UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-K /A
(Amendment No. 1)
(Mark One)
| ☒ |
ANNUAL REPORT PURSUANT TO SECTION 13 OR
15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 |
| For the fiscal year
ended December 31, 2021 |
| |
| ☐ |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934 |
| For the transition
period from ________ to ________ |
☐
Commission File Number 001-38623
PAYSIGN, INC.
(Exact name of registrant as specified in
its charter)
|
Nevada |
95-4550154 |
| (State or other
jurisdiction of incorporation or organization) |
(I.R.S. Employer
Identification No.) |
2615 St. Rose Parkway, Henderson, Nevada 89052
(Address of principal executive offices) (Zip Code)
Registrant’s telephone number, including area code: (702)
453-2221
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class |
Trading Symbol |
Name of each exchange on
which registered |
| Common Stock, $0.001 par value per
share |
PAYS |
The Nasdaq Stock Market LLC |
Securities registered under Section 12(g) of the Exchange Act:
None
Indicate by check mark if the registrant is a well-known seasoned
issuer, as defined in Rule 405 of the Securities Act. Yes
☐
No ☒
Indicate by check mark if the registrant is not required to file
reports pursuant to Section 13 or Section 15(d) of the Act. Yes
☐
No ☒
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or
for such shorter period that the registrant was required to file
such reports), and (2) has been subject to such filing requirements
for the past 90 days. Yes ☒ No
☐
Indicate by check mark whether the registrant has submitted
electronically every Interactive Data File required to be submitted
pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter)
during the preceding 12 months (or for such shorter period that the
registrant was required to submit such files). Yes ☒ No
☐
Indicate by check mark whether the registrant is a large
accelerated filer, an accelerated filer, a non-accelerated filer,
smaller reporting company, or an emerging growth company. See the
definitions of “large accelerated filer,” “accelerated filer”, a
“smaller reporting company”, and “emerging growth company” in Rule
12b-2 of the Exchange Act.
| Large accelerated filer ☐ |
Accelerated filer ☐ |
| Non-accelerated filer ☒ |
Smaller reporting company ☒ |
| |
Emerging growth company ☒ |
If an emerging growth company, indicate by check mark if the
registrant has elected not to use the extended transition period
for complying with any new or revised financial accounting
standards provided pursuant to Section 13(a) of the Exchange Act.
☐
Indicate by check mark whether the registrant has filed a report
and attestation to its management’s assessment of the effectiveness
of its internal control over financial reporting under Section
404(b) of the Sarbanes-Oxley Act (15 U.S.C. 762 (b)) by the
registered public accounting firm that prepared or issued its audit
report. ☐
Indicate by check mark whether the registrant is a shell company
(as defined in Rule 12b-2 of the Act). Yes ☐ No
☒
State the aggregate market value of the voting and non-voting
common equity held by non-affiliates computed by reference to the
price at which the common equity was last sold, or the average bid
and asked price of such common equity, as of the last business day
of the registrant’s most recently completed second fiscal quarter:
$100,192,362 based upon a market price of $3.18 per share.
Indicate the number of shares outstanding of each of the
registrant’s classes of common stock, as of the latest practicable
date: 51,991,932 as of April 22, 2022.
DOCUMENTS INCORPORATED BY REFERENCE
None.
EXPLANATORY NOTE
This Amendment No. 1 to Form 10-K (this “Amendment”) amends the
Annual Report on Form 10-K for the fiscal year ended December 31,
2021 originally filed on March 23, 2022 (the “Original Filing”) by
Paysign, Inc. (“Paysign,” the “Company,” “we,” or “us”). We are
filing this Amendment to present the information required by Part
III of Form 10-K as we will not file our definitive proxy statement
within 120 days of the end of our fiscal year ended
December 31, 2021.
Except as described above, this Amendment does not amend, update or
change any other items or disclosures in the Original Filing, and
accordingly, should be read in conjunction with the Original
Filing. As required by Rule 12b-15 under the Securities Exchange
Act of 1934, as amended (the “Exchange Act”), new certifications by
our principal executive officer and our principal financial officer
are filed as exhibits to this Amendment under Item 15 of Part IV
hereof.
TABLE OF CONTENTS
PART III
|
ITEM 10. |
DIRECTORS, EXECUTIVE OFFICERS
AND CORPORATE GOVERNANCE. |
Directors
|
Name
|
Age
|
Position
|
Director Since
|
| Mark R. Newcomer |
56 |
Chief Executive Officer, Vice-Chairman and Director |
March 2006 |
| Daniel H. Spence |
58 |
Executive Vice President, Director |
March 2006 |
| Joan M. Herman |
65 |
Executive Vice President, Director |
November 2018 |
| Dan R. Henry |
56 |
Chairman and Director |
May 2018 |
| Bruce Mina |
75 |
Director |
March 2018 |
| Quinn Williams |
72 |
Director |
April 2018 |
| Dennis Triplett |
75 |
Director |
May 2018 |
Mark R. Newcomer, Chief Executive Officer, Vice-Chairman and
Director. Mr. Newcomer serves as our Chief Executive Officer
and has served in this capacity and as a director since March 2006.
From February of 2001 to present, Mr. Newcomer continues to serve
as CEO of 3PEA Technologies, Inc., a payment solutions company he
co-founded in 2001 with Mr. Spence. Mr. Newcomer continues to be a
driving force in guiding our growth through technology investments,
acquisitions, new product lines, and strategic partnerships. Mr.
Newcomer attended Cal-Poly San Luis Obispo where he majored in
Bio-Science. We believe Mr. Newcomer should serve as our
Vice-Chairman based on the perspective and experience he brings to
the Board of Directors as our founder and Chief Executive Officer,
which adds historical knowledge, operational expertise and
continuity to the Board of Directors.
Daniel H. Spence, Executive Vice President and Director. Mr.
Spence serves as an Executive Vice President and has served as a
director since March 2006. Mr. Spence served as our Chief
Technology Officer until 2020 and is responsible for the design and
architecture of the Paysign® payments platform. Prior to
founding 3PEA Technologies, Inc. with co-founder Mr. Newcomer, Mr.
Spence designed and developed secure middleware for Internet
financial processing systems in various contract positions. Mr.
Spence was Systems Manager from 1995 to 1997, and then Director of
Technology Planning from 1997 to 1999 at The Associated Press, the
world’s largest news gathering organization with over 4,000
employees in 227 countries. From 1984 to 1994, Mr. Spence was with
Coca-Cola in Australia implementing financial and line of business
systems for Coca-Cola operations worldwide. In 2007 to 2008, he was
Project Manager for the implementation of Medicare Easyclaim for
ANZ Bank in Australia. Easyclaim allows patients and medical
practitioners to lodge Medicare claims using the existing EFTPOS
infrastructure. In 2010-2011 he was Business Analyst on the EFT and
Banking Stream that was responsible for the upgrade of POS
Terminals to EMV capability for Australia Post. Previously for
3PEA, he designed and developed EFTPOS terminals and secure key
injection systems, and the software tools (API/SDK) for the EFTPOS
terminal integration by third party developers. He has certified
several financial interchanges in the ISO8583 and AS2805 standards
to various EFT networks in the United States and Australia. He has
over 25 years’ experience deploying large-scale technology
solutions for major international corporations. We believe that Mr.
Spence should serve as a director based on his experience in
internet financial processing systems and as a founder of our
company.
