UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
For the quarterly period ended
or
For the transition period from ___________ to __________
Commission file number
(Exact name of registrant as specified in its charter)
| (State or other jurisdiction of incorporation or organization) | (IRS Employer Identification No.) |
(Address of principal executive offices) (Zip code)
(
(Registrant’s telephone number, including area code)
N/A
(Former name, former address and former fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol | Name of each exchange on which registered |
| The |
Indicate by check mark whether the registrant
(1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements
for the past 90 days.
Indicate by check mark whether the registrant
has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405
of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer ☐ | Accelerated filer ☐ |
| Smaller reporting company | |
| Emerging growth company |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act ☐
Indicate by check mark whether the registrant
is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: shares as of Nov 4, 2026.
PAYSIGN, INC.
FORM 10-Q REPORT
INDEX
| 2 |
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements.
PAYSIGN, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
September 30, (Unaudited) | December 31, (Audited) | |||||||
| ASSETS | ||||||||
| Current assets | ||||||||
| Cash | $ | $ | ||||||
| Restricted cash | ||||||||
| Accounts receivable, net | ||||||||
| Other receivables | ||||||||
| Prepaid expenses and other current assets | ||||||||
| Total current assets | ||||||||
| Fixed assets, net | ||||||||
| Intangible assets, net | ||||||||
| Goodwill | ||||||||
| Operating lease right-of-use asset | ||||||||
| Deferred tax asset, net | ||||||||
| Total assets | $ | $ | ||||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
| Current liabilities | ||||||||
| Accounts payable and accrued liabilities | $ | $ | ||||||
| Customer card funding | ||||||||
| Operating lease liability, current portion | ||||||||
| Other liabilities, current portion | ||||||||
| Total current liabilities | ||||||||
| Operating lease liability, long-term portion | ||||||||
| Other liabilities, long-term portion | ||||||||
| Total liabilities | ||||||||
| Commitments and contingencies (Note 9) | ||||||||
| Stockholders’ equity | ||||||||
| Preferred stock: $ par value; shares authorized; issued and outstanding | ||||||||
| Common stock; $ par value; shares authorized, and issued at September 30, 2026 and December 31, 2025, respectively | ||||||||
| Additional paid-in capital | ||||||||
| Treasury stock at cost, and shares, respectively | ( | ) | ( | ) | ||||
| Retained earnings | ||||||||
| Total stockholders’ equity | ||||||||
| Total liabilities and stockholders’ equity | $ | $ | ||||||
See accompanying notes to unaudited condensed consolidated financial statements.
| 3 |
PAYSIGN, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| Revenues | ||||||||||||||||
| Plasma industry | $ | $ | $ | $ | ||||||||||||
| Pharma industry | ||||||||||||||||
| Other | ||||||||||||||||
| Total revenues | ||||||||||||||||
| Cost of revenues | ||||||||||||||||
| Gross profit | ||||||||||||||||
| Operating expenses | ||||||||||||||||
| Selling, general and administrative | ||||||||||||||||
| Depreciation and amortization | ||||||||||||||||
| Total operating expenses | ||||||||||||||||
| Income from operations | ||||||||||||||||
| Other income | ||||||||||||||||
| Interest income, net | ||||||||||||||||
| Income before income tax provision | ||||||||||||||||
| Income tax provision | ||||||||||||||||
| Net income | $ | $ | $ | $ | ||||||||||||
| Net income per share | ||||||||||||||||
| Basic | $ | $ | $ | $ | ||||||||||||
| Diluted | $ | $ | $ | $ | ||||||||||||
| Weighted average common shares | ||||||||||||||||
| Basic | ||||||||||||||||
| Diluted | ||||||||||||||||
See accompanying notes to unaudited condensed consolidated financial statements.
| 4 |
PAYSIGN, INC.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(UNAUDITED)
| Common Stock | Additional
Paid-in |
Treasury Stock | Retained | Total Stockholders’ | ||||||||||||||||||||||||
| Shares | Amount | Capital | Shares | Amount | Earnings | Equity | ||||||||||||||||||||||
| Balance, December 31, 2025 | $ | $ | ( | ) | $ | ( | ) | $ | $ | |||||||||||||||||||
| Stock issued upon vesting of restricted stock | ( | ) | – | |||||||||||||||||||||||||
| Stock-based compensation | – | – | ||||||||||||||||||||||||||
| Shares withheld for employee taxes | – | ( | ) | ( | ) | ( | ) | |||||||||||||||||||||
| Net income | – | – | ||||||||||||||||||||||||||
| Balance, March 31, 2026 | $ | $ | ( | ) | $ | ( | ) | $ | $ | |||||||||||||||||||
| Stock issued upon vesting of restricted stock | ( | ) | – | |||||||||||||||||||||||||
| Exercise of stock options | – | |||||||||||||||||||||||||||
| Stock-based compensation | – | – | ||||||||||||||||||||||||||
| Shares withheld for employee taxes | – | ( | ) | ( | ) | ( | ) | |||||||||||||||||||||
| Net income | – | – | ||||||||||||||||||||||||||
| Balance, June 30, 2026 | $ | $ | ( | ) | $ | ( | ) | $ | $ | |||||||||||||||||||
| Stock issued upon vesting of restricted stock | ( | ) | – | |||||||||||||||||||||||||
| Exercise of stock options | – | |||||||||||||||||||||||||||
| Stock-based compensation | – | – | ||||||||||||||||||||||||||
| Shares withheld for employee taxes | – | ( | ) | ( | ) | ( | ) | |||||||||||||||||||||
| Net income | – | – | ||||||||||||||||||||||||||
| Balance, September 30, 2026 | $ | $ | ( | ) | $ | ( | ) | $ | $ | |||||||||||||||||||
| Common Stock | Additional
Paid-in | Treasury Stock | Retained | Total Stockholders’ | ||||||||||||||||||||||||
| Shares | Amount | Capital | Shares | Amount | Earnings | Equity | ||||||||||||||||||||||
| Balance, December 31, 2024 | $ | $ | ( | ) | $ | ( | ) | $ | $ | |||||||||||||||||||
| Stock issued upon vesting of restricted stock | ( | ) | – | |||||||||||||||||||||||||
| Stock-based compensation | – | – | ||||||||||||||||||||||||||
| Repurchase of common stock | – | ( | ) | ( | ) | ( | ) | |||||||||||||||||||||
| Issuance of stock in business combination | – | – | ||||||||||||||||||||||||||
| Net income | – | – | ||||||||||||||||||||||||||
| Balance, March 31, 2025 | ( | ) | ( | ) | ||||||||||||||||||||||||
| Stock issued upon vesting of restricted stock | ( | ) | – | |||||||||||||||||||||||||
| Exercise of stock options | – | |||||||||||||||||||||||||||
| Stock-based compensation | – | – | ||||||||||||||||||||||||||
| Net income | – | – | ||||||||||||||||||||||||||
| Balance, June 30, 2025 | ( | ) | ( | ) | ||||||||||||||||||||||||
| Stock issued upon vesting of restricted stock | ( | ) | – | |||||||||||||||||||||||||
| Exercise of stock options | – | |||||||||||||||||||||||||||
| Stock-based compensation | – | – | ||||||||||||||||||||||||||
| Net income | – | – | ||||||||||||||||||||||||||
| Balance, September 30, 2025 | $ | $ | ( | ) | $ | ( | ) | $ | $ | |||||||||||||||||||
See accompanying notes to unaudited condensed consolidated financial statements.
| 5 |
PAYSIGN, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
| Nine Months
Ended September 30, | ||||||||
| 2026 | 2025 | |||||||
| Cash flows from operating activities: | ||||||||
| Net income | $ | $ | ||||||
| Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
| Stock-based compensation expense | ||||||||
| Depreciation and amortization | ||||||||
| Noncash lease expense | ||||||||
| Change in fair value of contingent consideration | ( | ) | ||||||
| Deferred income taxes, net | ||||||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts receivable | ( | ) | ( | ) | ||||
| Other receivables | ||||||||
| Prepaid expenses and other current assets | ( | ) | ( | ) | ||||
| Accounts payable and accrued liabilities | ( | ) | ||||||
| Operating lease liability | ( | ) | ( | ) | ||||
| Customer card funding | ( | ) | ||||||
| Net cash provided by operating activities | ||||||||
| Cash flows from investing activities: | ||||||||
| Purchase of fixed assets | ( | ) | ( | ) | ||||
| Capitalization of internally developed software | ( | ) | ( | ) | ||||
| Purchase of intangible assets | ( | ) | ( | ) | ||||
| Net assets acquired in business combination | ( | ) | ||||||
| Net cash used in investing activities | ( | ) | ( | ) | ||||
| Cash flows from financing activities: | ||||||||
| Proceeds from exercise of options | ||||||||
| Payments on other liability | ( | ) | ||||||
| Repurchase of shares for tax withholding | ( | ) | ||||||
| Repurchase of common stock | ( | ) | ||||||
| Net cash (used in) provided by financing activities | ( | ) | ||||||
| Net change in cash and restricted cash | ( | ) | ||||||
| Cash and restricted cash, beginning of period | ||||||||
| Cash and restricted cash, end of period | $ | $ | ||||||
| Cash and restricted cash reconciliation: | ||||||||
| Cash | $ | $ | ||||||
| Restricted cash | ||||||||
| Total cash and restricted cash | $ | $ | ||||||
| Supplemental cash flow information: | ||||||||
| Non-cash assets acquired in business combination | $ | $ | ||||||
| Non-cash liabilities incurred in business combination | $ | $ | ( | ) | ||||
| Common stock issued in business combination | $ | $ | ( | ) | ||||
| Right-of-use assets obtained in exchange for new operating lease liabilities, net | $ | $ | ||||||
| Cash paid for taxes | $ | $ | ||||||
See accompanying notes to unaudited condensed consolidated financial statements.
| 6 |
PAYSIGN, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
1. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT POLICIES
The foregoing unaudited interim condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and with the instructions for Form 10-Q and Regulation S-X as promulgated by the Securities and Exchange Commission (“SEC”). Accordingly, these financial statements do not include all the disclosures required by GAAP for complete financial statements. These unaudited interim condensed consolidated financial statements should be read in conjunction with the audited financial statements and the notes thereto included on Form 10-K for the year ended December 31, 2025. In the opinion of management, the unaudited interim condensed consolidated financial statements furnished herein include all adjustments, all of which are of a normal recurring nature, necessary for a fair statement of the results for the interim period presented.
