Paysign, Inc. (PAYS) FY 2024 MD&A

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

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

Disclosure Regarding Forward-Looking
Statements

This Annual Report on Form 10-K includes forward
looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and
Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) (“Forward-Looking Statements”).
All statements other than statements of historical fact included in this report are Forward-Looking Statements. These Forward-Looking
Statements are based on our current expectations, assumptions, estimates and projections about our business and our industry. Words such
as “believe,” “anticipate,” “expect,” “intend,” “plan,” “propose,”
“may,” and other similar expressions identify Forward-Looking Statements. Specific forward-looking statements made herein
include: our belief that we cannot predict how future regulations might affect us; complying with future regulation could be expensive
or require us to change the way we operate our business; our belief that our in-house customer service center provides the highest customer
service experience for our clients as training is performed on-site by Paysign staff; we may utilize independent contractors who make
direct sales and are paid on a commission basis only; our belief that nearly ever state would require us to obtain a money transmitter
license to operate a money transfer business; our anticipation that we will not pay any cash dividends in the foreseeable future; our
intention to retain any earnings to finance the operation and expansion of our business; our intention to continue to make significant
investments to maintain the security of our data and cybersecurity infrastructure; our expectation that the trading price for our common
stock will be affected by any research or reports that securities analysts publish about us or our business; our belief that our editing
processes are consistent with applicable reimbursement rules and industry practice, a court, enforcement agency or whistleblower could
challenge these practices; our belief that all independent contractor and employment agreement relationships are satisfactory; our belief
that we have taken appropriate actions to remediate previously reported control deficiencies that we have identified and to strengthen
our internal control over financial reporting; our belief that we have utilized proven systems designed for robust data security and integrity
in electronic transactions, we may introduce products in the future that would be subject to such regulations; our belief that a data
security breach at one of the banks that issue our cards or our third-party service providers could result in significant reputational
harm to us and cause the use and acceptance of our cards to decline, either of which could have a significant adverse impact on our operating
results and future growth prospects; our belief that our existing competitors have longer operating histories, are substantially larger
than we are, may already have or could develop substantially greater financial and other resources than we have, may offer, develop or
introduce a wider range of programs and services than we offer or may use more effective advertising and marketing strategies than we
do to achieve broader brand recognition, customer awareness and retail penetration; our expectation that we may also face price competition
that results in decreases in the purchase and use of our products and services; our expectation that we may have to increase the incentives
that we offer to our marketing partners and decrease the prices of our products and services, which could adversely affect our operating
results; we may receive a stockholder proposal relating to a variety of ESG issues to public companies in the future; we may be subject
to, or contractually required to comply with, state and federal laws that govern various aspects of the submission of healthcare claims
for reimbursement and the receipt of payments for healthcare items or services; we may use and disclose individually identifiable health
information to perform our services and for other limited purposes, such as creating de-identified information; we may not be able to
detect unauthorized use of our intellectual property or proprietary information, or to take enforcement action; we may retain additional
employees and consultants during the next twelve months, including additional patient affordability, information technology, product and
project management, fraud, and customer care personnel to support our growing businesses; we may be unable to grow our business in future
periods, and if our revenue growth slows, or our revenues decline further, our business and financial conditions could be adversely affected;
we may experience a decline in margins; we may have deficiencies or weaknesses in our internal control over financial reporting which
could, if not remediated, adversely affect our ability to report our financial condition and results of operations in a timely and accurate
manner, decrease investor confidence in our Company, and reduce the value of our common stock; we may face price competition that results
in decreases in the purchase and use of our products and services; we may have to increase the incentives that we offer to our marketing
partners and decrease the prices of our products and services, which could adversely affect our operating results; we may be unable to
maintain adequate banking relationships or renew our agreements with the banks that currently issue our cards under terms at least as
favorable to us as those existing before renewal; we may not be able to successfully manage our intellectual property or may be subject
to infringement claims; we may have to litigate to enforce and protect our intellectual property rights, trade secrets and know-how or
to determine their scope, validity or enforceability, which is expensive and could cause a diversion of resources and may not prove successful;
