PaySign (PAYS) 10-Q 17 Nov 20 2020 Q3 Quarterly report Financial data

Document and Entity Information

Document and Entity Information - shares	9 Months Ended
	Sep. 30, 2020	Nov. 12, 2020
Cover [Abstract]
Entity Registrant Name	Paysign, Inc.
Entity Central Index Key	0001496443
Document Type	10-Q
Document Period End Date	Sep. 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		49,844,457
Document Fiscal Period Focus	Q3
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 ($)	Sep. 30, 2020	Dec. 31, 2019
Current assets
Cash	$ 7,497,579	$ 9,663,746
Restricted Cash	48,014,599	35,908,559
Accounts Receivable	792,143	891,936
Prepaid expenses and other current assets	1,306,433	1,413,208
Total current assets	57,610,754	47,877,449
Fixed assets, net	1,679,839	937,185
Intangible assets, net	3,658,809	3,816,232
Operating lease right-of-use asset	4,430,385	0
Deferred tax assets	3,677,706	917,480
Total assets	71,057,493	53,548,346
Current liabilities
Accounts payable and accrued liabilities	1,941,082	1,523,604
Operating lease, current portion	315,874	0
Customer card funding	48,014,599	32,723,227
Total current liabilities	50,271,555	34,246,831
Operating lease liability, long term portion	4,095,565	0
Total liabilities	54,367,120	34,246,831
Stockholders' equity
Preferred stock: $0.001 par value; 25,000,000 shares authorized; none issued and outstanding at September 30, 2020 and December 31, 2019	0	0
Common stock: $0.001 par value; 150,000,000 shares authorized, 49,888,907 and 48,577,712 issued at September 30, 2020 and December 31, 2019, respectively	49,889	48,578
Additional paid-in capital	13,532,403	11,577,539
Treasury stock at cost, 303,450 shares	(150,000)	(150,000)
Retained earnings	3,258,081	8,088,485
Total Paysign, Inc. stockholders' equity	16,690,373	19,564,602
Noncontrolling interest	0	(263,087)
Total equity	16,690,373	19,301,515
Total liabilities and equity	$ 71,057,493	$ 53,548,346