The preparation of financial statements in accordance with GAAP requires the use of estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities known to exist as of the date the financial statements are published, and the reported amounts of revenues and expenses during the reporting period. Uncertainties with respect to such estimates and assumptions are inherent in the preparation of the Company’s financial statements; accordingly, it is possible that the actual results could differ from these estimates and assumptions that could have a material effect on the reported amounts of the Company’s financial position and results of operations.
Operating results for the three and nine months ended September 30, 2026 are not necessarily indicative of the results that may be expected for the year ending December 31, 2026.
About Paysign, Inc.
Paysign, Inc. (the “Company,” “Paysign,” “we” or “our”) was incorporated on August 24, 1995, and trades under the symbol PAYS on The Nasdaq Stock Market LLC. Paysign is a provider of prepaid card programs, comprehensive patient affordability offerings, life science software technology solutions, digital banking services and integrated payment processing designed for businesses, consumers and government entities. Headquartered in Nevada, the Company creates customized, innovative payment solutions for clients across all industries, including pharmaceutical, healthcare, hospitality and retail.
Principles of Consolidation – The condensed consolidated financial statements include the accounts of the Company and its subsidiaries. All significant intercompany balances and transactions have been eliminated.
Subsequent Events – The Company discloses subsequent events that provide evidence about conditions that did not change the condensed consolidated financial statements at the balance sheet date but have a significant effect on the financial statements at the time of occurrence or on future operations of the Company (see “Note 12 – SUBSEQUENT EVENTS” in the notes to the accompanying condensed consolidated financial statements).
Segment Reporting – The Company operates as one business, a vertically integrated provider of prepaid card products and processing services. The Company’s chief operating decision maker (“CODM”), who is the Company’s chief executive officer, utilizes a consolidated approach to assess the performance of and allocate resources to the business. Accordingly, management has concluded that the Company consists of a operating segment and reportable segment for accounting and financial reporting purposes.
The CODM regularly assesses the performance of the single operating and reporting segment based on consolidated net income. The CODM reviews expenses at a level consistent with those reported in the Company’s consolidated statements of operations. All significant expense categories are reflected in the consolidated statements of operations. The measure of segment assets is reflected in the consolidated balance sheets as total assets.
| 7 |
Use of Estimates – The preparation of condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect (i) the reported amounts of assets and liabilities, (ii) the disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and (iii) the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.
Reclassifications – Certain prior period amounts have been reclassified to conform to the current period presentation. These reclassifications had no effect on previously reported net income, total assets, total liabilities, stockholders’ equity, or cash flows from operating activities.
Cash and Cash Equivalents – The Company
considers all highly liquid investments purchased with an original maturity of three months or less at the time of purchase to be cash
equivalents for the purposes of the statement of cash flows. The Company had
Restricted Cash – At September 30, 2026 and December 31, 2025, restricted cash consisted of funds held specifically for our card product and pharma patient affordability programs that are contractually restricted to use. The Company includes changes in restricted cash balances with cash and cash equivalents when reconciling the beginning and ending total amounts in our condensed consolidated statements of cash flows. These funds are restricted to the settlement of cardholder transactions and payment of eligible patient affordability program obligations and are not available for general corporate purposes.
Reimbursement Receivables – At September
30, 2026 and December 31, 2025, accounts receivable included $
The Company evaluates expected credit losses on accounts receivable under ASC 326. For eligible short-term receivables, the Company applies the practical expedient under ASU 2025-05, which assumes that conditions existing at the balance sheet date remain unchanged over the remaining life of the receivables. The Company considers historical collection experience, receivable aging, and current conditions in estimating expected credit losses. Based on its assessment, the Company determined that expected credit losses were immaterial and, therefore, no allowance was recorded.
Concentrations of Credit Risk – Financial
instruments that potentially subject the Company to concentrations of credit risk consist principally of cash and cash equivalents and
restricted cash. The Company maintains its cash and cash equivalents and restricted cash in various bank accounts primarily with one financial
institution in the United States, which at times may exceed federally insured limits. If this financial institution were to be placed
into receivership, we may be unable to access the cash we have on deposit. If we are unable to access our cash and cash equivalents as
needed, our financial position and ability to operate our business could be adversely affected. The Company has not experienced any losses,
nor does it anticipate any losses with respect to such accounts. At September 30, 2026 and December 31, 2025, the Company had approximately
$
As of September 30, 2026, the Company also had
a concentration of accounts receivable risk. Two pharma patient affordability customers individually represented
Business Combinations – The Company accounts for business combinations using the acquisition method. As of the acquisition date, the acquirer recognizes, separately from goodwill, the identifiable assets acquired, the liabilities assumed and any non-controlling interest in the acquiree. Goodwill is initially measured at cost, being the excess of the cost of acquisition over the fair value of the net identifiable assets acquired and liabilities assumed. The cost of an acquisition is measured as the aggregate of the consideration transferred, measured at acquisition date fair value and the amount of any non-controlling interest in the acquiree. If the cost of acquisition is lower than the fair value of the net identifiable assets, the difference is recognized in profit. Acquisition costs are expensed as incurred.
| 8 |
Fixed Assets – Fixed assets are stated
at cost less accumulated depreciation. Depreciation is principally recorded using the straight-line method over the estimated useful life
of the asset, which is generally
The Company periodically evaluates whether events and circumstances have occurred that may warrant revision of the estimated useful life of fixed assets or whether the remaining balance of fixed assets should be evaluated for possible impairment. The Company uses an estimate of the related undiscounted cash flows over the remaining life of the fixed assets in measuring their recoverability.
Intangible Assets – For intangible assets, the Company recognizes an impairment loss if the carrying amount of the intangible asset is not recoverable and exceeds its fair value. The carrying amount of the intangible asset is considered not recoverable if it exceeds the sum of the undiscounted cash flows expected to result from the use of the asset.
Intangible assets with an indefinite-life are
not amortized. Intangible assets with a finite life are amortized on a straight-line basis over their estimated useful lives, which are
generally
Goodwill – Our methodology for allocating the purchase price relating to purchase acquisitions is determined through established valuation techniques. Goodwill represents a residual value as of the acquisition date, which in most cases results in measuring goodwill as an excess of the purchase consideration transferred plus the fair value of any noncontrolling interest in the acquired company over the fair value of net assets acquired, including contingent consideration. We perform goodwill impairment tests on an annual basis, evaluated at a single reporting unit in the fourth fiscal quarter and between annual tests in certain circumstances. The assessment of fair value for goodwill and purchased intangible assets is based on factors that market participants would use in an orderly transaction in accordance with the accounting guidance for the fair value measurement of non-financial assets.
As of September 30, 2026 and December 31, 2025,
goodwill recorded in the condensed consolidated balance sheets totaled $
Internally Developed Software Costs – Computer software development costs are generally expensed as incurred. However, costs related to software developed for internal use, for resale, or for website development may be capitalized when they meet the criteria outlined below. These costs include compensation and related expenses, hardware and software costs and expenditures incurred in developing features and functionality.
For computer software developed or obtained for internal use, costs that are incurred in the preliminary project and post implementation stages of software development are expensed as incurred. Costs incurred during the application and development stage are capitalized. Capitalized costs are amortized using the straight-line method over a three-year estimated useful life, beginning in the period in which the software is available for use.
Costs incurred to develop software products for
sale, lease or other marketing are expensed as incurred until technological feasibility is established. Once technological feasibility
has been established, qualifying development costs are capitalized until the product is available for general release to customers. Capitalized
costs are amortized using the straight-line method over a
| 9 |
Contract Assets – Incremental
costs to obtain or fulfill a contract with a customer are capitalized. The Company determines the costs that are incremental by confirming
the costs (i) are directly related to a customer’s contract, (ii) generate or enhance resources to fulfill contract performance
obligations in the future, and (iii) are recoverable. Amortization is on a straight-line basis generally over
Hosting Implementation –
Costs to implement the cloud computing arrangements (the “hosting site”) are accounted for by following the same model as
internally developed software costs. Costs that are incurred in the preliminary project and post implementation stages of hosting development
are expensed when they are incurred. Costs incurred during the application and development stage are capitalized. Capitalized costs are
amortized using the straight-line method over a
Accounts Payable and Accrued Liabilities – At September 30, 2026 and December 31, 2025, accounts payable and accrued liabilities consisted of the following:
| September 30, 2026 | December 31, 2025 | |||||||
| Pass-through claims payable – patient affordability programs | $ | $ | ||||||
| Other accounts payable and accrued liabilities | ||||||||
| Total accounts payable and accrued liabilities | $ | $ | ||||||
Pass-through claims payable represents amounts owed to third-party claims processors for adjudicated claims under patient affordability programs that are funded by the client after claims are paid. The Company records a corresponding receivable from the client within accounts receivable. These receivables and payables are presented on a gross basis. Other accounts payable and accrued liabilities consist of trade accounts payable, accrued compensation and benefits, accrued network-related costs and other accrued liabilities at September 30, 2026 or December 31, 2025.
Customer Card Funding – At September 30, 2026 and December 31, 2025, customer card funding represented funds loaded or available to be loaded on cards for the Company’s card product programs, as well as funds received in advance from patient affordability clients under prefunded programs that will be used to pay pass-through reimbursement claims. Pass-through claim obligations under programs that are funded by the client after claims are processed and paid by the Company’s third-party processor are recorded within accounts payable and accrued liabilities, as described under Reimbursement Receivables.
Fair Value of Financial Instruments – Under applicable accounting guidance, fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date.
The Company determines the fair values of our financial instruments based on the fair value hierarchy established under applicable accounting guidance which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The following describes the three-level hierarchy:
Level 1 – Unadjusted quoted prices in active markets for identical assets or liabilities. Level 1 assets and liabilities include debt and equity securities. We currently do not have any assets or liabilities in this category.
Level 2 – Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities, quoted prices in markets that are not active or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. We currently do not have any assets or liabilities in this category.
