Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Jun. 30, 2020 | Aug. 12, 2020 | |
Cover [Abstract] | ||
Entity Registrant Name | Paysign, Inc. | |
Entity Central Index Key | 0001496443 | |
Document Type | 10-Q | |
Document Period End Date | Jun. 30, 2020 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Is Entity's Reporting Status Current? | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Common Stock, Shares Outstanding | 49,546,707 | |
Document Fiscal Period Focus | Q2 | |
Document Fiscal Year Focus | 2020 | |
Entity Emerging Growth | true | |
Entity Small Business | true | |
Entity Ex Transition Period | false | |
Entity File Number | 000-54123 | |
State of Incorporation | NV | |
Interactive data current? | Yes | |
Entity Shell Company | false |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) - USD ($) | Jun. 30, 2020 | Dec. 31, 2019 |
Current assets | ||
Cash | $ 7,633,149 | $ 9,663,746 |
Restricted Cash | 39,921,183 | 35,908,559 |
Accounts Receivable | 663,584 | 891,936 |
Prepaid expenses and other assets | 1,440,621 | 1,413,208 |
Total current assets | 49,658,537 | 47,877,449 |
Fixed assets, net | 1,753,368 | 937,185 |
Intangible assets, net | 4,008,794 | 3,816,232 |
Operating lease right-of-use asset | 4,526,089 | 0 |
Deferred tax assets | 1,417,179 | 917,480 |
Total assets | 61,363,967 | 53,548,346 |
Current liabilities | ||
Accounts payable and accrued liabilities | 1,136,821 | 1,523,604 |
Operating lease, current portion | 301,233 | 0 |
Customer card funding | 33,845,620 | 32,723,227 |
Total current liabilities | 35,283,674 | 34,246,831 |
Operating lease liability, long term portion | 4,176,314 | 0 |
Total liabilities | 39,459,988 | 34,246,831 |
Stockholders' equity | ||
Preferred stock: $0.001 par value; 25,000,000 shares authorized; none issued and outstanding at June 30, 2020 and December 31, 2019 | 0 | 0 |
Common stock: $0.001 par value; 150,000,000 shares authorized, 49,373,707 and 48,577,712 issued at June 30, 2020 and December 31, 2019, respectively | 49,374 | 48,578 |
Additional paid-in capital | 12,594,389 | 11,577,539 |
Treasury stock at cost, 303,450 shares | (150,000) | (150,000) |
Retained earnings | 9,410,216 | 8,088,485 |
Total Paysign, Inc. stockholders' equity | 21,903,979 | 19,564,602 |
Noncontrolling interest | 0 | (263,087) |
Total equity | 21,903,979 | 19,301,515 |
Total liabilities and equity | $ 61,363,967 | $ 53,548,346 |
CONDENSED CONSOLIDATED BALANC_2
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (Parenthetical) - $ / shares | Jun. 30, 2020 | Dec. 31, 2019 |
Statement of Financial Position [Abstract] | ||
Common stock, par value | $ 0.001 | $ .001 |
Common stock, shares authorized | 150,000,000 | 150,000,000 |
Common stock, shares issued | 49,373,707 | 48,577,712 |
Common stock, shares outstanding | 49,373,707 | 48,577,712 |
Treasury stock shares | 303,450 | 303,450 |
Preferred stock, par value | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized | 25,000,000 | 25,000,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Revenues | $ 6,443,065 | $ 8,636,271 | $ 17,019,538 | $ 15,893,561 |
Cost of revenues | 3,138,350 | 3,598,038 | 7,993,870 | 7,080,174 |
Gross profit | 3,304,715 | 5,038,233 | 9,025,668 | 8,813,387 |
Operating expenses | ||||
Selling, general and administrative | 3,401,501 | 3,012,972 | 7,228,825 | 5,717,921 |
Loss on abandonment of assets | 42,898 | 0 | 42,898 | 0 |
Depreciation and amortization | 506,477 | 395,510 | 1,008,854 | 729,271 |
Total operating expenses | 3,950,876 | 3,408,482 | 8,280,576 | 6,447,192 |
Income (loss) from operations | (646,161) | 1,629,751 | 745,092 | 2,366,195 |
Other income (expense) | ||||
Interest income | 3,130 | 131,812 | 65,291 | 250,985 |
Total other income | 3,130 | 131,812 | 65,291 | 250,985 |
Income (loss) before income tax provision (benefit) and noncontrolling interest | (643,031) | 1,761,563 | 810,383 | 2,617,180 |
Income tax provision (benefit) | (423,797) | 23,276 | (511,348) | 7,786 |
Net income (loss) before noncontrolling interest | (219,234) | 1,738,287 | 1,321,731 | 2,609,394 |
Net loss attributable to the noncontrolling interest | 0 | 504 | 0 | 1,068 |
Net income (loss) attributable to Paysign, Inc. | $ (219,234) | $ 1,738,791 | $ 1,321,731 | $ 2,610,462 |
Net income (loss) per share - basic | $ 0 | $ 0.04 | $ 0.03 | $ 0.06 |
Net income (loss) per share - diluted | $ 0 | $ 0.03 | $ 0.02 | $ 0.05 |
Weighted average common shares outstanding - basic | 49,015,686 | 47,310,209 | 48,864,424 | 47,136,608 |
Weighted average common shares outstanding - diluted | 54,396,850 | 54,967,595 | 54,542,458 | 54,739,483 |
Plasma Industry [Member] | ||||
Revenues | $ 4,572,439 | $ 6,542,655 | $ 11,915,849 | $ 12,427,232 |
Pharma industry [Member] | ||||
Revenues | 1,768,565 | 2,093,616 | 4,788,942 | 3,466,329 |
Other [Member] | ||||
Revenues | $ 102,061 | $ 0 | $ 314,747 | $ 0 |
CONDENSED CONSOLIDATED STATEM_2