CONDENSED CONSOLIDATED BALANC_2

CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (Parenthetical) - $ / shares	Sep. 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	49,888,907	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		9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019
Revenues	$ (152,541)	$ 9,008,117	$ 16,866,997	$ 24,901,678
Cost of revenues	3,281,888	3,641,595	11,275,758	10,721,769
Gross profit (loss)	(3,434,429)	5,366,522	5,591,239	14,179,909
Operating expenses
Selling, general and administrative	4,070,211	2,765,961	11,299,036	8,483,882
Impairment of intangible asset	382,414	0	382,414	0
Loss on abandonment of assets	0	0	42,898	0
Depreciation and amortization	537,792	318,508	1,546,645	1,047,779
Total operating expenses	4,990,417	3,084,469	13,270,993	9,531,661
Income (loss) from operations	(8,424,846)	2,282,053	(7,679,754)	4,648,248
Other income (expense)
Interest income	12,184	113,667	77,475	364,652
Income (loss) before income tax benefits and noncontrolling interest	(8,412,662)	2,395,720	(7,602,279)	5,012,900
Income tax benefit	(2,260,527)	(563,854)	(2,771,875)	(556,068)
Net income (loss) before noncontrolling interest	(6,152,135)	2,959,574	(4,830,404)	5,568,968
Net loss attributable to the noncontrolling interest	0	504	0	1,572
Net income (loss) attributable to Paysign, Inc.	$ (6,152,135)	$ 2,960,078	$ (4,830,404)	$ 5,570,540
Net income (loss) per share - basic	$ (0.12)	$ 0.06	$ (0.10)	$ 0.12
Net income (loss) per share - diluted	$ (0.12)	$ 0.05	$ (0.10)	$ 0.10
Weighted average common shares outstanding - basic	49,433,473	47,371,083	49,055,492	47,215,625
Weighted average common shares outstanding - diluted	49,433,473	54,291,368	49,055,492	54,588,470
Plasma Industry [Member]
Revenues	$ 5,186,566	$ 6,937,066	$ 17,102,415	$ 19,364,298
Pharma industry [Member]
Revenues	(5,383,887)	2,071,051	(594,945)	5,537,380
Other [Member]
Revenues	$ 44,780	$ 0	$ 359,527	$ 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 Sep. 30, 2019	48,095,192
Ending balance, value at Sep. 30, 2019	$ 48,095	10,737,190	(150,000)	6,150,122	(208,502)	16,576,905
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	(207,988)	12,713,251
Issuance of stock for previously vested stock-based compensation, shares	425,000
Issuance of stock for previously vested stock-based compensation, value	$ 425	(425)
Stock-based compensation		651,267				651,267
Stock options and warrants exercises, shares	113,280
Stock options and warrants exercises, value	$ 113	252,700				252,813
Net income (loss)				2,960,078	(504)	2,959,574
Ending balance, shares at Sep. 30, 2019	48,095,192
Ending balance, value at Sep. 30, 2019	$ 48,095	10,737,190	(150,000)	6,150,122	(208,502)	16,576,905
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
Stock options and warrants exercises, value
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 Sep. 30, 2020	49,888,907
Ending balance, value at Sep. 30, 2020	$ 49,889	13,532,403	(150,000)	3,258,081	0	16,690,373
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	0	21,903,979
Issuance of stock for previously vested stock-based compensation, shares	457,000
Issuance of stock for previously vested stock-based compensation, value	$ 457	(457)
Stock-based compensation		798,849				798,849
Exercise of stock options, shares	58,200
Exercise of stock options, value	$ 58	139,622				139,680
Net income (loss)				(6,152,135)		(6,152,135)
Ending balance, shares at Sep. 30, 2020	49,888,907
Ending balance, value at Sep. 30, 2020	$ 49,889	$ 13,532,403	$ (150,000)	$ 3,258,081	$ 0	$ 16,690,373

CONDENSED CONSOLIDATED STATEM_3

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) - USD ($)	9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019
Cash flows from operating activities:
Net income (loss) attributable to Paysign, Inc.	$ (4,830,404)	$ 5,570,540
Adjustments to reconcile net income to net cash provided by operating activities:
Net loss in noncontrolling interest	0	(1,572)
Depreciation and amortization	1,546,645	1,047,779
Stock based compensation	2,123,807	1,865,887
Impairment of intangible asset	382,414	0
Loss on abandonment of assets	42,898	0
Amortization of lease right-of use asset	239,615	0
Deferred taxes	(2,760,226)	0
Changes in operating assets and liabilities:
Accounts receivable	99,793	(632,144)
Prepaid expenses and other current assets	48,387	(792,617)
Accounts payable and accrued liabilities	527,497	136,189
Operating lease	(132,992)	0
Customer card funding	15,291,372	3,604,053
Net cash provided by operating activities	12,578,806	10,798,115
Cash flows from investing activities:
Purchase of fixed assets	(1,096,591)	(351,345)
Capitalization of internally developed software	(1,403,470)	(1,145,631)
Purchase of intangible assets	(57,127)	0
Net cash used in investing activities	(2,557,188)	(1,496,976)
Cash flows from financing activities:
Proceeds from exercise of stock options	163,680	252,813
Repurchase of employee common stock for taxes withheld	(245,425)	0
Net cash provided by (used in) financing activities	(81,745)	252,813
Net change in cash and restricted cash	9,939,873	9,553,952
Cash and restricted cash, beginning of period	45,572,305	31,665,741
Cash and restricted cash, end of period	55,512,178	41,219,693
Supplemental cash flow information:
Acquisition of right-of-use asset by operating lease	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 ($)	Sep. 30, 2020	Dec. 31, 2019	Sep. 30, 2019	Dec. 31, 2018
Additional Cash Flow Elements and Supplemental Cash Flow Information [Abstract]
Cash	$ 7,497,579	$ 9,663,746	$ 7,988,803
Restricted cash	48,014,599	35,908,559	33,230,890
Total cash and restricted cash	$ 55,512,178	$ 45,572,305	$ 41,219,693	$ 31,665,741