we may also be subject to costly litigation in the event our products and technology infringe upon another party’s proprietary rights;
we may also be subject to claims by third parties for breach of copyright, trademark or license usage rights; we may lose current and
future customers, which could have a material adverse effect on our business, financial condition and results of operations. The electronic
commerce industry is changing rapidly; we may experience other problems unrelated to system failures; we may also experience software
defects, development delays and installation difficulties, any of which could harm our business and reputation and expose us to potential
liability and increased operating expenses; we may raise capital in order to provide working capital for our expansion into other products
and services using our payments platform; we may not be able to retain our current key employees; we may experience difficulty fully integrating
our newly-hired personnel, which may adversely affect our business; we may not have sufficient personnel for our financial reporting responsibilities,
which may result in the untimely close of our books and records and delays in the preparation of financial statements and related disclosures;
our belief that future growth in the electronic commerce market will be driven by the cost, convenience, ease of use and quality of products
and services offered to consumers and businesses; our belief that risks from prior cybersecurity threats, including as a result of any
previous cybersecurity incidents, have not materially affected our business to date; our belief that our properties are adequate and suitable
for us to conduct business in the future; our belief that if we do not raise new capital, we will still be able to support our existing
business and expand into new vertical markets using internally generated funds; our plan for 2025 to continue to invest additional funds
in technology improvements, sales and marketing, cybersecurity, fraud, customer service, and regulatory compliance; our belief that the
following measures are the primary indicators of our quarterly and annual revenues: gross dollar volume loaded on cards and conversion
rates on gross dollar volume loaded on cards; our belief that the following are also key performance indicators: revenues, gross profit,
operational expenses as a percent of revenues, cardholder participation, and EBITDA; our belief that our available cash on hand, excluding
restricted cash, along with our forecast for revenues and cash flows for 2025 and through 2027, will be sufficient to sustain our operations
for the next 24 months. our belief that we do not anticipate any losses with respect to accounts with balances exceeding federally insured
limits; our expectation that the repurchase program will be completed within 36 months from the commencement dated; our expectation that
we are entitled to a breakage amount in certain card programs where we hold the cardholder funds; our belief that our platform can be
seamlessly integrated with our clients’ systems; we may become involved in various lawsuits and legal proceedings which arise in
the ordinary course of business; if a financial institution were to be placed into receivership, we may be unable to access the cash we
have on deposit; our belief that our distinctive positioning allows us to provide end-to end technologies that securely manage transaction
processing, cardholder enrollment, value loading, account management, data and analytics, and customer service; our belief that our architecture
is known for its cross-platform compatibility, flexibility, and scalability – allowing our clients and partners to leverage these
advantages for cost savings and revenue opportunities; our belief that if we do not raise new capital, then we will still be able to support
our existing business and expand into new vertical markets using internally generated funds; our expectation that IRC Sections 382 and
383 will significantly impact the utilization of its net operating losses and other tax carryforwards. In the normal course of our business,
we, in an effort to help keep our stockholders and the public informed about our operations, may from time-to-time issue certain statements,
either in writing or orally, that contain, or may contain, Forward-Looking Statements. Although we believe that the expectations reflected
in such Forward-Looking Statements are reasonable, we can give no assurance that such expectations will prove to have been correct. In
addition, any statements that refer to expectations, projections, estimates, forecasts, or other characterizations of future events or
circumstances are Forward-Looking Statements. These Forward-Looking Statements are subject to certain risks and uncertainties that could
cause actual results to differ materially from those reflected in the Forward-Looking Statements. Such important factors (“Important
Factors”) and other factors are disclosed in this report, including those factors discussed in “Part I - Item 1A.
Risk Factors” and in other reports filed with the Securities and Exchange Commission (the “SEC”) from time to time.
All prior and subsequent written and oral Forward-Looking Statements attributable to us or persons acting on our behalf are expressly
qualified in their entirety by the Important Factors described below that could cause actual results to differ materially from our expectations
as set forth in any Forward-Looking Statement made by or on behalf of us. You are cautioned not to place undue reliance on these Forward-Looking
Statements, which relate only to events as of the date on which the statements are made. We undertake no obligation to publicly revise
these Forward-Looking Statements to reflect events or circumstances that arise after the date hereof. You should refer to and carefully
review the information in future documents we file with the SEC.

