Paysign, Inc. (PAYS)

CIK: 0001496443. SIC: 7389 Services-Business Services, NEC. Latest 10-K as of: 2026-03-25.

SIC breadcrumb: Services > Business Services > SIC 7389 Services-Business Services, NEC

SEC company page: https://www.sec.gov/edgar/browse/?CIK=1496443. Latest filing source: 0001683168-26-002180.

Selected Fundamentals

Financials

Annual standardized facts from SEC companyfacts as of latest extracted filing date 2026-03-25. Source: https://data.sec.gov/api/xbrl/companyfacts/CIK0001496443.json. Derived margins, ratios, and free cash flow are computed from the extracted annual SEC facts.

Flow metrics use full-year FY periods from 10-K/10-K/A filings; balance-sheet metrics use FY-end instants. Free cash flow = operating cash flow - capital expenditures. Missing metrics are omitted rather than fabricated.

Ratios

ROE and ROA use period-end equity/assets. Liabilities / equity uses total liabilities divided by stockholders' equity. Current ratio uses current assets divided by current liabilities when both are reported.

Financial Charts

Quarterly

Quarterly standardized facts from SEC companyfacts as of latest extracted filing date 2026-05-13. Source: https://data.sec.gov/api/xbrl/companyfacts/CIK0001496443.json.

Flow metrics use discrete quarter-length periods from 10-Q/10-Q/A filings. Q4 revenue and net income are derived only when annual FY and nine-month YTD facts exist for the same fiscal year; derived Q4 values are labeled. EPS Q4 is not derived.

Quarterly Charts

Macro Cross-References

• CPIAUCSL - Consumer Price Index for All Urban Consumers: All Items in U.S. City Average
• UNRATE - Unemployment Rate
• FEDFUNDS - Federal Funds Effective Rate
• CES0500000003 - Average Hourly Earnings of All Employees, Total Private
• DFEDTARU - Federal Funds Target Range - Upper Limit
• DFEDTARL - Federal Funds Target Range - Lower Limit
• DGS3MO - Market Yield on U.S. Treasury Securities at 3-Month Constant Maturity
• DGS2 - Market Yield on U.S. Treasury Securities at 2-Year Constant Maturity
• DGS10 - Market Yield on U.S. Treasury Securities at 10-Year Constant Maturity
• DGS30 - Market Yield on U.S. Treasury Securities at 30-Year Constant Maturity
• T10Y2Y - 10-Year Treasury Constant Maturity Minus 2-Year Treasury Constant Maturity
• CPILFESL - Consumer Price Index for All Urban Consumers: All Items Less Food and Energy
• CPIUFDSL - Consumer Price Index for All Urban Consumers: Food
• CPIENGSL - Consumer Price Index for All Urban Consumers: Energy
• CUSR0000SAH1 - Consumer Price Index for All Urban Consumers: Shelter
• PCEPI - Personal Consumption Expenditures: Chain-type Price Index
• PCEPILFE - Personal Consumption Expenditures Excluding Food and Energy: Chain-type Price Index
• PPIACO - Producer Price Index by Commodity: All Commodities
• T10YIE - 10-Year Breakeven Inflation Rate
• U6RATE - Total Unemployed, Plus All Marginally Attached Workers Plus Total Employed Part Time for Economic Reasons
• PAYEMS - All Employees, Total Nonfarm
• CIVPART - Labor Force Participation Rate
• EMRATIO - Employment-Population Ratio
• UNEMPLOY - Unemployed
• CE16OV - Employment Level
• ICSA - Initial Claims
• JTSJOL - Job Openings: Total Nonfarm
• JTSQUR - Quits: Total Nonfarm
• GDPC1 - Real Gross Domestic Product
• A191RL1Q225SBEA - Real Gross Domestic Product: Percent Change from Preceding Period
• INDPRO - Industrial Production: Total Index
• TCU - Capacity Utilization: Total Index
• HOUST - New Privately-Owned Housing Units Started: Total Units
• PERMIT - New Privately-Owned Housing Units Authorized in Permit-Issuing Places: Total Units
• RSAFS - Advance Retail Sales: Retail Trade
• PCE - Personal Consumption Expenditures
• DSPIC96 - Real Disposable Personal Income
• PSAVERT - Personal Saving Rate
• M2SL - M2
• BOPGSTB - U.S. International Trade in Goods and Services: Balance
• MSPUS - Median Sales Price of Houses Sold for the United States
• HSN1F - New One Family Houses Sold: United States
• RHORUSQ156N - Homeownership Rate in the United States
• TTLCONS - Total Construction Spending: Total Construction in the United States
• RRVRUSQ156N - Rental Vacancy Rate in the United States
• TOTALSL - Total Consumer Credit Owned and Securitized
• REVOLSL - Revolving Consumer Credit Owned and Securitized
• DRCCLACBS - Delinquency Rate on Credit Card Loans, All Commercial Banks
• GDP - Gross Domestic Product
• GPDI - Gross Private Domestic Investment
• GCE - Government Consumption Expenditures and Gross Investment
• PCEC - Personal Consumption Expenditures
• NETEXP - Net Exports of Goods and Services
• GFDEBTN - Federal Debt: Total Public Debt
• GFDEGDQ188S - Federal Debt: Total Public Debt as Percent of Gross Domestic Product
• FYFSD - Federal Surplus or Deficit
• FGRECPT - Federal Government Current Receipts
• FGEXPND - Federal Government: Current Expenditures
• MANEMP - All Employees, Manufacturing
• USCONS - All Employees, Construction
• USTRADE - All Employees, Retail Trade
• USFIRE - All Employees, Financial Activities
• USGOVT - All Employees, Government
• AWHAETP - Average Weekly Hours of All Employees, Total Private
• DGORDER - Manufacturers' New Orders: Durable Goods
• NEWORDER - Manufacturers' New Orders: Nondefense Capital Goods Excluding Aircraft
• BUSINV - Total Business Inventories
• EXPGS - Exports of Goods and Services
• IMPGS - Imports of Goods and Services
• IR - Import Price Index (End Use): All Commodities
• PPIFIS - Producer Price Index by Commodity: Final Demand

