Paysign, Inc. (PAYS) Business

ITEM 1. BUSINESS.

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. 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.

What Are Prepaid Cards?

A prepaid card is a payment product that is pre-funded
and not directly linked to an individual bank account. Prepaid cards are unlike debit cards that are attached to a personal or business
checking account and draw funds from that linked account or a credit card that draws funds from a line of credit.

Prepaid cards can either be open-loop, closed-loop,
or restricted-loop. Open-loop, or network-branded, prepaid cards carry an acceptance mark of a national or international payment network
such as Visa, Interlink, Plus, MasterCard, Maestro, Cirrus, Discover or Pulse and can be used anywhere that card brand is accepted. Closed-loop
prepaid cards can only be used at a specific merchant whose name is typically branded on the card and are most likely not network branded.
Restricted-loop prepaid cards may carry a network brand and can be used only at a specific group of non-affiliated merchant locations
such as a shopping mall or a specific merchant category.

Open-loop, and some restricted-loop, prepaid
cards are issued by a financial institution under a license of the payment network. Open-loop prepaid cards provide consumers, businesses
and governments with the efficiency, security and flexibility of digital payments reducing costs associated with handling cash, checks
and other paper-based payment processes, and provides the end user a payment product that is accessible and with global utility, convenient,
safer than cash, can be used as a budgeting tool and contains protections against fraud and theft.

The prepaid market continues to experience significant
growth due to consumers, corporations and governments 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.

Javelin Advisory Services 22nd Annual U.S. Open-Loop
Prepaid Card Market Forecast, 2025-2029, shows that open-loop prepaid growth continues to demonstrate strong performance in both the short-term
and long-term. The forecast is led by robust anticipated growth in the cash access market, which remains the largest open-loop segment.
Javelin predicts an 8% compound annual growth rate (“CAGR”) from 2025 through 2029, with total open-loop loads projected to reach approximately
$450 billion by 2029. The cash access category alone is expected to grow at a 9% CAGR, reaching $350 billion by 2026.

Consumers, both banked and unbanked,
continue to increase their use of prepaid cards such as general purpose reloadable ("GPR") cards to conduct day-to-day
financial transactions including paying bills, depositing checks, and receiving direct deposits. According to Javelin's 2025 North
American Payments Insights survey, the use of open-loop reloadable cards grew significantly from 20% in 2024 to 27% in 2025.
Consumer sentiment research highlights strong purchase intent, with 35% of users reporting they are more likely to purchase
reloadable prepaid cards in the next 12 months, and 42% indicating they will maintain their current purchase levels. The research
also shows that 56% of GPR card users are likely to utilize these cards as budgeting tools in the coming year, demonstrating their
value beyond simple payment functionality.

Common Examples of Prepaid Cards

The prepaid card market is divided into three
macro categories based on who funds the card account. These categories are consumer-funded, corporate-funded and government-funded.

Consumer-Funded Programs: The consumer
prepaid category consists of products such as GPR cards, gift cards, travel money cards, and remittance/peer-to-peer (“P2P”)
cards.

General Purpose Reloadable Cards:
A type of prepaid card typically purchased by a consumer for his or her personal use to pay for purchases, pay bills and/or access
cash at ATMs. GPR cards may be purchased online and in retail locations from a variety of providers. Funds may be loaded onto the
card by direct deposit of wages or benefits or at retail locations offering prepaid card reload services.

Gift Cards: A non-reloadable
prepaid card that is purchased by a gift giver to be given to a gift recipient.

Corporate-Funded Programs: The corporate
prepaid category consists of products such as employee/partner incentives, consumer incentives, payroll, employee benefits, healthcare,
corporate expense and business travel, insurance claim disbursement, etc.

Government-Funded Programs: The government
prepaid category consists of products such as Social Security benefits, veterans’ benefits, disability benefits, pensions, unemployment
benefits, worker’s compensation, emergency disaster relief and child support disbursements.

Our Products and Services

As a payment processor and prepaid card
program manager, our payment solutions are utilized by our customers as a means to increase customer loyalty, increase brand
recognition and reward customers, agents and employees while reducing administration costs and streamlining operations. 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 fully staffed, in-house customer service department which utilizes bilingual customer
service representatives, interactive voice response (“IVR”) and two-way short message service (“SMS”)
messaging and text alerts. As we do not have our own banking license to issue open-loop prepaid cards, our cards are offered to end
users through our relationships with bank issuers.