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, breakage, and settlement income. Revenue from cardholder
fees, interchange, card program management fees, and transaction claims processing fees is recorded when the performance obligation is
fulfilled. Breakage is recorded ratably over the estimated card life based on historical redemption patterns, market-specific trends,
escheatment rules, and existing economic conditions and relates solely to our open-loop gift card business which began at the end of 2022.
Settlement income is recorded at the expiration of the card or card program and relates predominantly to our pharma prepaid business which
ended in 2022.

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 considered general purpose reloadable (“GPR”) cards. Payroll cards are issued by an employer to an
employee in order to allow the employee to access payroll amounts that are deposited into an account linked to their card. GPR cards can
also be issued to a consumer at a retail location or mailed to a consumer after completing an on-line application. GPR cards can be reloaded
multiple times with a consumer’s payroll, government benefit, a federal or state tax refund or through cash reload networks located
at retail locations. Reloadable cards are generally open-loop cards as described below.

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

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

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

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

Currently, we are focusing our marketing efforts
on corporate incentive and expense prepaid card products in various market verticals including but not limited to general corporate expense,
healthcare related markets including patient affordability solutions, clinical trials and donor compensation, loyalty rewards, and incentive
cards.

As part of our continuing platform expansion process,
we evaluate current and emerging technologies for applicability to our existing and future software platform. To this end, we engage with
various hardware and software vendors in evaluation of various infrastructure components. Where appropriate, we use third-party technology
components in the development of our software applications and service offerings. Third-party software may be used for highly specialized
business functions, which we may not be able to develop internally within time and budget constraints. Our principal target markets for
processing services include prepaid card issuers, retail and private-label issuers, small third-party processors, and small and mid-size
financial institutions in the United States and Mexico.

We have devoted more extensive resources to sales
and marketing activities as we have added essential personnel to our marketing, sales and support teams. We market our Paysign payment
solutions through direct marketing by the Company’s sales team. Our primary market focus is on companies that require a streamlined
payment solution for rewards, rebates, payment assistance, and other payments to their customers, employees, agents and others. To reach
these markets, we focus our sales efforts on direct contact with our target market and attendance at various industry specific conferences.
We may, at times, utilize independent contractors who make direct sales and are paid commissions and/or restricted stock awards. We market
our Paysign premier product through existing communication channels to a targeted segment of our existing cardholders, as well as to a
broad group of individuals, ranging from non-banked to fully banked consumers with a focus on long term users of our product.

In 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.

2024 Year Milestones

Results of Operations

Comparison of Year Ended December 31, 2024
to Year Ended December 31, 2023

The following table summarizes our consolidated
financial results for year ended December 31, 2024 in comparison to year ended December 31, 2023:

The increase in total revenues of $11,110,390
for the year ended December 31, 2024 compared to the same period in the prior year consisted primarily of a $1,927,849 increase in plasma
revenue, a $8,601,375 increase in pharma revenue, and a $581,166 increase in other revenue. The increase in plasma revenue was primarily
due to the addition of 16 net new plasma centers since December 31, 2023 and rise in the number of donations at existing plasma centers,
and, consequently, dollars loaded to cards, cardholder fees, and interchange, as there continues to be stable demand for plasma used in
plasma protein therapies. The increase in pharma revenue was primarily due a full year financial benefit of programs launched in 2023,
the launch of 33 net new pharma patient affordability programs since December 31, 2023 and the subsequent growth in monthly management
and setup fees, claim processing fees, and other billable services such as call center support. The number of claims processed increased
over 270% in 2024 compared to 2023. 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 year ended December 31,
2024 increased $3,049,221 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, program management,
application integration setup, and sales and commission expense. The increase in cost of revenues consisted primarily of (i) increased
network fees of approximately $1,026,000, which was driven predominantly by increased ATM network usage associated with growth in our
card programs and increases in transaction fees related to inflationary pressures; (ii) increased customer care expense of approximately
$838,000 associated primarily with the growth in our pharma patient affordability programs, wage inflation pressures, a tight labor market,
and increased benefit costs; (iii) increased third-party program management of approximately $651,000 associated with our pharma
patient affordability programs; (iv) increased sales commission expense of approximately $368,000 related to the increase in overall revenue
for programs in which we pay commission expenses; and (v) increased fraud charges of approximately $527,000. These increases were offset
by a decline in plastics and collateral of approximately $326,000 and a decline in other costs of approximately $35,000.

Gross profit for the year ended December 31, 2024
increased $8,061,169 compared to the same period in the prior year, resulting primarily from the increase in the number of pharma patient
affordability programs, a full year financial benefit of programs launched in 2023, and a corresponding increase in setup fees, monthly
management fees, claim processing fees, and other billable fees associated with our patient affordability programs. Gross profit also
benefited from our plasma revenue and the 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 third-party service providers, sales commission
expense, customer service costs and fraud expenses mentioned above, primarily driven by the overall growth in our business. The increase
in gross margin resulted primarily from a greater contribution of total revenue from our pharma patient affordability business which has
higher gross profit margins than our other businesses.

