PAYS 10-K & 10-Q changes, risk factors and insider trading

Deficiencies or weaknesses in our internal control over financial reporting that are not promptly identified and remediated may adversely affect our ability to report our financial condition and results of operations in a timely and accurate manner, decrease investor confidence in our Company,Company and reduce the value of our common stock. Although we believe we have taken appropriate actions to remediate previously reported control deficiencies that we have identified and to strengthen our internal control over financial reporting, we cannot assure you that we will not discover other deficiencies or weaknesses in the future.

Our relationships with various banks are currently, and will be for the foreseeable future, a critical component of our ability to conduct our business and to maintain our revenue and expense structure, because we are currently unable to issue our own cards. If we lose or do not maintain existing banking relationships, we wouldcould incur significant switching and other costs and expenses and we and users of our products and services could be significantly affected, creating contingent liabilities for us. As a result, the failure to maintain adequate banking relationships could have a material adverse effect on our business, results of operations and financial condition. Our agreement with the bank that issues our cards provideprovides for cost cost and expense allocations between the parties. Changes in the costs and expenses that we have to bear under these relationships could have have a material impact on our operating expenses. In addition, we may be unable to maintain adequate banking relationships or renew our agreements agreements with the banks that currently issue our cards under terms at least as favorable to us as those existing before renewal.

Some services relating to our business, including network connectivity and gateway servicesservices, are outsourced to third-party vendors. AllIf any of our vendors were to terminate their contracts with us or cease operations, we could bereplace replacedthe vendor with competitors ifa our vendor terminated our contract or went out of business.competitor. However, in some casescases, replacing a vendor would entailrequire one-time integration integration costs to connect our systems to those of the successor’snew systems,vendor, and could result in less advantageous contract terms for the same service, service, which could adversely affect our profitability.

We and the banks that issue our cards are subject to Visa, Interlink, Plus, MasterCard, Maestro, Cirrus, Discover and Pulse association rules that could subject us to a variety of fines or penalties that may be levied by the card networks for acts or omissions by us or businesses that work with us. The termination of the card association registrations held by us or any of the banks that issue our cards or any changes in card association or other debit network rules or standards, including interpretationinterpretations andor implementationimplementations of existing rules or standards, that increase theour cost of doing business or limit our ability to provide our products and servicesservices, could have an adverse effect on our business, operating results and financial condition. In addition, from time to time, card networks increase the organization and/or processing fees that they charge, which could increase our operating expenses, reduce our profit margin and adversely affect our business, operating results and financial condition.

In the rapidly developing legal framework, we rely on a combination of contractual rights and copyright, trademark and trade secret laws to establish and protect our proprietary technology. Despite our efforts to protect our intellectual property, third parties may infringe or misappropriate our intellectual property or may develop software or technology competitive to us. Our competitors may independently develop similar technology, duplicate our products or services or design around our intellectual property rights. We may haveneed to litigate to enforce andor protect our intellectual property rights, trade secrets and know-howknow-how, or to determine their scope, validity or enforceability,enforceability. whichSuch islitigation expensivecan andbe couldexpensive, causemay a diversiondivert of resourcesresources, and may not provebe successful. The loss of intellectual property protection or the inability to secure or enforce intellectual property protection could harm our business and ability to compete.

We may also be subject to costly litigation in the event our products and technology infringe upon another party’s proprietary rights. Third parties may have, or may eventually be issued, patents that would be infringed byupon our products or technology.technology Anyand any of these third parties could make a claim of infringement against us with respect to our products or technology. We may also be subject to claims by third parties for breach of copyright, trademark or license usage rights. Any such claims and any resulting litigation could subject us to significant liability for damages. An adverse determination in any litigation of this type could require us to design around a third party’s patent or to license alternative technology from another party. In addition, litigation is time consumingtime-consuming and expensive to defend and could result in the diversion of the time and attention of our management and employees. Any claim from third parties may result in limitations on our ability to use the intellectual intellectual property subject to these claims. As of the date of this filing, we had not received any notice or claim of infringement from any party.

The legal and regulatory landscape surrounding AI technologies is rapidly evolving and uncertain, including in the areas of consumer protection, intellectual property, cybersecurity,cybersecurity and privacy and data protection. In addition, there is uncertainty around the validity and enforceability of intellectual property rights related to the use, development,development and deployment of AI-generated outputs. Compliance with new and emerging laws, regulations or industry standards relating to AI in the U.S. and internationally, such as U.S. state regulations and the Artificial Intelligence Act in the EU, may impose significant operational costs and may limit our ability to develop, deploy or use existing or future AI technologies. As a result, our ability to adapt our existing products and services or develop future and new products and services using AI may be limited or restricted, which could adversely impact our business.