Level 3 – Unobservable inputs that are supported by little or no market activity and that are significant to the overall fair value of the assets or liabilities. Level 3 assets and liabilities include financial instruments for which the determination of fair value requires significant management judgment or estimation. The fair value for such assets and liabilities is generally determined using pricing models, market comparables, discounted cash flow methodologies or similar techniques that incorporate the assumptions a market participant would use in pricing the asset or liability.
| 10 |
The Company's contingent consideration liability is measured at fair value on a recurring basis and is classified within Level 3 of the fair value hierarchy. Changes in fair value of contingent consideration are recorded in the consolidated statements of operations. The fair value is estimated using a Monte Carlo simulation model based on projected revenues, the Company's common stock price, and expected payout scenarios. Significant unobservable inputs include forecasted revenues, revenue volatility, probability of achieving performance targets, and a continuous risk-free discount rate.
During the three and nine months ended September
30, 2026, the Company recognized fair value adjustment of $
On June 30, 2026, the Company and Gamma Innovation
LLC entered into an agreement to terminate the contingent consideration “earn-out” and no further consideration is or will
be payable to Gamma Innovation LLC. The termination did not result in any incremental gain or loss, as the liability had already been
reduced to $
The opening and closing balances of the contingent consideration (earn-out) liability are as follows:
| Three Months Ended September 30, | Nine Months Ended September 30, |
|||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| Beginning balance | $ | $ | $ | $ | ||||||||||||
| Additions from acquisition | ||||||||||||||||
| Change in fair value | ( | ) | ||||||||||||||
| Settlement (termination of earn-out) | ||||||||||||||||
| Ending balance | $ | $ | $ | $ | ||||||||||||
Revenue and Expense Recognition – In determining when and how revenue is recognized from contracts with customers, the Company performs the following five-step analysis: (i) identification of contracts with customers; (ii) determination of performance obligations; (iii) measurement of the transaction price; (iv) allocation of the transaction price to the performance obligations; and (v) recognition of revenue when (or as) the Company satisfies each performance obligation.
| 11 |
The Company generates revenues from plasma card programs through fees generated from cardholder fees and interchange fees. Revenues from pharma programs are generated through card program management fees, transaction claims processing fees, interchange fees, customer support fees and other billable services. Other revenues are generated through cardholder fees, interchange fees, program management fees, load fees, settlement income and breakage. Life science software technology solution revenues, acquired through our Gamma Innovation LLC acquisition, are generated through subscriptions to its cloud-based software platform and related professional services.
Plasma and pharma program revenues include both fixed and variable components. Cardholder fees represent an obligation to the cardholder based on a per transaction basis and are recognized at a point in time when the performance obligation is fulfilled. Card program management fees and transaction claims processing fees include an obligation to our program sponsors and are generally recognized when earned on a monthly basis and are typically due pursuant to the contract terms. The Company uses the output method to recognize card program management fee revenue at the amount of consideration to which an entity has a right to invoice. The performance obligation is satisfied when the services are transferred to the customer which the Company determined to be monthly, as the customer simultaneously receives and consumes the benefit from the Company’s performance. Interchange fees are earned when customer-issued cards are processed through card payment networks as the nature of our promise to the customer is that we stand ready to process transactions at the customer’s requests on a daily basis over the contract term. Since the timing and quantity of transactions to be processed by us are not determinable, we view interchange fees to comprise an obligation to stand ready to process as many transactions as the customer requests. Accordingly, the promise to stand ready is accounted for as a single series performance obligation. The Company uses the right to invoice practical expedient and recognizes interchange fee revenue concurrent with the processing of card transactions. Interchange fees are settled in accordance with the card payment network terms and conditions, which is typically within a few days.
The portion of the dollar value of prepaid-stored
value cards that consumers do not ultimately redeem are referred to as breakage. In certain card programs where we hold the cardholder
funds and expect to be entitled to a breakage amount, we recognize revenue using estimated breakage rates ratably over the estimated card
life; provided that a significant reversal of the amount of breakage revenue recognized is not probable, and record adjustments to such
estimates when redemption is remote or we are legally defeased of the obligation, if applicable. For each program, we utilize a third
party to estimate breakage rates based on historical redemption patterns, market-specific trends, escheatment rules and existing economic
conditions. The Company accounts for breakage in accordance with Accounting Standards Update (“ASU”) 2016-04, Liabilities—Extinguishment
of Liabilities (Subtopic 405-20): Recognition of Breakage for Certain Prepaid Stored-Value Cards for the recognition of such revenue.
Breakage revenue is recorded in other revenue on the consolidated statements of operations and was $
The Company utilizes the remote method of revenue
recognition for settlement income whereby the unspent card balances will be recognized as revenue at the expiration of the cards or the
respective card program. The Company records all revenue on a gross basis since it is the primary obligor and establishes the price in
the contract arrangement with its customers. The Company is currently under no obligation to refund any fees, and the Company does not
currently have any obligations for disputed claim settlements. Settlement income was $
The Company recognizes revenue from subscription and hosting service arrangements, under which customers receive continuous access to Company-hosted data and software tools, together with related maintenance and support. These arrangements represent single performance obligations satisfied over time, as the services are substantially the same and are transferred to the customer using the same pattern over the applicable contract term. Revenue is recognized ratably over the respective service periods. These revenue streams were not material to the Company's condensed consolidated financial statements for the period presented.
Cost of revenues is comprised of transaction processing fees, data connectivity and data center expenses, network fees, bank fees, card production and postage costs, customer service, program management, application integration setup, fraud charges and sales and commission expense.
| 12 |
Operating Leases – The Company determines if a contract is or contains a leasing element at contract inception or the date in which a modification of an existing contract occurs. In order for a contract to be considered a lease, the contract must transfer the right to control the use of an identified asset for a period of time in exchange for consideration. Control is determined to have occurred if the lessee has the right to (i) obtain substantially all of the economic benefits from the use of the identified asset throughout the period of use and (ii) direct the use of the identified asset.
In determining the present value of lease payments at lease commencement date, the Company utilizes its incremental borrowing rate based on the information available, unless the rate implicit in the lease is readily determinable. Certain lease contracts include obligations to pay for other services, such as maintenance and repairs. We account for these other services as a non-lease component of the lease and they are not considered when accounting for the lease. The liability for operating leases is based on the present value of future lease payments. Operating lease expenses are recorded as rent expense, which is included within selling, general and administrative expenses within the condensed consolidated statements of operations and presented as operating cash outflows within the condensed consolidated statements of cash flows.
Leases with an initial term of 12 months or less are not recorded on the balance sheet, with lease expense for these leases recognized on a straight-line basis over the lease term.
Stock-Based Compensation – The Company recognizes compensation expense for all restricted stock awards and stock options. The fair value of restricted stock awards is measured using the grant date trading price of our stock. The fair value of stock options is estimated at the grant date using the Black-Scholes option-pricing model, and the portion that is ultimately expected to vest is recognized as compensation cost over the requisite service period. We have elected to recognize compensation expense for all options with graded vesting on a straight-line basis over the vesting period of the entire option. The determination of fair value using the Black-Scholes pricing model is affected by our stock price as well as assumptions regarding a number of complex and subjective variables, including expected stock price volatility and the risk-free interest rate.
Recently Adopted Accounting Pronouncement – In July 2025, the FASB issued ASU 2025-05, “Financial Instruments — Credit Losses (Topic 326) – Measurement of Credit Losses for Accounts Receivable and Contract Assets” (“ASU 2025-05”), which provides a practical expedient for estimating expected credit losses for current accounts receivable and current contract assets. ASU 2025-05 will be effective for annual periods beginning after December 15, 2025, and interim periods within those annual reporting periods and should be applied prospectively. The Company adopted ASU 2025-05 effective January 1, 2026. The adoption did not have a material impact on the Company’s consolidated financial statements or related disclosures.
Recently Issued Accounting Pronouncement Not Yet Adopted – In November 2024, the FASB issued ASU 2024-03, “Disaggregation of Income Statement Expenses,” which requires disclosure in the notes to financial statements of specified information about certain costs and expenses. The amendments in this update are effective for fiscal years beginning after December 15, 2026. Early adoption is permitted. The amendments should be applied either prospectively to the financial statements issued for reporting periods after the effective date of this update or retrospectively to any or all prior periods presented in the financial statements. We are currently evaluating the potential effects of ASU 2024-03 on our consolidated financial statements and related disclosures.
In September 2025, the FASB issued ASU 2025-06, "Targeted Improvements to the Accounting for Internal-Use Software," which simplifies the capitalization guidance by removing all references to software development project stages, so that the guidance is neutral to different software development methods. The amendments in this update are effective for annual periods beginning after December 15, 2027. Early adoption is permitted. The amendments should be applied either retrospectively or prospectively to software costs incurred after the adoption date or on a modified prospective basis. We are currently evaluating the potential effects of ASU 2025-06 on our consolidated financial statements and related disclosures.
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In December 2025, the FASB issued ASU 2025-11, “Interim Reporting (Topic 270) –Narrow-Scope Improvements”. The amendments are intended to improve the clarity and navigability of interim reporting requirements within Topic 270 by clarifying when interim reporting guidance applies, enhancing the organization of required interim disclosures and specifying the form and content of interim financial statements. The guidance responds to stakeholder feedback that existing interim reporting requirements were difficult to navigate because of the historical origins and accumulated amendments within Topic 270. ASU 2025-11 adds a disclosure principle requiring entities to disclose events that occur after the end of the most recent annual reporting period that have a material impact on the entity. The amendments also introduce a comprehensive list of required interim disclosures drawn from various codification topics and clarify the presentation requirements for interim financial statements, including condensed financial statements and accompanying footnotes. Importantly, the ASU does not change the fundamental nature of interim reporting nor expand or reduce existing disclosure requirements; rather, it improves clarity and consistency across entities that issue interim financial statements in accordance with GAAP. ASU 2025-11 is effective for the Company for interim reporting periods within annual reporting periods beginning after December 15, 2027. Early adoption is permitted, and the amendments may be applied either prospectively or retrospectively. The Company is currently evaluating the impact of ASU 2025-11 and does not expect the adoption to have a material effect on its consolidated financial statements.
