Paysign(PAYS) - 2025 Q2 - Quarterly Report

PART I. FINANCIAL INFORMATION Item 1. Financial Statements This section presents Paysign, Inc.'s unaudited condensed consolidated financial statements, including balance sheets, statements of operations, statements of stockholders' equity, and statements of cash flows for the periods ended June 30, 2025, and December 31, 2024 (for balance sheet) or June 30, 2024 (for income statement and cash flow) Condensed Consolidated Balance Sheets This section provides a snapshot of the company's assets, liabilities, and equity at specific points in time Condensed Consolidated Balance Sheet Highlights (June 30, 2025 vs. December 31, 2024) | Metric | June 30, 2025 (Unaudited) | December 31, 2024 (Audited) | Change ($) | Change (%) | | :-------------------------------- | :------------------------ | :------------------------ | :--------- | :--------- | | Total assets | $193,896,201 | $179,028,197 | $14,868,004 | 8.31% | | Total current assets | $158,707,914 | $158,836,633 | $(128,719) | -0.08% | | Intangible assets, net | $23,682,758 | $12,239,717 | $11,443,041 | 93.50% | | Goodwill | $4,487,637 | $0 | $4,487,637 | N/A | | Total liabilities | $151,688,242 | $148,586,565 | $3,101,677 | 2.09% | | Total stockholders' equity | $42,207,959 | $30,441,632 | $11,766,327 | 38.65% | - The significant increase in intangible assets and the appearance of goodwill are primarily due to the acquisition of Gamma Innovation LLC on March 19, 2025[11][40][61] Condensed Consolidated Statements of Operations This section details the company's revenues, expenses, and net income over specific periods Condensed Consolidated Statements of Operations Highlights (Three Months Ended June 30) | Metric | 2025 | 2024 | Change ($) | Change (%) | | :-------------------------- | :--------- | :--------- | :--------- | :--------- | | Total revenues | $19,078,353 | $14,331,599 | $4,746,754 | 33.1% | | Plasma industry revenue | $10,743,924 | $11,273,262 | $(529,338) | -4.7% | | Pharma industry revenue | $7,753,906 | $2,674,901 | $5,079,005 | 189.9% | | Gross profit | $11,755,165 | $7,585,763 | $4,169,402 | 55.0% | | Income from operations | $1,437,607 | $125,677 | $1,311,930 | 1043.9% | | Net income | $1,387,761 | $697,102 | $690,659 | 99.1% | | Basic EPS | $0.03 | $0.01 | $0.02 | 200.0% | | Diluted EPS | $0.02 | $0.01 | $0.01 | 100.0% | Condensed Consolidated Statements of Operations Highlights (Six Months Ended June 30) | Metric | 2025 | 2024 | Change ($) | Change (%) | | :-------------------------- | :--------- | :--------- | :--------- | :--------- | | Total revenues | $37,676,502 | $27,521,673 | $10,154,829 | 36.9% | | Plasma industry revenue | $20,153,804 | $21,641,296 | $(1,487,492) | -6.9% | | Pharma industry revenue | $16,372,559 | $5,063,545 | $11,309,014 | 223.3% | | Gross profit | $23,445,993 | $14,525,014 | $8,920,979 | 61.4% | | Income (loss) from operations | $3,926,673 | $(132,675) | $4,059,348 | NM | | Net income | $3,973,861 | $1,006,198 | $2,967,663 | 294.9% | | Basic EPS | $0.07 | $0.02 | $0.05 | 250.0% | | Diluted EPS | $0.07 | $0.02 | $0.05 | 250.0% | Condensed Consolidated Statements of Stockholders' Equity This section outlines changes in the company's equity accounts over the reporting period Stockholders' Equity Changes (December 31, 2024 to June 30, 2025) | Item | Amount ($) | | :---------------------------------- | :--------- | | Balance, December 31, 2024 | 30,441,632 | | Stock-based compensation | 1,626,718 | | Repurchase of common stock | (375,786) | | Issuance of stock in business combination | 5,950,000 | | Net income | 3,973,861 | | Balance, June 30, 2025 | 42,207,959 | - Total stockholders' equity increased by $11,766,327 from December 31, 2024, to June 30, 2025, primarily driven by net income, stock-based compensation, and the issuance of stock for a business combination, partially offset by common stock repurchases[15] Condensed Consolidated Statements of Cash Flows This section summarizes the cash inflows and outflows from operating, investing, and