Latest quarter (10-Q)

Latest 10-Q source: 0001683168-26-003762.

Extracted structurally from real Item 2 body heading to real Item 3/4 boundary. Confidence: high. Filing date: 2026-05-13. Report date: 2026-03-31.

ITem 2.
Management’s discussion and analysis of financial condition and results of operations.

Disclosure Regarding Forward-Looking Statements

This Quarterly Report on Form 10-Q includes forward
looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and
Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) (“Forward-Looking Statements”).
All statements other than statements of historical fact included in this report are Forward-Looking Statements. These Forward-Looking
Statements are based on our current expectations, assumptions, estimates and projections about our business and our industry. Words such
as “believe,” “anticipate,” “expect,” “intend,” “plan,” “propose,”
“may,” and other similar expressions identify Forward-Looking Statements. Specific forward-looking statements made herein
include: our belief that we do not anticipate any losses with respect to accounts with balances exceeding federally insured limits; our
expected lease obligations for subsequent years; our belief that our platform can be seamlessly integrated with our clients’ systems;
our belief that changes in the estimates used to calculate the fair value of our business from year to year could materially affect the
determination of fair value; our conclusion that goodwill impairment for the three months ended March 31, 2026 was more likely than 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 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 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 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, along with our forecast for revenues
and cash flows for the remainder of 2026 and through the first quarter of 2028, will be sufficient to sustain our operations for the
next twenty-four months; 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; and our
expectation that the stock repurchase program will be completed within 36 months from the commencement date. 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.

20

Overview

Paysign, Inc. (the “Company,”
“Paysign,” “we” or “our”), headquartered in Nevada, was incorporated on August 24, 1995, and trades
under the symbol PAYS on The Nasdaq Stock Market LLC. We are a vertically integrated provider of prepaid card products and processing
services for corporate, consumer and government entities. Our payment solutions are utilized by our corporate customers as a means to
increase customer loyalty, increase patient adherence rates, reduce administration costs and streamline operations. Public sector organizations
can utilize our payment solutions to disburse public benefits or for internal payments. We market our prepaid card solutions under our
Paysign® brand. As we are a payment processor and prepaid card program manager, we derive our revenue from all stages of the prepaid
card lifecycle.

In addition to our payment solutions,
we also offer life science technology solutions targeting blood and plasma collection organizations. These software solutions are marketed
under the Apherion™ brand, and we derive our revenue from licensing, hosting and consulting fees.