2. ACQUISITION
On March 19, 2025, we entered into an Asset Purchase Agreement (the “Asset Purchase Agreement”) with Gamma Innovation LLC, a Pennsylvania limited liability company (“Gamma”), Beta Software and Technologies LLC, a Delaware limited liability company, and Michael Ngo, an individual, pursuant to which we acquired substantially all the assets of Gamma. Gamma is a software and services company focusing on the blood and plasma collection industry that developed innovative solutions targeting donor engagement, retention and management. The Gamma acquisition aligns with our technology and market presence by offering additional engagement, compensation and resource management solutions across our core markets. The new technologies acquired consist of the following solutions: (i) a donor engagement application designed to reduce plasma labor costs and donor fees while improving donor retention; (ii) a customer resource management platform designed to reduce unnecessary expenses and improve donor engagement, marketing effectiveness and retention; and (iii) a donor management solution designed to improve plasma donation center efficiency by reducing operational costs and optimizing donor compensation.
Total purchase consideration transferred or transferable
was $
| Cash paid upfront (1) | $ | |||
| Present value of future cash paid (1) | ||||
| Equity consideration (2) | ||||
| Earn-out contingent consideration (3) | ||||
| Total consideration | $ | |||
| (1) | |
| (2) | |
| (3) |
|
| 14 |
We have accounted for the Gamma acquisition as a business combination, which generally requires that we recognize the assets acquired and liabilities assumed at fair value as of the acquisition date. The final estimated acquisition date fair values of major classes of assets acquired and liabilities assumed, including a reconciliation to the total final purchase consideration, were as follows:
| Identifiable intangible assets | $ | |||
| Total identifiable net assets | ||||
| Goodwill | ||||
| Total assets acquired | $ | |||
During the second quarter of 2025, a measurement
period adjustment of $
Goodwill arising from the acquisition was attributable
to expected growth opportunities of the acquired technology, potential synergies from combining the acquired business into our existing
business, and an assembled workforce. We expect that approximately $
The estimated fair value of acquired technologies was $10,568,000. Total identifiable intangible assets, including the $503,000 non-compete agreement, were $11,071,000, all of which have finite lives. The fair value of the identifiable intangible assets has been estimated using the income approach by using the multi-period excess earnings method. Under this method, an intangible asset’s fair value is equal to the present value of future economic benefits to be derived from ownership of the asset. The estimated fair value was developed by discounting future net cash flows to their present value at market-based rates of return. Such assumptions included forecasted revenues, cost of sales and operating expenses, technology obsolescence and weighted average cost of capital. The Company also utilized the cost replacement approach for certain immaterial intangible assets included within the acquired technology stack. The determination of the useful lives for acquired technologies is based upon various industry studies, historical acquisition experience and economic factors. The following table reflects the final estimated acquisition date fair values of the identified intangible assets of Gamma and their respective weighted-average estimated amortization periods:
| Estimated Fair Value | Weighted Avg. Estimated Amortization (years) | |||||||
| Non-compete agreement | $ | |||||||
| Acquired technologies | ||||||||
| Total identifiable intangible assets | $ | |||||||
During the fourth quarter of 2025, we revised
the weighted-average useful life of acquired technology, reducing its amortization period from
The historical revenue and earnings of Gamma were
not material for purposes of presenting pro forma information. Transaction costs associated with this business combination were expensed
as incurred and recorded in selling, general and administrative expense in the condensed consolidated statements of operations. These
costs totaled $
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3. FIXED ASSETS, NET
Fixed assets consist of the following:
| September 30, 2026 | December 31, 2025 | |||||||
| Equipment | $ | $ | ||||||
| Software | ||||||||
| Furniture and fixtures | ||||||||
| Website costs | ||||||||
| Leasehold improvements | ||||||||
| Less: accumulated depreciation | ( | ) | ( | ) | ||||
| Fixed assets, net | $ | $ | ||||||
Depreciation expense for the three months ended
September 30, 2026 and 2025 was $
4. INTANGIBLE ASSETS, NET
Intangible assets consist of the following:
September 30, 2026 | December 31, 2025 | |||||||
| Patents and trademarks | $ | $ | ||||||
| Technology Platform | ||||||||
| Customer lists and contracts | ||||||||
| Licenses | ||||||||
| Hosting implementation | ||||||||
| Contract assets | ||||||||
| Non-compete agreement | ||||||||
| Acquired technologies | ||||||||
| Less: accumulated amortization | ( | ) | ( | ) | ||||
| Intangible assets, net | $ | $ | ||||||
Intangible assets are
amortized over their useful lives ranging from periods of
| 16 |
5. LEASE
The Company entered into an operating lease for
office space which became effective in June 2020. The lease term is
The Company entered into an operating lease for
additional office space which became effective in September 2025. The lease term is
Operating lease cost included in selling, general
and administrative expenses was $
Additional information related to the Company’s operating leases was as follows:
September 30, 2026 | December 31, 2025 | |||||||
| Weighted-average remaining lease term—operating leases | ||||||||
| Weighted-average discount rate—operating leases | ||||||||
The following is the lease maturity analysis of our operating leases as of September 30, 2026:
| Year ending December 31, | ||||
| 2026 (excluding the nine months ended September 30, 2026) | $ | |||
| 2027 | ||||
| 2028 | ||||
| 2029 | ||||
| 2030 | ||||
| Thereafter | ||||
| Total lease payments | ||||
| Less: Imputed interest | ( | ) | ||
| Present value of future lease payments | ||||
| Less: current portion of lease liability | ( | ) | ||
| Long-term portion of lease liability | $ | |||
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6. CUSTOMER CARD FUNDING LIABILITY
The Company issues prepaid cards with various provisions for cardholder fees and expiration. The Company recognizes revenue from cardholder transactions and interchange fees when the related performance obligation has been satisfied. Unspent prepaid card balances are recognized as settlement income upon expiration of the applicable cards and the related card programs. Contract liabilities associated with prepaid cards consist of funds loaded on cards and client funds held for future card loading, until such amounts are spent by cardholders or otherwise recognized as revenue by the Company. These contract liabilities are included in customer card funding liability on the condensed consolidated balance sheets. Contract liabilities also include prefunded amounts used to pay pass-through reimbursement amounts in the Company’s patient affordability business.
The opening and closing balances of the Company’s liabilities are as follows:
| Nine Months Ended September 30, | ||||||||
| 2026 | 2025 | |||||||
| Beginning balance | $ | $ | ||||||
| Increase (decrease), net | ( | ) | ||||||
| Ending balance | $ | $ | ||||||
The amount of revenue recognized during the three
months ended September 30, 2026 and 2025 that was included in the opening contract liability for prepaid cards was $
7. COMMON STOCK
At September 30, 2026, the Company’s authorized capital stock was shares of common stock, par value $ per share, and shares of preferred stock, par value $ per share. On that date, the Company had shares of common stock issued and shares of common stock outstanding. There were shares of preferred stock outstanding.
Stock-based compensation expense related to Company restricted stock grants for the three and nine months ended September 30, 2026 was $ and $, respectively. Stock-based compensation expense related to Company restricted stock grants for the three and nine months ended September 30, 2025 was $ and $, respectively.
2026 Transactions – During the three
and nine months ended September 30, 2026, the Company issued and shares of common stock, respectively, for vested stock
awards and the exercise of stock options. The Company received proceeds during the three and nine months ended September 30, 2026, of
$
During the three months ended September 30, 2026, the Company did t grant any restricted stock awards. During the nine months ended September 30, 2026, the Company granted restricted stock awards with a weighted-average grant-date fair value of $ per share. The awards vest over periods ranging from .
2025 Transactions – During the three
and nine months ended September 30, 2025, the Company issued and shares of common stock, respectively, for vested stock
awards and the exercise of stock options. The Company received proceeds during the three and nine months ended September 30, 2025 of $
During the three months ended September 30, 2025, the Company granted restricted stock awards with a weighted-average grant-date fair value of $ per share. These awards vest over periods ranging from . During the nine months ended September 30, 2025, the Company granted restricted stock awards with a weighted-average grant-date fair value of $ per share. Of these awards, 1,366,663 shares are subject to performance-based vesting and service requirements, and 2,500,000 shares were issued in connection with the Gamma acquisition (see “Note 2. Acquisition” in the notes to the accompanying condensed consolidated financial statements). The performance-based awards vest upon achievement of specified earnings targets and continued employee service through each applicable vesting period. The Company considers achievement of the performance targets probable. If the performance criteria are not met, the related compensation cost will be reversed. The restricted stock awards vest over periods ranging from .
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The following table sets forth the computation of basic and fully diluted net income per common share for the three and nine months ended September 30, 2026 and 2025:
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| Numerator: | ||||||||||||||||
| Net income | $ | $ | $ | $ | ||||||||||||
| Denominator: | ||||||||||||||||
| Weighted average common shares: | ||||||||||||||||
| Denominator for basic calculation | ||||||||||||||||
| Weighted average effects of potentially diluted common stock: | ||||||||||||||||
| Stock options (calculated using the treasury method) | ||||||||||||||||
| Unvested restricted stock grants | ||||||||||||||||
| Denominator for fully diluted calculation | ||||||||||||||||
| Net income per common share: | ||||||||||||||||
| Basic | $ | $ | $ | $ | ||||||||||||
| Fully diluted | $ | $ | $ | $ | ||||||||||||
There were potentially dilutive securities excluded from the computation of diluted net income per common share because their effect would have been anti-dilutive for the three and nine months ended September 30, 2026 and 2025.
9. COMMITMENTS AND CONTINGENCIES
Pending or Threatened Litigation – From time to time, we may become involved in various lawsuits and legal proceedings that arise in the ordinary course of business. However, litigation is subject to inherent uncertainties, and an adverse result in these or other matters may arise from time to time that may harm our business. We are not currently a party to any pending or threatened legal proceedings that we believe could have a material adverse effect on our business or financial condition.
The Company entered into an agreement to grant restricted stock units to an employee who also is the principal owner of Gamma Innovation LLC (see “Note 1 – Fair Value of Financial Instruments” in the notes to the accompanying condensed consolidated financial statements).
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10. RELATED PARTY
During the first quarter of 2025, the
Company hired an employee who is also the principal owner of a technical consulting corporation engaged by the Company to provide
technology, development, and support services to the Company and its customers. The Company recognized related party expenses of
$
11. INCOME TAX
The following table summarizes the Company’s income tax expense and effective tax rates for the three and nine months ended September 30, 2026 and 2025:
| Three Months Ended September 30, |
Nine Months Ended September 30, | |||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| Income before income taxes | $ | $ | $ | $ | ||||||||||||
| Income tax expense | $ | $ | $ | $ | ||||||||||||
| Effective tax rate | ||||||||||||||||
The effective tax rates for the three months and nine months ended September 30, 2026 and September 30, 2025, were based on the Company’s forecasted annualized effective tax rates and were adjusted for discrete items that occurred within the periods presented. The effective tax rate for the three months and nine months ended September 30, 2026, varies from the three months and nine months ended September 30, 2025 primarily as a result of tax benefits related to our stock-based compensation.