Joan M. Herman, Executive Vice President and Director. Ms.
Herman has served as an Executive Vice President since September
2017 and director since November 2018. Ms. Herman‘s experience in
payments spans more than 30 years, holding various management
positions in operations, product development, and sales and
marketing on both the issuing and acquiring sides of the card
business. Ms. Herman’s previous employers and directorships include
Sunrise Bank from June 2012 to August 2017, UMB Bank from 2010 to
2012 and Heartland Bank from 2006 to 2010, and served as a Director
at Heartland Payment Systems from 1997 to 2006. Ms. Herman is a
member of the Board of Directors of the National Branded Prepaid
Card Association and serves as its Treasurer. Ms. Herman earned her
B.A. and M.A. in business and marketing from Webster University,
St. Louis, Missouri. We believe that Ms. Herman should serve as a
director based on her extensive experience in the financial
services industry.
Dan R. Henry, Chairman and Director. Mr. Henry has served as
a director since May 2018. Mr. Henry has been a private investor
and advisor since 2013. Mr. Henry previously served as Chief
Executive Officer of NetSpend, a leading provider of prepaid debit
cards for personal and commercial use, from 2008 to 2014. Prior to
that, he served as president and chief operating officer of
Euronet, a global leader in processing secure electronic financial
transactions from 1994 to 2006. He was also a co-founder of Euronet
and served on its board until January 2008. Mr. Henry currently
serves as Chief Executive Officer of Green Dot Corporation and
serves on the Boards of Directors of Paysign and Dama Financial. We
believe that Mr. Henry should serve as Chairman because he is a
seasoned financial services industry entrepreneur who brings
valuable senior leadership, experience and insight to the
Board.
Bruce Mina, Director. Mr. Mina has served as a director
since March 2018. Mr. Mina, MS-Taxation, CPA/ABV, CFF, CVA, BVAL is
a co- founder & managing member of Mina Llano Higgins Group,
LLP (founded 1974). Mr. Mina is a Certified Public Accountant
licensed in the State of New York for over 30 years. He is
experienced in, and responsible for litigation support and
valuation assignments regarding business valuations, damage studies
and appraisal engagements. Mr. Mina has been retained as a Business
Appraiser, Expert Witness, Consultant, Forensic Examiner, Auditor,
Accountant and Tax Planner by business owners and corporate
officers, attorneys and Municipalities to provide services in
business appraisal and enterprise valuation, forensic examination
and litigation support. Mr. Mina served as CFO for Coal Brick Oven
Pizzeria, Inc., a Nevada corporation that operates the Grimaldi’s
Pizzeria chain of restaurants, from 2011 to 2018. He also has
served as CFO for Academy of Aviation in Long Island, NY since
2009. Mr. Mina earned his B.A. degree from Hofstra University, and
his Master of Science-Taxation Degree from Long Island University.
We believe that Mr. Mina should serve as director based on his
extensive experience in the accounting and audit industries.
Quinn Williams, Director. Mr. Williams has served as a
director since April 2018. Mr. Williams is an attorney and
shareholder with the firm of Greenberg Traurig LLP, which he joined
in June 2002. Admitted to the Bar in New York and Arizona, Mr.
Williams practice focuses on mergers and acquisitions, public and
private securities offerings, venture capital transactions and
advising on the formation and funding of emerging companies. Mr.
Williams’ industry experience includes technology, fintech,
banking, manufacturing, distribution, real estate and specialty
service industries. He serves as corporate counsel for private
companies and was formerly general counsel of an international
retail franchisor and served on the Board of Directors of Swenson’s
Inc., in 1985. Mr. Williams possesses a long list of accolades and
awards, including listed, The Best Lawyers in America,
Corporate Law; Franchise Law; Venture Capital Law, 1995-2018;
selected by The Business Journal “Best of the Bar Award”
Corporate Financing, 2005, and is rated AV preeminent® 5.0 out of 5 from Martindale
Hubbell. Mr. Williams graduated from the University of Wisconsin
and University of Arizona College of Law. We believe that
Mr. Williams should serve as director based on his extensive
experience in the fintech, banking and legal industries.
Dennis Triplett, Director. Mr. Triplett has served as a
director since May 2018. Mr. Triplett served as Chief Executive
Officer from March 2004 to April 2015 and Chairman from April 2015
to March 2017 of Healthcare Services at UMB Bank, N.A. a leading
provider of healthcare payment solutions including health savings
accounts (“HSAs”), healthcare spending accounts and payments
technology. Mr. Triplett founded this division that is now the
fifth largest HSA custodian in the nation with $2.6 billion in
assets and accounts exceeding $1.25 million. Mr. Triplett developed
the Bank’s Medical Savings Account product in the late 90’s and
grew that into a multipurpose card product supporting a variety of
spending accounts including HSAs, flexible spending accounts, and
health reimbursement accounts. Mr. Triplett has over 35 years of
experience in the banking industry including serving as the
President and Chief Executive Officer of two banks in the Midwest
and has extensive credit and debit card experience. Mr. Triplett is
a graduate of several banking schools and holds an MBA degree from
the University of Missouri. Mr. Triplett industry leadership has
included Chairing the Employers Council on Flexible Compensation
from 2007 to 2014; a founding Board Member of the American Bankers
Association’s HSA Council; Chairing American Health Insurance
Plan’s HSA Leadership Council from 2009 to 2013. Civically, Mr.
Triplett has served on the Board of the Greater Kansas City Crime
Commission since 2011, Chairperson for Community for Coaches since
2016 and member of UMB Healthcare Services Strategic Advisory
Council since 2016. We believe that Mr. Triplett should serve as
director based on his extensive experience in the financial
services industry.
Executive Officers
The following table sets forth information regarding our executive
officers as of April 21, 2021.
|
Name
|
Age
|
Title
|
| Mark R. Newcomer |
56 |
Chief Executive Officer |
| Robert P. Strobo |
43 |
General Counsel, Chief Legal
Officer, and Secretary |
| Daniel H. Spence |
58 |
Executive Vice President and
Director |
| Jeffery B. Baker |
51 |
Chief Financial Officer and
Treasurer |
| Matt Lanford |
55 |
Chief Operating Officer and
President |
| |
|
|
The biographies of Messrs. Newcomer and Spence are included above
under the section titled “Directors”.
Jeffery B. Baker, Chief Financial Officer and Treasurer. Mr.
Baker has served as our Chief Financial Officer and Treasurer since
February 2021. Prior to joining our company, Mr. Baker served as an
executive vice president of mergers and acquisitions at InComm
Payments from 2011 to 2021 and chief development and strategy
officer at Global Payments Inc. from 2003 to 2011. During his
career Mr. Baker has also held various senior equity analyst
positions at firms covering the financial technologies and
services, business-to-business (B2B), personal computer and
enterprise storage industries, including U.S. Bancorp Piper
Jaffray, W.R. Hambrecht & Co., SunTrust Equitable Securities,
and Principal Financial Securities. Mr. Baker also serves as a
Georgia regional director of Birmingham, Alabama-based ServisFirst
Bank. Mr. Baker is a graduate of Texas Christian University in Ft.
Worth, Texas, where he graduated cum laude with a Bachelor of
Business Administration in Finance.
Matt Lanford, Chief Operating Officer and President. Mr.