1. BASIS OF PRESENTATION AND SU

1. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES	9 Months Ended
	Sep. 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 nine months ended September 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. Previously, settlement income from breakage on Pharma programs was recognized and recorded ratably throughout the program lifecycle based on the Company’s estimate of the unspent balances to be remaining on the card at program expiration. During the quarter ended September 30, 2020, the Company changed its estimate of breakage for recognizing settlement income for Pharma programs resulting in the Company constraining revenue on all Pharma programs in accordance with ASC 606 by changing the estimate of breakage to the remote method of revenue recognition for settlement income whereby the unspent balances will be recognized as revenue at the expiration of the cards and the respective program. See Note 11. 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, and the Company does not currently have any obligations for disputed claim settlements. Given the nature of the Company’s services and contracts, it has no contract assets. Cost of revenues is comprised of transaction processing fees, data connectivity and data center expenses, network fees, bank fees, card production costs, customer service, program management, application integration setup, and sales and commission expense. Stock-Based Compensation New Accounting Pronouncements Simplifying the Accounting for Income Taxes

2. FIXED ASSETS, NET

2. FIXED ASSETS, NET	9 Months Ended
	Sep. 30, 2020
Property, Plant and Equipment [Abstract]
FIXED ASSETS	2. FIXED ASSETS, NET Fixed assets consist of the following: September 30, December 31, Equipment $ 1,742,674 $ 2,026,549 Software 190,782 180,223 Furniture and fixtures 747,060 149,684 Website costs 67,816 34,971 Leasehold improvements 77,386 52,894 2,825,718 2,444,321 Less: accumulated depreciation 1,145,879 1,507,136 Fixed assets, net $ 1,679,839 $ 937,185 Depreciation expense for the three months ended September 30, 2020 and 2019 was $115,778 and $91,635, respectively. Depreciation expense for the nine months ended September 30, 2020 and 2019 was $311,039 and $230,411, respectively. During the nine months ended September 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	9 Months Ended
	Sep. 30, 2020
Goodwill and Intangible Assets Disclosure [Abstract]
INTANGIBLE ASSETS	3. INTANGIBLE ASSETS, NET Intangible assets consist of the following: September 30, December 31, Trademarks $ 39,053 $ 39,053 Platform 7,001,606 5,598,136 Customer lists and contracts 1,177,200 1,177,200 Kiosk development – 64,802 Licenses 209,282 534,569 8,427,141 7,413,760 Less: accumulated amortization 4,768,332 3,597,528 Intangible assets, net $ 3,658,809 $ 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 September 30, 2020 and 2019 was $422,014 and $226,873, respectively. Amortization expense for the nine months ended September 30, 2020 and 2019 was $1,235,606 and $817,369, respectively. During the three months ended September 30, 2020 the Company reviewed the carrying value of acquisition costs related to a business license and determined that there was an impairment necessary as the efforts to acquire the license had been suspended. As the impairment was deemed other than temporary, the impairment of $382,414 was recorded during the third quarter of 2020.