Under the provisions of the Coronavirus Aid, Relief,
and Economic Security Act (the “CARES Act”) signed into law in 2020 and the subsequent extension of the CARES Act through
September 30, 2021, the Company was eligible for a refundable employee retention credit subject to certain criteria. The Company has elected
an accounting policy to recognize government assistance when it is probable that the Company is eligible to receive the assistance and
present the credit as a reduction of the related expense. As of September 30, 2026 and December 31, 2025, the Company recorded $
12. SUBSEQUENT EVENTS
In October 2026, a plasma industry customer notified the Company of its intent to transition 113 plasma donation centers currently served by the Company to another provider by December 31, 2026. These centers generated approximately $2.8 million in revenue and $1.3 million in gross profit for the three months ended September 30, 2026, and approximately $8.5 million in revenue and $3.9 million in gross profit for the nine months ended September 30, 2026. The Company expects the transition to reduce revenue and gross profit beginning in the fourth quarter of 2026. Because the notification occurred after September 30, 2026, no adjustments have been made to the accompanying condensed consolidated financial statements as a result of this event.
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ITem 2. Management’s discussion and analysis of financial condition and results of operations.
Disclosure Regarding Forward-Looking Statements
This Quarterly Report on Form 10-Q includes forward looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) (“Forward-Looking Statements”). All statements other than statements of historical fact included in this report are Forward-Looking Statements. These Forward-Looking Statements are based on our current expectations, assumptions, estimates and projections about our business and our industry. Words such as “believe,” “anticipate,” “expect,” “intend,” “plan,” “propose,” “may,” and other similar expressions identify Forward-Looking Statements. Specific forward-looking statements made herein include: our belief that we do not anticipate any losses with respect to accounts with balances exceeding federally insured limits; our expected lease obligations for subsequent years; our belief that our platform can be seamlessly integrated with our clients’ systems; our belief that changes in the estimates and assumptions used to estimate the fair value of our reporting unit could materially affect the determination of fair value and the assessment of goodwill impairment; our conclusion for the three and nine months ended September 30, 2026 that it is more likely than not that goodwill was not impaired; our expectation that approximately $4,487,637 of the goodwill from the Gamma acquisition will be deductible for income tax purposes; our belief that our distinctive positioning allows us to provide end-to end technologies that securely manage transaction processing, cardholder enrollment, value loading, account management, data and analytics, and customer service; our belief that our architecture is known for its cross-platform compatibility, flexibility, and scalability - allowing our clients and partners to leverage these advantages for cost savings and revenue opportunities; our evaluation of the impact of ASU 2025-11 and our expectation that the adoption of ASU 2025-11 will not have a material effect on our consolidated financial statements; our evaluation of the potential effects of ASU 2024-03 and ASU 2025-06 on our consolidated financial statements and related disclosures; our focus of our marketing efforts on corporate incentive and expense prepaid card products in various market verticals, including but not limited to, general corporate expense, healthcare related markets including patient affordability solutions, clinical trials and donor compensation, loyalty rewards and incentive cards; our principal target markets for processing services, including prepaid card issuers, retail and private-label issuers, small third-party processors and small and mid-size financial institutions in the United States; our plan during the remainder of 2026 to continue to invest additional funds in technology improvements, sales and marketing, cybersecurity, fraud, customer service, and regulatory compliance; our expectation that the transition of the payment processing for 113 plasma centers of one of our plasma customers to another provider will reduce our plasma revenue and gross profit beginning in the fourth quarter of 2026 and continuing in 2027; if a certain financial institution were to be placed into receivership, we may be unable to access the cash we have on deposit and if we are unable to access our cash and cash equivalents as needed, our financial position and ability to operate our business could be adversely affected; our belief that from time to time we evaluate raising capital to enable us to diversify into new market verticals; our belief that if we do not raise new capital, that we will still be able to support our existing business and expand into new vertical markets using internally generated funds; our belief that the plasma market appears to have returned to normalized growth following elevated plasma inventory levels experienced throughout much of 2025; our belief that the following measures are the primary indicators of our quarterly and annual revenues: gross dollar volume loaded on cards and conversion rates on gross dollar volume loaded on cards; our belief that the following are also key performance indicators: revenues, gross profit, operational expenses as a percentage of revenues, and cardholder participation; our belief that, based on our available cash on hand, excluding restricted cash, and our forecasted for revenues and cash flows through the third quarter of 2028, we have sufficient liquidity to fund our operations for at least the next twenty-four months; our belief, based on our monitoring of our bank relationships through publicly available information, that we have not discovered any issues that would cause us to alter our bank relationships; we may become involved in various lawsuits and legal proceedings that arise in the ordinary course of business and an adverse result in these or other matters may arise from time to time that may harm our business; third-party software may be used for highly specialized business functions, which we may not be able to develop internally within time and budget constraints; our intention to seek stockholder approval at our next annual meeting, expected to be held on or before June 30, 2027, for an increase in shares authorized under the 2023 Equity Incentive Plan; our expectation that it is probable that certain performance targets related to performance-based awards will be achieved; and our expectation that the stock repurchase program will remain available over a 36-month period expiring May 7, 2029. In the normal course of our business, we, in an effort to help keep our stockholders and the public informed about our operations, may from time-to-time issue certain statements, either in writing or orally, that contain, or may contain, forward-looking statements. Although we believe that the expectations reflected in such Forward-Looking Statements are reasonable, we can give no assurance that such expectations will prove to have been correct. In addition, any statements that refer to expectations, projections, estimates, forecasts, or other characterizations of future events or circumstances are Forward-Looking Statements. These Forward-Looking Statements are subject to certain risks and uncertainties that could cause actual results to differ materially from those reflected in the Forward-Looking Statements. Such important factors (“Important Factors”) and other factors are disclosed under “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2025 and in other reports filed with the Securities and Exchange Commission (the “SEC”) from time to time. All prior and subsequent written and oral Forward-Looking Statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by the Important Factors referred to above that could cause actual results to differ materially from our expectations as set forth in any Forward-Looking Statement made by or on behalf of us. You are cautioned not to place undue reliance on these Forward-Looking Statements, which relate only to events as of the date on which the statements are made. We undertake no obligation to publicly revise these Forward-Looking Statements to reflect events or circumstances that arise after the date hereof. You should refer to and carefully review the information in future documents we file with the SEC.
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Overview
Paysign, Inc. (the “Company,” “Paysign,” “we” or “our”), headquartered in Nevada, was incorporated on August 24, 1995, and trades under the symbol PAYS on The Nasdaq Stock Market LLC. We are a vertically integrated provider of prepaid card products and processing services for corporate, consumer and government entities. Our payment solutions are utilized by our corporate customers as a means to increase customer loyalty, increase patient adherence rates, reduce administration costs and streamline operations. Public sector organizations can utilize our payment solutions to disburse public benefits or for internal payments. We market our prepaid card solutions under our Paysign® brand. As we are a payment processor and prepaid card program manager, we derive our revenue from all stages of the prepaid card lifecycle.
In addition to our payment solutions, we also offer life science technology solutions targeting blood and plasma collection organizations. These software solutions are marketed under the Apherion™ brand, and we derive our revenue from licensing, hosting, and professional service fees.
We operate on a powerful, high-availability payment solutions platform with cutting-edge fintech capabilities that can be seamlessly integrated with our clients’ systems. This distinctive positioning allows us to provide end-to-end technologies that securely manage transaction processing, cardholder enrollment, value loading, account management, data and analytics and customer service. Our architecture is known for its cross-platform compatibility, flexibility, and scalability – allowing our clients and partners to leverage these advantages for cost savings and revenue opportunities.
Our suite of product offerings includes solutions for corporate rewards, prepaid gift cards, general purpose reloadable debit cards, employee incentives, consumer rebates, donor compensation, clinical trials, healthcare reimbursement payments and pharmaceutical payment assistance, demand deposit accounts accessible with a debit card and software solutions targeting blood and plasma collection organizations. Our cards are sponsored by our issuing bank partners.
Our revenues include fees generated from cardholder fees, interchange, card program management fees, transaction claims processing fees, software license fees, breakage and settlement income. Revenue from cardholder fees, interchange, card program management fees and transaction claims processing fees is recorded when the performance obligation is fulfilled. Software license fees are recorded ratably over the license period. Breakage is recorded ratably over the estimated card life based on historical redemption patterns, market-specific trends, escheatment rules, and existing economic conditions and relates solely to our open-loop gift card business which began at the end of 2022 and is recorded under other revenue on the condensed consolidated statements of operations. Settlement income is recorded at the expiration of the card or card program and relates primarily to our corporate incentive programs which is also recorded under other revenue on the condensed consolidated statements of operations.
The industry generally has two categories for our prepaid debit cards: (1) corporate and consumer reloadable cards and (2) non-reloadable cards.
Reloadable Cards: These types of cards are generally classified as payroll or considered general purpose reloadable (“GPR”) cards. Payroll cards are issued by an employer to an employee to allow the employee to access payroll amounts that are deposited into an account linked to their card. GPR cards can also be issued to a consumer at a retail location or mailed to a consumer after completing an online application. GPR cards can be reloaded multiple times with a consumer’s payroll, government benefit, a federal or state tax refund or through cash reload networks located at retail locations. Reloadable cards are generally open-loop cards as described below.
Non-Reloadable Cards: These are generally one-time use cards that are only active until the funds initially loaded to the card are spent. These types of cards are generally used as gift or incentive cards. Typically, these types of cards are used for the purchase of goods or services at retail locations and cannot be used to receive cash.
Both reloadable and non-reloadable cards may be open-loop, closed-loop or restricted-loop. Open-loop cards can be used to receive cash at ATM locations by PIN; or purchase goods or services by PIN or signature at retail locations virtually anywhere that the network brand (American Express, Discover, Mastercard, Visa, etc.) is accepted. Closed-loop cards can only be used at a specific merchant. Restricted-loop cards can be used at several merchants, or a defined group of merchants, such as all merchants at a specific shopping mall.