Lanford has served as our Chief Operating Officer and President
since February 2021. Mr. Lanford served as the Company’s Chief
Product Officer from 2019 to 2021. Prior to joining our company,
Mr. Lanford served as senior vice president and general manager of
the financial services division of InComm Payments from 2016 to
2019, where he was responsible for the company’s consumer-facing
Vanilla™ suite of products. Prior to his tenure at InComm, Mr.
Lanford was with Mastercard from 2006 to 2016, where he was a vice
president with the global prepaid product and solutions group and
the prepaid product lead for Europe, based in London. Mr. Lanford
had regional responsibility for innovation, product development,
go-to-market strategy and commercialization of the Mastercard
prepaid portfolio of products, in addition to senior leadership
roles in product management and investor relations. Mr. Lanford was
twice awarded the prestigious top spot in Europe’s Prepaid Power
10. Mr. Lanford earned his Bachelor of Science in Computer Science
from the University of Arkansas at Little Rock.
Robert P. Strobo, General Counsel, Chief Legal Officer, and
Secretary. Mr. Strobo has served as our General Counsel, Chief
Legal Officer, and Secretary since October 2018. Prior to joining
our company, from 2005 to 2018, Mr. Strobo served as Deputy General
Counsel and Vice President for Republic Bank & Trust Company, a
state-charted financial institution out of Louisville, Kentucky. He
specializes in prepaid card issuance and non-traditional banking,
which includes small-dollar consumer lending, commercial lending,
payments and tax-related financial products. In addition, Mr.
Strobo served as Chairman of the Board of Directors for
Commonwealth Theatre Center, a non-profit youth conservatory and
outreach program serving all of Kentucky and southern Indiana. He
received his B.A. in Psychology and Philosophy from the University
of Kentucky and his J.D. from DePaul University College of Law in
Chicago, Illinois.
There are no family relationships among any of our directors and
executive officers.
Delinquent Section 16(a) Reports
Section 16(a) of the Exchange Act requires directors, executive
officers, and persons who own more than 10% of a registered class
of our securities to file with the SEC initial reports of ownership
and reports of changes in ownership. Directors, executive officers,
and greater than 10% stockholders are required by SEC regulations
to furnish us with copies of all Section 16(a) forms they file.
Based solely upon our review of the copies of such forms that we
received during the year ended December 31, 2021, and written
representations that no other reports were required, we believe
that each person who at any time during such year was a director,
executive officer, or beneficial owner of more than 10% of our
common stock complied with all Section 16(a) filing requirements
during the year ended December 31, 2021, except that (i) the Form 4
filed by Jeffery Baker on March 22, 2021 was late; (ii) the Form 3
filed by Matthew Lanford on March 22, 2021 was late; (iii) the
From 3 filed by Jeffery Baker on May 10, 2021 was late; and (iv)
the Form 4 filed by Joan Herman on September 8, 2021 was late.
Code of Ethics
We have adopted a Code of Ethics that applies to all our directors,
officers and employees. The Code of Ethics is publicly available on
our website at www.paysign.com. Amendments to the Code of Ethics
and any grant of a waiver from a provision of the Code of Ethics
requiring disclosure under applicable SEC rules will be disclosed
on our website.
Corporate Governance
Board Leadership Structure
Dan R. Henry serves as our Chairman of the Board, and Mark Newcomer
serves as our Chief Executive Officer (“CEO”). The Board has
decided to maintain separate Chairman and CEO roles to allow our
CEO to focus on the development and execution of our business
strategy and leading the Company, while allowing the Chairman to
lead the Board in its fundamental role of providing advice to, and
independent oversight of, management. The Board recognizes the
time, effort and energy that the CEO is required to devote to his
position in the current business environment, as well as the
commitment required to serve as our Chairman. While our Bylaws and
Corporate Governance Guidelines do not require that our Chairman
and CEO positions be separate, the Board believes that having
separate positions and having an independent director serve as
Chairman is the appropriate leadership structure for us at this
time.
Role of the Board in Risk Oversight
Management is responsible for the day-to-day management of risk and
for identifying our risk exposures and communicating such exposures
to the Board. The Board is responsible for designing, implementing
and overseeing our risk management processes. The Board does not
have a standing risk management committee, but administers this
function directly through the Board as a whole. The Board considers
strategic risks and opportunities and receives reports from its
officers regarding risk oversight in their areas of responsibility
as necessary. We believe the Board’s structure facilitates the
division of risk management oversight responsibilities and enhances
the Board’s efficiency in fulfilling its oversight function with
respect to different areas of our business risks and our risk
mitigation practices.
Meetings of the Board
During 2021, there were five meetings of the Board. Each of the
directors attended at least 75% of the aggregate number of meetings
of the Board of Directors and the committees of the Board of
Directors on which he or she served during the year ended December
31, 2021 (in each case, which were held during the period for which
he or she was a director and/or a member of the applicable
committee). In addition to participation at Board meetings, our
directors discharge their responsibilities throughout the year
through personal meetings and other communications, including
considerable personal and telephone contact with our chairman and
chief executive officer and others regarding matters of interest
and concern to us.
We do not have a formal policy requiring members of the Board to
attend the annual meeting of stockholders, although all directors
are strongly encouraged to attend. All of our board members,
excluding Daniel Spence, attended our 2021 annual meeting of
stockholders.
Executive Sessions of Non-Management Directors
Pursuant to our corporate governance principles or as required by
the Nasdaq Stock Market rules, non-management directors of the
Board meet from time to time without the presence of management.
The Chairman generally chairs these sessions.
Committees of the Board
In 2018, the Board established three standing committees: the Audit
Committee, the Compensation Committee and the Nominating &
Corporate Governance Committee. From time to time, the Board may
also create various ad hoc committees for special purposes. The
membership during the last fiscal year and the function of each of
the Audit, Compensation, and Nominating and Corporate Governance
Committees are described below. The board has determined that all
of the members of each of the Audit, Compensation, and Nominating
and Corporate Governance Committees are independent as defined
under the rules of the Nasdaq Stock Market, including, in the case
of all members of the Audit Committee, the independence
requirements contemplated by Rule 10A-3 under the Exchange Act. The
charter of each standing committee is available on the Company’s
website at www.paysign.com.
The following chart sets forth the directors who currently serve as
members of each of the Board committee as of the date of this proxy
statement.
|
Directors
|
Audit
Committee
|
Compensation Committee
|
Nominating
Committee
|
| Dan R. Henry* |
X |
C |
X |
| Bruce Mina |
C |
X |
|
| Quinn Williams |
|
X |
C |
| Dennis Triplett |
X |
X |
|
_______________
* Chairman of the Board
“C” Denotes member and chair of committee
“X” Denotes member
Audit Committee Functions
We have a separately designated standing Audit Committee
established in accordance with Section 3(a)(58)(a) of the Exchange
Act. The Audit Committee met four times in 2021. The members of the
Audit Committee are Bruce Mina (chair), Dennis Triplett and Dan
Henry. The Board has determined that each member of the Audit
Committee is independent in accordance with SEC rules applicable to
audit committee members. The
Audit Committee is responsible for oversight of the quality and
integrity of our accounting, auditing and reporting practices. More
specifically, it assists the Board of Directors in fulfilling its
oversight responsibilities relating to (i) the quality and
integrity of our financial statements, reports and related
information provided to stockholders, regulators and others, (ii)
our compliance with legal and regulatory requirements, (iii) the
qualifications, independence and performance of our independent
registered public accounting firm, (iv) the internal control over
financial reporting that management and the Board have established,
and (v) the audit, accounting and financial reporting processes
generally. The Committee is also responsible for review and
approval of related-party transactions. The Board has determined
that Mr. Mina is an “audit committee financial expert” as defined
by SEC rules. The Audit Committee has the authority to obtain
advice and assistance from, and receive appropriate funding from
the Company for, outside legal, accounting or other advisors as it
deems necessary to carry out its duties.