financing activities Condensed Consolidated Statements of Cash Flows Highlights (Six Months Ended June 30) | Activity | 2025 ($) | 2024 ($) | Change ($) | | :---------------------------------- | :----------- | :----------- | :----------- | | Net cash (used in) provided by operating activities | (2,392,276) | 28,796,693 | (31,188,969) | | Net cash used in investing activities | (6,253,535) | (4,640,045) | (1,613,490) | | Net cash provided by financing activities | 215,748 | 24,000 | 191,748 | | Net change in cash and restricted cash | (8,430,063) | 24,180,648 | (32,610,711) | | Cash and restricted cash, end of period | 113,913,123 | 133,531,661 | (19,618,538) | - Operating activities shifted from providing $28.8 million in cash in H1 2024 to using $2.4 million in H1 2025, primarily due to changes in operating assets and liabilities related to pharma patient affordability business growth and timing of pass-through payments[17][134] - Investing activities cash usage increased, largely due to the $2 million cash payment for the Gamma acquisition and continued investment in software licenses and internally developed software[17][135] Notes to Condensed Consolidated Financial Statements This section includes detailed notes explaining the basis of presentation, significant accounting policies, recent acquisition, and other financial details 1. Basis of Presentation and Summary of Significant Policies This section outlines the foundational principles and key accounting methods used in preparing the financial statements - Paysign, Inc. (PAYS) is a provider of prepaid card programs, pharma patient affordability offerings, digital banking services, and integrated payment processing, incorporated in Nevada since August 24, 1995[22] - The company operates as a single operating and reportable segment, with the CEO assessing performance and allocating resources on a consolidated basis[24][25] - Revenue is generated from plasma and pharma card programs, including cardholder fees, interchange fees, program management fees, transaction claim processing fees, and breakage[49] - Breakage revenue for Q2 2025 was $54,934 (vs. $33,995 in Q2 2024) and for H1 2025 was $156,124 (vs. $86,786 in H1 2024)[50][51] - The company is evaluating the impact of new FASB ASUs: ASU 2023-09 (Income Taxes – Improvements to Income Tax Disclosures) effective for fiscal years after Dec 15, 2024, and ASU 2024-03 (Disaggregation of Income Statement Expenses) effective for fiscal years after Dec 15, 2026[58][59] - ASU 2023-07 (Improvements to Reportable Segment Disclosures) had no material impact[60] 2. Acquisition This section details the financial aspects and strategic rationale behind the company's recent business acquisition - On March 19, 2025, Paysign acquired substantially all assets of Gamma Innovation LLC, a software and services company focused on the blood and plasma collection industry, for a total preliminary purchase consideration of $15,558,637[61][62] Gamma Acquisition Purchase Consideration | Component | Amount ($) | | :-------------------------- | :----------- | | Cash paid upfront | 2,000,000 | | Present value of future cash paid | 6,618,637 | | Equity consideration | 5,950,000 | | Earn-out contingent consideration | 990,000 | | Total consideration | 15,558,637 | - The acquisition resulted in $4,487,637 in goodwill, attributable to expected growth opportunities, potential synergies, and an assembled workforce[63][64] - Identifiable intangible assets acquired were valued at $11,071,000, with acquired technologies accounting for $10,568,000[65] 3. Fixed Assets, Net This section presents the company's property, plant, and equipment, net of accumulated depreciation Fixed Assets, Net (June 30, 2025 vs. December 31, 2024) | Category | June 30, 2025 ($) | December 31, 2024 ($) | | :-------------------- | :---------------- | :-------------------- | | Equipment | 2,780,441 | 2,688,611 | | Software | 560,447 | 487,364 | | Furniture and fixtures | 762,144 | 762,144 | | Website costs | 69,881 | 69,881 | | Leasehold improvements | 236,904 | 236,904 | | Total cost | 4,409,817 | 4,244,904 | | Less: accumulated depreciation | (3,291,448) | (3,086,929) | | Fixed assets, net | 1,118,369 | 1,157,975 | - Net fixed assets slightly decreased by $39,606, despite increases in equipment and software, due to higher accumulated depreciation[66] - Depreciation expense for Q2 2025 was $102,672 (vs. $86,823 in Q2 2024) and for H1 2025 was $204,519 (vs. $177,923 in H1 2024)[66] 4. Intangible Assets, Net This section details the company's non-physical assets, such as patents, software platforms, and customer lists, net of amortization Intangible Assets, Net (June 30, 2025 vs. December 31, 2024) | Category | June 30, 2025 ($) | December 31, 2024 ($) | | :-------------------------- | :---------------- | :-------------------- | | Patents and trademarks | 38,186 | 38,186 | | Platform | 33,385,265 | 29,317,318 | | Customer lists and contracts | 1,177,200 | 1,177,200 | | Licenses | 237,576 | 216,901 | | Hosting implementation | 43,400 | 43,400 | | Contract assets | 277,600 | 277,600 | | Non-compete agreement | 503,000 | – | | Acquired technologies | 10,568,000 | – | | Total cost | 46,230,227 | 31,070,605 | | Less: accumulated amortization | (22,547,469) | (18,830,888) | | Intangible assets, net | 23,682,758 | 12,239,717 | - Net intangible assets significantly increased by $11,443,041, primarily due to the acquisition of Gamma Innovation LLC, which added $10,568,000 in acquired technologies and $503,000 in non-compete agreements[67][65] - Amortization expense for Q2 2025 was $2,017,425 (vs. $1,352,799 in Q2 2024) and for H1 2025 was $3,716,581 (vs. $2,548,104 in H1 2024), reflecting the increased intangible asset base[67] 5. Lease This section describes the company's operating lease arrangements and future payment obligations - The Company has an operating lease for office space effective June 2020, with a 10-year term and two optional five-year extensions not recognized in the right-of-use asset or lease liability[69] Operating Lease Maturity Analysis (as of June 30, 2025) | Year Ending December 31, | Lease Payments ($) | | :------------------------------- | :----------------- | | 2025 (remaining six months) | 320,302 | | 2026 | 640,604 | | 2027 | 640,604 | | 2028 | 640,604 | | 2029 | 640,604 | | Thereafter | 266,919 | | Total lease payments | 3,149,637 | | Less: Imputed interest | (427,913) | | Present value of future lease payments | 2,721,724 | 6. Customer Card Funding Liability This section details the company's liability for funds loaded onto customer cards or available for reimbursement claims Customer Card Funding Liability (Six Months Ended June 30) | Metric | 2025 ($) | 2024 ($) | | :---------------- | :----------- | :----------- | | Beginning balance | 111,328,270 | 92,282,124 | | (Decrease) Increase, net | (9,576,918) | 9,797,702 | | Ending balance | 101,751,352 | 102,079,826 | - Customer card funding liability decreased by $9,576,918 in H1 2025, contrasting with an increase of $9,797,702 in H1 2024[73] - This liability represents funds loaded on cards or available for reimbursement claims[72] 7. Common Stock This section provides information on the company's common stock, including shares issued, outstanding, and stock-based compensation - As of June 30, 2025, Paysign had 55,345,796 shares of common stock issued and 54,411,088 shares outstanding[74] Stock-Based Compensation Expense (Three and Six Months Ended June 30) | Period | 2025 ($) | 2024 ($) | | :-------------------- | :----------- | :----------- | | Three Months Ended | 954,400 | 670,138 | | Six Months Ended | 1,626,718 | 1,334,089 | - During H1 2025, the Company issued 988,000 shares for vested stock awards and option exercises, receiving $591,356 from option exercises[76] - It also granted 5,976,000 restricted stock awards with a weighted average grant date fair value of $2.36[77] 8. Basic and Fully Diluted Net Income (Loss) Per Common Share This section presents the calculation of earnings per share, both basic and