CONDENSED CONSOLIDATED STATEMENTS OF EQUITY (UNAUDITED) - USD ($) | Common Stock | Additional Paid-In Capital | Treasury Stock | Retained Earnings | Noncontrolling Interest | Total |
Beginning balance, shares at Dec. 31, 2018 | 46,440,765 | |||||
Beginning balance, value at Dec. 31, 2018 | $ 46,441 | $ 8,620,144 | $ (150,000) | $ 579,582 | $ (206,930) | $ 8,889,237 |
Issuance of stock for previously vested stock-based compensation, shares | 291,147 | |||||
Issuance of stock for previously vested stock-based compensation, value | $ 291 | (291) | ||||
Stock-based compensation | 646,710 | 646,710 | ||||
Net income (loss) | 871,671 | (564) | 871,107 | |||
Ending balance, shares at Mar. 31, 2019 | 46,731,912 | |||||
Ending balance, value at Mar. 31, 2019 | $ 46,732 | 9,266,563 | (150,000) | 1,451,253 | (207,494) | 10,407,054 |
Beginning balance, shares at Dec. 31, 2018 | 46,440,765 | |||||
Beginning balance, value at Dec. 31, 2018 | $ 46,441 | 8,620,144 | (150,000) | 579,582 | (206,930) | 8,889,237 |
Issuance of stock for acquisition of contract assets, value | 0 | |||||
Ending balance, shares at Jun. 30, 2019 | 47,556,912 | |||||
Ending balance, value at Jun. 30, 2019 | $ 47,557 | 9,833,648 | (150,000) | 3,190,044 | (207,998) | 12,713,251 |
Beginning balance, shares at Mar. 31, 2019 | 46,731,912 | |||||
Beginning balance, value at Mar. 31, 2019 | $ 46,732 | 9,266,563 | (150,000) | 1,451,253 | (207,494) | 10,407,054 |
Issuance of stock for previously vested stock-based compensation, shares | 825,000 | |||||
Issuance of stock for previously vested stock-based compensation, value | $ 825 | (825) | ||||
Stock-based compensation | 567,910 | 567,910 | ||||
Net income (loss) | 1,738,791 | (504) | 1,738,287 | |||
Ending balance, shares at Jun. 30, 2019 | 47,556,912 | |||||
Ending balance, value at Jun. 30, 2019 | $ 47,557 | 9,833,648 | (150,000) | 3,190,044 | (207,998) | 12,713,251 |
Beginning balance, shares at Dec. 31, 2019 | 48,577,712 | |||||
Beginning balance, value at Dec. 31, 2019 | $ 48,578 | 11,577,539 | (150,000) | 8,088,485 | (263,087) | 19,301,515 |
Issuance of stock for previously vested stock-based compensation, shares | 428,558 | |||||
Issuance of stock for previously vested stock-based compensation, value | $ 428 | (428) | ||||
Stock-based compensation | 724,183 | 724,183 | ||||
Exercise of stock options, shares | 10,000 | |||||
Exercise of stock options, value | $ 10 | 23,990 | 24,000 | |||
Dissolution of Paysign, Ltd. | (263,087) | 263,087 | ||||
Net income (loss) | 1,540,965 | 1,540,965 | ||||
Ending balance, shares at Mar. 31, 2020 | 49,016,270 | |||||
Ending balance, value at Mar. 31, 2020 | $ 49,016 | 12,062,197 | (150,000) | 9,629,450 | 21,590,663 | |
Beginning balance, shares at Dec. 31, 2019 | 48,577,712 | |||||
Beginning balance, value at Dec. 31, 2019 | $ 48,578 | 11,577,539 | (150,000) | 8,088,485 | (263,087) | 19,301,515 |
Issuance of stock for acquisition of contract assets, value | 177,200 | |||||
Ending balance, shares at Jun. 30, 2020 | 49,373,707 | |||||
Ending balance, value at Jun. 30, 2020 | $ 49,374 | 12,594,389 | (150,000) | 9,410,216 | 21,903,979 | |
Beginning balance, shares at Mar. 31, 2020 | 49,016,270 | |||||
Beginning balance, value at Mar. 31, 2020 | $ 49,016 | 12,062,197 | (150,000) | 9,629,450 | 21,590,663 | |
Issuance of stock for previously vested stock-based compensation, shares | 337,437 | |||||
Issuance of stock for previously vested stock-based compensation, value | $ 338 | (338) | ||||
Repurchase of employee common stock for taxes withheld | (245,425) | (245,425) | ||||
Stock-based compensation | 600,775 | 600,775 | ||||
Issuance of stock for acquisition of contract assets, shares | 20,000 | |||||
Issuance of stock for acquisition of contract assets, value | $ 20 | 177,180 | 177,200 | |||
Net income (loss) | (219,234) | (219,234) | ||||
Ending balance, shares at Jun. 30, 2020 | 49,373,707 | |||||
Ending balance, value at Jun. 30, 2020 | $ 49,374 | $ 12,594,389 | $ (150,000) | $ 9,410,216 | $ 21,903,979 |
CONDENSED CONSOLIDATED STATEM_3
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) - USD ($) | 6 Months Ended | |
Jun. 30, 2020 | Jun. 30, 2019 | |
Cash flows from operating activities: | ||
Net income attributable to Paysign, Inc. | $ 1,321,731 | $ 2,610,462 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Net loss in noncontrolling interest | 0 | (1,068) |
Depreciation and amortization | 1,008,854 | 729,271 |
Stock based compensation | 1,324,958 | 1,214,620 |
Loss on abandonment of assets | 42,898 | 0 |
Amortization of lease right-of use asset | 59,889 | 0 |
Deferred taxes | (499,699) | 0 |
Changes in operating assets and liabilities: | ||
Accounts receivable | 228,352 | (611,589) |
Prepaid expenses and other current assets | (85,801) | 208,608 |
Accounts payable and accrued liabilities | (259,626) | (321,630) |
Customer card funding | 1,122,393 | 14,362,643 |