Compensation Committee Functions
The Compensation Committee
met five times in 2021. Dan R. Henry (chair), Dennis Triplett,
Quinn Williams and Bruce Mina are the members of the Compensation
Committee. The Board has determined that each member of the
Compensation Committee is independent in accordance with SEC rules
applicable to compensation committee members. The Committee is
responsible for reviewing and recommending compensation policies
and programs, management and corporate goals, as well as salary and
benefit levels for our executive officers and other significant
employees. Its responsibilities include supervision and oversight
of the administration of our incentive compensation and stock
programs. As such, the Committee is responsible for administration
of grants and awards to directors, officers, employees, consultants
and advisors under our 2018 Incentive Compensation Plan. The
Compensation Committee has the authority to obtain advice and
assistance from, and receive appropriate funding from the Company
for, outside legal, compensation consultant, or other advisors as
it deems necessary to carry out its duties.
Nominating & Corporate Governance Committee
Functions
The Nominating and Corporate
Governance Committee met four times in 2021. Dan R. Henry and Quinn
Williams (chair) are the members of the Nominating and Corporate
Governance Committee. The Nominating and Corporate Governance
Committee is responsible for identifying individuals qualified to
become members of the Board, recommending to the Board, candidates
for election or re-election as directors, and reviewing our
governance policies in light of the corporate governance rules of
the SEC. Under its charter, the Committee is required to establish
and recommend criteria for service as a director, including matters
relating to professional skills and experience, board composition,
potential conflicts of interest and manner of consideration of
individuals proposed by management or stockholders for nomination.
The Committee believes candidates for the Board should have the
ability to exercise objectivity and independence in making informed
business decisions; extensive knowledge, experience and judgment;
the highest integrity; loyalty to the interests of our company and
its stockholders; a willingness to devote the extensive time
necessary to fulfill a director’s duties; the ability to contribute
to the diversity of perspectives present in board deliberations,
and an appreciation of the role of the corporation in society. The
Committee will consider candidates meeting these criteria who are
suggested by directors, management, stockholders and other advisers
hired to identify and evaluate qualified candidates. This committee
also monitors the ethical behavior of our employees, officers and
directors.
Communication with the Board
The Board and management encourage communication from our
stockholders. Stockholders who wish to communicate with our
management or directors should direct their communication to our
Corporate Secretary, 2615 St. Rose Parkway, Henderson, Nevada
89052. Our Secretary will forward communications intended for the
Board to the Chairman of the Board, currently Mr. Henry, or, if
intended for an individual director, to that director. If multiple
communications are received on a similar topic, the Secretary may,
in his discretion, forward only representative correspondence. Any
communications that are abusive, in bad taste or present safety or
security concerns may be handled differently.
Director Nomination Process
The Nominating and Corporate Governance (the “Nominating
Committee”) is responsible for, among other things, selection of
candidates for the annual slate of directors.
When identifying and evaluating candidates, the Nominating
Committee first determines whether there are any evolving needs of
the Board that require an expert in a particular field. The
Nominating Committee may retain a third-party search firm to assist
it in locating qualified candidates that meet the needs of the
Board at that time. The search firm would provide information on a
number of candidates, which the Nominating Committee discusses. The
Nominating Committee chair and some or all of the members of the
Nominating Committee, and our Chief Executive Officer, will
interview potential candidates that the Nominating Committee deems
appropriate. If the Nominating Committee determines that a
potential candidate meets the needs of the Board, has the
qualifications, and meets the independence standards required by
Nasdaq rules, it will recommend the nomination of the candidate to
the Board. It is the Nominating Committee’s policy to consider
director candidates recommended by stockholders, if such
recommendations are properly submitted to us. Stockholders wishing
to recommend persons for consideration by the Nominating Committee
as nominees for election to the Board can do so by writing to the
Corporate Secretary of Paysign, Inc., at 2615 St. Rose Parkway,
Henderson, Nevada 89052. Recommendations must include the proposed
nominee’s name, biographical data and qualifications, as well as a
written statement from the proposed nominee consenting to be named
and, if nominated and elected, to serve as a director.
Recommendations must also follow the Company’s procedures for
nomination of directors by stockholders (see the information under
the subheadings “Nominating and Corporate Governance
Committee” and “Criteria and Diversity”). The Nominating
Committee will consider the candidate and the candidate’s
qualifications in the same manner in which it evaluates nominees
identified by the Nominating Committee. The Nominating Committee
may contact the stockholder making the nomination to discuss the
qualifications of the candidate and the stockholder’s reasons for
making the nomination. The Nominating Committee may then interview
the candidate if it deems the candidate to be appropriate. The
Nominating Committee may use the services of a third-party search
firm to provide additional information about the candidate prior to
making a recommendation to the Board.
The Nominating Committee’s nomination process is designed to ensure
that the Nominating Committee fulfills its responsibility to
recommend candidates who are properly qualified to serve the
Company for the benefit of all of its stockholders, consistent with
the standards established by the Nominating Committee under our
corporate governance principles. The Nominating Committee did not
receive any director nominee recommendations from stockholders for
the 2021 Annual Meeting.
Criteria and Diversity
In considering whether to recommend any candidate for inclusion in
the Board’s slate of recommended director nominees, the Nominating
and Corporate Governance Committee will apply the criteria set
forth in governance guidelines. These criteria include the
candidate’s integrity, business acumen, age, experience,
commitment, diligence, conflicts of interest and the ability to act
in the interests of all stockholders. Our guidelines specify that
the value of diversity on the Board should be considered by the
Nominating and Corporate Governance Committee in the director
identification and nomination process. The Committee seeks nominees
with a broad diversity of experience, professions, skills,
geographic representation and backgrounds. The Committee does not
assign specific weights to particular criteria, and no particular
criterion is necessarily applicable to all prospective nominees. We
believe that the backgrounds and qualifications of the directors,
considered as a group, should provide a significant composite mix
of experience, knowledge and abilities that will allow the Board to
fulfill its responsibilities. Nominees are not discriminated
against on the basis of race, religion, national origin, sexual
orientation, disability or any other basis proscribed by law.
Report of the Audit Committee
The Audit Committee is responsible for providing independent,
objective oversight of our accounting functions and internal
control over financial reporting. The Audit Committee has reviewed
and discussed our audited financial statements with management. The
Audit Committee also has discussed with BDO USA, LLP (“BDO”) the
matters required to be discussed by the applicable requirements of
the Public Company Accounting Oversight Board (“PCAOB”) and the
SEC, which includes, among other items, matters related to the
conduct of the annual audit of our Company’s financial statements.
The Audit Committee has also received and reviewed the written
disclosures and the letter from BDO, as required by applicable
requirements of the PCAOB, regarding the communications by BDO with
the Audit Committee concerning independence, and has discussed with
BDO its independence from us.
Based upon the review and discussions referred to above, the Audit
Committee recommended to the Board of Directors that our audited
financial statements for the 2021 fiscal year be included in the
Annual Report filed on Form 10-K for the year ended December 31,
2021.
By the Audit Committee of the Board of Directors of Paysign,
Inc.