diluted, for the reporting periods Net Income Per Common Share (Three Months Ended June 30) | Metric | 2025 | 2024 | | :---------------- | :--- | :--- | | Basic EPS | $0.03 | $0.01 | | Diluted EPS | $0.02 | $0.01 | | Basic Weighted Average Shares | 54,228,027 | 53,008,286 | | Diluted Weighted Average Shares | 57,872,318 | 55,861,786 | Net Income Per Common Share (Six Months Ended June 30) | Metric | 2025 | 2024 | | :---------------- | :--- | :--- | | Basic EPS | $0.07 | $0.02 | | Diluted EPS | $0.07 | $0.02 | | Basic Weighted Average Shares | 53,903,829 | 52,926,462 | | Diluted Weighted Average Shares | 56,312,252 | 55,374,336 | 9. Commitments and Contingencies This section discloses potential future obligations and uncertain events that could impact the company's financial position - A securities class action lawsuit (In re Paysign, Inc. Securities Litigation) was preliminarily settled for $3,750,000, fully covered by the Company's directors-and-officers insurance policy, and received final court approval on April 18, 2024[82] - Four stockholder derivative actions (Toczek, Gray, Blanchette, Jeewa) are pending, alleging breach of fiduciary duty, unjust enrichment, waste, and insider trading[83][84][85][86] - The parties agreed in principle to a proposed settlement on October 4, 2024, with preliminary approval motion pending[86] 10. Income Tax This section provides details on the company's income tax expense, effective tax rates, and related accounting policies Income Tax Expense and Effective Tax Rates (Three and Six Months Ended June 30) | Metric | Q2 2025 | Q2 2024 | H1 2025 | H1 2024 | | :------------------------ | :------ | :------ | :------ | :------ | | Income before income taxes | $2,042,767 | $939,034 | $5,294,031 | $1,412,026 | | Income tax expense | $655,006 | $241,932 | $1,320,170 | $405,828 | | Effective tax rate | 32.1% | 25.8% | 24.9% | 28.7% | - The effective tax rate for Q2 2025 increased to 32.1% from 25.8% in Q2 2024, reflecting the impact of discrete items related to stock price appreciation[87][114][124] - For H1 2025, the rate was 24.9% (vs. 28.7% in H1 2024), primarily due to tax benefits from stock-based compensation[87][114][124] - The Company is evaluating the impact of the One Big Beautiful Bill (OBBB), signed into law on July 4, 2025, which solidifies tax law changes from the TCJA 2017[88] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations This section provides management's perspective on Paysign, Inc.'s financial condition and results of operations for the three and six months ended June 30, 2025, compared to the same periods in 2024 Disclosure Regarding Forward-Looking Statements This section highlights that the report contains projections and expectations about future events, subject to various risks and uncertainties - The report contains forward-looking statements based on current expectations, assumptions, estimates, and projections, identified by words like 'believe,' 'anticipate,' 'expect,' 'intend,' 'plan,' and 'may'[91] - Key forward-looking statements include expectations regarding no losses from uninsured bank balances, future lease obligations, seamless platform integration, end-to-end technology capabilities, focus on corporate incentive and expense prepaid card products, and plans for continued investment in technology, sales, marketing, cybersecurity, and compliance in 2025[91] Overview This section provides a general description of Paysign's business, its product offerings, and strategic focus - Paysign is a vertically integrated provider of prepaid card products and processing services for corporate, consumer, and government applications, operating on a high-availability payments platform[92][93] - The company's product offerings include solutions for corporate rewards, prepaid gift cards, general purpose reloadable debit cards, employee incentives, consumer rebates, donor compensation, clinical trials, healthcare reimbursement, and pharmaceutical payment assistance[94] - Paysign is focusing marketing efforts on corporate