As an end-to-end payment processor and prepaid
card program manager, we derive our revenue from all stages of the card lifecycle. These revenues can include fees from program set-up;
customization and development; data processing and report generation; card production and fulfillment; transaction fees derived from card
usage; inactivity fees; card replacement fees; program administration fees; breakage; and settlement income.

To date, we have issued millions of prepaid cards
under programs implemented for Fortune 500 companies, multinationals, as well as top pharmaceutical manufacturers, universities and social
media companies.

As of December 31, 2025, we had approximately
8.4 million cardholders participating in approximately 670 card programs.

In our early years of operations, we focused mainly
on providing co-pay assistance prepaid cards to the pharmaceutical industry. In 2011, we began marketing a corporate incentive prepaid
card-based payment solution targeting the plasma donation industry. More recently, having built the necessary infrastructure and added
essential staff, we have increased our focus and sales efforts on disbursement programs, corporate incentive and expense card programs,
as well as retargeting the pharmaceutical industry with patient affordability solutions such as co-pay assistance, buy and bill and other
prepaid programs designed to maximize patient enrollment, adherence and retention.

The Paysign® Brand

In order to leverage the capabilities of the Paysign
platform and successfully expand our product offerings, we established the Paysign brand of prepaid cards and solutions. The Paysign brand
encompasses all of our current and future prepaid product offerings, including but not limited to, corporate incentives, healthcare related
payment solutions for clinical trials, donations and patient affordability solutions, payroll, disbursement payments, corporate expense
cards and solutions designed for the public sector as well as general purpose reloadable prepaid cards and prepaid gift cards. Paysign
is a registered trademark of the Company in the United States and other countries.

Corporate Incentives

Our Paysign corporate incentive cards offer businesses
a practical and contemporary way to reward and motivate existing and potential customers, employees, donors, patients, clinical trial
participants, sales professionals, agents and distributors. We develop incentive card programs, either traditional plastic or virtual,
that our customers use for a wide variety of applications, including but not limited to: consumer rebates for large purchases or frequent
buyers; trade incentives for third-party distributors; new product launches and commission based sales incentives; consumer promotions
such as automobile test drives; purchase incentives; loyalty rewards; compensation for the time and effort of donating; pharmaceutical
payment assistance; referral programs; event giveaways; and purchase incentives. The Paysign solution can be integrated into existing
payment management systems or act as a stand-alone solution. All Paysign cards are accepted anywhere Visa, Interlink, Plus, MasterCard,
Maestro, Cirrus, Discover and Pulse are accepted depending on the brands used on the card.

Key benefits of our corporate incentive cards
are:

Per Diem/ Corporate Expense Payments

Per Diem, Corporate Expense and Business Travel
Cards are reloadable prepaid cards that allows businesses, non–profits and government agencies the ability to control employee spending
while reducing administration costs by eliminating the need for traditional expense reports. We are currently focusing on marketing these
card products to large corporations.

Pharmaceutical Market

Our Paysign solutions for the pharmaceutical industry
are a specialized, adjudicated solution that pays all or a portion of a patient’s out-of-pocket costs associated with a prescription
drug purchase. Funds are provided by the sponsoring pharmaceutical company for use at retail pharmacies, specialty pharmacies, hospitals,
doctors’ offices and clinics nationwide.

Our pharmaceutical solutions provide payment claims
processing and other administrative services for clients according to client benefit plan designs. Our offerings also allow clients to
directly manage more of their pharmacy benefits and include pharmacy claims adjudication, network and payment administration, client call
center service and support, reporting, rebate management, as well as implementation, training and account management.

Patient Affordability Products and Services

Paysign provides targeted products and services
designed to address financial barriers related to patients starting and remaining on brand name and biosimilar drug therapies. Our products
are specifically designed to work within the established workflow of the specific healthcare provider. These products can be used to cover
all or a portion of the patient’s financial responsibility. We continue to build out additional products as industry concerns continue
to emerge presenting new business opportunities. A critical component of all patient affordability products is the ability of a pharmaceutical
manufacturer to access and visualize data related to the performance of their affordability program, patient and prescriber behavior,
and overall brand growth on a commercially insured patient basis. To provide these insights, Paysign has data scientists and a team of
analytic professionals dedicated to these products and clients.