We operate on a powerful, high-availability
payment solutions platform with cutting-edge fintech capabilities that can be seamlessly integrated with our clients’ systems. This
distinctive positioning allows us to provide end-to-end technologies that securely manage transaction processing, cardholder enrollment,
value loading, account management, data and analytics and customer service. Our architecture is known for its cross-platform compatibility,
flexibility, and scalability – allowing our clients and partners to leverage these advantages for cost savings and revenue opportunities.

Our suite of product offerings
includes solutions for corporate rewards, prepaid gift cards, general purpose reloadable debit cards, employee incentives, consumer rebates,
donor compensation, clinical trials, healthcare reimbursement payments and pharmaceutical payment assistance, demand deposit accounts
accessible with a debit card and software solutions targeting blood and plasma collection organizations. Our cards are sponsored by our
issuing bank partners.

Our revenues include fees generated
from cardholder fees, interchange, card program management fees, transaction claims processing fees, 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. Breakage is recorded ratably over the estimated card life based on historical redemption patterns, market-specific
trends, escheatment rules, and existing economic conditions and relates solely to our open-loop gift card business which began at the
end of 2022 and is recorded under other revenue on the condensed consolidated statements of operations. Settlement income is recorded
at the expiration of the card or card program and relates primarily to our corporate incentive programs which is also recorded under other
revenue on the condensed consolidated statements of operations.

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

Reloadable Cards: These types
of cards are generally classified as payroll or considered general purpose reloadable (“GPR”) cards. Payroll cards are issued
by an employer to an employee 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-line application.
GPR cards can be reloaded multiple times with a consumer’s payroll, government benefit, a federal or state tax refund or through
cash reload networks located at retail locations. Reloadable cards are generally open-loop cards as described below.

Non-Reloadable Cards: These
are generally one-time use cards that are only active until the funds initially loaded to the card are spent. These types of cards are
generally used as gift or incentive cards. Typically, these types of cards are used for the purchase of goods or services at retail locations
and cannot be used to receive cash.

Both reloadable and non-reloadable
cards may be open-loop, closed-loop or restricted-loop. Open-loop cards can be used to receive cash at ATM locations by PIN; or purchase
goods or services by PIN or signature at retail locations virtually anywhere that the network brand (American Express, Discover, Mastercard,
Visa, etc.) is accepted. Closed-loop cards can only be used at a specific merchant. Restricted-loop cards can be used at several merchants,
or a defined group of merchants, such as all merchants at a specific shopping mall.

21

The prepaid card market in the
United States has experienced significant growth in recent years due to consumers and merchants embracing improved technology, greater
convenience, more product choices and greater flexibility. Prepaid cards have also proven to be an attractive alternative to traditional
bank accounts for certain segments of the population, particularly those without, or who could not qualify for, a checking or savings
account.

We manage all aspects of the
prepaid card lifecycle, from managing the card design and approval processes with partners and networks, to production, packaging, distribution
and personalization. We also oversee inventory and security controls, renewals, lost and stolen card management and replacement. We employ
a 24/7/365 fully staffed, in-house customer service department which utilizes bilingual customer service representatives, Interactive
Voice Response, and two-way short message service messaging and text alerts.

Currently, we are focusing our
marketing efforts on corporate incentive and expense prepaid card products in various market verticals incl

[Excerpt truncated for page length; source filing is linked above.]

Latest 10-K MD&A

Extracted from Item 7 to the first post-MD&A boundary after HTML sanitization. Confidence: high. Filing date: 2026-03-25. Report date: 2025-12-31.

ITEM
7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION and RESULTS OF OPERATIONS.

The following discussion and analysis of our
financial condition and results of operations should be read in conjunction with the audited consolidated financial statements and related
notes included elsewhere in this Form 10-K. This discussion contains forward-looking statements that involve risks and uncertainties.
Our actual results could differ materially from those discussed below. Factors that could cause or contribute to such differences include,
but are not limited to, those identified below and those discussed in “Risk Factors” included elsewhere in this Form 10-K.