incentive and expense prepaid card products across various verticals, including healthcare-related markets, and is now also selling its donor engagement application and customer resource management product following the Gamma acquisition[102] - In 2025, Paysign plans to invest further in technology improvements, sales and marketing, cybersecurity, fraud prevention, customer service, and regulatory compliance, aiming to support existing business and expand into new markets using internally generated funds or potentially new capital[105] Results of Operations This section analyzes Paysign's financial performance for the three and six months ended June 30, 2025, compared to the prior year, detailing revenue and expense drivers Comparison of Q2 2025 to Q2 2024 This section compares the company's financial performance for the second quarter of 2025 against the same period in 2024 Q2 2025 vs. Q2 2024 Financial Performance | Metric | Q2 2025 ($) | Q2 2024 ($) | Change ($) | Change (%) | | :---------------------------------- | :---------- | :---------- | :--------- | :--------- | | Total revenues | 19,078,353 | 14,331,599 | 4,746,754 | 33.1% | | Plasma industry revenue | 10,743,924 | 11,273,262 | (529,338) | (4.7%) | | Pharma industry revenue | 7,753,906 | 2,674,901 | 5,079,005 | 189.9% | | Other revenue | 580,523 | 383,436 | 197,087 | 51.4% | | Cost of revenues | 7,323,188 | 6,745,836 | 577,352 | 8.6% | | Gross profit | 11,755,165 | 7,585,763 | 4,169,402 | 55.0% | | Gross margin % | 61.6% | 52.9% | 8.7% | | | Selling, general and administrative | 8,197,461 | 6,020,464 | 2,176,997 | 36.2% | | Depreciation and amortization | 2,120,097 | 1,439,622 | 680,475 | 47.3% | | Income from operations | 1,437,607 | 125,677 | 1,311,930 | 1043.9% | | Net income | 1,387,761 | 697,102 | 690,659 | 99.1% | - Total revenues increased by 33.1%, driven by a 189.9% surge in pharma revenue due to new programs and increased claims processed (over 80% increase), offsetting a 4.7% decline in plasma revenue as donation levels normalized[107] - Gross profit increased by 55.0%, and gross margin improved from 52.9% to 61.6%, primarily due to the higher gross profit margins of the growing pharma patient affordability business[109] - Operating expenses rose by 38.3%, mainly due to increased compensation and benefits ($974,000), technology and telecom investments ($299,000), and stock-based compensation ($284,000) to support business growth and platform security[110] Comparison of H1 2025 to H1 2024 This section compares the company's financial performance for the first half of 2025 against the same period in 2024 H1 2025 vs. H1 2024 Financial Performance | Metric | H1 2025 ($) | H1 2024 ($) | Change ($) | Change (%) | | :---------------------------------- | :---------- | :---------- | :--------- | :--------- | | Total revenues | 37,676,502 | 27,521,673 | 10,154,829 | 36.9% | | Plasma industry revenue | 20,153,804 | 21,641,296 | (1,487,492) | (6.9%) | | Pharma industry revenue | 16,372,559 | 5,063,545 | 11,309,014 | 223.3% | | Other revenue | 1,150,139 | 816,832 | 333,307 | 40.8% | | Cost of revenues | 14,230,509 | 12,996,659 | 1,233,850 | 9.5% | | Gross profit | 23,445,993 | 14,525,014 | 8,920,979 | 61.4% | | Gross margin % | 62.2% | 52.8% | 9.4% | | | Selling, general and administrative | 15,598,220 | 11,931,662 | 3,666,558 | 30.7% | | Depreciation and amortization | 3,921,100 | 2,726,027 | 1,195,073 | 43.8% | | Income (loss) from operations | 3,926,673 | (132,675) | 4,059,348 | NM | | Net income | 3,973,861 | 1,006,198 | 2,967,663 | 294.9% | - Total revenues increased by 36.9% for H1 2025, primarily driven by a 223.3% increase in pharma revenue due to 21 new programs launched in H1 2025 and the full-year impact of 2024 programs, leading to over 110% increase in claims processed[117] - Gross profit for H1 2025 increased by 61.4%, with gross margin improving from 52.8% to 62.2%, largely due to the higher margins of the pharma patient affordability business[119] - Operating expenses increased by 33.2%, with