Pharmacy Based Voucher and Patient Affordability
Programs: Voucher and patient affordability programs have become an industry standard offering for pharmaceutical brands entering a market
or seeking to increase market share. These products are processed via the pharmacy transactional systems in accordance with established
standards. These products are the most common form of affordability programs and exist for almost every retail and specialty-based branded
pharmaceutical drug. Pharmacies process claims to one of Paysign’s chosen processors who grow and maintain their own individual
contractual networks. Claims may be submitted in the primary or secondary payor position where our processor will adjudicate the claim
in accordance with business rules defined by each client.

Medical Claims Based Affordability Programs: These
programs are similar to pharmacy-based products but utilize internal networks developed and maintained by Paysign. We are a direct processor
of these claims and conduct adjudication on an internal proprietary platform specifically designed to address the needs of our clients
and their unique business rules. Payments for processed claims are made directly to a healthcare provider using either checks or virtual
debit cards. We differentiate ourselves with this specific product by offering accelerated adjudication and payments for medical claims
relative to our competition. This results in providers having a stronger willingness to utilize our products versus our competitors.

Debit Based Affordability Programs: We continue
to utilize physical and virtual debit cards to address highly specific industry concerns related to patient affordability. These issues
include utilization of debit-based products to combat copay accumulators and maximizers, currently one of the largest threats in the marketplace
for pharmaceutical manufacturers.

Source Plasma Donor Payments

Plasma derived therapies are lifesaving treatments
used to treat various rare conditions. Plasma based therapies are manufactured using human plasma, which is the yellow liquid portion
of whole blood that can be easily replaced by the body. Plasma makes up approximately 55% of whole blood and consists primarily of water
and proteins. Source plasma is the plasma collected from individual donors that serves as the raw material for the further manufacture
into these lifesaving therapies. In the past, source plasma donation centers compensated their donors with cash or check. Today, the
predominant compensation means for donor payments is a prepaid card.

The Company provides a fully customized payment
solution for source plasma collection centers under the Paysign brand. This offering includes the Paysign Plasma Donor Compensation Prepaid
Card and the Paysign Partner Portal for administrators. In addition, the plasma solution features a point-of-sale cash-back rewards program,
a pharmacy prescription discount card and a digital banking account, all designed to help plasma donation centers enhance and optimize
the donor experience. The solution offers customized reporting and provides a level of business analytics previously unavailable. The
solution can be utilized either as a stand-alone web-based solution or integrated with existing donor management systems, giving plasma
donation centers an increased level of flexibility. The Company entered the market in late 2011 and has seen significant growth in this
market segment. Currently, the Company services approximately 48% of the plasma collection centers in the United States and Puerto Rico.

Life Science Technology Solutions

Paysign offers a cloud-based, state of the art
technology platform purpose-built for blood and plasma collection organizations known as Apherion™. It combines donor engagement,
donor relationship management, core operational systems, compensation optimization, donor payments, competitive market intelligence and
quality assurance, into a single, modular operating system designed for regulated, high-volume blood and plasma collection environments.
Apherion replaces fragmented legacy systems with an integrated platform that enables operators to reduce collection costs, improve donor
experience and retention, maintain compliance and scale efficiently across single-center and multi-center donation networks.

DDA Debit Cards—Paysign Premier

Recently, providers of GPR card products, in
response to changes in the regulatory environment, have introduced new products similar to a GPR card but that act as true demand deposit
accounts accessible with a debit card (“DDA Debit Card”). These DDA Debit Cards offer many of the features and functionalities
of a traditional debit card associated with a standard bank account, including overdraft protection. The Company markets this product,
branded Paysign Premier Digital Bank Account, to a targeted portion of its existing cardholder base through existing communication points
and to customers and employees of new clients.

Other Services

Customer Service Center

In order to provide a full range of services to
our customers, we offer a fully staffed, in-house Customer Service Center which is operational 24 hours a day, 7 days per week consisting
of live bilingual customer care representatives. The Paysign platform provides IVR, SMS alerts and two-way SMS messaging, allowing cardholders
to set alerts and check their balances and transaction history without the assistance of a live customer service operator. We believe
our in-house customer service center provides the highest quality customer service experience for our clients as training is performed
on-site by Paysign staff.

The Paysign Communications Suite

To help maximize the cardholder experience, cardholders
can access their card balances and transaction history, as well as other information as dictated by the program, such as an ATM locator,
a loyalty point counter, and geo-specific messaging through a number of touchpoints such as the Paysign Mobile App, two-way SMS, text
alerts and the Paysign cardholder web portal.