26

Disclosure Regarding Forward-Looking Statements

This Annual Report on Form 10-K 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 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
experience for our clients as training is performed on-site by Paysign staff; we may utilize independent contractors who make direct
sales and are paid on a commission basis only; our belief that nearly every 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 intention to retain any earnings to finance the operation and expansion of our business; our intention to continue to make
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; 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; we may introduce products in the future that would be subject to money 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
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 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 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 need to litigate to enforce or protect our intellectual property rights,
trade secrets and know-how or to determine their scope, validity or enforceability, which is expensive, may divert resources, and
may not be successful; we may be subject to costly litigation in the event our products and technology infringe upon another
party’s proprietary rights; we may 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; our belief that the measures we have taken to provide reliable service to our clients and cardholders,
including the implementation of 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 experience difficulty integrating newly-hired personnel, which could adversely affect our operations; 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 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 2026 to continue to invest additional funds in technology improvements, sales
and marketing, cybersecurity, fraud, customer service, and regulatory compliance; our belief that gross dollar volume loaded on
cards and conversion rates on gross dollar volume loaded on cards are the primary indicators of our quarterly and annual revenues
our belief that our available cash on hand, excluding restricted cash, along with our forecast for revenues and cash flows for the
remainder of 2026 and through 2028, will be sufficient to sustain our operations for the next twenty-four 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 date; our expectation that we will be entitled to a
breakage amount in certain card programs where we hold the cardholder funds; our belief that our platform can be seamlessly
integrated with our clients’ systems; we may become involved in various lawsuits and legal proceedings which arise in 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 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; and 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-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 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 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.

27

Overview

Paysign, Inc. (the “Company,” “Paysign,”
“we” or “our”), headquartered in Nevada, was incorporated on August 24, 1995, and trades under the symbol PAYS
on The Nasdaq Stock Market LLC. We are a vertically integrated provider of prepaid card products and processing services for corporate,
consumer and government entities. Our payment solutions are utilized by our corporate customers as a means to increase customer loyalty,
increase patient adherence rates, reduce administration costs and streamline operations. Public sector organizations can utilize our payment
solutions to disburse public benefits or for internal payments. We market our prepaid card solutions under our Paysign® brand. As
we are a payment processor and prepaid card program manager, we derive our revenue from all stages of the prepaid card lifecycle.

In addition to our payment solutions, we also
offer life science technology solutions targeting blood and plasma collection organizations. These software solutions are marketed under
the Apherion™ brand, and we derive our revenue from licensing, hosting and consulting fees. 

We operate on a powerful, high-availability payment
solutions platform with cutting-edge fintech capabilities that can be seamlessly integrated with our clients’ systems. This distinctive
positioning allows us to provide end-to-end technologies that securely manage transaction processing, cardholder enrollment, value loading,
account management, data and analytics and customer service. Our architecture is known for its cross-platform compatibility, flexibility,
and scalability – allowing our clients and partners to leverage these advantages for cost savings and revenue opportunities.

Our suite of product offerings includes solutions
for corporate rewards, prepaid gift cards, general purpose reloadable debit cards, employee incentives, consumer rebates, donor compensation,
clinical trials, healthcare reimbursement payments and pharmaceutical payment assistance, demand deposit accounts accessible with a debit
card and software solutions targeting blood and plasma collection organizations. Our cards are sponsored by our issuing bank partners.

Our revenues include fees generated from cardholder
fees, interchange, card program management fees, transaction claims processing fees, 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. 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 primarily to our corporate incentive programs.

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

Reloadable Cards: These types of cards are generally
classified as payroll or considered general purpose reloadable (“GPR”) cards. Payroll cards are issued by an employer to an
employee 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-line application. GPR cards can be reloaded
multiple times with a consumer’s payroll, government benefit, a federal or state tax refund or through cash reload networks located
at retail locations. Reloadable cards are generally open-loop cards as described below.

Non-Reloadable Cards: These are generally one-time
use cards that are only active until the funds initially loaded to the card are spent. These types of cards are generally used as gift
or incentive cards. Typically, these types of cards are used for the purchase of goods or services at retail locations and cannot be used
to receive cash.

Both reloadable and non-reloadable cards may be
open-loop, closed-loop or restricted-loop. Open-loop cards can be used to receive cash at ATM locations by PIN; or purchase goods or services
by PIN or signature at retail locations virtually anywhere that the network brand (American Express, Discover, Mastercard, Visa, etc.)
is accepted. Closed-loop cards can only be used at a specific merchant. Restricted-loop cards can be used at several merchants, or a defined
group of merchants, such as all merchants at a specific shopping mall.

28

The prepaid card market in the United States has
experienced significant growth in recent years due to consumers and merchants embracing improved technology, greater convenience, more
product choices and greater flexibility. Prepaid cards have also proven to be an attractive alternative to traditional bank accounts for
certain segments of the population, particularly those without, or who could not qualify for, a checking or savings account.