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The prepaid card market in the United States has experienced significant growth in recent years due to consumers and merchants embracing improved technology, greater convenience, more product choices and greater flexibility. Prepaid cards have also proven to be an attractive alternative to traditional bank accounts for certain segments of the population, particularly those without, or who could not qualify for, a checking or savings account.
We manage all aspects of the prepaid card lifecycle, from managing the card design and approval processes with partners and networks, to production, packaging, distribution and personalization. We also oversee inventory and security controls, renewals, lost and stolen card management and replacement. We employ a 24/7/365 fully staffed, in-house customer service department which utilizes bilingual customer service representatives, Interactive Voice Response, and two-way short message service messaging and text alerts.
We currently focus our marketing efforts on two primary areas: prepaid card programs and patient affordability solutions. Our prepaid card programs serve a variety of market verticals, including, but not limited to, plasma donor compensation, clinical trial participant payments, general corporate expense, and loyalty, rewards and incentive programs. Our patient affordability solutions serve pharmaceutical manufacturers by administering copay assistance and other patient support programs. These solutions combine claims processing, program management and call center support to deliver financial assistance to patients at the pharmacy or provider level.
As part of our continuing platform expansion process, we evaluate current and emerging technologies for applicability to our existing and future software platform. To this end, we engage with various hardware and software vendors in evaluation of various infrastructure components. Where appropriate, we use third-party technology components in the development of our software applications and service offerings. Third-party software may be used for highly specialized business functions, which we may not be able to develop internally within time and budget constraints. Our principal target markets for processing services include prepaid card issuers, retail and private-label issuers, small third-party processors and small and mid-size financial institutions in the United States.
We have devoted more extensive resources to sales and marketing activities as we have added essential personnel to our marketing, sales and support teams. We market our Paysign payment solutions through direct marketing by the Company’s sales team. Our primary market focus is on companies that require a streamlined payment solution for rewards, rebates, payment assistance, and other payments to their customers, employees, agents and others. To reach these markets, we focus our sales efforts on direct contact with our target market and attendance at various industry-specific conferences. We may, at times, utilize independent contractors who make direct sales and are paid commissions and/or restricted stock awards. We market our Paysign premier product through existing communication channels to a targeted segment of our existing cardholders, as well as to a broad group of individuals, ranging from non-banked to fully banked consumers with a focus on long-term users of our product.
During the remainder of 2026, we plan to continue to invest additional funds in technology improvements, sales and marketing, cybersecurity, fraud, customer service and regulatory compliance. From time to time, we evaluate raising capital to enable us to diversify into new market verticals. If we do not raise new capital, we believe that we will still be able to support our existing business and expand into new vertical markets using internally generated funds.
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Results of Operations
Comparison of the Three Months Ended September 30, 2026 to the Three Months Ended September 30, 2025
The following table summarizes our condensed consolidated financial results for the three months ended September 30, 2026 in comparison to the three months ended September 30, 2025:
Three Months Ended September 30, 2026, (Unaudited) | Variance | |||||||||||||||
| 2026 | 2025 | $ | % | |||||||||||||
| Revenues | ||||||||||||||||
| Plasma industry | $ | 13,826,621 | $ | 12,860,478 | $ | 966,143 | 7.5% | |||||||||
| Pharma industry | 16,620,579 | 7,920,604 | 8,699,975 | 109.8% | ||||||||||||
| Other | 352,958 | 815,396 | (462,438 | ) | (56.7% | ) | ||||||||||
| Total revenues | 30,800,158 | 21,596,478 | 9,203,680 | 42.6% | ||||||||||||
| Cost of revenues | 10,880,300 | 9,446,089 | 1,434,211 | 15.2% | ||||||||||||
| Gross profit | 19,919,858 | 12,150,389 | 7,769,469 | 63.9% | ||||||||||||
| Gross margin % | 64.7% | 56.3% | ||||||||||||||
| Operating expenses | ||||||||||||||||
| Selling, general and administrative | 10,291,131 | 8,378,018 | 1,913,113 | 22.8% | ||||||||||||
| Depreciation and amortization | 2,309,103 | 2,190,420 | 118,683 | 5.4% | ||||||||||||
| Total operating expenses | 12,600,234 | 10,568,438 | 2,031,796 | 19.2% | ||||||||||||
| Income from operations | $ | 7,319,624 | $ | 1,581,951 | $ | 5,737,673 | 362.7% | |||||||||
| Other income | $ | 870,573 | $ | 663,666 | $ | 206,907 | 31.2% | |||||||||
| Net income | $ | 6,735,694 | $ | 2,215,135 | $ | 4,520,559 | 204.1% | |||||||||
| Net margin % | 21.9% | 10.3% | ||||||||||||||
The increase in total revenues of $9,203,680 for the three months ended September 30, 2026 compared to the same period in the prior year consisted primarily of a $966,143 increase in plasma revenue, an $8,699,975 increase in pharma revenue and a $462,438 decrease in other revenue. The increase in plasma revenue was primarily due to an increase in plasma donations and dollars loaded to cards as the market appears to have returned to normalized growth following elevated plasma inventory levels experienced throughout much of 2025, offset by the reduction of 33 net plasma centers during the prior twelve-month period as existing customers closed underperforming plasma centers and one customer sold their plasma centers to a company utilizing another payment provider. The increase in pharma revenue was primarily due to the financial benefit of 62 net pharma patient affordability programs launched during the prior twelve-month period, and a corresponding increase in monthly management fees, setup fees, claim processing fees and other billable services such as dynamic business rules and call center support. For the three months ended September 30, 2026 the number of claims processed increased approximately 55% compared to the same period in the prior year.
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Cost of revenues for the three months ended September 30, 2026 increased $1,434,211 compared to the same period in the prior year. Cost of revenues is comprised of transaction processing fees, data connectivity and data center expenses, network fees, bank fees, card production and postage costs, call center support, program implementation and sales and commission expense. The increase in cost of revenues consisted primarily of (i) increased call center support expense of approximately $604,000 associated primarily with the growth in our plasma and pharma patient affordability businesses, a new customer service contact center that opened in the fourth quarter of 2025, increased hiring, wage inflation pressures, a tight labor market and increased benefit costs; (ii) increased sales and commission expense of approximately $305,000 related to the increase in overall revenue for programs in which we pay commission expenses; and (iii) increased network and network related fees of approximately $565,000 associated with an increase in plasma donations and dollars loaded to cards and 62 net pharma patient affordability programs launched during the prior twelve-month period. These increases were offset by a decrease in other costs of approximately $41,000.
Gross profit for the three months ended September 30, 2026 increased $7,769,469 compared to the same period in the prior year resulting primarily from the launch of an additional 62 net pharma patient affordability programs during the prior twelve-month period, and a corresponding increase in setup fees, monthly management fees, claim processing fees and other billable fees. Gross profit also benefited from an increase in plasma donations and dollars loaded to cards over the prior twelve-month period, and corresponding revenue and beneficial impact of a variable cost structure, as many of the plasma transaction costs are variable in nature and are provided by third parties who charge us based on the number of active cards outstanding and transactions that occurred during the period. The increase in gross profit was offset by increased costs from network fees, third-party service providers, sales commission expense and customer service costs mentioned above, primarily driven by the overall growth in our business. The increase in gross margin resulted primarily from a greater contribution of total revenue from our pharma patient affordability business which has higher gross profit margins than our other businesses.
Selling, general and administrative expenses for the three months ended September 30, 2026 increased $1,913,113 compared to the same period in the prior year and consisted primarily of an increase in (i) compensation and benefits of approximately $497,000 due to continued hiring to support our growth, a tight labor market and increased benefit costs; (ii) stock-based compensation of approximately $90,000 related to the issuance of restricted stock units for new hires and employee retention; (iii) technologies and telecom expense of approximately $231,000 primarily related to ongoing platform security investments and the opening of a new call center in November 2025; (iv) general expenses of approximately $279,000 primarily related to rent associated with the new call center, travel, conferences, deliveries, and employee education; (v) outside services of approximately $246,000 primarily related to professional services associated with the company’s SOX 404(b) readiness; and (vi) a decrease in capitalized platform development costs of approximately $570,000.
Depreciation and amortization expense for the three months ended September 30, 2026 increased $118,683 compared to the same period in the prior year. The increase in depreciation and amortization expense was primarily due to the amortization of intangible assets from our Gamma acquisition, continued capitalization of new software development costs and equipment purchases related to continued enhancements to our processing platform and employment growth.
For the three months ended September 30, 2026, we recorded income from operations of $7,319,624 representing an improvement of $5,737,673 compared to income from operations of $1,581,951 during the same period in the prior year related to the aforementioned factors.
Other income for the three months ended September 30, 2026 increased $206,907 primarily due to higher average bank account balances offset by the implied interest expense related to future cash payments for the Gamma acquisition of $102,484 and slightly lower interest rates.
For the three months ended September 30, 2026, our income tax provision for federal, state and local taxes was $1,454,503, representing an effective tax rate of 17.8%. For the three months ended September 30, 2025, our income tax provision was $30,482, representing an effective tax rate of 1.4%. Both rates were based on our net operating income adjusted for discrete items that occurred within the quarter and tax benefits related to our stock-based compensation. The significant driver in the discrete item adjustment primarily related to the increase in stock price at September 30, 2026 when compared to the same period in the prior year
The net income for the three months ended September 30, 2026 was $6,735,694, an improvement of $4,520,559 compared to the net income of $2,215,135 for the three months ended September 30, 2025. The overall change in net income relates to the aforementioned factors.