Technology

Our technology platform employs a standard enterprise
services bus in a service-oriented architecture, configured for 24/7/365 transaction processing and operations. We utilize two secure,
interconnected, environmentally-controlled data centers, with emergency power generation capabilities, and fully redundant capabilities,
and cloud hosting. We use a variety of proprietary and licensed standards-based technologies to implement our platforms, including those
which provide for orchestration, interoperability and process control. The platforms also integrate a data infrastructure to support both
transaction processing and data warehousing for operational support and data analytics.

Competition

The markets for financial products and services,
including prepaid cards and services related thereto, are intensely competitive. We compete with a variety of companies in our markets
and our competitors vary in size, scope and breadth of products and services offered. Certain segments of the financial services and healthcare
industries tend to be highly fragmented, with numerous companies competing for market share. Highly fragmented segments currently include
financial account processing, customer relationship management solutions, electronic funds transfer and prepaid solutions.

Many of our existing and potential competitors
have longer operating histories, greater financial strength and more recognized brands in the industry. These competitors may be able
to attract customers more easily because of their financial resources and awareness in the market. Our larger competitors can also devote
substantially more resources to business development and may adopt more aggressive pricing policies. To compete with these companies,
we rely primarily on direct marketing strategies including strategic marketing partners.

Sales and Marketing

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 on a commission basis only.

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.

Markets and Major Customers

We have no major customers and are not reliant
on any individual card program. We manage multiple card programs at any given time. As of December 31, 2025, we managed approximately
670 card programs with approximately 8.4 million participating cardholders.

Regulations

Introduction

We operate in a highly regulated environment and
are subject to extensive regulation, supervision and examination. Applicable laws and regulations may change, and there is no assurance
that such changes will not adversely affect our business. Regulatory authorities have extensive discretion in connection with their supervisory
and enforcement activities, including but not limited to the imposition of restrictions on the operation of financial institutions we
may work with. Any change in such regulation and oversight, whether in the form of restrictions on activities, regulatory policy, regulations,
or legislation, including but not limited to changes in the regulations governing banks, could have a material impact on our operations.

Our products and services are generally subject
to federal, state and local laws and regulations, including:

These laws are often evolving and sometimes ambiguous
or inconsistent, and the extent to which they apply to us or the banks that issue our cards, our clients or our third-party service providers
is at times unclear. Any failure to comply with applicable law — either by us or by the card issuing banks, our client or our
third-party service providers, over which we have limited legal and practical control — could result in restrictions on our
ability to provide our products and services, as well as the imposition of civil fines and criminal penalties and the suspension or revocation
of a license or registration required to sell our products and services. See "Risk Factors" for additional discussion regarding
the potential impacts of changes in laws and regulations to which we are subject and failure to comply with existing or future laws
and regulations.

We continually monitor and enhance our compliance
program to stay current with the most recent legal and regulatory changes. We also continue to implement policies and programs and to
adapt our business practices and strategies to help us comply with current legal standards, as well as with new and changing legal requirements
affecting particular services or the conduct of our business generally.

Anti-Money Laundering and Anti-Bribery Laws

Our products and services are generally subject
to federal anti-money laundering laws, including the Bank Secrecy Act, as amended by the USA PATRIOT Act, and similar state laws. On an
ongoing basis, these laws require us, among other things, to:

Anti-money laundering regulations are constantly
evolving. We continuously monitor our compliance with anti-money laundering regulations and implement policies and procedures to make
our business practices flexible, so we can comply with the most current legal requirements. We cannot predict how these future regulations
might affect us. Complying with future regulation could be expensive or require us to change the way we operate our business.

Money Transfer and Payment Instrument Licensing
Regulations

We are not currently subject to money transfer
and payment instrument licensing regulations; however, we may introduce products in the future that would be subject to such regulations.
Currently, we believe that nearly every state would require us to obtain a money transmitter license to operate a money transfer
business. As a licensee, we would be subject to certain restrictions and requirements, including reporting, net worth and surety bonding
requirements and requirements for regulatory approval of controlling stockholders, agent locations and consumer forms and disclosures.
We would also be subject to inspection by the regulators in the jurisdictions in which we are licensed, many of which conduct regular
examinations. In addition, we would be required to maintain "permissible investments" in an amount equivalent to all "outstanding
payment obligations."