We regularly review our businesses strategy and evaluate potential acquisitions, joint ventures, divestitures,divestitures and other strategic transactions. The success of these transactions is dependent dependent upon, among other things, our ability to realize the full extent of the expected returns, benefits, cost savings or synergies as a result of a transaction within the anticipated time frame, or at all. Acquisitions often involve additional or increased risks including, for for example:

In the event of a system failure that goes undetected for a substantial period of time, wetransactions could allowbe transactionsprocessed on blocked accounts, confirm false authorizations,authorizations could be confirmed, charges could fail to deductbe charges deducted from accounts or fail to detect systematic fraud or abuse.abuse could go undetected. Errors or failures of this nature could adversely impact our operations, our credibility and our financial standing.

Our ability to provide reliable service to our clients and cardholders depends on the efficient and uninterrupted operation of our computer network systems and data centers as well as those of our third-party service providers. Our business involves movement of large sums of money, processing of large numbers of transactions and management of the data necessary to do both. Our success depends upon the efficient and error-free handling of the money. We rely on the ability of our employees, systems and processes and those of the banks that issue our cards, and our third-party service providers to process and facilitate these transactions in an efficient, uninterrupted and error-free manner.

Adverse global and regional economic conditions such as turmoil affecting the banking system and financial markets, including, but not limited to, tightening in the credit markets, extreme volatility or distress in the financial markets (including the fixed income, credit, currency, equity, and commodity markets), higherhigh unemployment, unemployment, high consumer debt levels, recessionary or inflationary pressures, supply chain issues, reduced consumer confidence or economic activity, activity, government fiscal and tax policies, U.S. and international trade relationships, agreements, treaties, tariffs and restrictive actions, actions, the inability of a government to enact a budget in a fiscal year, government shutdowns, government austerity programs, and other negative negative financial news or macroeconomic developments could have a material adverse impact on the demand for our products and services, including including a reduction in the volume and size of transactions on our payments platform. Additionally, an inability to access the capital markets markets when needed due to volatility or illiquidity in the markets or increased regulatory liquidity and capital requirements may strain our our liquidity position. Such conditions may also expose us to fluctuations in foreign exchange rates or interest rates that could materially and adversely affect our financial results.

We depend on key personnel and couldmay be harmed by the loss of their services becauseor ofour theinability limitedto numberattract, ofdevelop, integrate, incentivize and retain qualified people in our industry.employees.

Because of our small size,size and the limited number of qualified professionals in our industry, we requirerely heavily on the continued service and performance of our management team,team salesand our experienced sales, marketing, program and technology employees,personnel, all of whom we consider to be key employees. CompetitionOur future success depends, to a significant forextent, on our ability to attract, source, hire, train, develop, incentivize and retain highly skilled directors, officers, management, financial, legal, marketing, sales and technical personnel. Competition for qualified employees in the financial services and healthcare industry industries is intense.intense, Ourand successcompetitors willhave dependin the past and may in the future attempt to a significant degree uponrecruit our ability to attract, train,management and retainother highlykey skilled directors, officers, management, business, financial, legal, marketing,employees. sales, and technical personnel and upon the continued contributions of such people. In addition, weWe may notalso beexperience abledifficulty tointegrating retainnewly hired personnel, which could adversely affect our current key employees.operations. The loss of the services of one or more of our key personnel andemployees, our failure to attract or retain additional highly qualified personnelpersonnel, or our inability to effectively integrate and motivate such individuals could impair our ability to manage and expand our operationsbusiness and provide serviceservices to our customers.

Our stock price is volatilevolatile, and you may not be able to sell your shares at a price higher than what was paid.

The market for our common stock is highly volatile. In 2024,2025, our stock price fluctuated between $2.50$1.94 and $5.48.$8.56. The trading price of our common stock could be subject to wide fluctuations in response to, among other things, quarterly variations in operating and financial results, announcements of technological innovations or new products by our competitors or us, changes in prices of our products and services or our competitors’ products and services, changes in product mix,mix or changes in our revenue and revenue growth rates.

Our directors, executive officers,officers and holders of more than 5% of our total shares of common stock outstanding and their respective affiliates, in the aggregate, beneficially own, as of March 19, 2025,own approximately 48% 31% of our outstanding common stock.stock as of March 9, 2026. As a result, these stockholders will be able to exercise a controlling influence influence over matters requiring stockholder approval, including the election of directors and approval of significant corporate transactions, and and will have significant influence over our management and policies for the foreseeable future. Some of these persons or entities may have have interests that are different from yours. For example, these stockholders may support proposals and actions with which you may disagree or which are not in your interests. The concentration of ownership could delay or prevent a change in control of our company or otherwise discourage a potential acquirer from attempting to obtain control of our company, which in turn could reduce the price of our common stock. In addition, these stockholders, some of which have representatives sitting on our board of directors (the “Board”), could use their voting control to maintain our existing management and directors in office, delay or prevent changes of control of our company, or support or reject other management and Board proposals that are subject to stockholder approval, such as amendments to our employee stock plans and approvals of significant financing transactions.