4. LEASE

4. LEASE	9 Months Ended
	Sep. 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 September 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 $218,412 and $278,302 for the three and nine months ended September 30, 2020. Short-term lease cost included in selling, general and administrative expense was $57,309 for the three months ended September 30, 2019. Short-term lease cost included in selling, general and administrative expense was $94,906 and $166,538 for the nine months ended September 30, 2020 and 2019, respectively. The following is the lease maturity analysis of our operating lease as of September 30, 2020: Twelve months ending September 30, 2021 $ 571,968 2022 571,968 2023 571,968 2024 571,968 2025 594,846 Thereafter 2,989,487 Total lease payments 5,872,205 Less: Imputed interest 1,460,766 Present value of future lease payments 4,411,439 Less: current portion of lease liability (315,874 ) Long-term portion of lease liability $ 4,095,565

5. CUSTOMER CARD FUNDING LIABIL

5. CUSTOMER CARD FUNDING LIABILITY	9 Months Ended
	Sep. 30, 2020
Revenue from Contract with Customer [Abstract]
CUSTOMER CARD FUNDING LIABILITY	5. CUSTOMER CARD FUNDING LIABILITY The Company issues prepaid cards with various provisions for transaction fees, inactivity fees, or expiration. Revenue generated from cardholder transactions and interchange are recognized when a card transaction occurs and the Company's performance obligation is fulfilled. Unspent balances left on the cards will be recognized as settlement income at the expiration of the cards and the program. Contract liabilities related to prepaid cards represent funds on card and client funds held to be loaded to card before the amounts are ultimately spent by the cardholders or recognized as revenue by the Company. Contract liabilities related to prepaid cards are reported as Customer card funding liability on the consolidated balance sheet. The opening and closing balances of the Company's contract liabilities are as follows: Nine Months Ended September 30, 2020 2019 Beginning balance $ 32,723,227 $ 25,960,974 Increase (decrease), net 15,291,372 3,604,053 Ending balance $ 48,014,599 $ 29,565,027 The amount of revenue recognized during the nine months ended September 30, 2020 and 2019 that was included in the opening contract liability for prepaid cards was $844,514 and $818,889, respectively.

6. COMMON STOCK

6. COMMON STOCK	9 Months Ended
	Sep. 30, 2020
Equity [Abstract]
COMMON STOCK	6. COMMON STOCK At September 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 49,888,907 shares of common stock issued, and no shares of preferred stock outstanding. Stock-based compensation expense related to Company grants for the three and nine months ended September 30, 2020 was $798,849 and $2,123,807, respectively. Stock-based compensation expense for the three and nine months ended September 30, 2019 was $651,267 and $1,865,887, respectively. 2020 Transactions: 2019 Transactions:

7. BASIC AND FULLY DILUTED NET

7. BASIC AND FULLY DILUTED NET INCOME PER COMMON SHARE	9 Months Ended
	Sep. 30, 2020
Earnings Per Share [Abstract]
BASIC AND FULLY DILUTED NET INCOME PER COMMON SHARE	7. BASIC AND FULLY DILUTED NET INCOME (LOSS) PER COMMON SHARE The following table sets forth the computation of basic and fully diluted net income (loss) per common share. Three Months Ended September 30, Nine Months Ended September 30, 2020 2019 2020 2019 Numerator: Net income (loss) attributable to Paysign, Inc. $ (6,152,135 ) $ 2,960,078 $ (4,830,404 ) $ 5,570,540 Denominator: Weighted average common shares: Denominator for basic calculation 49,433,473 47,371,083 49,055,492 47,215,625 Weighted average effects of potentially dilutive common stock: Stock options (calculated using the treasury method) – 2,060,285 – 2,125,263 Unvested restricted stock grants – 4,860,000 – 5,247,582 Denominator for fully diluted calculation 49,433,473 54,291,368 49,055,492 54,588,470 Net income (loss) per common share: Basic $ (0.12 ) $ 0.06 $ (0.10 ) $ 0.12 Diluted $ (0.12 ) $ 0.05 $ (0.10 ) $ 0.10 Due to the net losses for the three and nine months ended September 30, 2020, the effect of all potential common share equivalents was anti-dilutive, and therefore, all such shares were excluded from the computation of diluted weighted average shares outstanding for both periods. The amount of potential common share equivalents excluded were 5,005,985 and 5,452,382 for three and nine months ended September 30, 2020, respectively.