Escheatment Laws

Unclaimed property laws of every U.S. state
require that certain information be tracked on card programs. If customer funds are unclaimed at the end of an applicable statutory abandonment
period, the proceeds of the unclaimed property must be remitted to the appropriate state. Analysis of facts and circumstances of
each card program under state unclaimed property laws determines whether funds under such programs are escheatable.

Privacy and Data Protection Regulation

In the ordinary course of our business, we or
our third-party service providers collect certain types of data, which subjects us to certain privacy and information security laws in
the United States, including, for example, the Gramm-Leach-Bliley Act of 1999, and other laws or rules designed to regulate consumer information
and mitigate identity theft. We are also subject to privacy laws of various states. These state and federal laws impose obligations with
respect to the collection, processing, storage, disposal, use and disclosure of personal information, and require that financial institutions
have in place policies regarding information privacy and security. In addition, under federal and certain state financial privacy laws,
we must provide notice to consumers of our policies and practices for sharing nonpublic information with third parties, provide advance
notice of any changes to our policies and, with limited exceptions, give consumers the right to prevent use of their nonpublic personal
information and disclosure of it to unaffiliated third parties. Certain state laws may, in some circumstances, require us to notify affected
individuals of security breaches of computer databases that contain their personal information. These laws may also require us to notify
state law enforcement, regulators or consumer reporting agencies in the event of a data breach, as well as businesses and governmental
agencies that own data. In order to comply with the privacy and information safeguard laws, we have confidentiality/information security
standards and procedures in place for our business activities and with our third-party vendors and service providers. Privacy and information
security laws evolve regularly, requiring us to adjust our compliance program on an ongoing basis and presenting compliance challenges.

Bank Regulations

All the cards that we service are issued by state-chartered
banks. Thus, we are subject to the oversight of the regulators for, and certain laws applicable to, these card issuing banks. These banking
laws require us, as a servicer to the banks that issue our cards, among other things, to undertake compliance actions similar to those
described under "Anti-Money Laundering Laws" above and to comply with the privacy regulations promulgated under the Gramm-Leach-Bliley
Act as discussed under "Privacy and Information Safeguard Laws" above.

Consumer Protection Laws

Certain products that we offer are subject to
additional state and federal consumer protection laws, including laws prohibiting unfair and deceptive practices, regulating electronic
fund transfers and protecting consumer nonpublic information. As such, we have developed appropriate procedures for compliance with these
consumer protection laws.

Card Networks

In order to provide our products and services,
we, as well as the banks that issue our cards, must be registered with Visa and/or MasterCard, as well as any other networks that we desire
to use, such as Interlink, Plus, Maestro, Cirrus, Discover and Pulse, and, as a result, are subject to card association rules that could
subject us to a variety of fines or penalties that may be levied by the card association or network for certain acts or omissions. The
banks that issue our cards are specifically registered as "members" of the card networks. The card networks set the standards
with which we and the card issuing banks must comply.

Environmental Sustainability

Climate-related events, including extreme weather
events and natural disasters and their effect on critical infrastructure in the U.S. could have similar adverse effects on our operations,
customers or third-party suppliers. Furthermore, our stockholders, customers and other stakeholders have begun to consider how corporations
are addressing environmental, social and governance ("ESG") issues. Government regulators, investors, customers and the general
public are increasingly focused on ESG practices and disclosures, and views about ESG are diverse and rapidly changing. These shifts in
investing priorities may result in adverse effects on the trading price of the Company’s common stock if investors determine that
the Company has not made sufficient progress on ESG matters. Furthermore, developing and acting on initiatives within the scope of ESG,
and collecting, measuring and reporting ESG-related information and metrics can be costly, difficult and time consuming, and are subject
to evolving reporting standards and/or contractual obligations. We could also face potential negative ESG-related publicity in traditional
media or social media if stockholders or other stakeholders determine that we have not adequately considered or addressed ESG matters.
Stockholders are increasingly submitting proposals related to a variety of ESG issues to public companies, and we may receive such proposals
in the future. Such proposals may not be in the long-term interests of the Company or our stockholders and may divert management’s
attention away from operational matters or create the impression that our practices are inadequate.