As a registered public company, we have experienced an increase in legal, accounting and other expenses. In addition, the Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”), as well as new rules subsequently implemented by the SEC, has imposed various requirements on public companies, including requiring changes in corporate governance practices. Our management and other personnel need to devote a substantial amount of time to these compliance initiatives. Moreover, these rules and regulations have increased our legal and financial compliance costs and make some activities more time-consuming and costly. In addition, three putative class action lawsuits were filed against us, which could requirerequired our management to devote significant time to defending. See “Item 3. Legal Proceedings” for additional information.

If we are not able to comply with the requirements of the Sarbanes-Oxley Act, or if we or our independent registered public accounting firm identify additional deficiencies in our internal control over financial reporting that are deemed to be material weaknesses, the market price of our stock could decline and we could be subject to sanctions or investigations by the SEC and other regulatory authorities.

This Annual Report on Form 10-K includes forward 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 cannot predict how future regulations might affect us; our belief that complying with future regulation could be expensive or require us to change the way we operate our business; our belief that our in-house customer service center provides the highest customer service service experience for our clients as training is performed on-site by Paysign staff; we may utilize independent contractors who make direct direct sales and are paid on a commission basis only; our belief that nearly everevery state would require us to obtain a money transmitter license to operate a money transfer business; our anticipation that we will not pay any cash dividends in the foreseeable future; our our intention to retain any earnings to finance the operation and expansion of our business; our intention to continue to make significant significant investments to maintain the security of our data and cybersecurity infrastructure; our expectation that the trading price for our common stock will be affected by any research or reports that securities analysts publish about us or our business; our belief that our editing processes are consistent with applicable reimbursement rules and industry practice, a court, enforcement agency or whistleblower could challenge these practicespractice; our belief that all independent contractor and employment agreement relationships are satisfactory; our belief that we have taken appropriate actions to remediate previously reported control deficiencies that we have identified and to strengthen our internal control over financial reporting; our belief that we have utilized proven systems designed for robust data security and integrity in electronic transactions, transactions; we may introduce products in the future that would be subject to suchmoney transfer and payment instrument licensing regulations; our belief that a data security breach at one of the banks that issue our cards or our third-party service providers could result in significant reputational harm to us and cause the use and acceptance of our cards to decline, either of which could have a significant adverse impact on our operating results and future growth prospects; our belief that our existing competitors have longer operating histories, are substantially larger than we are, may already have or could develop substantially greater financial and other resources than we have, may offer, develop or introduce a wider range of programs and services than we offer or may use more effective advertising and marketing strategies than we do to achieve broader brand recognition, customer awareness and retail penetration; our expectation that we may also face price competition that results in decreases in the purchase and use of our products and services; our expectation that we may have to increase the incentives that we offer to our marketing partners and decrease the prices of our products and services, which could adversely affect our operating results; we may receive a stockholder proposal relating to a variety of ESG issues to public companies in the future; we may be subject to, or contractually required to comply with, state and federal laws that govern various aspects of the submission of healthcare claims for reimbursement and the receipt of payments for healthcare items or services; we may use and disclose individually identifiable health information to perform our services and for other limited purposes, such as creating de-identified information; we may not be able to detect detect unauthorized use of our intellectual property or proprietary information, or to take enforcement action; we may retain additional employees and consultants during the next twelve months, including additional patient affordability, information technology, product and and project management, fraud, and customer care personnel to support our growing businesses; we may be unable to grow our business in future periods, and if our revenue growth slows, or our revenues decline further, our business and financial conditions could be adversely affected; our anticipation that we will experience an inevitable decline in growth rates as our operating revenues increase to higher levels and we may also experience a decline in margins; our anticipation that if our operating revenue growth rates slow materially or decline, our business, operating results and financial condition could be adversely affected; we may have deficiencies or weaknesses in our internal control over financial reporting which could, if not remediated, adversely affect our ability to report our financial condition and results of operations in a timely and accurate manner, decrease investor confidence in our Company, and reduce the value of our common stock; we may face price competition that results in decreases in the purchase and use of our products and services; our belief that to stay competitive , we may have to increase the incentives that we offer to our marketing marketing partners and decrease the prices of our products and services, which could adversely affect our operating results; we may be unable to maintain adequate banking relationships or renew our agreements with the banks that currently issue our cards under terms at least as favorable to us as those existing before renewal; we may not be able to successfully manage our intellectual property or may be subject to infringement claims; we may haveneed to litigate to enforce andor protect our intellectual property rights, trade secrets and know-how or to determine their scope, validity or enforceability, which is expensiveexpensive, may divert resources, and could cause a diversion of resources and may not provebe successful; we may also be subject to costly litigation in the event our products and technology infringe upon another party’s proprietary rights; we may also be subject to claims by third parties for breach of copyright, trademark or license usage rights; we may lose current and future customers, which could have a material adverse effect on our business, financial condition and results of operations.operations; Theour electronicbelief that the measures we have taken to provide reliable service to our clients and cardholders, commerceincluding industrythe isimplementation changingof rapidly;disaster recovery plans and redundant computer systems, may not be successful, and we may experience other problems unrelated to system failures; we may also experience software defects, development delays and installation difficulties, any of which could harm our business and reputation and expose us to potential liability and increased operating expenses; we may raise capital in order to provide working capital for our expansion into other products and services using our payments platform; we may not be able to retain our current key employees; we may experience difficulty fully integrating our newly-hired personnel, which maycould adversely affect our businessoperations; we may not have sufficient personnel for our financial reporting responsibilities, which may result in the untimely close of our books and records and delays in the preparation of financial statements and related disclosures; our belief that future growth in the electronic commerce market will be driven by the cost, convenience, ease of use and quality of products and services offered to consumers and businesses; our belief that risks from prior cybersecurity threats, including as a result of any previous cybersecurity incidents, have not materially affected our business to date; our belief that our properties are adequate and suitable for us to conduct business in the future; our belief that if we do not raise new capital, we will still be able to support our existing business and expand into new vertical markets using internally generated funds; our plan for 20252026 to continue to invest additional funds in technology improvements, sales and marketing, cybersecurity, fraud, customer service, and regulatory compliance; our belief that thegross dollar volume loaded on followingcards measuresand conversion rates on gross dollar volume loaded on cards 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 percent of revenues, cardholder participation, and EBITDA; our belief that our available cash on hand, excluding restricted cash, along with our forecast for revenues and cash flows for 2025the remainder of 2026 and through 2027,2028, will be sufficient to sustain our operations for the next 24twenty-four months.months; our belief that we do not anticipate any losses with respect to accounts with balances exceeding federally insured limits; our expectation that the repurchase program will be completed within 36 months from the commencement dateddate; our expectation that we arewill be entitled to a breakage amount in certain card programs where we hold the cardholder funds; our belief that our platform can be seamlessly seamlessly integrated with our clients’ systems; we may become involved in various lawsuits and legal proceedings which arise in the the ordinary course of business; if a financial institution were to be placed into receivership, we may be unable to access the cash we have on deposit; our belief that our distinctive positioning allows us to provide end-to end technologies that securely manage transaction transaction processing, cardholder enrollment, value loading, account management, data and analytics,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 belief that if we do not raise new capital, then we will still be able to support our existing business and expand into new vertical markets using internally generated funds; our expectation that IRC Sections 382 and 383 will not significantly impact the utilization of its net operating losses and other tax carryforwards. 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-Lookingforward-looking Statements. 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 in this report, including those factors discussed in “Part I - Item 1A. Risk Factors” 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 described below 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 revise these Forward-Looking Statements to reflect events or circumstances that arise after the date hereof. You should refer to and carefully carefully review the information in future documents we file with the SEC.