8. COMMITMENTS AND CONTINGENCIE

8. COMMITMENTS AND CONTINGENCIES	9 Months Ended
	Sep. 30, 2020
Commitments and Contingencies Disclosure [Abstract]
COMMITMENTS AND CONTINGENCIES	8. 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” or the “Securities Class Action”). Smith & Duvall v. Paysign, Inc. et. al. was voluntarily dismissed on May 21, 2020. On May 18, 2020, the plaintiffs in Yilan Shi v. Paysign, Inc., Lorna Chase v. Paysign, Inc., and another entity called the Paysign Investor Group, each filed a motion to consolidate the remaining Shi and Chase actions, and the Paysign Investor Group filed a motion to be appointed lead plaintiff. The Complaints are putative class actions 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 generally allege that the Company, Mark R. Newcomer, and Mark Attinger violated Section 10(b) of the Exchange Act, and that 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 the Company’s internal control over financial reporting and its financial statements. The Complaints seek class action certification, compensatory damages, and attorney’s fees and costs. The motion to consolidate, and the motion to appoint lead plaintiff, are pending before the court. The parties have entered into a court approved stipulation specifying a timetable for lead plaintiff to file an amended complaint. As of the date of this filing Paysign cannot give any meaningful probability of outcome or damages. The Company has also been named as a nominal defendant in a stockholder derivative action in the U.S. District Court for the District of Nevada: Andrzej Toczek, derivatively on behalf of Paysign, Inc. v. Mark, R. Newcomer, et. al., filed on September 17, 2020. This action alleges violations of Section 14(a) of the Exchange Act, breach of fiduciary duty, unjust enrichment, and waste, largely in connection with the failure to correct information technology controls over financial reporting alleged in the Securities Class Action, thereby causing the Company to face exposure in the Securities Class Action. The derivative complaint also alleges insider trading, violations against certain individual defendants. As of the date of this filing, Paysign cannot give any meaningful probability of outcome or damages.

9. RELATED PARTY

9. RELATED PARTY	9 Months Ended
	Sep. 30, 2020
Related Party Transactions [Abstract]
RELATED PARTY	9. 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 $429,380 and $544,868 during the three and nine months ended September 30, 2020, respectively, with the related party law firm. During each of the three and nine months ended September 30, 2019 the Company incurred legal expense of $4,862 and $29,029 with the related party law firm.

10. INCOME TAX BENEFIT

10. INCOME TAX BENEFIT	9 Months Ended
	Sep. 30, 2020
Income Tax Disclosure [Abstract]
INCOME TAX BENEFIT	10. INCOME TAX BENEFIT The effective tax rate (income tax benefit as a percentage of income (loss) before income tax benefit) was 26.9% and 36.5% for the three and nine months ended September 30, 2020, as compared to (23.5%) and (11.1%) for the three and nine months ended September 30, 2019, The effective tax rates vary

11. CHANGE IN ACCOUNTING ESTIMA

11. CHANGE IN ACCOUNTING ESTIMATE	9 Months Ended
	Sep. 30, 2020
Change in Accounting Estimate [Abstract]
CHANGE IN ACCOUNTING ESTIMATE	11. CHANGE IN ACCOUNTING ESTIMATE The Company generates settlement income from breakage on Pharma industry programs which was previously recognized and recorded ratably throughout the account and program lifecycle based on expected dollar loads, spending patterns and historical experience. The Company accumulated data trends on over 100 Pharma programs over the last 10 years and has historically realized settlement income from breakage at an average rate of approximately 23.5%, calculated as unspent balances as a percentage of dollars loaded to card. The most recent completed programs in the prior year performed consistent with our historical breakage estimates. During the three and nine months ended September 30, 2020, the Company changed its estimate of breakage for recognizing settlement income for Pharma programs based on substantially different performance indicators observed, current trends in the industry regarding program management by third parties, and new information available in dollar loads and spending patterns compared to historical experience. Given these triggering events based on the new information observed, this change in accounting estimate resulted in the Company constraining revenue on all Pharma programs in accordance with ASC 606 by changing the estimate of breakage to the remote method of revenue recognition for settlement income whereby the unspent balances will be recognized as revenue at the expiration of the cards and the respective program. This has resulted in the reversal of all previously recognized settlement income for all current Pharma programs. The adjustment was a $6,293,203 reduction in Pharma revenue and an increase in net loss after the impact of income taxes of $4,971,630 or $(0.10) per basic and diluted share for the three and nine months ended September 30, 2020.