Selling, general  and administrative expenses
for the year ended December 31, 2024 increased $4,903,998 compared to the same period in the prior year and consisted primarily of an
increase in (i) compensation and benefits of approximately $5,388,000 due to continued hiring to support the Company’s growth primarily
from our pharma patient affordability business, a tight labor market, and increased benefit costs; (ii) technologies and telecom of approximately
$1,320,000 primarily related to ongoing platform security investments; and (iii) travel and entertainment of approximately $207,000. This
increase was offset by a decrease in stock compensation of approximately $249,000, an increase of $1,738,000 in the amount of capitalized
platform development costs, and a decrease in other cost of approximately $23,000.

Depreciation and amortization expense for the
year ended December 31, 2024 increased $1,968,408 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 year ended December 31, 2024, we recorded
income from operations of $1,021,508 representing an improvement of $1,188,763 compared to a loss from operations of $167,255 during the
same period in the prior year, related to the aforementioned factors.

Other income for the year ended December 31, 2024
increased $585,618 primarily related to steady interest rates and the associated interest income received on higher average bank account
balances at our sponsor bank.

At December 31, 2024, our income tax provision
was $322,290, which equates to an effective tax rate of 7.8% primarily as a result of federal taxes
offset by net operating loss true-up on our state taxes, tax benefits related to our stock-based compensation and changes to the Company’s
tax credits. We recorded an income tax benefit of $4,094,911 for the year ended December 31, 2023, which equates to an effective
tax rate of (173.2)%, primarily as a result of the release of our valuation allowance of $4,588,781 on our federal and state deferred
tax assets.

The net income for the year ended December 31,
2024 was $3,815,907, a decline of $2,642,820 compared to the net income of $6,458,727 for the year ended December 31, 2023. The overall
change in net income relates to the aforementioned factors.

Key Metrics, Performance Indicators and Non-GAAP
Measures

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

Gross Dollar Volume Loaded on Cards: Represents
the total dollar volume of funds loaded to all of our prepaid card programs. Our gross dollar volume loaded on cards was $1,783 million
and $1,706 million for the year ended December 31, 2024 and 2023, respectively. We use this metric to analyze the total amount of money
moving into our prepaid card programs.

Conversion Rates on Gross Dollar Volume Loaded
on Cards: Represents revenues, gross profit or net income conversion rates of gross dollar volume loaded on cards which are calculated
by taking our total revenues, gross profit or net income, respectively, as a numerator and dividing by the gross dollar volume loaded
on cards as a denominator. As we derive a number of our financial results from cardholder fees, we utilize these metrics as an indication
of the amount of money that is added to cards and will eventually be converted to revenues, gross profit and net income. Our total revenue
conversion rates for the years ended December 31, 2024 and 2023 were 3.27% or 327 basis points (“bps”), and 2.77% or 277 bps,
respectively, of gross dollar volume loaded on cards. Our total gross profit conversion rates for the year ended December 31, 2024 and
2023 were 1.81% or 181 bps, and 1.41% or 141 bps, respectively, of gross dollar volume loaded on cards. Our net income conversion rates
for the year ended December 31, 2024 and 2023 were 0.21% or 21 bps, and 0.38% or 38 bps, respectively, of gross dollar volume loaded on
cards.

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

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

“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 for our last two fiscal years ended December 31, 2024 and 2023:

Comparison of Fiscal 2024 and 2023

During the years ended December 31, 2024 and 2023,
we financed our operations through internally generated funds.

Operating activities provided $22,947,120 of cash
in 2024, a decrease of $4,673,504 compared to 2023. This change in cash flow compared to the prior period is primarily due to net decreases
in operating assets and liabilities and net income. The changes in accounts receivable, accounts payable, and customer card funding are
primarily related to the growth in our pharma patient affordability business and timing of 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. Changes in net income in 2024 when compared to 2023 are also driven by a net decrease in our deferred tax asset valuation. The
decrease in cash flows from operating activities and net income was offset by non-cash adjustments for deferred income taxes, depreciation
and amortization, stock-based compensation, and lease expense.

We used net cash in investing activities during
the years ended December 31, 2024 and 2023 of $9,488,702 and $7,048,678, respectively. Cash used for investing activities was primarily
attributed to an increase in the capitalization of internally developed software as we continue to invest in our technology platform.