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 applications.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.

We operate on a powerful, high-availability paymentspayment solutions platform with cutting-edge fintech capabilities that can be seamlessly integrated with our clients’ systems. This distinctive positioning positioning allows us to provide end-to-end technologies that securely manage transaction processing, cardholder enrollment, value loading, account account management, data and analytics,analytics and customer service. Our architecture is known for its cross-platform compatibility, flexibility, and 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, and demand deposit accounts accessible with a debit card 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, breakage, and settlement income. Revenue from cardholder fees, interchange, card program management fees,fees and transaction claims processing fees is recorded when the performance obligation is fulfilled. 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. Settlement income is recorded at the expiration of the card or card program and relates predominantlyprimarily to our pharmacorporate prepaidincentive business which ended in 2022.programs.

WeThe haveindustry generally has two categories for our prepaid debit cards: (1) corporate and consumer reloadable cards,cards and (2) non-reloadable cards.

Both reloadable and non-reloadable cards may be open-loop, closed-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 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.

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,distribution and personalization. We also oversee inventory and security controls, renewals, lost and stolen card management,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.

Currently, we are focusing 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,rewards and incentive cards.

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,processors and small and mid-size financial institutions in the United States and Mexico.

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 specificindustry-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.

In 2025,2026, we plan to continue to invest additional funds in technology improvements, sales and marketing, cybersecurity, fraud, customer service,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.

The increase in total revenues of $11,110,390$23,643,624 for the year ended December 31, 20242025 compared to the same period in the prior year consisted primarily of a $1,927,849$1,736,132 increase in plasma revenue, a $8,601,375$21,236,219 increase in pharma revenue, and a $581,166$671,273 increase in other revenue. The increase in plasma revenue was primarily due to the addition of 16115 net new plasma centers sinceadded Decemberduring 31,the 2023past and12 risemonths offset by a decline in the number ofplasma donations at existing plasma centers, and, consequently,and dollars loaded to cards, cardholder fees, and interchange,cards as thereplasma inventory continueslevels were elevated throughout much of 2025, which has reduced our average monthly revenue per center as compared to bethe stable demand for plasma usedsame period in plasma proteinthe therapies.prior year. The increase in pharma revenue was primarily due ato full yearthe financial benefit of programs launched in 2023, the launch of 3355 net new pharma patient affordability programs sincelaunched Decemberduring 31,the 2023past 12 months, and thea subsequentcorresponding growthincrease in monthly management and fees, setup fees, claim processing fees, fees and other billable services such as dynamic business rules and call center support. TheFor the year ended December 31, 2025 the number of claims processed increased over 270% in 202479% compared to 2023.the same period in the prior year. The increase in other revenue was primarily due to the growth and usage in the number of cardholders of our payroll, retail,retail and corporate incentive programs.