Bruce Mina, Chair
Dan Henry
Dennis Triplett
|
ITEM 11. |
EXECUTIVE COMPENSATION. |
Executive Compensation
Our named executive officers (“NEOs”), consist of our principal
executive officer during the last completed fiscal year, our two
most highly compensated executive officers who were serving as
executive officers on December 31, 2021 and one former
executive officer who would have been one of our two most highly
compensated executive officers but was not serving as an executive
officer on December 31, 2021:
|
· |
Mark R. Newcomer, Chief Executive
Officer; |
|
· |
Jeffery B. Baker, Chief Financial
Officer and Treasurer; |
|
· |
Mark K. Attinger, former Chief
Financial Officer; and |
|
· |
Robert P. Strobo, General Counsel,
Chief Legal Financial Officer, and Secretary. |
Summary Compensation Table
|
Name and Principal Position |
|
Year |
|
|
Salary
$ |
|
|
Bonus
$(1) |
|
|
Stock Awards
$(2)(3) |
|
|
All Other Compensation $(4) |
|
|
Total
$ |
|
Mark R. Newcomer,
|
|
|
2021 |
|
|
$ |
950,000 |
|
|
$ |
1,741 |
|
|
$ |
47,277 |
|
|
$ |
11,600 |
|
|
$ |
1,010,618 |
|
| President and CEO |
|
|
2020 |
|
|
$ |
950,000 |
|
|
$ |
– |
|
|
$ |
63,036 |
|
|
$ |
24,000 |
|
|
$ |
1,037,036 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Jeffery B. Baker, CFO |
|
|
2021 |
|
|
$ |
310,096 |
|
|
$ |
161,849 |
|
|
$ |
239,435 |
|
|
$ |
11,600 |
|
|
$ |
722,980 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Robert P. Strobo, CLO |
|
|
2021 |
|
|
$ |
370,384 |
|
|
$ |
1,376 |
|
|
$ |
150,435 |
|
|
$ |
11,600 |
|
|
$ |
533,795 |
|
| |
|
|
2020 |
|
|
$ |
360,000 |
|
|
$ |
– |
|
|
$ |
142,806 |
|
|
$ |
14,400 |
|
|
$ |
517,206 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Mark K. Attinger, CFO |
|
|
2021 |
|
|
$ |
285,321 |
|
|
$ |
– |
|
|
$ |
275,565 |
|
|
$ |
4,773 |
|
|
$ |
565,659 |
|
| |
|
|
2020 |
|
|
$ |
360,385 |
|
|
$ |
45,000 |
|
|
$ |
368,478 |
|
|
$ |
16,215 |
|
|
$ |
790,078 |
|
|
(1) |
Represents signing bonus paid to
Mr. Baker in accordance with his employment agreement and
discretionary bonus paid to Mr. Attinger determined by the Board of
Directors and not based on the fulfillment of any formula,
criteria, or fulfillment of any performance target, goal or
condition. |
|
(2) |
In November 2016, we granted Mark
R. Newcomer 2,000,000 shares of restricted common stock, which had
a total value of $315,180, based upon a value of $0.15759 per
share. The value per share was based on the market value on the
date of grant, less a 15% discount due to the shares being
restricted and lacking market liquidity. The stock grants vest in
equal amounts over a period of five years as of the end of each
calendar quarter to the extent Mr. Newcomer is still employed by us
at the time. For Mr. Newcomer, a total of 2,000,000 shares were
vested and issued as of December 31, 2021. |
|
(3) |
In October 2018, we granted Mark K.
Attinger 450,000 shares of restricted common stock with a value of
$1,561,500, which vest annually in equal amounts over a four-year
period on the anniversary date of the grant, if Mr. Attinger is
still employed by us at that time. As of December 31,
2021, a total of 270,000 shares had vested and been issued. In
March 2020, the Company granted Mark K. Attinger 100,000 stock
option awards which vest on an annual basis over four years. Mr.
Attinger’s employment terminated on March 31, 2021. Per the
terms of Mr. Attinger’s severance agreement, 90,000 restricted
shares vested in October 2021 and the remaining restricted shares
were cancelled. Per the terms of Mr. Attinger’s severance
agreement, 25,000 stock option awards vested in March 2021 and the
remaining stock option awards were cancelled. |
|
(4) |
All Other Compensation is comprised
of 401(k)-employer matching and profit-sharing plan contributions
for Mark R. Newcomer, Jeffery B. Baker, Robert P. Strobo and Mark
K. Attinger. |
We did not grant any stock appreciation rights to our named
executive officers in the last fiscal year. We did not reprice any
options or stock appreciation rights during the last fiscal year.
We did not waive or modify any specified performance target, goal
or condition to payout with respect to any amount included in any
incentive plan compensation included in the summary compensation
table.
Option Exercises in 2021
There were no exercises of stock options by the NEOs during the
2021 fiscal year.
Narrative Disclosure to Summary Compensation Table
The Board is responsible for creating and reviewing the
compensation of our executive officers, as well as overseeing our
compensation and benefit plans and policies and administering our
equity incentive plans. The following describes our 2021 executive
compensation program and explains our compensation philosophy,
policies, and practices, focusing primarily on the compensation of
our named executive officers, or NEOs. The following is intended to
be read in conjunction with the tables that follow, which provide
detailed historical compensation information for our NEOs.
Compensation Philosophy
We believe in providing a competitive total compensation package to
its executives through a combination of base salary, annual
performance bonuses, and long-term equity awards. The executive
compensation program is designed to achieve the following
objectives:
|
· |
provide competitive compensation
that will help attract, retain and reward qualified
executives; |
|
· |
align executives’ interests with
our success by making a portion of the executive’s compensation
dependent upon corporate performance; and |
|
· |
align executives’ interests with
the interests of stockholders by including long-term equity
incentives. |
The Board believes that our executive compensation program should
include annual and long-term components, including cash and
equity-based compensation, and should reward consistent performance
that meets or exceeds expectations. The Board evaluates both
performance and compensation to make sure that the compensation
provided to executives remains competitive relative to compensation
paid by companies of similar size and stage of development
operating in the payment processing industry and taking into
account our relative performance and its own strategic
objectives.
The Board has not used compensation consultants in the past but
reserves the right to do so in the future.
Employment Contracts of Named Executive Officers
There are no agreements or understandings between the Company and
any NEO which guarantees continued employment or any level of
compensation, including incentive or bonus payments, to the
NEO.
Potential Payments Upon Termination or Change-in-Control
Other than described below, we do not have any agreements with our
named executive officers that contain provisions requiring that we
make payments to the named executive officer at, following, or in
connection with the resignation, retirement or other termination of
the named executive officer, or a change in control of us, or a
change in the named executive officer's responsibilities following
a change in control.
On February 24, 2021, we announced that Mr. Mark K. Attinger
resigned from his position as our Chief Financial Officer,
effective February 19, 2021, and that the Board had appointed Mr.
Jeffery B. Baker to succeed Mr. Attinger as Chief Financial
Officer, effective February 22, 2021. Per the terms of Mr.
Attinger’s severance agreement, we continued to pay his salary and
benefits through September 30, 2021 and his stock options and stock
awards vested through March 2021 and October 2021,
respectively.
