Paysign, Inc.: Form 10-Q for the period ended Sep 30, 2025

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, 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 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 focus of our marketing efforts on corporate incentive and expense prepaid card products in various market verticals; our plan for 2025 to continue to invest additional funds in technology improvements, sales and marketing, cybersecurity, fraud, customer service, and regulatory compliance; 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 on loaded cards and conversion rates on gross dollar volume loaded on cards; our belief that the following are also key performance indicators: revenues, gross profit, operational expenses as a percent of revenues, cardholder participation, and EBITDA; and our belief that our available cash on hand, excluding restricted cash, along with our forecast for revenues and cash flows for the remainder of 2025 and through the third quarter of 2027, will be sufficient to sustain our operations for the next twenty-four months. 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, 2024 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.

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 applications. Our payment solutions are utilized by our corporate customers as a means to increase customer loyalty, increase patient adherence rates, reduce administration costs and streamline operations. Public sector organizations can utilize our payment solutions to disburse public benefits or for internal payments. We market our prepaid card solutions under our Paysign® brand. As we are a payment processor and prepaid card program manager, we derive our revenue from all stages of the prepaid card lifecycle.

We operate on a powerful, high-availability payments 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, and demand deposit accounts accessible with a debit card. 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, customer service, other billable services, breakage, and settlement income. Revenue from cardholder fees, interchange, card program management fees, transaction claims processing fees, customer service fees, and other service 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 and card program.

We have 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 general purpose reloadable (“GPR”) cards. Payroll cards are issued by an employer to an employee to allow the employee to access payroll amounts that are deposited into an account linked to their card. GPR cards can also be issued to a consumer at a retail location or mailed to a consumer after completing an 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 utilizing a customer’s primary identification number (“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.

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 pharma patient affordability solutions, clinical trials and donor compensation, loyalty rewards, incentive cards, and general disbursements. Following the acquisition of Gamma, we are now allocating some of our marketing efforts to selling our donor engagement application and customer resource management product into our existing markets.

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 and application 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.

For the remainder of 2025, 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.

Results of Operations

Comparison of the Three Months Ended September 30, 2025 to the Three Months Ended September 30, 2024

The following table summarizes our consolidated financial results for the three months ended September 30, 2025 in comparison to the three months ended September 30, 2024:

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The increase in total revenues of $6,340,047 for the three months ended September 30, 2025 compared to the same period in the prior year consisted primarily of a $1,420,944 increase in plasma revenue, a $4,645,716 increase in pharma revenue, and a $273,387 increase in other revenue. The increase in plasma revenue was primarily due to the addition of 117 net plasma centers during the past 12 months offset by a decline in plasma donations and dollars loaded to cards as plasma inventory levels have normalized, 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 39 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. The number of claims processed increased over 60% in the third quarter of 2025 compared to the same period in the prior year. The increase in other revenue was primarily due to the growth and usage in the number of cardholders of our payroll, retail, and corporate incentive programs.

Cost of revenues for the three months ended September 30, 2025 increased $2,662,972 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, customer service, application integration setup, and sales and commission expense. The increase in cost of revenues consisted primarily of (i) increased variable costs of approximately $1,724,000 related to the addition of 117 net plasma centers; (ii) increased customer care expense of approximately $546,000 associated with the overall 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; (iii) increased third-party program network fees of approximately $196,000 associated with our pharma patient affordability programs; (iv) increased sales commission expense of approximately $187,000 related to the increase in overall revenue for programs in which we pay commission expenses; and (v) other increased expenses connected to fraud of approximately $10,000.

Gross profit for the three months ended September 30, 2025 increased $3,677,075 compared to the same period in the prior year, resulting from the launch of an additional 39 net pharma patient affordability programs during the past 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 117 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 three months ended September 30, 2025 increased $2,160,174 compared to the same period in the prior year and consisted primarily of an increase in (i) compensation and benefits of approximately $847,000 due to continued hiring to support our growth primarily from our pharma patient affordability business, a tight labor market, and increased benefit costs; (ii) stock-based compensation costs of approximately $692,000 related to the issuance of additional restricted stock units for new hires and employee retention; (iii) technologies and telecom of approximately $163,000 primarily related to ongoing platform security investments; (iv) travel and entertainment costs approximately of $54,000; (v) general expenses of approximately $94,000 primarily related to conferences, deliveries, and employee education; (vi) outside professional services of approximately $78,000 for audit, tax, and human resources; (vii) other expenses of approximately $3,000; and (viii) a $230,000 decrease in the amount of platform development costs that were capitalized.

Depreciation and amortization expense for the three months ended September 30, 2025 increased $624,799 compared to the same period in the prior year. The increase in depreciation and amortization expense was primarily due to the continued capitalization of new software development costs and equipment purchases related to continued enhancements to our processing platform and employment growth.

For the three months ended September 30, 2025, we recorded income from operations of $1,581,951 representing an improvement of $892,102 compared to income from operations of $689,849 during the same period in the prior year, related to the aforementioned factors.

Other income for the three months ended September 30, 2025 decreased $137,049 primarily related to the implied interest expense related to future cash payments for the Gamma acquisition of $131,694 and slightly lower interest rates.