1. BASIS OF PRESENTATION AND _2

1. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies)	9 Months Ended
	Sep. 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. Previously, settlement income from breakage on Pharma programs was recognized and recorded ratably throughout the program lifecycle based on the Company’s estimate of the unspent balances to be remaining on the card at program expiration. During the quarter ended September 30, 2020, the Company changed its estimate of breakage for recognizing settlement income for Pharma programs resulting in the Company constraining revenue on all Pharma programs in accordance with ASC 606 by changing the estimate of breakage to the remote method of revenue recognition for settlement income whereby the unspent balances will be recognized as revenue at the expiration of the cards and the respective program. See Note 11. 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, and the Company does not currently have any obligations for disputed claim settlements. Given the nature of the Company’s services and contracts, it has no contract assets. Cost of revenues is comprised of transaction processing fees, data connectivity and data center expenses, network fees, bank fees, card production costs, customer service, program management, application integration setup, and sales and commission expense.
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)	9 Months Ended
	Sep. 30, 2020
Property, Plant and Equipment [Abstract]
Schedule of fixed assets	September 30, December 31, Equipment $ 1,742,674 $ 2,026,549 Software 190,782 180,223 Furniture and fixtures 747,060 149,684 Website costs 67,816 34,971 Leasehold improvements 77,386 52,894 2,825,718 2,444,321 Less: accumulated depreciation 1,145,879 1,507,136 Fixed assets, net $ 1,679,839 $ 937,185

3. INTANGIBLE ASSETS, NET (Tabl

3. INTANGIBLE ASSETS, NET (Tables)	9 Months Ended
	Sep. 30, 2020
LIABILITIES AND STOCKHOLDERS' DEFICIT
Schedule of intangible assets	September 30, December 31, Trademarks $ 39,053 $ 39,053 Platform 7,001,606 5,598,136 Customer lists and contracts 1,177,200 1,177,200 Kiosk development – 64,802 Licenses 209,282 534,569 8,427,141 7,413,760 Less: accumulated amortization 4,768,332 3,597,528 Intangible assets, net $ 3,658,809 $ 3,816,232

4. LEASE (Tables)

4. LEASE (Tables)	9 Months Ended
	Sep. 30, 2020
Leases [Abstract]
Schedule of operating lease liabilities	The following is the lease maturity analysis of our operating lease as of September 30, 2020: Twelve months ending September 30, 2021 $ 571,968 2022 571,968 2023 571,968 2024 571,968 2025 594,846 Thereafter 2,989,487 Total lease payments 5,872,205 Less: Imputed interest 1,460,766 Present value of future lease payments 4,411,439 Less: current portion of lease liability (315,874 ) Long-term portion of lease liability $ 4,095,565

5. CUSTOMER CARD FUNDING LIAB_2

5. CUSTOMER CARD FUNDING LIABILITY (Tables)	9 Months Ended
	Sep. 30, 2020
Revenue from Contract with Customer [Abstract]
Schedule of contract liabilities	Nine Months Ended September 30, 2020 2019 Beginning balance $ 32,723,227 $ 25,960,974 Increase (decrease), net 15,291,372 3,604,053 Ending balance $ 48,014,599 $ 29,565,027