Net cash provided by operating activities | 4,263,949 | 18,191,317 |
Cash flows from investing activities: | ||
Purchase of fixed assets | (1,054,342) | (234,255) |
Capitalization of internally developed software | (949,028) | (648,480) |
Purchase of intangible assets | (57,127) | (84,885) |
Net cash used in investing activities | (2,060,497) | (967,620) |
Cash flows from financing activities: | ||
Proceeds from exercise of stock options | 24,000 | 0 |
Repurchase of employee common stock for taxes withheld | (245,425) | 0 |
Net cash provided by financing activities | (221,425) | 0 |
Net change in cash and restricted cash | 1,982,027 | 17,223,697 |
Cash and restricted cash, beginning of period | 45,572,305 | 31,665,741 |
Cash and restricted cash, end of period | 47,554,332 | 48,889,438 |
Supplemental cash flow information: | ||
Operating lease right-of-use asset | 4,455,271 | 0 |
Issuance of stock for asset acquisition | 177,200 | 0 |
Dissolution of noncontrolling interest | $ 263,087 | $ 0 |
RECONCILIATION OF CASH
RECONCILIATION OF CASH - USD ($) | Jun. 30, 2020 | Dec. 31, 2019 | Jun. 30, 2019 | Dec. 31, 2018 |
Additional Cash Flow Elements and Supplemental Cash Flow Information [Abstract] | ||||
Cash | $ 7,633,149 | $ 9,663,746 | $ 6,289,008 | |
Restricted cash | 39,921,183 | 35,908,559 | 42,600,430 | |
Total cash and restricted cash | $ 47,554,332 | $ 45,572,305 | $ 48,889,438 | $ 31,665,741 |
1. DESCRIPTION OF BUSINESS, HIS
1. DESCRIPTION OF BUSINESS, HISTORY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 6 Months Ended |
Jun. 30, 2020 | |
Accounting Policies [Abstract] | |
BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 1. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT POLICIES The foregoing unaudited interim condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and with the instructions for Form 10-Q and Regulation S-X as promulgated by the Securities and Exchange Commission (“SEC”). Accordingly, these financial statements do not include all of the disclosures required by GAAP for complete financial statements. These unaudited interim condensed consolidated financial statements should be read in conjunction with the audited financial statements and the notes thereto included on Form 10-K for the year ended December 31, 2019. In the opinion of management, the unaudited interim condensed consolidated financial statements furnished herein include all adjustments, all of which are of a normal recurring nature, necessary for a fair statement of the results for the interim period presented. The preparation of financial statements in accordance with GAAP requires the use of estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities known to exist as of the date the financial statements are published, and the reported amounts of revenues and expenses during the reporting period. Uncertainties with respect to such estimates and assumptions are inherent in the preparation of the Company’s financial statements; accordingly, it is possible that the actual results could differ from these estimates and assumptions that could have a material effect on the reported amounts of the Company’s financial position and results of operations. Operating results for the three and six months ended June 30, 2020 are not necessarily indicative of the results that may be expected for the year ending December 31, 2020. Impact of COVID-19 Pandemic The outbreak of a novel coronavirus and the incidence of the related disease (COVID-19) starting in late 2019 has continued, spreading throughout the United States and much of the world beginning in the first quarter of 2020. In March 2020, the World Health Organization declared the outbreak as a pandemic. While the disruption is currently expected to be temporary, there is uncertainty around the duration. The COVID-19 outbreak has had and will continue to have an adverse effect on the Company's results of operations. Given the uncertainty around the extent and timing of the potential future spread or mitigation of COVID-19 and around the imposition or relaxation of protective measures, management cannot reasonably estimate the impact to the Company's future results of operations, cash flows, or financial condition. On March 27, 2020, President Trump signed into a law a stimulus package, the Coronavirus Aid, Relief and Economic Security ("CARES") Act, which contains several tax provisions. The new provisions did not have a material impact on the Company’s condensed consolidated financial statements. About Paysign, Inc. Paysign, Inc. (the “Company,” “Paysign,” or “we,” formerly known as 3PEA International, Inc.) is a vertically integrated provider of prepaid card products and processing services for corporate, consumer and government applications. The Company markets prepaid card solutions under our PaySign ® The PaySign brand offers prepaid card based solutions