We manage all aspects of the prepaid card lifecycle,
from managing the card design and approval processes with partners and networks, to production, packaging, distribution and personalization.
We also oversee inventory and security controls, renewals, lost and stolen card management and replacement. We employ a 24/7/365 fully
staffed, in-house customer service department which utilizes bilingual customer service representatives, Interactive Voice Response, and
two-way short message service messaging and text alerts.

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 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 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-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 2026, we plan to continue to invest additional funds in technology
improvements, sales and marketing, cybersecurity, fraud, customer service and regulatory compliance. From time to time, we evaluate raising
capital to enable us to diversify into new market verticals. If we do not raise new capital, we believe that we will still be able to
support our existing business and expand into new vertical markets using internally generated funds.

2025 Year Milestones

·

Grew to approximately 8.4 million cardholders and approximately 670 card programs as of December 31, 2025.

·

Year over year revenue increased 40.5%.

·

Gamma Innovation LLC acquisition.

·

Added 115 net plasma programs, launched 55 net new pharma programs, and added 3 net new other prepaid programs.

29

Results of Operations

Comparison of Year Ended December 31, 2025
to Year Ended December 31, 2024

The following table summarizes our consolidated
financial results for year ended December 31, 2025 in comparison to year ended December 31, 2024:

Year ended December 31,

Variance

2025

2024

$

%

Revenues

Plasma industry

$

45,615,640

$

43,879,508

$

1,736,132

4.0

%

Pharma industry

33,888,631

12,652,412

21,236,219

167.8

%

Other

2,523,905

1,852,632

671,273

36.2

%

Total revenues

82,028,176

58,384,552

23,643,624

40.5

%

Cost of revenues

33,311,223

26,187,218

7,124,005

27.2

%

Gross profit

48,716,953

32,197,334

16,519,619

51.3

%

Gross margin %

59.4

%

55.1

%

Operating expenses

Selling, general and administrative

33,035,317

25,180,840

7,854,477

31.2

%

Depreciation and amortization

8,318,797

5,994,986

2,323,811

38.8

%

Total operating expenses

41,354,114

31,175,826

10,178,288

32.6

%

Income from operations

$

7,362,839

$

1,021,508

$

6,341,331

620.8

%

Other income

$

2,670,415

$

3,116,689

$

(446,274

)

(14.3

%)

Income tax provision

$

2,481,641

$

322,290

$

2,159,351

670.0

%

Net income

$

7,551,613

$

3,815,907

$

3,735,706

97.9

%

Net margin %

9.2

%

6.5

%

The increase in total revenues of $23,643,624
for the year ended December 31, 2025 compared to the same period in the prior year consisted primarily of a $1,736,132 increase in plasma
revenue, a $21,236,219 increase in pharma revenue, and a $671,273 increase in other revenue. The increase in plasma revenue was primarily
due to 115 net plasma centers added during the past 12 months offset by a decline in plasma donations and dollars loaded to cards as plasma
inventory levels were elevated throughout much of 2025, which has reduced our average monthly revenue per center as compared to the same
period in the prior year. The increase in pharma revenue was primarily due to the financial benefit of 55 net pharma patient affordability
programs launched during the past 12 months, 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 year ended December 31, 2025 the number of
claims processed increased 79% 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.

30

Cost of revenues for the year ended December 31,
2025 increased $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, call center support, application
integration setup and sales and commission expense. The increase in cost of revenues consisted primarily of (i) increased call center
support expense of approximately $2,089,000 associated primarily with the growth in our plasma and pharma patient affordability businesses,
a new customer service contact center, wage inflation pressures, a tight labor market and increased benefit costs; (ii) increased sales
and commission expense of approximately $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, collateral and postage of approximately $320,000. These increases were offset by a decrease in other costs of approximately
$45,000.

Gross profit for the year ended December 31, 2025
increased $16,519,619 compared to the same period in the prior year resulting primarily from the launch of an additional 55 net pharma
patient affordability programs during the prior 12 months, and a corresponding increase in setup fees, monthly management fees, claim
processing fees and other billable fees. Gross profit also benefited from the addition of 115 net plasma centers during the past 12 months,
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 year ended December 31, 2025 increased $7,854,477 compared to the same period in the prior year and consisted primarily of an increase
in (i) compensation and benefits of approximately $3,766,000 due to continued hiring to support our 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 $833,000 primarily related to ongoing platform
security investments; (iv) general expenses of approximately $241,000 primarily related to conferences, deliveries, and employee education;
(v) 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 $272,000; and (vii) a decrease in capitalized platform development costs of approximately $1,056,000.
The rise in costs was offset by a reduction in other operating expenses of approximately $92,000.