Cash used in financing
activities of $466,245 and $1,118,284 for the years ended December 31, 2024 and 2023, respectively, was primarily attributed to the repurchase
of 136,700 shares of the Company’s common stock at a weighted average price of $3.62 per share during the year ended December 31,
2024 offset by proceeds received of $28,800 for the exercise of stock options. For the year ended December 31, 2023, the repurchase of
394,558 shares of the Company’s common stock at a weighted average price of $2.86 per share offset by proceeds received of $9,600
for the exercise of stock options.

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

Liquidity and Sources of Financing

Unrestricted cash was $10,766,982 as of December
31, 2024, a decrease of $6,227,723 compared to the same period in the prior year. The decrease resulted primarily from payment timing
on pass-through claim reimbursement receivables and related payables associated with our patient affordability business, in the amount
of $7,018,053 offset by the improvement in our operating results. We believe that our available cash on hand, excluding restricted cash,
at December 31, 2024 of $10,766,982, along with our forecast for revenues and cash flows for 2025 and through 2027, will be sufficient
to sustain our operations for the next 24 months. In light of the elevated interest rates and increased refinancing risks related to commercial
real estate holdings on bank balance sheets, we continue to monitor the health and soundness of our bank relationships through publicly
available information. In particular, we are closely following FDIC publicly announced developments, but those developments have not caused
us to alter our bank relationships in any material respect at this time.

Critical Accounting Policies and Estimates

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

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

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

Intangible assets with a finite life are amortized
on a straight-line basis over its estimated useful life, which is generally 3 to 15 years.

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

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, as the Platform asset. Capitalized costs are amortized
using the straight-line method over a three-year estimated useful life, beginning in the period in which the software is available for
use.

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

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

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

The Company generates revenues from plasma card
programs through fees generated from cardholder fees and interchange fees. Revenues from pharma card programs are generated through card
program management fees, transaction claims processing fees, interchange fees, and settlement income. Other revenues are generated through
cardholder fees, interchange fees, program management fees, load fees and breakage.

Plasma and pharma card program revenues include
both fixed and variable components. Cardholder fees represent an obligation to the cardholder based on a per transaction basis and are
recognized at a point in time when the performance obligation is fulfilled. Card program management fees and transaction claims processing
fees include an obligation to our card program sponsors and are generally recognized when earned on a monthly basis and are typically
due within 30 days pursuant to the contract terms which are generally multi-year contracts. The Company uses the output method to recognize
card program management fee revenue at the amount of consideration to which an entity has a right to invoice. The performance obligation
is satisfied when the services are transferred to the customer which the Company determined to be monthly, as the customer simultaneously
receives and consumes the benefit from the Company’s performance. Interchange fees are earned when customer-issued cards are processed
through card payment networks as the nature of our promise to the customer is that we stand ready to process transactions at the customer’s
requests on a daily basis over the contract term. Since the timing and quantity of transactions to be processed by us are not determinable,
we view interchange fees to comprise an obligation to stand ready to process as many transactions as the customer requests. Accordingly,
the promise to stand ready is accounted for as a single series performance obligation. The Company uses the right to invoice practical
expedient and recognizes interchange fee revenue concurrent with the processing of card transactions. Interchange fees are settled in
accordance with the card payment network terms and conditions, which is typically within a few days.

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

The Company utilizes the remote method of revenue
recognition for settlement income whereby the unspent balances will be recognized as revenue at the expiration of the cards or the respective
card program. This has primarily been associated with the pharma prepaid business which ended in 2022. The Company records all revenue
on a gross basis since it is the primary obligor and establishes the price in the contract arrangement with its customers. The Company
is currently under no obligation to refund any fees, and the Company does not currently have any obligations for disputed claim settlements

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

Operating Leases – The Company determines
if a contract is or contains a leasing element at contract inception or the date in which a modification of an existing contract occurs.
In order for a contract to be considered a lease, the contract must transfer the right to control the use of an identified asset for a
period of time in exchange for consideration. Control is determined to have occurred if the lessee has the right to (i) obtain substantially
all of the economic benefits from the use of the identified asset throughout the period of use and (ii) direct the use of the identified
asset.

In determining the present value of lease payments
at lease commencement date, the Company utilizes its incremental borrowing rate based on the information available, unless the rate implicit
in the lease is readily determinable. The liability for operating leases is based on the present value of future lease payments. Operating
lease expenses are recorded as rent expense, which is included within selling, general and administrative expenses within the consolidated
statements of operations and presented as operating cash outflows within the consolidated statements of cash flows.

Leases with an initial term of 12 months or less
are not recorded on the balance sheet, with lease expenses for these leases recognized on a straight-line basis over the lease term.

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