7. BASIC AND FULLY DILUTED NE_2

7. BASIC AND FULLY DILUTED NET INCOME PER COMMON SHARE (Tables)	9 Months Ended
	Sep. 30, 2020
Earnings Per Share [Abstract]
Computation of earnings per share	Three Months Ended September 30, Nine Months Ended September 30, 2020 2019 2020 2019 Numerator: Net income (loss) attributable to Paysign, Inc. $ (6,152,135 ) $ 2,960,078 $ (4,830,404 ) $ 5,570,540 Denominator: Weighted average common shares: Denominator for basic calculation 49,433,473 47,371,083 49,055,492 47,215,625 Weighted average effects of potentially dilutive common stock: Stock options (calculated using the treasury method) – 2,060,285 – 2,125,263 Unvested restricted stock grants – 4,860,000 – 5,247,582 Denominator for fully diluted calculation 49,433,473 54,291,368 49,055,492 54,588,470 Net income (loss) per common share: Basic $ (0.12 ) $ 0.06 $ (0.10 ) $ 0.12 Diluted $ (0.12 ) $ 0.05 $ (0.10 ) $ 0.10

1. BASIS OF PRESENTATION AND _3

1. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details Narrative)	9 Months Ended
	Sep. 30, 2020
Accounting Policies [Abstract]
Estimated useful lives of fixed assets	3 to 10 years

2. FIXED ASSETS, NET (Details)

2. FIXED ASSETS, NET (Details) - USD ($)	Sep. 30, 2020	Dec. 31, 2019
Fixed Assets Gross	$ 2,825,718	$ 2,444,321
Less: accumulated depreciation	1,145,879	1,507,136
Fixed assets, net	1,679,839	937,185
Equipment [Member]
Fixed Assets Gross	1,742,674	2,026,549
Software [Member]
Fixed Assets Gross	190,782	180,223
Furniture and Fixtures [Member]
Fixed Assets Gross	747,060	149,684
Website Costs [Member]
Fixed Assets Gross	67,816	34,971
Leasehold Improvements [Member]
Fixed Assets Gross	$ 77,386	$ 52,894

2. FIXED ASSETS, NET (Details N

2. FIXED ASSETS, NET (Details Narrative) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019
Property, Plant and Equipment [Abstract]
Depreciation expense	$ 115,778	$ 91,635	$ 311,039	$ 230,411
Loss on abandonment of assets	$ 0	$ 0	$ (42,898)	$ 0

3. INTANGIBLE ASSETS, NET (Deta

3. INTANGIBLE ASSETS, NET (Details) - USD ($)	Sep. 30, 2020	Dec. 31, 2019
Intangible assets gross	$ 8,427,141	$ 7,413,760
Less: accumulated amortization	4,768,332	3,597,528
Intangible assets, net	3,658,809	3,816,232
Trademarks [Member]
Intangible assets gross	39,053	39,053
Platform [Member]
Intangible assets gross	7,001,606	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	$ 209,282	$ 534,569

3. INTANGIBLE ASSETS, NET (De_2

3. INTANGIBLE ASSETS, NET (Details Narrative) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019
Amortization expense	$ 422,014	$ 226,873	$ 1,235,606	$ 817,369
Impairment of intangible assets	$ 382,414	$ 0	$ 382,414	$ 0
Maximum [Member]
Intangible assets useful lives			5 years
Minimum [Member]
Intangible assets useful lives			3 years

4. LEASE (Details)

4. LEASE (Details) - USD ($)	Sep. 30, 2020	Dec. 31, 2019
Leases [Abstract]
2021	$ 571,968
2022	571,968
2023	571,968
2024	571,968
2025	594,846
Thereafter	2,989,487
Total lease payments	5,872,205
Less: Imputed interest	1,460,766
Present value of future lease payments	4,411,439
Less: current portion of lease liability	(315,874)	$ 0
Long-term portion of lease liability	$ 4,095,565	$ 0