or “card products” for corporate incentive rewards and corporate expense, per diem and travel payments, healthcare reimbursement payments, pharmaceutical co-pay assistance, donor compensation and clinical trials. We plan to expand our product offering to include payroll cards, general purpose re-loadable cards, and others. Our cards are offered to end users through our relationships with bank issuers. Our proprietary PaySign platform was built on modern cross-platform architecture and designed to be highly flexible, scalable and customizable. The platform allows us to expand our operational capabilities by facilitating entry into new markets within the payments space through its flexibility and ease of customization. The PaySign platform delivers cost benefits and revenue building opportunities to our partners. We manage all aspects of the debit card lifecycle, from managing the card design and approval processes with partners and networks, to production, packaging, distribution, and personalization. We oversee inventory and security controls, renewals, lost and stolen card management and replacement. We deploy a fully staffed, in-house customer service department which utilizes bilingual customer service agents, Interactive Voice Response (IVR), and two-way short message service (SMS) messaging and text alerts. Principles of Consolidation Use of Estimates Restricted Cash Fixed Assets The Company periodically evaluates whether events and circumstances have occurred that may warrant revision of the estimated useful life of fixed assets or whether the remaining balance of fixed assets should be evaluated for possible impairment. The Company uses an estimate of the related undiscounted cash flows over the remaining life of the fixed assets in measuring their recoverability. Intangible Assets Intangible assets with finite lives are amortized on a straight-line basis over their estimated useful lives. Internally Developed Software Costs - 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 to five year estimated useful life, beginning in the period in which the software is available for use. Earnings Per Share Revenue and Expense Recognition Revenue from Contracts with Customers (ASC Topic 606), The Company recognizes revenue when goods or services are transferred to customers in an amount that reflects the consideration which it expects to receive in exchange for those goods or services. 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 revenue for the Plasma industry through fees generated from cardholder transactions, interchange and card program management fees. For the Pharma industry, the Company generates revenue from interchange, program management fees and settlement income. Revenue from cardholder transactions, interchange and card program management is recorded when the performance obligation is fulfilled. Settlement income is recognized and recorded ratably throughout the account and program lifecycle. 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 for refunding any fees or has any obligations for disputed claim settlements. Given the nature of the Company’s services and contracts, it has no contract assets. Stock-Based Compensation New Accounting Pronouncements Simplifying the Accounting for Income Taxes |
2. FIXED ASSETS, NET
2. FIXED ASSETS, NET | 6 Months Ended |
Jun. 30, 2020 | |
Property, Plant and Equipment [Abstract] | |
FIXED ASSETS | 2. FIXED ASSETS, NET Fixed assets consist of the following: June 30, December 31, Equipment $ 1,666,607 $ 2,026,549 Software 180,223 180,223 Furniture and fixtures 801,060 149,684 Website costs 65,071 34,971 Leasehold improvements 70,508 52,894 2,783,469 2,444,321 Less: accumulated depreciation 1,030,101 1,507,136 Fixed assets, net $ 1,753,368 $ 937,185 Depreciation expense for the three months ended June 30, 2020 and 2019 was $102,933 and $78,994, respectively. Depreciation expense for the six months ended June 30, 2020 and 2019 was $195,261 and $138,775, respectively. During the three months ended June 30, 2020 the Company relocated its corporate headquarters and recognized a $42,898 loss on abandonment of assets primarily related to leasehold improvements. |
3. INTANGIBLE ASSETS, NET
3. INTANGIBLE ASSETS, NET | 6 Months Ended |
Jun. 30, 2020 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
INTANGIBLE ASSETS | 3. INTANGIBLE ASSETS, NET Intangible assets consist of the following: June 30, December 31, Trademarks $ 39,053 $ 39,053 Platform 6,547,164 5,598,136 Customer lists and contracts 1,177,200 1,177,200 Kiosk development – 64,802 Licenses 591,696 534,569 8,355,113 7,413,760 Less: accumulated amortization 4,346,319 3,597,528 Intangible assets, net $ 4,008,794 $ 3,816,232 Intangible assets are amortized over their useful lives ranging from periods of 3 to 5 years. Amortization expense for the three months ended June 30, 2020 and 2019 was $403,544 and 316,516, respectively. Amortization expense for the six months ended June 30, 2020 and 2019 was $813,592 and $590,496, respectively. |