At September 30, 2025, our income tax provision was $30,482, which equates to an effective tax rate of 1.4% primarily resulting from the impact of our net operating income adjusted for discrete items that occurred within the quarter. At September 30, 2024, our income tax expense was $53,727, which equates to an effective tax rate of 3.6% primarily resulting from tax benefits related to our stock-based compensation and changes to the Company’s valuation allowance recorded on its net deferred tax assets.

The net income for the three months ended September 30, 2025 was $2,215,135, an increase of $778,298 compared to the net income of $1,436,837 for the three months ended September 30, 2024. The overall change in net income relates to the aforementioned factors.

Comparison of the Nine Months Ended September 30, 2025 to the Nine Months Ended September 30, 2024

The following table summarizes our consolidated financial results for the nine months ended September 30, 2025 in comparison to the nine months ended September 30, 2024:

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The increase in total revenues of $16,494,876 for the nine months ended September 30, 2025 compared to the same period in the prior year consisted primarily of a $66,548 decrease in plasma revenue, a $15,954,730 increase in pharma revenue, and a $606,694 increase in other revenue. The decrease in plasma revenue was primarily due to a decline in plasma donations and dollars loaded to cards as plasma inventory levels have normalized, which has reduced our average monthly revenue per center as compared to the same period in the prior year. This decline was offset by the addition of 117 net plasma centers during the past 12 months. The increase in pharma revenue was primarily due to the financial benefit of 39 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 nine months ending September 30, 2025 the number of claims processed increased over 90% compared to the same period in the prior year. The increase in other revenue was primarily due to the growth and usage in the number of cardholders of our payroll, retail, and corporate incentive programs.

Cost of revenues for the nine months ended September 30, 2025 increased $3,896,822 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, customer service, application integration setup, and sales and commission expense. The increase in cost of revenues consisted primarily of (i) increased customer care expense of approximately $1,280,000 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 $654,000 related to the increase in overall revenue for programs in which we pay commission expenses; (iii) increased variable costs of approximately $997,000 related to the addition of 117 net plasma centers; (iv) increased third-party program network fees of approximately $777,000 associated with our pharma patient affordability programs; and (v) increased plastics, collateral and postage of approximately $226,000. These increases were offset by a decrease in other costs of approximately $37,000.

Gross profit for the nine months ended September 30, 2025 increased $12,598,054 compared to the same period in the prior year resulting primarily from the launch of an additional 39 net pharma patient affordability programs during the past 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 117 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 nine months ended September 30, 2025 increased $5,826,732 compared to the same period in the prior year and consisted primarily of an increase in (i) compensation and benefits of approximately $3,366,000 due to continued hiring to support our growth, a tight labor market, and increased benefit costs; (ii) stock-based compensation of approximately $985,000 related to the issuance of restricted stock units for new hires and employee retention; (iii) technologies and telecom expense of approximately $793,000 primarily related to ongoing platform security investments; (iv) general expenses of approximately $219,000 primarily related to conferences, deliveries, and employee education; (v) acquisition costs of approximately $129,000 associated with the Gamma asset purchase; (vi) travel and entertainment of approximately $129,000; and (vii) a decrease in capitalized platform development costs of approximately $240,000. The rise in costs was offset by a reduction in other operating expenses of approximately $35,000.

Depreciation and amortization expense for the nine months ended September 30, 2025 increased $1,819,872 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 and equipment purchases related to continued enhancements to our processing platform and employment growth.

For the nine months ended September 30, 2025, we recorded income from operations of $5,508,624 representing an improvement of $4,951,450 compared to income from operations of $557,174 during the same period in the prior year related to the aforementioned factors.

Other income for the nine months ended September 30, 2024 decreased $314,392 primarily related to the implied interest expense related to future cash payments for the Gamma acquisition of $260,866 and slightly lower interest rates.

At September 30, 2025, our income tax expense was $1,350,652, which equates to an effective tax rate of 17.9% primarily resulting from improved book earnings and tax benefits related to our stock-based compensation. At September 30, 2024, our income tax expense was $459,555, which equates to an effective tax rate of 15.8% primarily resulting from tax benefits related to our stock-based compensation and changes to the Company’s valuation allowance recorded on its net deferred tax assets.

The net income for the nine months ended September 30, 2025 was $6,188,996, an improvement of $3,745,961 compared to the net income of $2,443,035 for the nine months ended September 30, 2024. The overall change in net income relates to the aforementioned factors.

Key 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 our prepaid card programs. Our gross dollar volume loaded on cards was $552 million and $456 million for the three months ended September 30, 2025 and 2024, respectively. Our gross dollar volume loaded on cards was $1.399 million and $1.339 million for the nine months ended September 30, 2025 and 2024, respectively. We use this metric to analyze the total amount of money moving into our prepaid card programs. The year over year increase reflects the number of new plasma centers added, the number of pharma patient affordability programs added, and growth in our other prepaid programs.