4. LEASE (Details Narrative)

4. LEASE (Details Narrative) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 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	$ 218,412		$ 278,302
Short-term lease cost		$ 57,309	$ 94,906	$ 166,538

5. CUSTOMER CARD FUNDING LIAB_3

5. CUSTOMER CARD FUNDING LIABILITY (Details) - USD ($)	9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019
Revenue from Contract with Customer [Abstract]
Contract liabilities, beginning balance	$ 32,723,227	$ 25,960,974
Increase (decrease) in contract liabilities	15,291,372	3,604,053
Contract liabilities, ending balance	$ 48,014,599	$ 29,565,027

5. CUSTOMER CARD FUNDING LIAB_4

5. CUSTOMER CARD FUNDING LIABILITY (Details Narrative) - USD ($)	9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019
Revenue from Contract with Customer [Abstract]
Revenue recognized in current year previously included in contract liabilities	$ 844,514	$ 818,889

6. COMMON STOCK (Details Narrat

6. COMMON STOCK (Details Narrative) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 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 issued	49,888,907		49,888,907		48,577,712
Preferred stock, shares authorized	25,000,000		25,000,000		25,000,000
Preferred stock, par value	$ 0.001		$ 0.001		$ 0.001
Preferred stock, shares outstanding	0		0		0
Stock based compensation expense	$ 798,849	$ 651,267	$ 2,123,807	$ 1,865,887
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 vested stock grants and exercise of options	$ 139,680	$ 252,813	$ 163,680	$ 252,813
Stock issued for vested stock grants and exercise of options, shares	515,200		1,291,195
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

7. BASIC AND FULLY DILUTED NE_3

7. BASIC AND FULLY DILUTED NET INCOME PER COMMON SHARE (Details) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019
Numerator:
Net income (loss) attributable to Paysign, Inc.	$ (6,152,135)	$ 2,960,078	$ (4,830,404)	$ 5,570,540
Denominator:
Denominator for basic calculation	49,433,473	47,371,083	49,055,492	47,215,625
Weighted average effects of potentially diluted common stock:
Stock options (calculated under treasury method)	0	2,060,285	0	2,125,263
Unvested restricted stock grants	0	4,860,000	0	5,247,582
Denominator for fully diluted calculation	49,433,473	54,291,368	49,055,492	54,588,470
Basic	$ (0.12)	$ 0.06	$ (0.10)	$ 0.12
Fully diluted	$ (0.12)	$ 0.05	$ (0.10)	$ 0.10

7. BASIC AND FULLY DILUTED NE_4

7. BASIC AND FULLY DILUTED NET INCOME PER COMMON SHARE (Details Narrative) - shares	3 Months Ended	9 Months Ended
	Sep. 30, 2020	Sep. 30, 2020
Earnings Per Share [Abstract]
Potential common share equivalents excluded from computation	5,005,985	5,452,382

9. RELATED PARTY (Details Narra

9. RELATED PARTY (Details Narrative) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019
Related Party Transactions [Abstract]
Legal fees paid to related party	$ 429,380	$ 4,862	$ 544,868	$ 29,029

10. INCOME TAX BENEFIT (Details

10. INCOME TAX BENEFIT (Details Narrative)	3 Months Ended		9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019
Income Tax Disclosure [Abstract]
Effective income tax rate	26.90%	(23.50%)	36.50%	(11.10%)

11. CHANGE IN ACCOUNTING ESTI_2

11. CHANGE IN ACCOUNTING ESTIMATE (Details Narrative) - Change In Accounting Method Accounted For As Change In Estimate [Member]	3 Months Ended
	Sep. 30, 2020USD ($)$ / shares
Change in accounting estimate	Change in estimate for recognizing settlement income
Revenue [Member]
Change in accounting estimate	$ 6,293,203
Settlement income on average from breakage percentage	23.50%
Change in accounting estimate increase in net loss, net of tax	$ (4,971,630)
Change in accounting estimate increase in net loss, net of tax, per share | $ / shares	$ (0.10)