compensation and benefits rising by $2,519,000 and technology/telecom expenses by $631,000, reflecting investments in growth and platform security, including $129,000 in Gamma acquisition costs[120] Key Performance Indicators and Non-GAAP Measures This section presents key operational metrics and non-GAAP financial measures used to evaluate the company's performance Gross Dollar Volume Loaded on Cards (Three and Six Months Ended June 30) | Period | 2025 ($) | 2024 ($) | Change ($) | Change (%) | | :-------------------- | :--------- | :--------- | :--------- | :--------- | | Three Months Ended | 440 million | 456 million | (16 million) | -3.5% | | Six Months Ended | 847 million | 882 million | (35 million) | -4.0% | - Gross dollar volume loaded on cards declined year-over-year, reflecting a decrease in plasma programs partially offset by growth in pharma patient affordability and other prepaid programs[126] Conversion Rates on Gross Dollar Volume Loaded on Cards (Three and Six Months Ended June 30) | Metric | Q2 2025 | Q2 2024 | H1 2025 | H1 2024 | | :-------------------------- | :------ | :------ | :------ | :------ | | Total revenue conversion rates | 4.34% | 3.14% | 4.45% | 3.12% | | Total gross profit conversion rates | 2.67% | 1.66% | 2.77% | 1.65% | | Net income (loss) conversion rates | 0.32% | 0.15% | 0.47% | 0.11% | Adjusted EBITDA Reconciliation (Three and Six Months Ended June 30) | Metric | Q2 2025 ($) | Q2 2024 ($) | H1 2025 ($) | H1 2024 ($) | | :-------------------------- | :---------- | :---------- | :---------- | :---------- | | Net income | 1,387,761 | 697,102 | 3,973,861 | 1,006,198 | | Income tax provision | 655,006 | 241,932 | 1,320,170 | 405,828 | | Interest income, net | (605,160) | (813,357) | (1,367,358) | (1,544,701) | | Depreciation and amortization | 2,120,097 | 1,439,622 | 3,921,100 | 2,726,027 | | EBITDA | 3,557,704 | 1,565,299 | 7,847,773 | 2,593,352 | | Stock-based compensation | 954,400 | 670,138 | 1,626,718 | 1,334,089 | | Adjusted EBITDA | 4,512,104 | 2,235,437 | 9,474,491 | 3,927,441 | Adjusted EBITDA Margin (Three and Six Months Ended June 30) | Metric | Q2 2025 | Q2 2024 | H1 2025 | H1 2024 | | :-------------------- | :------ | :------ | :------ | :------ | | Net income margin | 7.3% | 4.9% | 10.5% | 3.7% | | EBITDA margin | 18.6% | 10.9% | 20.8% | 9.4% | | Adjusted EBITDA margin | 23.7% | 15.6% | 25.1% | 14.3% | Liquidity and Capital Resources This section assesses the company's cash flows, liquidity position, and capital resources for the periods presented Comparison of H1 2025 and 2024 Cash Flows This section compares the company's cash flow activities for the first half of 2025 against the same period in 2024 Major Sources and Uses of Cash (Six Months Ended June 30) | Activity | 2025 ($) | 2024 ($) | Change ($) | | :---------------------------------- | :----------- | :----------- | :----------- | | Net cash (used in) provided by operating activities | (2,392,276) | 28,796,693 | (31,188,969) | | Net cash used in investing activities | (6,253,535) | (4,640,045) | (1,613,490) | | Net cash provided by financing activities | 215,748 | 24,000 | 191,748 | | Net (decrease) increase in cash and restricted cash | (8,430,063) | 24,180,648 | (32,610,711) | - Operating activities shifted from a net cash inflow of $28.8 million in H1 2024 to a net cash outflow of $2.4 million in H1 2025, primarily due to changes in accounts receivable, accounts payable, and customer card funding related to the pharma patient affordability business growth and timing of pass-through payments[134] - Investing activities used $6.3 million in H1 2025, an increase from $4.6 million in H1 2024, mainly due to $2 million for the Gamma acquisition and continued capitalization of internally developed software[135] - Financing activities provided $215,748 in H1 2025, primarily from stock option exercises ($591,534), partially offset by common stock repurchases ($375,786)[136] Sources of Liquidity This section discusses the company's available cash and expected future