SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): November 5, 2019
PAYSIGN, INC.
(Exact name of registrant as specified in its charter)
| Nevada | 000-54123 | 95-4550154 |
| (State or other jurisdiction of incorporation) | (Commission file number) | (I.R.S. Employer Identification Number) |
1700 W Horizon Ridge Parkway, Suite 200,
Henderson, Nevada 89012
(Address of principal executive offices) (Zip Code)
(702) 453-2221
(Registrant's telephone number, including area code)
N/A
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4c))
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
|
Common Stock, $0.001 par value per share |
PAYS |
The NASDAQ Stock Market LLC |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company x
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨
Section 2 - Financial Information
Item 2.02 Results of Operations and Financial Condition.
On November 5 2019, Paysign, Inc. issued a press release regarding its financial results for the quarter ended September 30, 2019. A copy of the press release is filed herewith as Exhibit 99.1 to this Current Report and is incorporated herein by reference.
As provided in General Instruction B.2 of SEC Form 8-K, such information shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, and it shall not be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or under the Exchange Act, whether made before or after the date hereof, except as expressly set forth by specific reference in such filing to this Current Report on Form 8-K.Section 9 – Financial Statements and Exhibits.
Item 9.01 Financial Statements and Exhibits.
| (a) | Financial Statements of businesses acquired: Not applicable. |
| (b) | Pro forma financial information: Not applicable. |
| (c) | Shell company transactions: Not applicable. |
| (d) | Exhibits: |
| Exhibit No. | Description | |
| 99.1 | Press release dated November 5, 2019. |
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SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
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PAYSIGN, INC.
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| Date: November 5, 2019 | By: /s/ Mark Newcomer |
| Mark Newcomer, Chief Executive Officer |
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Exhibit 99.1
Paysign, Inc. Reports Record Third Quarter 2019 Revenues and Net Income
Third Quarter 2019 Net income increased by 269.6% to $0.06 per basic share, Revenues
by
40.3% and Adjusted EBITDA by 123.6% when compared to the same period in 2018.
November 05, 2019 01:01 PM Pacific Standard Time
HENDERSON, Nev.--(BUSINESS WIRE)-- Paysign, Inc. (NASDAQ: PAYS), a vertically integrated provider of innovative prepaid card programs and processing services for corporate, consumer and government applications, today reported financial results for the third quarter ended September 30, 2019.
Financial Highlights
| • | Revenues for the quarter ended September 30, 2019 were $9,008,117, an increase of $2,586,721 or 40.3% percent compared to $6,421,396 for the same period last year. Revenues for the nine months ended September 30, 2019 were $24,901,678, an increase of 50.4% compared to $16,558,438 for the same period last year. The increase in revenues is attributable to continued growth within our existing programs and the addition of new card programs in both existing and new industry verticals. |
| • | Third quarter 2019 gross profit increased 76.3% to $5.4 million or 59.6% of revenues, compared to $3.0 million or 47.4% of revenues for the same period last year. 2019 nine month gross profit increased 79.3% to $14.2 million, or 56.9% of revenues, from $7.9 million or 47.8% of revenues in the same period in 2018. The increase was primarily driven by a favorable mix towards higher margin card programs. |
| • | Total operating expenses in the third quarter were $3.1 million compared to $3.4 million in the prior quarter, and to $2.3 million in the third quarter of 2018. Total operating expenses in the first nine months of 2019 were $9.5 million compared to $6.0 million in the same period last year. The increase is primarily attributable to increases in leadership and staffing, investments in infrastructure, and increased stock-based compensation. |
| • | Net Income for the quarter ended September 30, 2019 was $2,960,078, or $0.06 per basic share, an increase of 269.6% compared to $800,862 or $0.02 per basic share in the same period the prior year. 2019 nine month net income was $5,570,540, or $0.12 per basic share, an increase of 186.3% compared to $1,945,425 or $0.04 per basic share in the same period the prior year. For the quarter fully diluted earnings per share was $0.05 versus $0.02 for the previous year. For the nine-month period fully diluted earnings per share was $0.10 versus $0.04 for the prior year. |
| • | Non-GAAP Adjusted EBITDA was $3,252,332, or $0.07 per basic share in the quarter ended September 30, 2019, an increase of 123.6% compared to $1,454,224, or $0.03 per basic share in the same period the prior year. Nine month non-GAAP Adjusted EBITDA for 2019 was $7,563,486, or $0.16 per basic share, an increase of 123.1% compared to $3,390,833, or $0.07 per basic share in the same period in the prior year. |
| • | Our revenue conversion rate of gross dollar volume loaded on cards for the quarter was 4.29% or 429 bps compared to 3.72% or 372 bps the same period the prior year. |
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Corporate Update
In the third quarter of 2019, the Company successfully on-boarded all scheduled plasma programs, increasing the Company’s footprint in the industry by 13%. In the third quarter, $210 million was loaded to cards. As a comparison, $88 million was loaded to cards in October 2019. The Company recently launched Paysign Premier, its demand deposit account accessible with the Paysign Premier Card.