Employee Benefit Plans
We sponsor a 401(k)-retirement plan in which our NEO’s participate
on the same basis as our other employees. Effective January 2017,
the Board approved a matching contribution of 100% of employee
contributions up to 3% of the employee’s earnings, and a matching
contribution of 50% of the next 2% of the employee’s earnings,
subject to the Annual Compensation Limit as defined in the Internal
Revenue Code Section 401(1)(17). During the year ended December 31,
2021 and 2020, the Company made contributions to this plan of
approximately $205,000 and $193,000, respectively.
Pension Benefits
None of our NEOs are covered by a pension plan or similar benefit
plan that provides for payment or other benefits at, following, or
in connection with retirement.
Nonqualified Deferred Compensation
None of our NEOs are covered by a deferred contribution or other
plan that provides for the deferral of compensation on a basis that
is not tax-qualified.
Outstanding Equity Awards at Fiscal Year-End 2021
The following table sets forth information regarding all
outstanding equity awards held by the NEOs at December 31, 2021.
Outstanding restricted stock grants have been approved by the
Board.
| |
|
|
Stock Awards
|
|
|
Name |
|
|
Number of Shares or Units of Stock that have not Vested
(#)
|
|
|
|
Market Value of Shares or Units of Stock that have not Vested
(1) ($)
|
|
|
|
Equity Incentive Plan Awards: Number of Unearned Shares, Units
or Other Rights that have not Vested (#)
|
|
|
|
Equity Incentive Plan Awards: Market or Payout Value of Unearned
Shares, Units or other Rights that have not Vested (1) ($)
|
|
| Mark R. Newcomer (2) |
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
| Jeffery B. Baker (3) |
|
|
300,000 |
|
|
|
480,000 |
|
|
|
– |
|
|
|
– |
|
| Robert P. Strobo (4) |
|
|
80,000 |
|
|
|
128,000 |
|
|
|
50,000 |
|
|
|
– |
|
| Mark K. Attinger (5) |
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
(1) |
The value of the unearned awards is
based upon the closing price of our common stock on December 31,
2021, which was $1.60 per share. |
|
(2) |
The restricted stock grant
consisted of 2,000,000 shares granted on November 21, 2016, which
vest on a quarterly basis over five years to the extent the
executive is still employed by us at the end of each quarter, of
which all shares were vested as of December 31, 2021. |
|
(3) |
The restricted stock grant
consisted of 300,000 shares granted in February 2021, which vest on
an annual basis over five years to the extent the executive is
still employed by us at the end of each anniversary date, of which
no shares have vested as of December 31, 2021. |
|
(4) |
The restricted stock grant
consisted of 200,000 shares granted in October 2018, which vest on
an annual basis over five years to the extent the executive is
still employed by us at the end of each anniversary date, of which
120,000 shares have vested as of December 31, 2021. In March 2020,
50,000 stock option awards were issued which vest on an annual
basis over four years, of which 12,500 have vested as of December
31, 2021. |
|
(5) |
The restricted stock grant
consisted of 450,000 shares granted in October 2018, which vest on
an annual basis over five years to the extent the executive is
still employed by us at the end of each anniversary date, of which
270,000 shares have vested as of December 31, 2021. In March 2020,
100,000 stock option awards were issued which vest on an annual
basis over four years. Mr. Attinger’s employment ended on March 31,
2021. Per the terms of Mr. Attinger’s severance agreement, 90,000
restricted shares vested in October 2021 and the remaining
restricted shares were cancelled. In March 2021, 25,000 option
awards vested and the remaining option awards were cancelled. |
Director Compensation
The following table details the total compensation earned by our
directors during the year ended December 31, 2021.
|
Name |
|
Fees Earned or Paid in Cash ($) |
|
|
Restricted Stock Awards ($) (2) |
|
|
Option Awards ($) (3) |
|
|
Non-Equity Incentive Plan Compensation ($) |
|
|
Total Compensation ($) (4) |
|
| Dan R. Henry (1) |
|
|
21,000 |
|
|
|
– |
|
|
|
392,568 |
|
|
|
– |
|
|
|
413,568 |
|
| Bruce Mina (1) |
|
|
21,000 |
|
|
|
58,500 |
|
|
|
– |
|
|
|
– |
|
|
|
79,500 |
|
| Dennis Triplett (1) |
|
|
21,000 |
|
|
|
66,817 |
|
|
|
– |
|
|
|
– |
|
|
|
87,817 |
|
| Quinn Williams (1) |
|
|
21,000 |
|
|
|
79,891 |
|
|
|
– |
|
|
|
– |
|
|
|
100,891 |
|
| Daniel Spence |
|
|
10,500 |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
10,500 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
Mr. Henry, Mr. Mina, Mr. Triplett
and Mr. Williams were appointed to the board for the first time in
2018. |
|
(2) |
Mr. Mina, Mr. Triplett and Mr.
Williams received restricted stock grants in 2018 as part of their
compensation for their services. The restricted shares will vest
over a four-year period from the date of their appointment as a
director. |
|
(3) |
Represents the grant date fair
value of stock option award based upon the Black Scholes valuation
model made in 2018. Options were granted on May 3, 2018, and will
vest over a four-year period from the date his appointment. |
|
(4) |
Excludes business travel expense
reimbursements. |
|
Name
|
Number of Shares Subject to Option Awards Held as of December
31, 2020
|
| Dan R. Henry |
1,350,000
|
| TOTAL |
1,350,000 |
| |
|
We also reimburse our directors for reasonable business travel and
other related expenses in connection with their duties as a
director. Independent Board members are paid an annual fee of
$21,000 per year, and $1,500 each quarterly board meeting they
attend in person. Joan Herman did not receive any additional
compensation for services as a director.
In 2018, we also issued 200,000 shares of restricted common stock
to three of our independent directors (other than Dan Henry) at the
time of their appointment to the Board. The shares vest over a
four-year period from the date of their appointment. Mr. Henry was
granted a stock option for 1,500,000 shares of common stock with an
exercise price of $1.34 for his role as an independent director and
chairman of the Board at the time of his appointment to the Board.
Mr. Henry’s options vest over a four-year period from the date of
his appointment.
|
ITEM 12. |
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER
MATTERS. |
Security Ownership of Certain Beneficial Owners and
Management
The following table sets forth, as of April 22, 2022, certain
information concerning the beneficial ownership of our common stock
by (i) each person known by us to own beneficially five percent
(5%) or more of the outstanding shares of each class, (ii) each of
our directors and named executive officers, and (iii) all of our
executive officers and directors as a group.