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Comparison of the Nine months Ended September 30, 2026 to the Nine months Ended September 30, 2025
The following table summarizes our condensed consolidated financial results for the nine months ended September 30, 2026 in comparison to the nine months ended September 30, 2025:
Nine months Ended September 30, 2026 (Unaudited) | Variance | |||||||||||||||
| 2026 | 2025 | $ | % | |||||||||||||
| Revenues | ||||||||||||||||
| Plasma industry | $ | 38,615,772 | $ | 33,014,282 | $ | 5,601,490 | 17.0% | |||||||||
| Pharma industry | 46,949,164 | 24,293,163 | 22,656,001 | 93.3% | ||||||||||||
| Other | 1,525,717 | 1,965,535 | (439,818 | ) | (22.4% | ) | ||||||||||
| Total revenues | 87,090,653 | 59,272,980 | 27,817,673 | 46.9% | ||||||||||||
| Cost of revenues | 31,054,827 | 23,676,598 | 7,378,229 | 31.2% | ||||||||||||
| Gross profit | 56,035,826 | 35,596,382 | 20,439,444 | 57.4% | ||||||||||||
| Gross margin % | 64.3% | 60.1% | ||||||||||||||
| Operating expenses | ||||||||||||||||
| Selling, general and administrative | 27,752,063 | 23,976,238 | 3,775,825 | 15.7% | ||||||||||||
| Depreciation and amortization | 7,285,088 | 6,111,520 | 1,173,568 | 19.2% | ||||||||||||
| Total operating expenses | 35,037,151 | 30,087,758 | 4,949,393 | 16.4% | ||||||||||||
| Income from operations | $ | 20,998,675 | $ | 5,508,624 | $ | 15,490,051 | 281.2% | |||||||||
| Other income | $ | 2,565,639 | $ | 2,031,024 | $ | 534,615 | 26.3% | |||||||||
| Net income | $ | 18,931,149 | $ | 6,188,996 | $ | 12,742,153 | 205.9% | |||||||||
| Net margin % | 21.7% | 10.4% | ||||||||||||||
The increase in total revenues of $27,817,673 for the nine months ended September 30, 2026 compared to the same period in the prior year consisted primarily of a $5,601,490 increase in plasma revenue, a $22,656,001 increase in pharma revenue and a $439,818 decrease in other revenue. The increase in plasma revenue was primarily due to an increase in plasma donations and dollars loaded to cards as the market appears to have returned to normalized growth following elevated plasma inventory levels experienced throughout much of 2025, offset by the reduction of 33 net plasma centers during the prior twelve-month period as existing customers closed underperforming plasma centers and one customer sold their plasma centers to a company utilizing another payment provider. The increase in pharma revenue was primarily due to the financial benefit of 62 net pharma patient affordability programs launched during the prior twelve-month period, and a corresponding increase in monthly management fees, setup fees, claim processing fees and other billable services such as dynamic business rules and call center support. For the nine months ended September 30, 2026 the number of claims processed increased approximately 53% compared to the same period in the prior year.
Cost of revenues for the nine months ended September 30, 2026 increased $7,378,229 compared to the same period in the prior year. Cost of revenues is comprised of transaction processing fees, data connectivity and data center expenses, network fees, bank fees, card production and postage costs, call center support, program implementation and sales and commission expense. The increase in cost of revenues consisted primarily of (i) increased call center support expense of approximately $2,289,000 associated primarily with the growth in our plasma and pharma patient affordability businesses, a new customer service contact center that opened in the fourth quarter of 2025, increased hiring, wage inflation pressures, a tight labor market and increased benefit costs; (ii) increased sales and commission expense of approximately $820,000 related to the increase in overall revenue for programs in which we pay commission expenses; and (iii) increased network and network related fees of approximately $4,574,000 associated with an increase in plasma donations and dollars loaded to cards and the addition of 62 net pharma patient affordability programs launched during the prior twelve-month period. These increases were offset by a decrease in plastics, collateral and postage of approximately $127,000 and bad debt of approximately $179,000.
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Gross profit for the nine months ended September 30, 2026 increased $20,439,444 compared to the same period in the prior year resulting primarily from the launch of an additional 62 net pharma patient affordability programs during the prior twelve-month period, and a corresponding increase in setup fees, monthly management fees, claim processing fees and other billable fees. Gross profit also benefited from an increase in plasma donations and dollars loaded to cards over the prior twelve-month period, and corresponding revenue and beneficial impact of a variable cost structure, as many of the plasma transaction costs are variable in nature and are provided by third parties who charge us based on the number of active cards outstanding and transactions that occurred during the period. The increase in gross profit was offset by increased costs from network fees, third-party service providers, sales commission expense and customer service costs mentioned above, primarily driven by the overall growth in our business. The increase in gross margin resulted primarily from a greater contribution of total revenue from our pharma patient affordability business which has higher gross profit margins than our other businesses.
Selling, general and administrative expenses for the nine months ended September 30, 2026 increased $3,775,825 compared to the same period in the prior year and consisted primarily of an increase in (i) compensation and benefits of approximately $1,250,000 due to continued hiring to support our growth, a tight labor market and increased benefit costs; (ii) stock-based compensation of approximately $1,000,000 related to the issuance of restricted stock units for new hires and employee retention; (iii) technologies and telecom expense of approximately $486,000 primarily related to ongoing platform security investments and the opening of a new call center in November 2025; (iv) general expenses of approximately $569,000 primarily related to rent associated with the new call center, travel, conferences, deliveries, merger and acquisition costs and employee education; (v) outside professional services of approximately $416,000 primarily related to the company’s SOX 404(b) readiness; and (vi) a decrease in capitalized platform development costs of approximately $1,045,000. The rise in costs was offset by a one-time gain on the fair value of our contingent consideration (earn-out) of approximately $990,000 associated with the Gamma Innovation LLC (“Gamma”) acquisition that closed on March 19, 2025 (see “Note 1 – Fair Value of Financial Instruments” in the notes to the accompanying condensed consolidated financial statements).
Depreciation and amortization expense for the nine months ended September 30, 2026 increased $1,173,568 compared to the same period in the prior year. The increase in depreciation and amortization expense was primarily due to the amortization of intangible assets from our Gamma acquisition, continued capitalization of new software development costs and equipment purchases related to continued enhancements to our processing platform and employment growth.
For the nine months ended September 30, 2026, we recorded income from operations of $20,998,675 representing an improvement of $15,490,051 compared to income from operations of $5,508,624 during the same period in the prior year related to the aforementioned factors.
Other income for the nine months ended September 30, 2026 increased $534,615 primarily due to higher average bank account balances offset by the implied interest expense related to future cash payments for the Gamma acquisition of $339,891 and slightly lower interest rates.
For the nine months ended September 30, 2026, our income tax provision for federal, state and local taxes was $4,633,165, representing an effective tax rate of 19.7%. For the nine months ended September 30, 2025, our income tax provision was $1,350,652, representing an effective tax rate of 17.9%. Both rates were based on our net operating income adjusted for discrete items that occurred within the period and tax benefits related to our stock-based compensation. The significant driver in the discrete item adjustment primarily related to the increase in stock price at September 30, 2026 when compared to the same period in the prior year.
The net income for the nine months ended September 30, 2026 was $18,931,149, an improvement of $12,742,153 compared to the net income of $6,188,996 for the nine months ended September 30, 2025. The overall change in net income relates to the aforementioned factors.
Key Performance Indicators and Non-GAAP Measures
Management reviews several metrics to help us monitor the performance of and identify trends affecting our business. We believe the following measures are the primary indicators of our quarterly and annual revenues:
Gross Dollar Volume Loaded on Cards: Represents the total dollar volume of funds loaded to all our prepaid card programs. Our gross dollar volume loaded on cards was $547 million and $552 million for the three months ended September 30, 2026 and 2025, respectively. Our gross dollar volume loaded on cards was $1,616 million and $1,399 million for the nine months ended September 30, 2026 and 2025, respectively. We use this metric to analyze the total amount of money moving into our prepaid card programs. The increase for the nine months ended September 30, 2026 compared to the same period in the prior year reflects an increase in loads we are experiencing in our plasma programs as the market appears to have returned to normalized growth following elevated plasma inventory levels experienced throughout much of 2025, in addition to growth in our pharma patient affordability program and other prepaid programs.
Gross dollar volume loaded on cards for the three months ended September 30, 2026 was relatively consistent with the same period in the prior year.
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Conversion Rates on Gross Dollar Volume Loaded on Cards: Represents revenues, gross profit or net income (loss) conversion rates of gross dollar volume loaded on cards which are calculated by taking our total revenues, gross profit or net income (loss), respectively, as a numerator and dividing by the gross dollar volume loaded on cards as a denominator. As we derive a number of our financial results from cardholder fees, we utilize these metrics as an indication of the amount of money that is added to cards and will eventually be converted to revenues, gross profit and net income (loss). Our total revenue conversion rates for the three months ended September 30, 2026 and 2025 were 5.64 % or 564 basis points (“bps”), and 3.91% or 391 basis points, respectively, of gross dollar volume loaded on cards. Our total gross profit conversion rates for the three months ended September 30, 2026 and 2025 were 3.64% or 364 bps, and 2.20% or 220 bps, respectively, of gross dollar volume loaded on cards. Our net income conversion rates for the three months ended September 30, 2026 and 2025 were 1.23% or 123 bps, and 0.40% or 40 bps, respectively, of gross dollar volume loaded on cards.
Our total revenue conversion rates for the nine months ended September 30, 2026 and 2025 were 5.39% or 539 bps, and 4.24% or 424 bps, respectively, of gross dollar volume loaded on cards. Our total gross profit conversion rates for the nine months ended September 30, 2026 and 2025 were 3.47% or 347 bps, and 2.54% or 254 bps, respectively, of gross dollar volume loaded on cards. Our net income conversion rates for the nine months ended September 30, 2026 and 2025 were 1.17% or 117 bps, and 0.44% or 44 bps, respectively, of gross dollar volume loaded on cards.