Depreciation and amortization expense for the
year ended December 31, 2025 increased $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, equipment purchases related to continued enhancements
to our processing platform and employment growth and the amortization of intangible assets from our Gamma acquisition.

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

Other income for the year ended December 31, 2025
decreased $446,274 primarily related to the implied interest expense related to future cash payments for the Gamma acquisition of $395,130
and slightly lower interest rates.

At December 31, 2025, our income tax expense totaled
$2,481,641, representing an effective tax rate of 24.7%. This rate was primarily driven by higher book earnings and adjustments to our
provision estimate related to Section 174 changes under the One Big Beautiful Bill Act, offset by tax benefits associated with stock-based
compensation and tax credits. At December 31, 2024, our income tax provision was $322,290, which equates to an effective tax rate of 7.8%
primarily as a result of federal taxes offset by net operating loss true-up on our state taxes, tax benefits related to our stock-based
compensation and changes to our tax credits.

31

The net income for the year ended December 31,
2025 was $7,551,613, an improvement of $3,735,706 compared to the net income of $3,815,907 for the year ended December 31, 2024. The overall
change in net income relates to the aforementioned factors.

Key Metrics, Performance Indicators and Non-GAAP
Measures

Management reviews a number of metrics to help
us monitor the performance of and identify trends affecting our business. We believe the following measures are the primary indicators
of our quarterly and annual revenues:

Gross Dollar Volume Loaded on Cards: Represents
the total dollar volume of funds loaded to all of our prepaid card programs. Our gross dollar volume loaded on cards was $1,935 million
and $1,783 million for the years ended December 31, 2025 and 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, 2025 and 2024 were 4.24% or 424 basis points (“bps”), and 3.27% or 327 bps,
respectively, of gross dollar volume loaded on cards. Our total gross profit conversion rates for the years ended December 31, 2025 and
2024 were 2.52% or 252 bps, and 1.81% or 181 bps, respectively, of gross dollar volume loaded on cards. Our net income conversion rates
for the years ended December 31, 2025 and 2024 were 0.39% or 39 bps, and 0.21% or 21 bps, respectively, of gross dollar volume loaded
on cards.

Management also reviews key performance indicators,
such as revenues, gross profit, operational expenses as a percent of revenues, and cardholder participation. In addition, we consider
certain non-GAAP (or “adjusted”) measures to be useful to management and investors evaluating our operating performance for
the periods presented and provide a financial tool for evaluating our ongoing operations, liquidity and management of assets. This information
can assist investors in assessing our financial performance and measures our ability to generate capital for deployment and investment
in new card programs. These adjusted metrics are consistent with how management views our business and are used to make financial, operating
and planning decisions. These metrics, however, are not measures of financial performance under GAAP and should not be considered a substitute
for revenue, operating income, net income, earnings per share (basic and diluted) or net cash from operating activities as determined
in accordance with GAAP. We consider the following non-GAAP measures, which may not be comparable to similarly titled measures reported
by other companies, to be key performance indicators:

“EBITDA” is defined as earnings before
interest, income taxes, depreciation and amortization expense and “Adjusted EBITDA” reflects the adjustment to EBITDA to exclude
stock-based compensation expense. A reconciliation of net income to Adjusted EBITDA is provided in the table below.

Year ended December 31,

2025

2024

Reconciliation of adjusted EBITDA to net income:

Net income

$

7,551,613

$

3,815,907

Income tax provision

2,481,641

322,290

Interest income, net

(2,670,415

)

(3,116,689

)

Depreciation and amortization

8,318,797

5,994,986

EBITDA

15,681,636

7,016,494

Stock-based compensation

4,262,058

2,604,589

Adjusted EBITDA

$

19,943,694

$

9,621,083

32

“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 as a percentage of revenue.
A reconciliation of net income margin to Adjusted EBITDA margin is provided in the table below.