Cost of revenues for the year ended December 31, 20242025 increased $3,049,221$7,124,005 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, customercall service,center programsupport, management,application application integration setup,setup and sales and commission expense. The increase in cost of revenues consisted primarily of (i) increased call center network fees of approximately $1,026,000, which was driven predominantly by increased ATM network usage associated with growth in our card programs and increases in transaction fees related to inflationary pressures; (ii) increased customer caresupport expense of approximately $838,000 $2,089,000 associated primarily with the growth in our plasma and pharma patient affordability programs,businesses, a new customer service contact center, wage inflation pressures, a tight labor market, market and increased benefit costs; (iii) increased third-party program management of approximately $651,000 associated with our pharma patient affordability programs; (ivii) increased sales and commission expense of approximately $368,000$852,000 related to the increase in overall revenue for programs in which we pay commission expenses; (iii) increased network and network related fees of approximately $2,845,000 associated to the addition of 115 net plasma centers; (iv) increased third-party variable costs of approximately $1,063,000 associated with our pharma patient affordability programs; and (v) increased plastics, fraudcollateral chargesand postage of approximately $527,000.$320,000. These increases were offset by a decline in plastics and collateral of approximately $326,000 and a declinedecrease in other costs of approximately $35,000. $45,000.

Gross profit for the year ended December 31, 20242025 increased $8,061,169$16,519,619 compared to the same period in the prior year,year resulting primarily from the increaselaunch inof an additional 55 net pharma patient affordability programs during the numberprior of12 pharma patient affordability programs, a full year financial benefit of programs launched in 2023,months, and a corresponding increase in setup fees, monthly management fees, claim processing fees,fees and other billable fees associated with our patient affordability programs.fees. Gross profit also benefited from ourthe addition of 115 net plasma centers during the past 12 months, and corresponding revenue and the beneficial impact of a variable cost structure, as many of the plasma transaction costs are variable in nature and are provided by third-partiesthird parties who charge us based on the number of active cards outstanding and transactions that occurred occurred during the period. The increase in gross profit was offset by increased costs from network fees, third-party service providers, sales commission commission expense,expense and customer service costs and fraud expenses mentioned above, primarily driven by the overall growth in our business. The increase in 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 for the year ended December 31, 20242025 increased $4,903,998$7,854,477 compared to the same period in the prior year and consisted primarily of an increase increase in (i) compensation and benefits of approximately $5,388,000$3,766,000 due to continued hiring to support the Company’s growth primarily from our pharma patient affordability business,growth, a tight labor market, and increased benefit costs; (ii) stock-based compensation of approximately $1,657,000 related to the issuance of restricted stock units for new hires and employee retention; (iii) technologies and telecom expense of approximately $1,320,000 $833,000 primarily related to ongoing platform security investments; (iv) general expenses of approximately $241,000 primarily related to conferences, deliveries, and employee education; (iiiv) acquisition costs of approximately $121,000 associated with the Gamma Innovation LLC (“Gamma”) acquisition that closed on March 19, 2025 (see “Note 3- ACQUISITION” in the notes to the accompanying consolidated financial statements) ; (vi) travel and entertainment of approximately $207,000.$272,000; Thisand (vii) a decrease in capitalized platform development costs of approximately $1,056,000. increaseThe rise in costs was offset by a decreasereduction in stockother compensationoperating expenses of approximately $249,000, an increase of $1,738,000 in the amount of capitalized platform development costs, and a decrease in other cost of approximately $23,000.$92,000.

Depreciation and amortization expense for the year ended December 31, 20242025 increased $1,968,408$2,323,811 compared to the same period in the prior year. The increase in depreciation and amortization expense was primarily due to continued capitalization of new software development costs andcosts, equipment purchases related to continued enhancements to our processing platform and employment growth.growth and the amortization of intangible assets from our Gamma acquisition.

For the year ended December 31, 2024,2025, we recorded income from operations of $1,021,508$7,362,839 representing an improvement of $1,188,763$6,341,311 compared to a lossincome from operations of $167,255$1,021,508 during the the same period in the prior year,year related to the aforementioned factors.

The net income for the year ended December 31, 20242025 was $3,815,907,$7,551,613, aan declineimprovement of $2,642,820$3,735,706 compared to the net income of $6,458,727$3,815,907 for the year ended December 31, 2023.2024. The overall change in net income relates to the aforementioned factors.

