
15. 15Our business is subject to interruptions, delays or failures resulting from earthquakes, other natural catastrophic events or terrorism
16. 16Failure to deal effectively with fraudulent transactions and subscriber disputes would increase our loss rate and harm our business
17. 17We are subject to payments-related risks
18. 18Federal laws and regulations, such as the Bank Secrecy Act and the USA PATRIOT Act and similar foreign laws, could be expanded to include discount certificates and Discount Dining Passes
19. 19State laws regulating money transmission could be expanded to include our discount certificates and Discount Dining Passes
20. 20Current uncertainty in global economic conditions could adversely affect our revenue and business
21. 21Downturns in general economic and market conditions and reductions in spending may reduce demand for our digital dining products
22. 22Our ability to raise capital in the future may be limited, and our failure to raise capital when needed could prevent us from growing
23. 23We intend to make acquisitions that could disrupt our operations and adversely impact our business and operating results
24. 24If the products that we offer on our online marketplaces do not reflect our customers’ tastes and preferences, our sales and profit margins would decrease
25. 25Our plans for expansion cannot be implemented if we lose our key personnel or cannot recruit additional personnel
26. 26To obtain future revenue growth and achieve and sustain profitability, we will have to attract and retain customers on cost-effective terms
27. 27We rely upon search engines like Google, Bing and Yahoo to rank our product offerings and may at times be subject to changes in search algorithms and ranking penalties if they believe we are not in compliance with their guidelines
28. 28More individuals are using mobile devices to access the internet and versions of our service developed or optimized for these devices may not gain widespread adoption by users of such devices
29. 29We rely on third-party systems to conduct our business, and our revenues and market share may decrease if these systems are unavailable in the future or if they no longer offer quality performance
30. 30We are subject to cyber security risks and risks of data loss or other security breaches
31. 31We may not be able to compete successfully against existing or future competitors including larger, well-established and well-financed e-commerce companies and restaurants and merchants increasing their own online operations
32. 32Our competitors may directly increase our marketing costs and also may cause us to decrease certain types of marketing
33. 33Our business depends on effective marketing, including marketing via email and social networking messaging, and we intend to increase our spending on marketing and branding, which may adversely affect our financial results
34. 34Our operating results depend on our websites, network infrastructure and transaction-processing systems. Capacity constraints or system failures would harm our business, prospects, financial condition and results of operations
35. 35If we do not respond to rapid technological changes, our services could become obsolete, and we could lose customers
36. 36Use of social media may adversely impact our reputation
37. 37We may experience unexpected expenses or delays in service enhancements if we are unable to license third-party technology on commercially reasonable terms
38. 38If we fail to forecast our revenue accurately due to lengthy sales cycles, or if we fail to match our expenditures with corresponding revenue, our operating results could be adversely affected
39. 39We could be subject to additional sales tax or other tax liabilities
40. 40The 26 adoption of tax reform policies, including the enactment of legislation or regulations implementing changes in the tax treatment of companies engaged in Internet commerce or the U.S. taxation of international business activities could materially affect our financial position and results of operations
41. 41Our insurance coverage and indemnity rights may not adequately protect us against loss
42. 42Our operating results may vary significantly from quarter to quarter
43. 43If we fail to retain our existing customers or acquire new customers, our operating results and business will be harmed
44. 44Our future success depends upon our ability to attract and retain high quality merchants and third-party business partners

Risks Related to Our Common Stock

1. 45Our securities are “Penny Stock” and subject to specific rules governing their sale to investors
2. 46Generally, brokers may be less willing to execute transactions in securities subject to the “penny stock” rules. This may make it more difficult for Company’s shareholders to sell shares of our common stock
3. 47There is limited recent trading activity in our common stock and there is no assurance that an active market will develop in the future
4. 48Our second amended and restated bylaws designate specific courts as the exclusive forum for certain litigation that may be initiated by our stockholders, which could limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us
5. 49If we fail to maintain an effective system of internal controls, we may not be able to accurately report our financial results or detect fraud. Consequently, investors could lose confidence in our financial reporting and this may decrease the trading price of our stock
6. 50The price of our common stock may become volatile, which could lead to losses by investors and costly securities litigation
7. 51Investors may experience dilution of their ownership interests because of the future issuance of additional shares of our common stock
8. 52Our common stock is controlled by insiders
9. 53The price of our common stock may decline. The stock market in general, and the market price of our common stock will likely be subject to fluctuation, whether due to, or irrespective of, our operating results, financial condition and prospects
10. 54As a smaller reporting company, we are subject to scaled disclosure requirements that may make it more challenging for investors to analyze our results of operations and financial prospects