Management Commentary
“We are very pleased with our quarterly and year to date financial results, as we posted both record revenue and net profit, said Mark Newcomer, Chief Executive Officer, Paysign. We remain very optimistic as we continue to increase market share, gain traction in our existing verticals, expand our industry reach and market to consumers both directly and through channel partners.”
“We continued to deliver strong results in the third quarter, commented Dan Henry, Chairman, Paysign. As we enter new markets, we are confident in our ability to leverage the combined experience of our management team to execute on its strategic initiatives. Looking ahead, we remain focused on execution, profitability and maximizing shareholder value.”
“In the third quarter we experienced an expansion in both gross and net margins, as we improved our operating leverage and experienced a beneficial industry mix,” stated Mark Attinger, Chief Financial Officer, Paysign.
Guidance
The Company is issuing no change to its previous full year revenue and Adjusted EBITDA guidance of $35 to $37 million and $10 to $12 million, respectively.
Conference Call
A conference call and live webcast is scheduled for 4:30 PM ET click here, and will be available for at least 90 days at click here.
About Paysign, Inc.
Paysign, Inc. (NASDAQ: PAYS) is a vertically integrated provider of innovative prepaid card programs and processing services for corporate, consumer, and government applications. Its payment solutions are utilized by corporate customers as a means to increase customer loyalty, increase patient adherence rates, reduce administration costs, and streamline operations. For consumers, the Company offers Paysign Premier. Public sector organizations can utilize Paysign’s payment solutions to disburse public benefits or for internal payments. Through the Paysign platform, it provides a variety of services, including transaction processing, cardholder enrollment, value loading, cardholder account management, reporting, and customer service. Paysign has developed prepaid card programs for corporate incentive and rewards, including, but not limited to, consumer rebates and rewards, donor compensation, demand deposit accounts accessible with a debit card, healthcare reimbursement payments, and pharmaceutical payment assistance. Paysign® is a registered trademark of Paysign, Inc. in the United States and other countries. For more information visit us at paysign.com, or follow us on Facebook, Twitter, and LinkedIn.
Forward-Looking Statements
Certain statements contained in this press release may be deemed to be forward-looking statements under federal securities laws, and the company intends that such forward-looking statements be subject to the safe-harbor created thereby. All statements, other than statements of fact, included in this release, are forward-looking statements. Such forward-looking statements include, among others, the company’s expected total revenue and Adjusted EBITDA for fiscal 2019; the company’s belief that it continues to experience gross margin expansion and improved operating leverage during 2019; and, the company’s optimism with respect to its future and its commitment to the growth of both new and existing product lines. We caution that these statements are qualified by important risks, uncertainties, and other factors that could cause actual results to differ materially from those reflected by such forward-looking statements. Such factors include, among others, the risks detailed from time to time in the company’s reports filed with the SEC, including its Annual Report on Form 10-K for the fiscal year ended December 31, 2018. Except to the extent required by federal securities laws, the company undertakes no obligation to publicly update or revise any statements in this release, whether as a result of new information, future events, or otherwise.