Gross Dollar Volume Loaded on Cards: Represents the total dollar volume of funds loaded to all of our prepaid card programs. Our gross dollar volume loaded on cards was $1,783$1,935 million and $1,706$1,783 million for the yearyears ended December 31, 20242025 and 2023,2024, respectively. We use this metric to analyze the total amount of money moving into our prepaid card programs.

Conversion Rates on Gross Dollar Volume Loaded on Cards: Represents revenues, gross profit or net income conversion rates of gross dollar volume loaded on cards which are calculated by taking our total revenues, gross profit or net income, 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. Our total revenue conversion rates for the years ended December 31, 20242025 and 20232024 were 3.27%4.24% or 327424 basis points (“bps”), and 2.77%3.27% or 277327 bps, respectively, of gross dollar volume loaded on cards. Our total gross profit conversion rates for the yearyears ended December 31, 20242025 and 20232024 were 2.52% or 252 bps, and 1.81% or 181 bps, and 1.41% or 141 bps, respectively, of gross dollar volume loaded on cards. Our net income conversion rates for the yearyears ended December 31, 20242025 and 20232024 were 0.39% or 39 bps, and 0.21% or 21 bps, and 0.38% or 38 bps, respectively, of gross dollar volume loaded on on cards.

Operating activities provided $22,947,120$52,450,867 of cash in 2024, a decreaseas of $4,673,504December 31, 2025, an increase of $29,503,747 compared to 2023.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 decreases increase in operating assets and liabilities and net income.liabilities. The changes in accounts receivable, accounts payable,payable and customer card fundingfunding, a net increase of $18,475,867, 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. ChangesThe in net income in 2024 when compared to 2023 are also driven by a net decrease in our deferred tax asset valuation. The decreaseincrease in cash flows from operating activities andwas also attributed to an increase in net incomeincome, wasreduced offsetprepaid byexpenses, collection of tax credits and non-cash adjustments for depreciation and amortization, deferred income taxes,tax, depreciation and amortization, stock-based compensation, and lease expense.compensation.

We used net cash in investing activities during the yearsyear ended December 31, 20242025 and 20232024 of $9,488,702$10,094,210 and $7,048,678,$9,488,702, respectively. CashFor the year ended December 31, 2025, $8,094,210 of cash was used for investing activities wasprimarily primarily attributedattributable to an increase in thesoftware 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 Gamma acquisition. For the year ended December 31, 2024, $9,488,702 of cash was used for investing activities primarily attributable to an increase in software licenses, fixed assets and capitalization of internally developed software as we continue to invest in our technology platform.

Unrestricted cash was $10,766,982$21,067,651 as of December 31, 2024,2025, aan decreaseincrease of $6,227,723$10,300,669 compared to the same period in the prior year. The decreaseincrease resulted primarily from payment timing on pass-through claim reimbursement receivables and related payables associated with our patient affordability business, in the amount of $7,018,053 offset by the improvement in our operating results. We believe that our available cash on hand, excluding restricted cash, at December 31, 20242025 of $10,766,982, $21,067,651, along with our forecast for revenues and cash flows for 2025the remainder of 2026 and through 2027,2028, will be sufficient to sustain our operations for the next 24twenty-four months. In light of the elevated interest rates and increased refinancing risks related to commercial real estate holdings onrecent bank balance sheets,failures, we continue to monitor the health and soundness of our bank relationships through publicly available information. InBased particular,on recent SEC filings, we are closely following FDIC publicly announced developments, but those developments have not caused discovered any issues that would cause us to alter our bank relationships in any material respect at this time.relationships.

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. value. The carrying amount of the intangible asset is considered not recoverable if it exceeds the sum of the undiscounted cash flows expected 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 itstheir estimated useful life,lives, which is are generally 3 to 1510 years.

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, as the Platform asset.capitalized. Capitalized costs are amortized using the straight-line method over a three-yearthree year estimated useful life, beginning in the period in which the software is available for use.

The Company generates revenues from plasma card programs through fees generated from cardholder feescardholders and interchange fees. Revenues from pharma card programs are generated through card program program management fees, transaction claimsclaim processing fees, interchange fees, customer service fees, other billable service fees and settlement income. Other revenues are generated through cardholder fees, interchange fees, program management fees, load fees and breakage.

Plasma and pharma card program revenues include both both fixed and variable components. Cardholder fees represent an obligation to the cardholder based on a per transaction basis and are recognized recognized at a point in time when the performance obligation is fulfilled. Card program management fees and transaction claims processing fees include an obligationrepresent obligations to our card program sponsorssponsors. andThese fees are generally recognized as revenue when earned on a monthly basis and are typically payable due within 30 days pursuantaccording to the contract terms whichoutlined arein generallythe multi-year contracts.contract. 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 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 respective card program. This has primarily been associated with the pharma prepaid business which ended in 2022. 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 settlementssettlements. CostGiven the nature of revenuesthe isCompany’s comprised of transaction processing fees, data connectivityservices and datacontracts, centergenerally it expenses,has networkno fees,contract bankassets fees,as cardit productionpertains andto postageservices costs,rendered customerbut service,not program management, application integration setup, fraud charges, and sales and commission expense.invoiced.