Year ended December 31,

(As a percentage of revenue)

2025

2024

Reconciliation of adjusted EBITDA margin to net income margin:

Net income margin

9.2

%

6.5

%

Income tax provision

3.0

%

0.6

%

Interest income, net

(3.3

%)

(5.3

%)

Depreciation and amortization

10.1

%

10.3

%

EBITDA margin

19.1

%

12.0

%

Stock-based compensation

5.2

%

4.5

%

Adjusted EBITDA margin

24.3

%

16.5

%

Liquidity and Capital Resources

The following table sets forth the major sources
and uses of cash for our last two fiscal years ended December 31, 2025 and 2024:

Year ended December 31,

2025

2024

Net cash provided by operating activities

$

52,450,867

$

22,947,120

Net cash used in investing activities

(10,094,210

)

(9,488,702

)

Net cash provided by (used in) financing activities

284,868

(466,245

)

Net increase in cash and restricted cash

$

42,641,525

$

12,992,173

Comparison of Fiscal 2025 and 2024

During the years ended December 31, 2025 and 2024,
we financed our operations through internally generated funds.

Operating activities provided $52,450,867 of cash
as of December 31, 2025, an increase of $29,503,747 compared to 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 increase in operating assets and liabilities. The changes in accounts
receivable, accounts payable and customer card funding, 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. The increase in cash flows
from operating activities was also attributed to an increase in net income, reduced prepaid expenses, collection of tax credits and non-cash
adjustments for depreciation and amortization, deferred income tax, and stock-based compensation.

We used net cash in investing activities during
the year ended December 31, 2025 and 2024 of $10,094,210 and $9,488,702, respectively. For the year ended December 31, 2025, $8,094,210
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. 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.

33

Cash provided by financing activities of $284,868
for the year ended December 31, 2025 was primarily attributed to proceeds from the exercise of options of $660,654, partially offset by
the repurchase of 100,000 shares of the Company’s common stock at a weighted average price of $3.76 per share. Finance activities
during the year ended December 31, 2024 used $466,245 in cash, attributable to the repurchase of 136,700 shares of the Company’s
common stock at a weighted average price of $3.62 per share offset by proceeds of $28,800 for the exercise of stock options.

Our significant contractual cash requirements
also include ongoing payments for lease liabilities. For additional information regarding our cash commitments and contractual obligations,
see “Note 6 – LEASE” in the notes to the accompanying consolidated financial statements.

Liquidity and Sources of Financing

Unrestricted cash was $21,067,651 as of December
31, 2025, an increase of $10,300,669 compared to the same period in the prior year. The increase resulted primarily from the improvement
in our operating results. We believe that our available cash on hand, excluding restricted cash, at December 31, 2025 of $21,067,651,
along with our forecast for revenues and cash flows for the remainder of 2026 and through 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.

Critical Accounting Policies and Estimates

The preparation of consolidated financial statements
in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements
and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.

Our estimates will be based on our experience
and our interpretation of economic, political, regulatory, and other factors that affect our business prospects.

Intangible Assets – For intangible
assets, the Company recognizes an impairment loss if the carrying amount of the intangible asset is not recoverable and exceeds its fair
value. The carrying amount of the intangible asset is considered not recoverable if it exceeds the sum of the undiscounted cash flows
expected to result from the use of the asset.

Intangible assets with an indefinite-life are
not amortized. Intangible assets with a finite life are amortized on a straight-line basis over their estimated useful lives, which are
generally 3 to 10 years.

Goodwill – Our methodology for
allocating the purchase price relating to acquisitions is determined through established valuation techniques. Goodwill represents a residual
value as of the acquisition date, which in most cases results in measuring goodwill as an excess of the purchase consideration transferred
plus the fair value of any noncontrolling interest in the acquired company over the fair value of net assets acquired, including contingent
consideration. We perform goodwill impairment tests on an annual basis in the fourth fiscal quarter, and, in certain circumstances between
annual tests. The assessment of fair value for goodwill and purchased intangible assets is based on factors that market participants would
use in an orderly transaction in accordance with the new accounting guidance for the fair value measurement of non-financial assets.

Internally Developed Software Costs –
Computer software development costs are expensed as incurred, except for internal use software or website development costs that qualify
for capitalization as described below, and include compensation and related expenses, costs of hardware and software, and costs incurred
in developing features and functionality.

34

For computer software developed or obtained for
internal use, costs that are incurred in the preliminary project and post implementation stages of software development are expensed as
incurred. Costs incurred during the application and development stage are capitalized. Capitalized costs are amortized using the straight-line
method over a three year estimated useful life, beginning in the period in which the software is available for use.