4. LEASE
4. LEASE | 6 Months Ended |
Jun. 30, 2020 | |
Leases [Abstract] | |
LEASE | 4. LEASE The Company entered into an operating lease for an office space which became effective in June 2020 when the construction was complete and we were given access to occupy the space. The lease term is 10 years from the effective date and allows for two optional extensions of five years each. The two optional extensions are not recognized as part of the right-of-use asset or lease liability since it is not reasonably certain that the Company will extend this lease. As of June 30, 2020, the remaining lease term was 10 years and the discount rate was 6%. The lease for our previous office space was accounted for as a short-term lease. Operating lease cost included in Selling, general and administrative expenses was $59,889 for the three and six months ended June 30, 2020. Short-term lease cost included in Selling, general and administrative expense was $37,597 and $56,415 for the three months ended June 30, 2020 and 2019, respectively. Short-term lease cost included in Selling, general and administrative expense was $94,906 and $109,229 for the six months ended June 30, 2020 and 2019, respectively The following is the lease maturity analysis of our z as of June 30, 2020: Twelve months ending June 30, 2021 $ 561,968 2022 571,968 2023 571,968 2024 571,968 2025 577,688 Thereafter 3,149,637 Total lease payments 6,005,197 Less: Imputed interest 1,527,650 Present value of future lease payments 4,477,547 Less: current portion of lease liability (301,233) Long-term portion of lease liability $ 4,176,314 |
5. COMMON STOCK
5. COMMON STOCK | 6 Months Ended |
Jun. 30, 2020 | |
Equity [Abstract] | |
COMMON STOCK | 5. COMMON STOCK At June 30, 2020, the Company's authorized capital stock was 150,000,000 shares of common stock, par value $0.001 per share, and 25,000,000 shares of preferred stock, par value $0.001 per share. On that date, the Company had 49,373,707 shares of common stock issued and outstanding, and no shares of preferred stock outstanding. Stock-based compensation expense related to Company grants for the three and six months ended June 30, 2020 was $600,775 and $1,324,958, respectively. Stock-based compensation expense for the three and six months end June 30, 2019 was $567,910 and $1,214,620, respectively. 2020 Transactions: 2019 Transactions: |
6. BASIC AND FULLY DILUTED NET
6. BASIC AND FULLY DILUTED NET INCOME PER COMMON SHARE | 6 Months Ended |
Jun. 30, 2020 | |
Earnings Per Share [Abstract] | |
BASIC AND FULLY DILUTED NET INCOME PER COMMON SHARE | 6. BASIC AND FULLY DILUTED NET INCOME PER COMMON SHARE The following table sets forth the computation of basic and fully diluted net income per common share. Three Months Ended June 30, Six Months Ended June 30, 2020 2019 2020 2019 Numerator: Net income (loss) attributable to Paysign, Inc. $ (219,234 ) $ 1,738,791 $ 1,321,731 $ 2,610,462 Denominator: Weighted average common shares: Denominator for basic calculation 49,015,686 47,310,209 48,864,424 47,136,608 Weighted average effects of potentially diluted common stock: Stock options (calculated using the treasury method) 3,402,441 2,287,387 3,776,221 2,158,289 Unvested restricted stock grants 1,978,723 5,370,000 1,901,813 5,444,586 Denominator for fully diluted calculation 54,396,850 54,967,595 54,542,458 54,739,483 Net income (loss) per common share: Basic $ 0.00 $ 0.04 $ 0.03 $ 0.06 Fully diluted $ 0.00 $ 0.03 $ 0.02 $ 0.05 |
7. COMMITMENTS AND CONTINGENCIE
7. COMMITMENTS AND CONTINGENCIES | 6 Months Ended |
Jun. 30, 2020 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES | 7. COMMITMENTS AND CONTINGENCIES The Company has been named as a defendant in three complaints filed in the United States District Court for the District of Nevada: Yilan Shi v. Paysign, Inc. et. al., filed on March 19, 2020, Lorna Chase v. Paysign, Inc. et. al., filed on March 25, 2020 and Smith & Duvall v. Paysign, Inc. et. al., filed on April 2, 2020 (collectively, the “Complaints”). Smith & Duvall v. Paysign, Inc. et. al. was voluntarily dismissed by the plaintiff on May 21, 2020. The complaints are putative class action lawsuits filed on behalf of a class of persons who acquired the Company’s common stock from March 12, 2020 through March 15, 2020, inclusive. The Complaints allege that the Company, Mark R. Newcomer, and Mark Attinger violated Section 10(b) of the Exchange Act, and Messrs. Newcomer and Attinger violated Section 20(a) of the Exchange Act, by making materially false or misleading statements, or failing to disclose material facts, regarding our internal control over financial reporting and our financial statements. The Complaints seek certification as a class action, compensatory damages, and attorney’s fees and costs. Paysign has not been served any of the complaints as of the date of this filing and cannot give any meaningful probability of outcome or damages. |