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 calculate the fair value of our business from year to year could materially affect the determination of fair value and the assessment of goodwill impairment; our conclusion that goodwill impairment for the three and six months ended MarchJune 31,30, 2026 was more likely than not that goodwill was not impaired; 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 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 evaluation of the impact that ASU 2025-05 will have 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 and Mexico; our plan for 2026 to continue to invest additional funds in technology improvements, sales and marketing, cybersecurity, fraud, customer service, and regulatory compliance; 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 our available cash on hand, excluding restricted cash, alongtogether with our forecast for revenues and cash flows for the remainder of 2026 and through the firstsecond quarter of 2028, will be sufficient to sustain our operations for the next twenty-four months; our belief, based on recent SEC filings, 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 beremain completedavailable withinover 36a months36-month fromperiod theexpiring commencementMay date.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 described below 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.

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 under the Apherion™ brand, and we derive our revenue from licensing, hostinghosting, and consultingprofessional service fees.

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.

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 in order 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 on-lineonline 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.

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. 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 termlong-term users of our product.

Comparison of the Three Months Ended MarchJune 31,30, 2026 to the Three Months Ended MarchJune 31,30, 2025

The following table summarizes our condensed consolidated financial results for the three months ended MarchJune 31,30, 2026 in comparison to the three months ended MarchJune 31,30, 2025:

The increase in total revenues of $9,440,275$9,173,718 for the three months ended MarchJune 31,30, 2026 compared to the same period in the prior year consisted primarily of a $2,338,731$2,296,616 increase in plasma revenue, a $7,060,799$6,895,227 increase in pharma revenue and a $40,745$18,125 increasedecrease in other revenue. The increase in plasma revenue was primarily due to 89 net plasma centers added during the prior twelve-month period and 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 46 net plasma centers during the prior 2025.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 4551 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 March 31,June 30, 2026 the number of claims processed increased approximately 49%54% compared to the same period in the prior year. The increase in other revenue was primarily due to the growth and usage in the number of cardholders of our payroll, retail and corporate incentive programs.

Cost of revenues for the three months ended March 31,June 30, 2026 increased $2,912,158$3,031,860 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 $901,000$784,000 associated primarily with the growth in our plasma and pharma patient affordability businesses, a new customer service contact center,center that opened in the fourth quarter of 2025, wage inflation pressures, a tight labor market and increased benefit costs; (ii) increased sales and commission expense of approximately $266,000$249,000 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 $1,767,000$2,241,000 associated with thean increase addition of 89 netin plasma centers donations and 45dollars loaded to cards and 51 net pharma patient affordability programs. These increases were offset by a decrease in plastics, collateral and postage of approximately $14,000 $158,000 and other costs of approximately $7,000.$85,000.

Gross profit for the three months ended MarchJune 30, 31, 2026 increased $6,528,117$6,141,858 compared to the same period in the prior year resulting primarily from the launch of an additional 4551 net pharma pharma patient affordability programs during the prior twelve-month period, and a corresponding increase in setup fees, monthly management fees, fees, claim processing fees and other billable fees. Gross profit also benefited from thean additionincrease of 89 netin plasma centersdonations duringand dollars loaded to cards over the prior twelve monthtwelve-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 MarchJune 31,30, 2026 increased $1,513,895$348,817 compared to the same period in the prior year and consisted primarily of an increase increase in (i) compensation and benefits of approximately $180,000$573,000 due to continued hiring to support our growth, a tight labor market and increased benefit costs; (ii) stock-based compensation of approximately $612,000$298,000 related to the issuance of restricted stock units for new hires and employee retention; (iii) technologies and telecom expense of approximately $81,000$175,000 primarily related to ongoing platform security security investments; (iv) general expenses of approximately $177,000$93,000 primarily related to rent, conferences, deliveries and employee education; (v) other expenses of approximately $70,000$186,000 primarily related to insurance and outside professional services; associated with the company’s SOX 404(vib) travel and entertainment of approximately $97,000readiness; and (viivi) a decrease in capitalized platform development costs of approximately $406,000.$15,000. The rise in costs was offset by a reductionone-time ingain acquisitionon coststhe fair value of our contingent consideration (earn-out) of approximately $108,000$990,000 associated with the Gamma Innovation LLC (“Gamma”) acquisition that closed on March 19, 2025 (see “Note 21 –ACQUISITION Fair Value of Financial Instruments” in the notes to the accompanying condensed consolidated financial statements).

Depreciation and amortization expense for the three months ended MarchJune 31,30, 2026 increased $835,153$219,732 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 MarchJune 31,30, 2026, we recorded recorded income from operations of $6,668,135$7,010,916 representing an improvement of $4,179,069$5,573,309 compared to income from operations of $2,489,066$1,437,607 during during the same period in the prior year related to the aforementioned factors.