False Claims Laws and Other Fraud and Abuse
Restrictions

We provide claims processing and other transaction
services to pharmaceutical companies that relate to, or directly involve, the reimbursement of pharmaceutical costs covered by Medicare,
Medicaid, other federal healthcare programs and private payers. As a result of these aspects of our business, 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. These laws generally prohibit an individual or entity from knowingly presenting
or causing to be presented claims for payment to Medicare, Medicaid or other third-party payers that are false or fraudulent. False or
fraudulent claims include, but are not limited to, billing for services not rendered, failing to refund known overpayments, misrepresenting
actual services rendered in order to obtain higher reimbursement, improper coding and billing for medically unnecessary goods and services.
Many of these laws provide significant civil and criminal penalties for noncompliance and can be enforced by private individuals through
“whistleblower” or qui tam actions. To avoid liability, providers and their contractors must, among other things, carefully
and accurately code, complete and submit claims for reimbursement.

From time to time, participants in the healthcare
industry, including us, may be subject to actions under the federal False Claims Act or other fraud and abuse provisions. We cannot guarantee
that state and federal agencies will regard any billing errors we process as inadvertent or will not hold us responsible for any compliance
issues related to claims we handle on behalf of providers and payers. Although we believe our editing processes are consistent with applicable
reimbursement rules and industry practice, a court, enforcement agency or whistleblower could challenge these practices. We cannot predict
the impact of any enforcement actions under the various false claims and fraud and abuse laws applicable to our operations. Even an unsuccessful
challenge of our practices could cause adverse publicity and cause us to incur significant legal and related costs.

Privacy and Security Standards under HIPAA
or Other Laws.

HIPAA contains privacy regulations and security
regulations that apply to some of our operations. The privacy regulations extensively regulate the use and disclosure of individually
identifiable health information by entities subject to HIPAA. For example, the privacy regulations permit parties to use and disclose
individually identifiable health information for treatment and to process claims for payment, but other uses and disclosures, such as
marketing communications, require written authorization from the individual or must meet an exception specified under the privacy regulations.
The privacy regulations also provide patients with rights related to understanding and controlling how their health information is used
and disclosed. To the extent permitted by the privacy regulations from the American Recovery and Reinvestment Act, and our contracts with
our customers, we may use and disclose individually identifiable health information to perform our services and for other limited purposes,
such as creating de-identified information. Determining whether data has been sufficiently de-identified to comply with the privacy regulations
and our contractual obligations may require complex factual and statistical analyses and may be subject to interpretation. The security
regulations require certain entities to implement and maintain administrative, physical and technical safeguards to protect the security
of individually identifiable health information that is electronically transmitted or electronically stored. We have implemented and maintain
policies and processes to assist us in complying with the privacy regulations, the security regulations and our contractual obligations.
We cannot provide assurance regarding how these standards will be interpreted, enforced or applied to our operations. If we are unable
to properly protect the privacy and security of health information entrusted to us, we could be subject to substantial penalties, damages
and injunctive relief.

In addition to HIPAA, numerous other state and
federal laws govern the collection, dissemination, use, access to and confidentiality of individually identifiable health information
and healthcare provider information. In addition, some states are considering new laws and regulations that further protect the confidentiality,
privacy and security of medical records or other types of medical information. In many cases, these state laws are not preempted by the
HIPAA privacy regulations and may be subject to interpretation by various courts and other governmental authorities. Further, the U.S. Congress
and a number of states have considered or are considering prohibitions or limitations on the disclosure of medical or other information
to individuals or entities located outside of the United States.

Patents and Trademarks

We protect our intellectual property rights through
a combination of trademark, patent, copyright, and trade secrets laws.

In order to limit access to and disclosure of
our intellectual property and proprietary information, all of our employees and consultants have signed confidentiality and we enter into
nondisclosure agreements with third parties. We cannot provide assurance that the steps we have taken to protect our intellectual property
rights, however, will deter adequately infringement or misappropriation of those rights. Particularly given the international nature of
the Internet, the rate of growth of the Internet and the ease of registering new domain names, we may not be able to detect unauthorized
use of our intellectual property or proprietary information, or to take enforcement action.

Employees and Independent Contractors

As of December 31, 2025, we had approximately
two hundred twenty-six employees and independent contractors.

We have no collective bargaining agreements with
our employees and believe all independent contractor and employment agreement relationships are satisfactory. We hire independent contractors
on an as-needed basis, and 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.

Available Information

Our internet address is www.paysign.com. Information
on our website does not constitute part of this Annual Report.