8. RELATED PARTY
8. RELATED PARTY | 6 Months Ended |
Jun. 30, 2020 | |
Related Party Transactions [Abstract] | |
RELATED PARTY | 8. RELATED PARTY A member of our Board of Directors is also a partner in a law firm that the Company engages for services to review regulatory filings and various legal matters. The Company incurred legal expense of $96,755 and $115,488 during the three and six months ended June 30, 2020, respectively, with the related party law firm. During each of the three and six months ended June 30, 2019 the Company incurred legal expense of $24,167 with the related party law firm. |
9. INCOME TAXES
9. INCOME TAXES | 6 Months Ended |
Jun. 30, 2020 | |
Income Tax Disclosure [Abstract] | |
INCOME TAXES | 9. INCOME TAX PROVISION (BENEFIT) Income tax benefit was $423,797 and $511,348 for the three and six months ended June 30, 2020, respectively, primarily related to the deferred benefit for stock-based compensation. Income tax provision was $23,726 and $7,786 for the three and six months ended June 30, 2019, respectively. |
1. DESCRIPTION OF BUSINESS, H_2
1. DESCRIPTION OF BUSINESS, HISTORY AND SUMMARY OF SIGNIFICANT POLICIES (Policies) | 6 Months Ended |
Jun. 30, 2020 | |
Accounting Policies [Abstract] | |
Impact of COVID-19 Pandemic | Impact of COVID-19 Pandemic The outbreak of a novel coronavirus and the incidence of the related disease (COVID-19) starting in late 2019 has continued, spreading throughout the United States and much of the world beginning in the first quarter of 2020. In March 2020, the World Health Organization declared the outbreak as a pandemic. While the disruption is currently expected to be temporary, there is uncertainty around the duration. The COVID-19 outbreak has had and will continue to have an adverse effect on the Company's results of operations. Given the uncertainty around the extent and timing of the potential future spread or mitigation of COVID-19 and around the imposition or relaxation of protective measures, management cannot reasonably estimate the impact to the Company's future results of operations, cash flows, or financial condition. On March 27, 2020, President Trump signed into a law a stimulus package, the Coronavirus Aid, Relief and Economic Security ("CARES") Act, which contains several tax provisions. The new provisions did not have a material impact on the Company’s condensed consolidated financial statements. |
Description of Business/About Paysign | About Paysign, Inc. Paysign, Inc. (the “Company,” “Paysign,” or “we,” formerly known as 3PEA International, Inc.) is a vertically integrated provider of prepaid card products and processing services for corporate, consumer and government applications. The Company markets prepaid card solutions under our PaySign ® The PaySign brand offers prepaid card based solutions or “card products” for corporate incentive rewards and corporate expense, per diem and travel payments, healthcare reimbursement payments, pharmaceutical co-pay assistance, donor compensation and clinical trials. We plan to expand our product offering to include payroll cards, general purpose re-loadable cards, and others. Our cards are offered to end users through our relationships with bank issuers. Our proprietary PaySign platform was built on modern cross-platform architecture and designed to be highly flexible, scalable and customizable. The platform allows us to expand our operational capabilities by facilitating entry into new markets within the payments space through its flexibility and ease of customization. The PaySign platform delivers cost benefits and revenue building opportunities to our partners. We manage all aspects of the debit card lifecycle, from managing the card design and approval processes with partners and networks, to production, packaging, distribution, and personalization. We oversee inventory and security controls, renewals, lost and stolen card management and replacement. We deploy a fully staffed, in-house customer service department which utilizes bilingual customer service agents, Interactive Voice Response (IVR), and two-way short message service (SMS) messaging and text alerts. |
Principles of consolidation | Principles of Consolidation |
Use of estimates | Use of Estimates |
Restricted cash | Restricted Cash |
Fixed assets | Fixed Assets The Company periodically evaluates whether events and circumstances have occurred that may warrant revision of the estimated useful life of fixed assets or whether the remaining balance of fixed assets should be evaluated for possible impairment. The Company uses an estimate of the related undiscounted cash flows over the remaining life of the fixed assets in measuring their recoverability. |