The number of shares beneficially owned by each 5% stockholder,
director or executive officer is determined under the rules of the
Securities & Exchange Commission, or SEC, and the information
is not necessarily indicative of beneficial ownership for any other
purpose. Under those rules, beneficial ownership includes any
shares as to which the individual or entity has sole or shared
voting power or investment power and also any shares that the
individual or entity has the right to acquire within 60 days after
April 22, 2022 through the exercise of any stock option, warrant or
other right, or the conversion of any security. Unless otherwise
indicated, each person or entity has sole voting and investment
power (or shares such power with his or her spouse) with respect to
the shares set forth in the following table. The inclusion in the
table below of any shares deemed beneficially owned does not
constitute an admission of beneficial ownership of those
shares.
|
Name and Address of Beneficial Owner
|
Amount and Nature of Beneficial Ownership
|
Percent of Class (1)
|
| Mark R. Newcomer (2) (3) (4) |
9,426,202 |
18.1% |
| Daniel H. Spence (2) (3) |
9,390,000 |
18.1% |
| Jeffery B. Baker (2) (3) |
58,693 |
* |
| Joan M. Herman (2) (3) |
770,168 |
1.5% |
| Robert P. Strobo (2) (3) |
100,791 |
* |
| Mark K. Attinger (2) (3) |
20,000 |
* |
| Dan R. Henry (2) (3) |
1,350,000 |
2.6% |
| Bruce Mina (2) (3) |
205,500 |
* |
| Quinn Williams (2) (3) |
185,000 |
* |
| Dennis Triplett (2) (3) |
200,000 |
* |
| All Officers and Directors as a Group (3) |
21,743,416 |
41.8% |
|
(1) |
Based upon 51,991,932 shares of Common Stock issued and
outstanding as of April 22, 2022. |
|
(2) |
The address for the shareholder is 2615 St. Rose Parkway,
Henderson, NV 89052. |
|
(3) |
Includes the following number of shares of our common stock
either (a) issuable upon exercise of stock options granted to our
named executive officers and directors that are exercisable within
60 days after April 22, 2022, or (b) issuable pursuant to stock
grants to our named executive officers and directors that vest
within 60 days after April 22, 2022: |
|
Directors and Executive Officers
|
Options Exercisable/Shares Issuable within 60 days
|
| Mark R. Newcomer |
45,000 |
| Daniel H. Spence |
– |
| Jeffery B. Baker |
– |
| Joan M. Herman |
12,500 |
| Robert P. Strobo |
25,000 |
| Dan R. Henry |
1,350,000 |
| Bruce Mina |
– |
| Quinn Williams |
– |
| Dennis Triplett |
50,000 |
| All executive officers and directors as a group |
1,495,000 |
|
(4) |
Includes 45,000 vested options in the name of Erin
Newcomer. |
Securities Authorized for Issuance Under Equity Compensation
Plans
Equity Compensation Plan Information
The following table provides information as of December 31, 2021
about the securities issued, or authorized for future issuance,
under our equity compensation plans.
|
Plan Category |
|
Number of securities to be issued upon exercise of outstanding
options, warrants and rights
(a) |
|
|
Weighted-
average exercise price of
outstanding options, warrants
and rights
(b) |
|
|
Number of
securities
remaining
available for
future issuance under equity compensation plans (excluding
securities reflected in column (a))
(c) |
|
| Equity compensation plans approved by
security holders |
|
|
– |
|
|
$ |
– |
|
|
|
– |
|
| 2018
Incentive Compensation Plan (3) |
|
|
1,576,000 |
|
|
$ |
4.11 |
|
|
|
3,075,553 |
|
| Equity compensation plans not approved
by security holders |
|
|
|
|
|
|
|
|
|
|
|
|
| 2016 Officer
Restricted Stock Grant (1) |
|
|
– |
|
|
$ |
0.16 |
|
|
|
– |
|
| 2017 Restricted
Stock Grant to Officer (2) |
|
|
– |
|
|
$ |
0.42 |
|
|
|
– |
|
| 2018 Option issued
to Director (4) |
|
|
1,350,000 |
|
|
$ |
1.34 |
|
|
|
– |
|
| 2018 Restricted
Stock Grants to Directors (5) |
|
|
150,000 |
|
|
$ |
1.37 |
|
|
|
– |
|
| 2018
Restricted Stock Grants to Officers and Employees (6) |
|
|
180,000 |
|
|
$ |
1.63 |
|
|
|
– |
|
| Total |
|
|
3,256,000 |
|
|
$ |
2.70 |
|
|
|
3,075,553 |
|
| |
(1) |
In November 2016, we granted Mark
Newcomer, Daniel Spence, Anthony DePrima (former General Counsel,
Secretary) and Brian Polan (former CFO) 2,000,000, 2,000,000,
500,000 and 500,000 shares of restricted stock, respectively. The
shares were valued at $0.1576 on the date of the award, based on
the market value on the date of grant, less a 15% discount due to
the shares being restricted and lacking market liquidity. The
shares vest quarterly over a five-year period. As of December 31,
2021, 4,700,000 of the shares had been issued and 300,000 shares
lapsed as result of the retirement of Mr. DePrima. |
| |
(2) |
In September 2017, we granted
800,000 shares of restricted stock to Joan M. Herman. The shares
were valued at $0.42 on the date of the award, based on the market
value on the date of grant. The shares vest annually over a
four-year period. As of December 31, 2021, 800,000 of the shares
had been issued. |
| |
(3) |
In July 2018, the Board approved
the Company’s 2018 Incentive Compensation Plan, and reserved
5,000,000 shares for issuance under the plan. As of December 31,
2021, 1,204,000 options had been issued under the plan, of which
433,800 had been forfeited. As of December 31, 2021, 1,697,247
restricted shares were granted under the 2018 Incentive
Compensation Plan, of which 543,000 had been forfeited. |
| |
(4) |
In May 2018, we issued Dan Henry,
one of our directors, an option to purchase 1,500,000 shares of
common stock for $1.34 per share, which was the market price of the
common stock on the date of the option. The option vests annually
over a four-year period from the date of the option. |
| |
(5) |
In March, April and May 2018, we
granted Bruce Mina, Quinn Williams and Dennis Triplett, each of
whom is a director, 200,000 shares of restricted stock each. The
shares vest annually over a four-year period from the date of the
grant. The weighted average value of the stock grant was $1.37 per
share, based on the market price of our common stock on the date of
each grant. As of December 31, 2021, 450,000 of the shares had been
issued. |
| |
(6) |
At various times in 2018, we
granted an aggregate of 2,340,000 shares of restricted common stock
to seven employees. 2,040,000 of the shares vest annually over a
five-year period from the date of the grant, and the remaining
300,000 shares vested annually over a three-year period from the
date of the grant. The weighted average value of the stock grants
was $1.84 per share, based on the market price of our common stock
on the date of each grant. 830,000 of the shares have been
cancelled as of December 31, 2021. |
|
ITEM 13. |
CERTAIN RELATIONSHIPS AND
RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE. |
Transactions with Related Persons
We did not participate in any transactions in which any of our
directors, executive officers, any beneficial owner of more than 5%
of our common stock, nor any of their immediate family members, had
a direct or indirect material interest.
Our Audit Committee Charter requires that members of the Audit
Committee, all of whom are independent directors, conduct an
appropriate review of, and be responsible for the oversight of, all
related party transactions on an ongoing basis. There were no
related party material transactions during the fiscal year ended
December 31, 2021. A member of the Board of Directors is also a
shareholder in a law firm that the Company paid approximately
$479,684 and $609,459 during the years ended December 31, 2021
and 2020, respectively.
Review, Approval or Ratification of Transactions with Related
Persons
The Nominating and Corporate Governance Committee and the Board
have adopted a Code of Ethics, which is available at
www.paysign.com, that sets forth various policies and procedures
intended to promote the ethical behavior of the Company’s
employees, officers and directors. The Code of Ethics describes our
policy on conflicts of interest. All transactions between us and
our officers, directors, principal stockholders and their
affiliates are subject to approval by the Board according to the
terms of our written Code of Ethics.
The executive officers and the Board are also required to complete
a questionnaire on an annual basis which requires them to disclose
any related person transactions and potential conflicts of
interest. The responses to these questionnaires are reviewed by
outside corporate counsel, and, if a transaction is reported by an
independent director or executive officer, the questionnaire is
submitted to the Chairperson of the Audit Committee for review. If
necessary, the Audit Committee will determine whether the
relationship is material and will have any effect on the director’s
independence. After making such determination, the Audit Committee
will report its recommendation on whether the transaction should be
approved or ratified by the entire Board.