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PAYSIGN, INC.
CONSOLIDATED STATEMENTS OF INCOME
FOR THREE AND NINE MONTHS ENDED September 30, 2019 AND 2018
(Unaudited)
| For the three months ended | For the nine months ended | |||||||||||||||
| September 30, | September 30, | |||||||||||||||
| 2019 | 2018 | 2019 | 2018 | |||||||||||||
| Revenues | $ | 9,008,117 | $ | 6,421,396 | $ | 24,901,678 | $ | 16,558,438 | ||||||||
| Cost of revenues | 3,641,595 | 3,376,753 | 10,721,769 | 8,650,839 | ||||||||||||
| Gross profit | 5,366,522 | 3,044,643 | 14,179,909 | 7,907,599 | ||||||||||||
| Operating expense | ||||||||||||||||
| Depreciation and amortization | 318,508 | 284,124 | 1,047,779 | 780,203 | ||||||||||||
| Selling, general and administrative | 2,765,961 | 1,996,957 | 8,483,882 | 5,244,278 | ||||||||||||
| Total operating expenses | 3,084,469 | 2,281,081 | 9,531,661 | 6,024,481 | ||||||||||||
| Income from operations | 2,282,053 | 763,562 | 4,648,248 | 1,883,118 | ||||||||||||
| Other income (expense) | ||||||||||||||||
| Other (expense) | – | – | – | (31,125 | ) | |||||||||||
| Interest income | 113,667 | 36,683 | 364,652 | 90,298 | ||||||||||||
| Total other income, net | 113,667 | 36,683 | 364,652 | 59,173 | ||||||||||||
| Income before income tax benefit and noncontrolling interest | 2,395,720 | 800,245 | 5,012,900 | 1,942,291 | ||||||||||||
| Income tax benefit | (563,854 | ) | – | (556,068 | ) | – | ||||||||||
| Net income before income noncontrolling interest | 2,959,574 | 800,245 | 5,568,968 | 1,942,291 | ||||||||||||
| Net loss attributable to noncontrolling interest | 504 | 617 | 1,572 | 3,134 | ||||||||||||
| Net income attributable to Paysign, Inc. | $ | 2,960,078 | $ | 800,862 | $ | 5,570,540 | $ | 1,945,425 | ||||||||
| Net income per common share - basic | $ | 0.06 | $ | 0.02 | $ | 0.12 | $ | 0.04 | ||||||||
| Net income per common share - fully diluted | $ | 0.05 | $ | 0.02 | $ | 0.10 | $ | 0.04 | ||||||||
| Weighted average common shares outstanding - basic | 47,371,083 | 45,460,902 | 47,215,625 | 45,373,595 | ||||||||||||
| Weighted average common shares outstanding - fully diluted | 54,291,368 | 52,215,970 | 54,588,470 | 51,985,074 | ||||||||||||
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PAYSIGN, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
SEPTEMBER 30, 2019 and DECEMBER 31, 2018
| September 30, | December 31, | |||||||
| 2019 | 2018 | |||||||
| (Unaudited) | (Audited) | |||||||
| ASSETS | ||||||||
| Current Assets | ||||||||
| Cash | $ | 7,988,803 | $ | 5,615,073 | ||||
| Restricted cash | 33,230,890 | 26,050,668 | ||||||
| Accounts receivable | 969,447 | 337,303 | ||||||
| Prepaid expenses and other current assets | 1,967,858 | 1,175,241 | ||||||
| Total current assets | 44,156,998 | 33,178,285 | ||||||
| Fixed assets, net | 1,004,425 | 883,490 | ||||||
| Intangible assets, net | 2,444,195 | 2,115,933 | ||||||
| Total assets | $ | 47,605,618 | $ | 36,177,708 | ||||
| LIABILITIES AND EQUITY | ||||||||
| Current liabilities | ||||||||
| Accounts payable and accrued liabilities | $ | 1,463,686 | $ | 1,327,497 | ||||
| Customer card funding | 29,565,027 | 25,960,974 | ||||||
| Total current liabilities | 31,028,713 | 27,288,471 | ||||||
| Total liabilities | 31,028,713 | 27,288,471 | ||||||