Intangible assets | Intangible Assets Intangible assets with finite lives are amortized on a straight-line basis over their estimated useful lives. Internally Developed Software Costs - 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 to five year estimated useful life, beginning in the period in which the software is available for use. |
Earnings per share | Earnings Per Share |
Revenue and expense recognition | Revenue and Expense Recognition Revenue from Contracts with Customers (ASC Topic 606), The Company recognizes revenue when goods or services are transferred to customers in an amount that reflects the consideration which it expects to receive in exchange for those goods or services. 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 revenue for the Plasma industry through fees generated from cardholder transactions, interchange and card program management fees. For the Pharma industry, the Company generates revenue from interchange, program management fees and settlement income. Revenue from cardholder transactions, interchange and card program management is recorded when the performance obligation is fulfilled. Settlement income is recognized and recorded ratably throughout the account and program lifecycle. 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 for refunding any fees or has any obligations for disputed claim settlements. Given the nature of the Company’s services and contracts, it has no contract assets. |
Stock-based compensation | Stock-Based Compensation |
New accounting pronouncements | New Accounting Pronouncements Simplifying the Accounting for Income Taxes |
2. FIXED ASSETS, NET (Tables)
2. FIXED ASSETS, NET (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Property, Plant and Equipment [Abstract] | |
Schedule of fixed assets | Fixed assets consist of the following: June 30, December 31, Equipment $ 1,666,607 $ 2,026,549 Software 180,223 180,223 Furniture and fixtures 801,060 149,684 Website costs 65,071 34,971 Leasehold improvements 70,508 52,894 2,783,469 2,444,321 Less: accumulated depreciation 1,030,101 1,507,136 Fixed assets, net $ 1,753,368 $ 937,185 |
3. INTANGIBLE ASSETS, NET (Tabl
3. INTANGIBLE ASSETS, NET (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
LIABILITIES AND STOCKHOLDERS' DEFICIT | |
Schedule of intangible assets | Intangible assets consist of the following: June 30, December 31, Trademarks $ 39,053 $ 39,053 Platform 6,547,164 5,598,136 Customer lists and contracts 1,177,200 1,177,200 Kiosk development – 64,802 Licenses 591,696 534,569 8,355,113 7,413,760 Less: accumulated amortization 4,346,319 3,597,528 Intangible assets, net $ 4,008,794 $ 3,816,232 |
4. LEASE (Tables)
4. LEASE (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Leases [Abstract] | |
Schedule of operating lease liabilities | The following is the lease maturity analysis of our z as of June 30, 2020: Twelve months ending June 30, 2021 $ 561,968 2022 571,968 2023 571,968 2024 571,968 2025 577,688 Thereafter 3,149,637 Total lease payments 6,005,197 Less: Imputed interest 1,527,650 Present value of future lease payments 4,477,547 Less: current portion of lease liability (301,233) Long-term portion of lease liability $ 4,176,314 |
6. BASIC AND FULLY DILUTED NE_2
6. BASIC AND FULLY DILUTED NET INCOME PER COMMON SHARE (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Earnings Per Share [Abstract] | |
Computation of earnings per share | The following table sets forth the computation of basic and fully diluted net income per common share. Three Months Ended June 30, Six Months Ended June 30, 2020 2019 2020 2019 Numerator: Net income (loss) attributable to Paysign, Inc. $ (219,234 ) $ 1,738,791 $ 1,321,731 $ 2,610,462 Denominator: Weighted average common shares: Denominator for basic calculation 49,015,686 47,310,209 48,864,424 47,136,608 Weighted average effects of potentially diluted common stock: Stock options (calculated using the treasury method) 3,402,441 2,287,387 3,776,221 2,158,289 Unvested restricted stock grants 1,978,723 5,370,000 1,901,813 5,444,586 Denominator for fully diluted calculation 54,396,850 54,967,595 54,542,458 54,739,483 Net income (loss) per common share: Basic $ 0.00 $ 0.04 $ 0.03 $ 0.06 Fully diluted $ 0.00 $ 0.03 $ 0.02 $ 0.05 |
1. DESCRIPTION OF BUSINESS, H_3
1. DESCRIPTION OF BUSINESS, HISTORY AND SUMMARY OF SIGNIFICANT POLICIES (Details Narrative) - shares | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Accounting Policies [Abstract] | ||||
Antidilutive shares | 0 | 0 | 0 | 0 |
Estimated useful lives of fixed assets | 3 to 10 years |
2. FIXED ASSETS, NET (Details)
2. FIXED ASSETS, NET (Details) - USD ($) | Jun. 30, 2020 | Dec. 31, 2019 |
Fixed Assets Gross | $ 2,783,469 | $ 2,444,321 |
Less: accumulated depreciation | 1,030,101 | 1,507,136 |
Fixed assets, net | 1,753,368 | 937,185 |
Equipment [Member] | ||
Fixed Assets Gross | 1,666,607 | 2,026,549 |