Conversion Rates on Gross Dollar Volume Loaded on Cards: Represents revenues, gross profit or net income (loss) conversion rates of gross dollar volume loaded on cards which are calculated by taking our total revenues, gross profit or net income (loss), respectively, as a numerator and dividing by the gross dollar volume loaded on cards as a denominator. As we derive a number of our financial results from cardholder fees, we utilize these metrics as an indication of the amount of money that is added to cards and will eventually be converted to revenues, gross profit and net income (loss). Our total revenue conversion rates for the three months ended September 30, 2025 and 2024 were 3.91% or 391 basis points (“bps”), and 3.34% or 334 basis points, respectively, of gross dollar volume loaded on cards. Our total gross profit conversion rates for the three months ended September 30, 2025 and 2024 were 2.20% or 220 bps, and 1.86% or 186 bps, respectively, of gross dollar volume loaded on cards. Our net income conversion rates for the three months ended September 30, 2025 and 2024 were 0.40% or 40 bps, and 0.31% or 31 bps, respectively, of gross dollar volume loaded on cards. Our total revenue conversion rates for the nine months ended September 30, 2025 and 2024 were 4.24% or424 bps, and 3.20% or 320 bps, respectively, of gross dollar volume loaded on cards. Our total gross profit conversion rates for the nine months ended September 30, 2025 and 2024 were 2.54% or 254 bps, and 1.72% or 172 bps, respectively, of gross dollar volume loaded on cards. Our net income conversion rates for the nine months ended September 30, 2025 and 2024 were 0.44% or 44 bps, and 0.18% or 18 bps, respectively, of gross dollar volume loaded on cards.

Management also reviews key performance indicators, such as revenues, gross profit, operational expenses as a percentage of revenues, and cardholder participation. In addition, we consider certain non-GAAP (or “adjusted”) measures to be useful to management and investors evaluating our operating performance for the periods presented and provide a financial tool for evaluating our ongoing operations, liquidity and management of assets. This information can assist investors in assessing our financial performance and 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.

“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.

Liquidity and Capital Resources

The following table sets forth the major sources and uses of cash:

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Comparison of Nine Months Ended September 30, 2025 and 2024

During the nine months ended September 30, 2025 and 2024, we financed our operations through internally generated funds.

Operating activities provided $4,360,171 of cash as of September 30, 2025, a decrease of $4,273,751 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 decreases in operating assets and liabilities. The changes in accounts receivable, accounts payable, and customer card funding, a net decrease of $12,667,611, 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 decrease in cash flows from operating activities was offset by an increase in net income, reduced prepaid expenses, collection of tax credits and non-cash adjustments for depreciation and amortization, deferred income tax, stock-based compensation, and lease expense.

We used net cash in investing activities during the nine months ended September 30, 2025 and 2024 of $8,436,339 and $7,087,867, respectively. For the nine months ended September 30, 2025, $6,436,339 of cash was used for investing activities primarily attributable to an increase in software licenses 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 that closed on March 19, 2025 (see “Note 2- ACQUISITION” in the notes to the accompanying consolidated financial statements). For the nine months ended September 30, 2024, $7,087,867 of cash was used for investing activities primarily attributable to an increase in software licenses and capitalization of internally developed software as we continue to invest in our technology platform.

Cash provided by financing activities of $284,868 for the nine months ended September 30, 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 nine months ended September 30, 2024 used $331,695 in cash, attributable to the repurchase of 100,000 shares of the Company’s common stock at a weighted average price of $3.60 per share offset by proceeds received of $28,800 for the exercise of stock options.

Our significant contractual cash requirements also include ongoing payments for lease liabilities and acquisition. For additional information regarding our cash commitments and contractual obligations, see “Note 2 – ACQUISITION” and “Note 5 – LEASE” in the notes to the accompanying consolidated financial statements.

Sources of Liquidity

Unrestricted cash was $7,529,047 as of September 30, 2025, a decrease of $2,764,160 compared to the same period in the prior year. The decrease resulted primarily in payment timing on passthrough claim reimbursement receivables and related payables associated with our patient affordability business in the amount of $9,364,030, offset from the improvement in our operating results. We believe that our available cash on hand, excluding restricted cash, at September 30, 2025 of $7,529,047, along with our forecast for revenues and cash flows for the remainder of 2025 and through the third quarter of 2027, 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

Our significant accounting policies are described in Note 2 of the Notes to Consolidated Financial Statements of our Annual Report on Form 10-K for the fiscal year ended December 31, 2024.

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

Our estimates are based on our experience and our interpretation of economic, political, regulatory, and other factors that affect our business prospects. Actual results may differ significantly from our estimates.

Disclosure Controls and Procedures

Disclosure controls and procedures means controls and other procedures that are designed to ensure that the information we are required to disclose in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and to ensure that information required to be disclosed by us in those reports is accumulated and communicated to our management, including our principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. Our chief executive officer and chief financial officer evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of September 30, 2025. Based on that evaluation, our chief executive officer and chief financial officer have concluded that our disclosure controls and procedures were effective as of September 30, 2025, the end of the period covered by this Quarterly Report on Form 10-Q.

Changes in Internal Control over Financial Reporting

During the quarter ended September 30, 2025, there have been no changes in our internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.