| Equity | ||||||||
| Preferred stock: $0.001 par value; 25,000,000 shares authorized; none issued and outstanding | – | – | ||||||
| Common stock: $0.001 par value; 150,000,000 shares authorized, 48,095,192 and 46,440,765 issued at September 30, 2019 and December 31, 2018, respectively | 48,095 | 46,441 | ||||||
| Additional paid-in-capital | 10,737,190 | 8,620,144 | ||||||
| Treasury stock at cost, 303,450 shares | (150,000 | ) | (150,000 | ) | ||||
| Retained earnings | 6,150,122 | 579,582 | ||||||
| Total Paysign, Inc.'s stockholders' equity | 16,785,407 | 9,096,167 | ||||||
| Noncontrolling interest | (208,502 | ) | (206,930 | ) | ||||
| Total equity | 16,576,905 | 8,889,237 | ||||||
| Total liabilities and equity | $ | 47,605,618 | $ | 36,177,708 | ||||
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Paysign, Inc. Non-GAAP Measures
To supplement Paysign’s financial results presented on a GAAP basis, we use a non-GAAP measure of Adjusted EBITDA. Adjusted EBITDA, is a non-GAAP financial measure. Non-GAAP financial measures should not be considered in isolation from, or as a substitute for, or superior to, financial information presented in compliance with GAAP, and non-GAAP financial measures as used by the company may not be comparable to similarly titled measures used by other companies. The company defines Adjusted EBITDA as net income less the following cash and non-cash items: interest, taxes, stock-based compensation, amortization, and depreciation.
The company believes this non-GAAP measure helps investors better evaluate its past financial performance and potential future results. Additionally, such measure helps compare the company’s performance on a consistent basis across time periods. Adjusted EBITDA reflects the adjustment to EBITDA to exclude stock-based compensation charges. Adjusted EBITDA is not intended to represent cash flows from operations, operating income (loss) or net income (loss) as defined by U.S. GAAP as indicators of operating performance.
PAYSIGN, INC.
RECONCILIATION OF ADJUSTED EBITDA TO NET INCOME
FOR THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2019 AND 2018
(Unaudited)
| For the three months ended | For the nine months ended | |||||||||||||||
| September 30, | September 30, | |||||||||||||||
| 2019 | 2018 | 2019 | 2018 | |||||||||||||
| Net income attributable to Paysign, Inc. | $ | 2,960,078 | $ | 800,862 | $ | 5,570,540 | $ | 1,945,425 | ||||||||
| Income tax benefit | (563,854 | ) | – | (556,068 | ) | – | ||||||||||
| Interest | (113,667 | ) | (36,683 | ) | (364,652 | ) | (90,298 | ) | ||||||||
| Depreciation and amortization | 318,508 | 284,124 | 1,047,779 | 780,203 | ||||||||||||
| EBITDA | 2,601,065 | 1,048,303 | 5,697,599 | 2,635,330 | ||||||||||||
| Stock-based compensation | 651,267 | 405,921 | 1,865,887 | 755,503 | ||||||||||||
| Adjusted EBITDA | $ | 3,252,332 | $ | 1,454,224 | $ | 7,563,486 | $ | 3,390,833 | ||||||||
| Non-GAAP EPS - basic | $ | 0.07 | $ | 0.03 | $ | 0.16 | $ | 0.07 | ||||||||
| Non-GAAP EPS - fully diluted | $ | 0.06 | $ | 0.03 | $ | 0.14 | $ | 0.07 | ||||||||
Contacts
Paysign, Inc.
Jim McCroy, 702-749-7269
Investor Relations
ir@paysign.com
www.paysign.com
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