Software [Member] | ||
Fixed Assets Gross | 180,223 | 180,223 |
Furniture and Fixtures [Member] | ||
Fixed Assets Gross | 801,060 | 149,684 |
Website Costs [Member] | ||
Fixed Assets Gross | 65,071 | 34,971 |
Leasehold Improvements [Member] | ||
Fixed Assets Gross | $ 70,508 | $ 52,894 |
2. FIXED ASSETS, NET (Details N
2. FIXED ASSETS, NET (Details Narrative) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Property, Plant and Equipment [Abstract] | ||||
Depreciation expense | $ 102,933 | $ 78,994 | $ 195,261 | $ 138,775 |
Loss on abandonment of assets | $ (42,898) | $ 0 | $ (42,898) | $ 0 |
3. INTANGIBLE ASSETS, NET (Deta
3. INTANGIBLE ASSETS, NET (Details) - USD ($) | Jun. 30, 2020 | Dec. 31, 2019 |
Intangible assets gross | $ 8,355,113 | $ 7,413,760 |
Less: accumulated amortization | 4,346,319 | 3,597,528 |
Intangible assets, net | 4,008,794 | 3,816,232 |
Trademarks [Member] | ||
Intangible assets gross | 39,053 | 39,053 |
Platform [Member] | ||
Intangible assets gross | 6,547,164 | 5,598,136 |
Customer lists and contracts [Member] | ||
Intangible assets gross | 1,177,200 | 1,177,200 |
Kiosk Development [Member] | ||
Intangible assets gross | 0 | 64,802 |
Licenses [Member] | ||
Intangible assets gross | $ 591,696 | $ 534,569 |
3. INTANGIBLE ASSETS, NET (De_2
3. INTANGIBLE ASSETS, NET (Details Narrative) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Amortization expense | $ 403,544 | $ 316,516 | $ 813,592 | $ 590,496 |
Maximum [Member] | ||||
Intangible assets useful lives | 5 years | |||
Minimum [Member] | ||||
Intangible assets useful lives | 3 years |
4. LEASE (Details)
4. LEASE (Details) - USD ($) | Jun. 30, 2020 | Dec. 31, 2019 |
Leases [Abstract] | ||
2021 | $ 561,968 | |
2022 | 571,968 | |
2023 | 571,968 | |
2024 | 571,968 | |
2025 | 577,688 | |
Thereafter | 3,149,637 | |
Total lease payments | 6,005,197 | |
Less: Imputed interest | 1,527,650 | |
Present value of future lease payments | 4,477,547 | |
Less: current portion of lease liability | (301,233) | $ 0 |
Long-term portion of lease liability | $ 4,176,314 | $ 0 |
4. LEASE (Details Narrative)
4. LEASE (Details Narrative) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Leases [Abstract] | ||||
Lease term | 10 years | 10 years | ||
Lease term option to extend | Two optional extensions of five years each. | |||
Remaining lease term | 10 years | 10 years | ||
Discount rate | 6.00% | 6.00% | ||
Operating lease cost | $ 59,889 | |||
Short-term lease cost | $ 37,597 | $ 56,415 | $ 94,906 | $ 109,229 |
5. COMMON STOCK (Details Narrat
5. COMMON STOCK (Details Narrative) - USD ($) | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | Dec. 31, 2019 | |
Common stock, shares authorized | 150,000,000 | 150,000,000 | 150,000,000 | ||
Common stock, par value | $ 0.001 | $ 0.001 | $ .001 | ||
Common stock, shares outstanding | 49,373,707 | 49,373,707 | 48,577,712 | ||
Stock based compensation expense | $ 600,775 | $ 567,910 | $ 1,324,958 | $ 1,214,620 | |
Options granted | 0 | 500,000 | |||
Fair value of options per share | $ 2.86 | ||||
Option vesting period | 4 years | ||||
Risk-free interest rate | 0.38% | ||||
Expected volatility | 100.00% | ||||
Dividend yield | 0.00% | ||||
Weighted average expected life | 5 years | ||||
Proceeds from exercise of options | $ 24,000 | $ 0 | |||
Stock issued for vested stock grants and exercise of options, shares | 337,437 | 825,000 | 775,995 | 1,116,147 | |
Customer Lists and Contracts [Member] | |||||
Issuance of common stock related to acquisition of customer lists and contracts | 20,000 | ||||
Share Price | $ 8.86 | $ 8.86 |
6. BASIC AND FULLY DILUTED NE_3
6. BASIC AND FULLY DILUTED NET INCOME PER COMMON SHARE (Details) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Numerator: | ||||
Net income (loss) attributable to Paysign, Inc. | $ (219,234) | $ 1,738,791 | $ 1,321,731 | $ 2,610,462 |
Denominator: | ||||
Denominator for basic calculation | 49,015,686 | 47,310,209 | 48,864,424 | 47,136,608 |
Weighted average effects of potentially diluted common stock: | ||||
Stock options (calculated under treasury method) | 3,402,441 | 2,287,387 | 3,776,221 | 2,158,289 |
Unvested restricted stock grants | 1,978,723 | 5,370,000 | 1,901,813 | 5,444,586 |
Denominator for fully diluted calculation | 54,396,850 | 54,967,595 | 54,542,458 | 54,739,483 |
Basic | $ 0 | $ 0.04 | $ 0.03 | $ 0.06 |
Fully diluted | $ 0 | $ 0.03 | $ 0.02 | $ 0.05 |
8. RELATED PARTY (Details Narra
8. RELATED PARTY (Details Narrative) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Related Party Transactions [Abstract] | ||||
Legal fees paid to related party | $ 96,755 | $ 24,167 | $ 115,488 | $ 24,167 |
9. INCOME TAXES (Details Narrat
9. INCOME TAXES (Details Narrative) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Income Tax Disclosure [Abstract] | ||||
Income tax provision (benefit) | $ (423,797) | $ 23,276 | $ (511,348) | $ 7,786 |