Other income for the three months ended MarchJune 30, 31, 2026 increased $38,665$289,043 primarily due to higher average bank account balances offset by the implied interest expense related to future cash payments for the Gamma acquisition of $136,884$100,523 and slightly lower interest rates.

At MarchJune 31,30, 2026, our income tax expense for federal, federal, state and local taxes totaled $2,030,080,$1,148,582, representing an effective tax rate of 27.2%.14.5%. At MarchJune 31,30, 2025, our income tax provision was was $665,164,$655,006, representing an effective tax rate of 20.5%.32.1%. Both rates were based on our net operating income adjusted for discrete items that that occurred within the quarter and tax benefits related to our stock-based compensation. The significant driver in the discrete item adjustment adjustment primarily related to the increase in stock price at MarchJune 31,30, 2026 when compared to the same period in the prior year.

The net income for the three months ended MarchJune 31,30, 2026 was $5,438,918,$6,756,537, an improvement of $2,852,818$5,368,776 compared to the net income of $2,586,100$1,387,761 for the three months ended MarchJune 31,30, 2025. The overall change in net income relates to the aforementioned factors.

Management reviews a number ofseveral metrics to help us us monitor the performance of and identify trends affecting our business. We believe the following measures are the primary indicators of 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 $514$546 million and $407$440 million for the three months ended MarchJune 31,30, 2026 and 2025, respectively. Our gross dollar volume loaded on cards was $1,071 million and $847 million for the six months ended June 30, 2026 and 2025, respectively. We use this metric to analyze the total amount of of money moving into our prepaid card programs. The year over year increase 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.

Conversion Rates on Gross Dollar Volume Loaded on on Cards: Represents revenues, gross profit or net income (loss) conversion rates of gross dollar volume loaded on cards which are calculated by by taking our total revenues, gross profit or net income,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 indication of the amount of money that is added to cards and will eventually be converted to revenues, gross profit and net income.income (loss). Our total revenue conversion rates for the three months ended MarchJune 31,30, 2026 and 2025 were 5.45%5.17 % or 545517 basis points (“bps”), and 4.57%4.34% or 457 bps,434 basis points, respectively, of gross dollar volume loaded on cards. Our total gross profit conversion rates for the three months ended MarchJune 31, 30, 2026 and 2025 were 3.54%3.28% or 354328 bps, and 2.87%2.67% or 287267 bps, respectively, of gross dollar volume loaded on cards. Our net income conversion rates for the three months ended MarchJune 31,30, 2026 and 2025 were 1.06%1.24% or 106124 bps, and .64%0.32% or 6432 bps, respectively, of gross dollar volume loaded on cards.

“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.expense and change in fair value of contingent consideration. A reconciliation of net income to Adjusted EBITDA is provided in the table below.

“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.

Comparison of ThreeSix Months Ended MarchJune 31,30, 2026 and 2025

During the threesix months ended MarchJune 31,30, 2026 and 2025, 2025, we financed our operations through internally generated funds.

Operating activities provided $18,785,758$20,081,074 of cash as of MarchJune 31,30, 2026, an increase of $24,818,935$22,473,350 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, a net increase of $22,045,295,$14,390,693, 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, deferred income tax, stock-based compensation and lease expense; offset by an increase in gain in fair value of contingent consideration and prepaid expenses and other current assets.

We used net cash in investing activities during the threesix months ended MarchJune 31,30, 2026 and 2025 of $2,075,341$3,518,107 and $4,443,855,$6,253,535, respectively. For the threesix months ended MarchJune 31,30, 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 six months ended June 30, 2025, $4,253,535 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. For the three months ended March 31, 2025, $2,443,855 in cash was used for investing activities primarily attributable to an increase in software 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 threesix months ended MarchJune 31,30, 2026, financing activities resulted in a net cash outflow of $2,199,677,$5,065,139, driven primarily by a $2,000,000 contract liability payment related to the Company’s acquisition of Gamma. The remainder reflects taxes paid in connection with the net settlement of vested equity awards, for which 56,247524,981 shares of common stock were withheld at a weighted average price of $3.55$6.08 per share.share, offset by $125,400 in stock option proceeds. For the comparable prior-year period ended March 31,June 30, 2025, financing activities resulted in a net cash outflowinflow of $375,786,$215,748, attributable solelyto $591,534 toof stock option proceeds, offset by the repurchase of 100,000 shares of common stock at a weighted average price of $3.76 per share.

At MarchJune 31,30, 2026, our available cash on hand, excluding excluding restricted cash was $20,545,119,$27,372,858, an increase of $13,698,098$15,619,674 compared to the same period in the prior year, driven primarily by improvements in our operating results. We believe this cash position, together with our forecast for revenues and cash flows for the remainder of 2026 and through the firstsecond quarter of 2028, will be sufficient to sustain our operations for the next twenty-four months. In light of the recent bank failures, we continue to monitor the health and soundness of our bank relationships through publicly available information. Based on recent SEC filings, we have not discovered any issues that would cause us to alter our bank relationships.