Income Taxes – Income tax expense
is comprised of current and deferred income tax expense. Current income tax expense approximates taxes to be paid or refunded for the
current period. Deferred income tax expense results from the changes in deferred tax assets and liabilities during the periods. These
gross deferred tax assets and liabilities represent decreases or increases in taxes expected to be paid in the future because of future
reversals of temporary differences between the basis of assets and liabilities as measured by tax laws and their basis as reported in
our consolidated financial statements. We also recognize deferred tax assets for tax attributes such as net operating loss carryforwards
and tax credit carryforwards. We record valuation allowances to reduce deferred tax assets to the amounts we conclude are more likely-than-not
to be realized in the foreseeable future. While the Company has considered future taxable income and ongoing prudent and feasible tax
strategies in assessing the need for the valuation allowance, if these estimates and assumptions change in the future, the Company may
be required to adjust its valuation allowance.

Income tax benefits are recognized and measured
based upon a two-step model: 1) a tax position must be more likely-than-not to be sustained based solely on its technical merits in order
to be recognized, and 2) the benefit is measured as the largest dollar amount of that position that is more likely-than-not to be sustained
upon settlement. The difference between the benefit recognized for a position and the tax benefit claimed on a tax return is referred
to as an unrecognized tax benefit. Income tax related interest and penalties, if applicable, are accrued within income tax expense.

Revenue and Expense Recognition –
In determining when and how revenue is recognized from contracts with customers, the Company performs the following five-step analysis:
(i) identification of contracts with customers; (ii) determination of performance obligations; (iii) measurement of the transaction price;
(iv) allocation of the transaction price to the performance obligations; and (v) recognition of revenue when (or as) the Company satisfies
each performance obligation.

The Company generates revenues from plasma card
programs through fees generated from cardholders and interchange fees. Revenues from pharma card programs are generated through card program
management fees, transaction claim 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 program revenues include both
fixed and variable components. Cardholder fees represent an obligation to the cardholder based on a per transaction basis and are recognized
at a point in time when the performance obligation is fulfilled. Card program management fees and transaction claims processing fees represent
obligations to our program sponsors. These fees are generally recognized as revenue when earned on a monthly basis and are typically payable
according to the terms outlined in the 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.

35

The portion of the dollar value of prepaid-stored
value cards that consumers do not ultimately redeem are referred to as breakage. In certain card programs where we hold the cardholder
funds and expect to be entitled to a breakage amount, we recognize revenue using estimated breakage rates ratably over the estimated card
life; provided that a significant reversal of the amount of breakage revenue recognized is not probable, and record adjustments to such
estimates when redemption is remote or we are legally defeased of the obligation, if applicable. For each program, we utilize a third
party to estimate breakage rates based on historical redemption patterns, market-specific trends, escheatment rules and existing economic
conditions. The Company accounts for breakage in accordance with Accounting Standards Update (“ASU”) 2016-04, Liabilities—Extinguishment
of Liabilities (Subtopic 405-20): Recognition of Breakage for Certain Prepaid Stored-Value Cards for the recognition of such revenue.

The Company utilizes the remote method of revenue
recognition for settlement income whereby the unspent card balances will be recognized as revenue at the expiration of the cards or the
respective card program. The Company records all revenue on a gross basis since it is the primary obligor and establishes the price in
the contract arrangement with its customers. The Company is currently under no obligation to refund any fees, and the Company does not
currently have any obligations for disputed claim settlements. Given the nature of the Company’s services and contracts, generally
it has no contract assets as it pertains to services rendered but not invoiced.

Cost of revenues is comprised of transaction processing
fees, data connectivity and data center expenses, network fees, bank fees, card production and postage costs, customer service, program
management, application integration setup, fraud charges and sales and commission expense.

Stock-Based Compensation – The Company
recognizes compensation expense for all restricted stock awards and stock options. The fair value of restricted stock awards is measured
using the grant date trading price of our stock. The fair value of stock options is estimated at the grant date using the Black-Scholes
option-pricing model, and the portion that is ultimately expected to vest is recognized as compensation cost over the requisite service
period. We have elected to recognize compensation expense for all options with graded vesting on a straight-line basis over the vesting
period of the entire option. The determination of fair value using the Black-Scholes option pricing model is affected by our stock price
as well as assumptions regarding a number of complex and subjective variables, including expected stock price volatility and the risk-free
interest rate.