cash flows to meet its operational needs - Paysign believes its available cash on hand ($11,753,184 at June 30, 2025), excluding restricted cash, combined with forecasted revenues and cash flows, will be sufficient to sustain operations for the next twenty-four months[138] Critical Accounting Policies and Estimates This section identifies the accounting policies that require significant judgment and estimation by management - The preparation of financial statements requires management to make estimates and assumptions that affect reported amounts, and actual results may differ significantly from these estimates[140][141] Item 3. Quantitative and Qualitative Disclosures About Market Risk As a smaller reporting company, Paysign, Inc. is not required to provide quantitative and qualitative disclosures about market risk - Paysign, Inc. is exempt from providing quantitative and qualitative disclosures about market risk due to its status as a smaller reporting company[142] Item 4. Controls and Procedures This section confirms the effectiveness of Paysign, Inc.'s disclosure controls and procedures and reports no material changes in internal control over financial reporting during the quarter ended June 30, 2025 - The CEO and CFO concluded that Paysign's disclosure controls and procedures were effective as of June 30, 2025[143] - There were no material changes in internal control over financial reporting during the quarter ended June 30, 2025[144] PART II. OTHER INFORMATION Item 1. Legal Proceedings This section details Paysign, Inc.'s involvement in legal proceedings, including a securities class action that has been settled and multiple pending stockholder derivative actions - A securities class action lawsuit, In re Paysign, Inc. Securities Litigation, was settled for $3,750,000, fully covered by the Company's D&O insurance, and received final court approval on April 18, 2024[148] - Four stockholder derivative actions (Toczek, Gray, Blanchette, Jeewa) are pending, alleging violations of the Exchange Act, breach of fiduciary duty, unjust enrichment, and waste[149][150][151][152] - The parties agreed in principle to a proposed settlement on October 4, 2024, with preliminary approval motion currently pending[152] Item 1A. Risk Factors As a smaller reporting company, Paysign, Inc. is not required to provide risk factor disclosures in this quarterly report - Paysign, Inc. is exempt from providing risk factor disclosures in this Form 10-Q due to its status as a smaller reporting company[153] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds This section confirms no unregistered sales of equity securities during the quarter and provides an update on the Company's common stock repurchase program - No shares of common stock were issued in unregistered sales during the quarter ended June 30, 2025[154] - As of June 30, 2025, Paysign had repurchased 631,258 shares of common stock for $1,998,715 at a weighted average price of $3.17 per share under a $5 million stock repurchase program authorized on March 21, 2023[156] - No shares were repurchased during the three months ended June 30, 2025, leaving $3,001,285 available under the program[156] Item 5. Other Information This section states that no director or officer adopted or terminated a Rule 10b5-1 or non-Rule 10b5-1 trading arrangement during the quarter - No director or officer adopted or terminated a Rule 10b5-1 or non-Rule 10b5-1 trading arrangement during the quarter ended June 30, 2025[157] Item 6. Exhibits This section lists the exhibits filed as part of the Form 10-Q, including certifications and XBRL-related documents - The exhibits include Rule 13a-14(a)/15d-14(a) Certifications, Section 1350 Certifications, and various Inline XBRL documents[160] SIGNATURES This section contains the required signatures for the Form 10-Q report, confirming its submission on behalf of Paysign, Inc. - The report was signed by Mark Newcomer, President and Chief Executive Officer, and Jeff Baker, Chief Financial Officer, on August 6, 2025[164]