Independence of Board of Directors
The Board has reviewed the materiality of any relationship that
each of our directors has with us, either directly or indirectly.
Based upon this review, the Board has determined that all of our
presently serving directors other than Mr. Newcomer, Mr. Spence and
Ms. Herman are “independent directors” as defined by The Nasdaq
Stock Market. The Board also determined that Messrs. Henry and
Williams, who comprise our presently serving Nominating and
Corporate Governance Committee, both satisfy the independence
standards for such committee established by the SEC and the Nasdaq
Marketplace Rules. With respect to our presently serving Audit
Committee, the Board has determined that Messrs. Mina, Henry and
Triplett satisfy the independence standards for such committee
established by Rule 10A-3 under the Exchange Act, the SEC and the
Nasdaq Marketplace Rules, as applicable. Furthermore, the
Nominating and Corporate Governance Committee, with concurrence by
the Board, has determined that Mr. Mina is an “audit committee
financial expert” within the meaning of SEC rules. With respect to
our presently serving Compensation Committee, the Board has
determined that Messrs. Henry, Williams, Mina and Triplett satisfy
the independence standards for such committee established by Rule
10C-1 under the Exchange Act, the SEC and the Nasdaq Marketplace
Rules, as applicable.
In making such determinations, the Board considered the
relationships that each such non-employee director or director
nominee has with our company and all other facts and circumstances
the Board deemed relevant in determining their independence,
including the beneficial ownership of our capital stock by each
non-employee director. In considering the independence of our
directors, the Board considered the association of each such
non-employee director has with us and all other facts and
circumstances the Board deemed relevant in determining
independence.
|
ITEM 14. |
PRINCIPAL ACCOUNTING FEES AND
SERVICES. |
Principal Accountant Fees and Services
Fees and Services
The following table presents fees for professional audit services
and other services rendered to the Company by BDO for the fiscal
years ended December 31, 2021 and 2020. Squar Milner LLP was our
independent registered public accounting firm until BDO was
appointed in July 2020.
| |
|
Fiscal Year
2021 |
|
|
Fiscal Year
2020 |
|
| Audit Fees (1) |
|
$ |
274,480 |
|
|
$ |
169,762 |
|
| Audit-Related Fees (2) |
|
|
– |
|
|
|
15,000 |
|
| Tax Fees (3) |
|
|
– |
|
|
|
– |
|
| All Other Fees
(4) |
|
|
– |
|
|
|
– |
|
| Total
Fees |
|
$ |
274,480 |
|
|
$ |
184,762 |
|
_______________
| (1) |
Audit fees.
Audit services and related expenses include work performed for the
audit of our financial statements and the review of financial
statements included in our quarterly reports, as well as work that
is normally provided by the independent registered public
accounting firm in connection with statutory and regulatory
filings. |
| (2) |
Audit-related services.
Audit-related services are for assurance and related services that
are reasonably related to the performance of the audit or review of
our financial statements and are not covered above under “audit
services.” Audit related services in fiscal year 2020 relates to
due diligence services performed by BDO in connection with
strategic alternatives. |
| (3) |
Tax services. Tax services
include all services performed by the independent registered public
accounting firm’s tax personnel for tax compliance, tax advice and
tax planning. |
| (4) |
All other fees. All other
fees are those services and/or travel expenses not described in the
other categories. |
Additionally, prior to the appointment of BDO as our independent
registered public accounting firm, audit fees totaling $35,000 were
paid to Squar Milner LLP for the fiscal year ended 2020.
Pre-Approval Policy and Procedures
Our Audit Committee has adopted policies and procedures which set
forth the manner in which the Audit Committee will review and
approve all services to be provided by the independent auditor
before the auditor is retained to provide such services. The policy
requires Audit Committee pre-approval of the terms and fees of the
annual audit services engagement, as well as any changes in terms
and fees resulting from changes in audit scope or other items. The
Audit Committee also pre-approves, on an annual basis, other audit
services, and audit-related and tax services set forth in the
policy, subject to estimated fee levels, on a project basis and
aggregate annual basis, which have been pre-approved by the Audit
Committee.
All other services performed by the auditor that are not prohibited
non-audit services under SEC or other regulatory authority rules
must be separately pre-approved by the Audit Committee. Amounts in
excess of pre-approved limits for audit services, audit-related
services and tax services require separate pre-approval of the
Audit Committee.
Our chief financial officer reports quarterly to the Audit
Committee on the status of pre-approved services, including
projected fees. All of the services reflected in the above table
were approved by the Audit Committee in fiscal 2021 and fiscal
2020.
PART IV
|
ITEM 15. |
EXHIBITS, FINANCIAL STATEMENT
SCHEDULES. |
(a) The following
documents are included as a part of the Original Filing:
(1) All financial
statements: Audited financial statements of Paysign, Inc. as of
December 31, 2021 and 2020, and for the years ended December 31,
2021 and 2020, including balance sheets, statements of income,
statements of cash flows, and statements of changes in
stockholders’ equity required to be filed, were listed in Exhibit A
of the Original Filing.
(2) Those financial
statement schedules required to be filed by Item 8 of the Original
Filing, and by paragraph (b) below: none.
(3) Those exhibits
required by Item 601 of Regulation S-K (Section 229.601 of this
chapter) and by paragraph (b) below. Identify in the list each
management contract or compensatory plan or arrangement required to
be filed as an exhibit to this form pursuant to Item 15(b) of this
report.: See below.
(Exhibits marked with an asterisk (*) were furnished with the
Original Filing.)
(Exhibits marked with two asterisks (**) are filed herewith.)
| (1) |
Incorporated by reference to our Current Report on Form 8-K filed
on September 9, 2019 (File Number 001-38623).
|
| (2) |
Incorporated
by reference to our Current Report on Form 8-K filed on May 22,
2018 (File Number 000-54123). |
| (3) |
Incorporated
by reference to our Registration Statement on Form 10 filed on
September 16, 2010 (File Number 000-54123). |
| (4) |
Incorporated
by reference to our Annual Report on Form 10-K filed on April 3,
2020 (File Number 001-38623). |
| (5) |
Incorporated
by reference to our Form S-8 filed on March 29, 2019 (File Number
333-230634). |
| (6) |
Incorporated
by reference to our Form S-8 filed on March 29, 2019 (File Number
333-230632). |
| (7) |
Incorporated
by reference to our Form S-8 filed on August 22, 2019 (File Number
333-233400). |
| (8) |
Incorporated
by reference to our Form 10-K filed on April 4, 2020 (File Number
001-38623). |
| (c) |
Other
Financial Statement Schedules: None. |
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the registrant has duly caused
this report to be signed on its behalf by the undersigned, hereunto
duly authorized.
| |
PAYSIGN,
INC. |
| |
|
| |
|
| |
|
| Dated:
May 2, 2022 |
/s/
Mark Newcomer |
| |
Mark
Newcomer, Chief Executive Officer |
| |
(Principal Executive Officer) |
| |
|
| |
By: |
| Dated:
May 2, 2022 |
/s/
Jeffery B. Baker |
| |
Jeffery
B. Baker, Chief Financial Officer and Treasurer |
| |
(Principal Financial and Accounting
Officer) |
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