Management also reviews key performance indicators, such as revenues, gross profit, operational expenses as a percentage of revenues, and cardholder participation. In addition, we consider certain non-GAAP (or “adjusted”) measures to be useful to management and investors evaluating our operating performance for the periods presented and provide a financial tool for evaluating our ongoing operations, liquidity and management of assets. This information can assist investors in assessing our financial performance and measuring our ability to generate capital for deployment and investment in new card programs. These adjusted metrics are consistent with how management views our business and are used to make financial, operating and planning decisions. These metrics, however, are not measures of financial performance under GAAP and should not be considered a substitute for revenue, operating income, net income, earnings per share (basic and diluted) or net cash from operating activities as determined in accordance with GAAP. We consider the following non-GAAP measures, which may not be comparable to similarly titled measures reported by other companies, to be key performance indicators:
“EBITDA” is defined as earnings before interest, income taxes, depreciation and amortization expense and “Adjusted EBITDA” reflects the adjustment to EBITDA to exclude stock-based compensation expense and change in fair value of contingent consideration. A reconciliation of net income to Adjusted EBITDA is provided in the table below.
| Three Months Ended September 30, | Nine months Ended September 30, | |||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| Reconciliation of Adjusted EBITDA to net income: | ||||||||||||||||
| Net income | $ | 6,735,694 | $ | 2,215,135 | $ | 18,931,149 | $ | 6,188,996 | ||||||||
| Income tax provision | 1,454,503 | 30,482 | 4,633,165 | 1,350,652 | ||||||||||||
| Interest income, net | (870,573 | ) | (663,666 | ) | (2,565,639 | ) | (2,031,024 | ) | ||||||||
| Depreciation and amortization | 2,309,103 | 2,190,420 | 7,285,088 | 6,111,520 | ||||||||||||
| EBITDA | 9,628,727 | 3,772,371 | 28,283,763 | 11,620,144 | ||||||||||||
| Stock-based compensation | 1,355,748 | 1,265,591 | 3,892,007 | 2,892,309 | ||||||||||||
| Change in fair value of contingent consideration | – | – | (990,000 | ) | – | |||||||||||
| Adjusted EBITDA | $ | 10,984,475 | $ | 5,037,962 | $ | 31,185,770 | $ | 14,512,453 | ||||||||
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“EBITDA margin” is defined as earnings before interest, income taxes, depreciation and amortization expense as a percentage of the Company’s revenue and “Adjusted EBITDA margin” reflects the adjustment to EBITDA margin to exclude stock-based compensation expense and change in fair value of contingent consideration as a percentage of revenue. A reconciliation of net income margin to Adjusted EBITDA margin is provided in the table below.
| Three Months Ended September 30, | Nine months Ended September 30, | |||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| Reconciliation of adjusted EBITDA margin to net income margin: | ||||||||||||||||
| Net income margin | 21.9% | 10.3% | 21.7% | 10.4% | ||||||||||||
| Income tax provision | 4.7% | 0.1% | 5.3% | 2.3% | ||||||||||||
| Interest income, net | (2.8% | ) | (3.1% | ) | (2.9% | ) | (3.4% | ) | ||||||||
| Depreciation and amortization | 7.5% | 10.1% | 8.4% | 10.3% | ||||||||||||
| EBITDA margin | 31.3% | 17.5% | 32.5% | 19.6% | ||||||||||||
| Stock-based compensation | 4.4% | 5.9% | 4.5% | 4.9% | ||||||||||||
| Change in fair value of contingent consideration | – | – | (1.1% | ) | – | |||||||||||
| Adjusted EBITDA margin | 35.7% | 23.3% | 35.8% | 24.5% | ||||||||||||
Liquidity and Capital Resources
The following table sets forth the major sources and uses of cash:
Nine months Ended September 30, (Unaudited) | ||||||||
| 2026 | 2025 | |||||||
| Net cash provided by operating activities | $ | 82,831,431 | $ | 4,360,171 | ||||
| Net cash used in investing activities | (4,523,863 | ) | (8,436,339 | ) | ||||
| Net cash (used in) provided by financing activities | (6,958,565 | ) | 284,868 | |||||
| Net increase (decrease) in cash and restricted cash | $ | 71,349,003 | $ | (3,791,300 | ) | |||
Comparison of Nine months Ended September 30, 2026 and 2025
During the nine months ended September 30, 2026 and 2025, we financed our operations through internally generated funds.
Operating activities provided $82,831,431 of cash for the nine months ended September 30, 2026, an increase of $78,471,260 compared to the same period in the prior year. This change in cash flow compared to the change in cash flow in the prior period is primarily due to net increases in operating assets and liabilities. The changes in accounts receivable, accounts payable, and customer card funding compared to changes in the same period in the prior year, a net increase of $65,895,104, are primarily related to the growth in our pharma patient affordability business and timing of pass-through payments as we are invoiced by third-party service providers at the end of the period and are due monies from our pharma patient affordability customers to cover these third-party payables. The increase in cash flow from operating activities was also attributed to an increase in net income and non-cash adjustments for depreciation and amortization, stock-based compensation and lease expense; offset by an increase in gain in fair value of contingent consideration, deferred income taxes and prepaid expenses and other current assets and liabilities.
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We used net cash in investing activities during the nine months ended September 30, 2026 and 2025 of $4,523,863 and $8,436,339, respectively. For the nine months ended September 30, 2026, cash used for investing activities was primarily attributable to an increase in licenses, fixed assets and capitalization of internally developed software as we continue to invest in our technology platform. For the nine months ended September 30, 2025, $6,436,339 in cash was used for investing activities primarily attributable to an increase in licenses, fixed assets and capitalization of internally developed software as we continue to invest in our technology platform. The remaining amount of $2,000,000 was used for the initial purchase consideration payment related to the Company’s Gamma acquisition.
For the nine months ended September 30, 2026, financing activities resulted in a net cash outflow of $6,958,565, reflecting $5,192,235 of taxes paid in connection with the net settlement of vested equity awards, for which 740,495 shares of common stock were withheld at a weighted average price of $7.01 per share and contract liability payment of $2,000,000 related to the Company’s acquisition of Gamma, offset by $233,670 in stock option proceeds. For the comparable prior-year period ended September 30, 2025, financing activities resulted in a net cash inflow of $284,868, attributable to $660,654 of stock option proceeds, offset by the repurchase of 100,000 shares of common stock at a weighted average price of $3.76 per share.
Our significant contractual cash requirements also include ongoing payments for lease liabilities and acquisition. For additional information regarding our cash commitments and contractual obligations, see “Note 2 – ACQUISITION” and “Note 5 – LEASE” in the notes to the accompanying condensed consolidated financial statements.
Sources of Liquidity
At September 30, 2026, our available cash on hand, excluding restricted cash was $34,539,557, an increase of $13,471,906 compared to December 31, 2025 and increase of $27,010,510 compared to September 30, 2025. The increase compared to September 30, 2025 primarily resulted from improved operating performance and the timing of payments associated with $9,364,030 of third-quarter 2025 pass-through claim reimbursement receivables and related payables in our patient affordability business. Based on this cash position and our forecasted revenues and cash flows through the third quarter of 2028, we believe we have sufficient liquidity to fund operations for at least the next twenty-four months. We continue to monitor the health and soundness of our bank relationships through publicly available information. Based on this monitoring, we have not discovered any issues that would cause us to alter our bank relationships.
Critical Accounting Policies and Estimates
Our significant accounting policies are described in Note 2 of the Notes to Consolidated Financial Statements of our Annual Report on Form 10-K for the fiscal year ended December 31, 2025.
The preparation of consolidated financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.
Our estimates are based on our experience and our interpretation of economic, political, regulatory, and other factors that affect our business prospects. Actual results may differ significantly from our estimates.
Item 3. Quantitative and Qualitative Disclosures about Market Risk.
Because we are a smaller reporting company, we are not required to provide the information called for by this Item.
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Item 4. Controls and Procedures.
Disclosure Controls and Procedures
Disclosure controls and procedures means controls and other procedures that are designed to ensure that the information we are required to disclose in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and to ensure that information required to be disclosed by us in those reports is accumulated and communicated to our management, including our principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. Our chief executive officer and chief financial officer evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of September 30, 2026. Based on that evaluation, our chief executive officer and chief financial officer have concluded that our disclosure controls and procedures were effective as of September 30, 2026, the end of the period covered by this Quarterly Report on Form 10-Q.
Changes in Internal Control over Financial Reporting
During the quarter ended September 30, 2026, there have been no changes in our internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
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PART II. OTHER INFORMATION
Item 1. Legal Proceedings.
From time to time, we may become involved in various lawsuits and legal proceedings that arise in the ordinary course of business. However, litigation is subject to inherent uncertainties, and an adverse result in these or other matters may arise from time to time that may harm our business. We are not currently a party to any pending or threatened legal proceedings that we believe could have a material adverse effect on our business or financial condition.
Item 1A. Risk Factors.
Because we are a smaller reporting company, we are not required to provide the information called for by this Item.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
During the quarter ended September 30, 2026, we did not issue shares of common stock that were not registered under the Securities Act of 1933.
Issuer Purchases of Equity Securities
The following table sets forth certain information relating to the purchases of our common stock by us and any affiliated purchasers within the meaning of Rule 10b-18(a)(3) under the Exchange Act during the three months ended September 30, 2026.
| Period | Total Number of Shares Purchased | Weighted Average Price Paid Per Share | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (1) | Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs | ||||||||||||
| July 1, 2026 – July 31, 2026 | – | – | – | $ | 5,000,000 | |||||||||||
| August 1, 2026 – August 31, 2026 | – | – | – | 5,000,000 | ||||||||||||
| September 1, 2026 – September 30, 2026 | – | – | – | 5,000,000 | ||||||||||||
| Total | – | – | – | $ | 5,000,000 | |||||||||||
| (1) | On May 8, 2026, our Board authorized a stock repurchase program to repurchase up to $5 million of our common stock, subject to certain conditions, in the open market, in privately negotiated transactions, or by other means in compliance with Rule 10b-18 under the Exchange Act, over a 36-month period expiring May 7, 2029. |
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Item 5. Other Information.
During the quarter ended September 30, 2026,
the following directors and officers of the Company
On
On
Item 6. Exhibits.
| 31.1* | Rule 13a-14(a)/15d-14(a) Certifications |
| 31.2* | Rule 13a-14(a)/15d-14(a) Certifications |
| 32.1* | Section 1350 Certifications |
| 32.2* | Section 1350 Certifications |
| 101.INS | Inline XBRL Instance Document (the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document) |
| 101.SCH | Inline XBRL Taxonomy Extension Schema Document |
| 101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase Document |
| 101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase Document |
| 101.LAB | Inline XBRL Taxonomy Extension Label Linkbase Document |
| 101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase Document |
| 104 | Cover Page Interactive Data File (formatted in iXBRL, and included in exhibit 101). |
______________
| * | Filed herewith. |
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| PAYSIGN, INC. | |
| Date: November 10, 2026 | /s/ Mark Newcomer |
|
By: Mark Newcomer, President and Chief Executive Officer (principal executive officer) | |
| Date: November 10, 2026 | /s/ Jeff Baker |
|
By: Jeff Baker, Chief Financial Officer (principal financial and accounting officer) |
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