What changed in this filing

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Item 1. Financial Statements

2025-11-04 compared with 2025-08-08 · 90 added, 78 removed, 412 unchanged (29% of the section changed)

4 unchanged sentences

(in thousands, except share and per share amounts)

September 30,

Current assets:

20 unchanged sentences

$ 0.001 par value— 100,000 shares authorized;

0 shares issued and outstanding at June 30, 2025 and December 31, 2024

0 shares issued and outstanding at September 30, 2025 and December 31, 2024

Common stock;

$ 0.001 par value— 100,000,000 shares authorized;

11,334,910 and 11,240,507 shares issued and outstanding at June 30, 2025 and December 31, 2024, respectively

11,387,538 and 11,240,507 shares issued and outstanding at September 30, 2025 and December 31, 2024, respectively

Capital deficit

7 unchanged sentences

(in thousands, except share and per share amounts)

Three Months Ended June 30,

Six Months Ended June 30,

Three Months Ended September 30,

Nine Months Ended September 30,

Total net sales

11 unchanged sentences

Interest, net

Other (expense) income, net

Loss on debt extinguishment

Other expense, net

Total other expense, net

Income before income taxes

Income tax expense

Income tax (expense) benefit

Basic and diluted earnings per share:

10 unchanged sentences

(in thousands, except share amounts)

March 31, 2025

June 30, 2025

Shares issued under stock-based compensation plans

1 unchanged sentence

Components of comprehensive income:

June 30, 2025

September 30, 2025

December 31, 2024

2 unchanged sentences

Components of comprehensive income:

September 30, 2025

June 30, 2024

March 31, 2024

Shares issued under stock-based compensation plans

2 unchanged sentences

Components of comprehensive income:

June 30, 2024

September 30, 2024

December 31, 2023

3 unchanged sentences

Components of comprehensive income:

June 30, 2024

September 30, 2024

See accompanying notes to condensed consolidated financial statements

3 unchanged sentences

(in thousands)

Six Months Ended June 30,

Nine Months Ended September 30,

Operating activities

4 unchanged sentences

Amortization of debt issuance costs

Loss on early extinguishment of debt

Deferred income taxes and other, net

17 unchanged sentences

Debt issuance costs

Payment for debt early redemption premium

Taxes withheld and paid on stock-based compensation awards

Cash provided by (used in) financing activities

Net decrease in cash and cash equivalents

Net (decrease) increase in cash and cash equivalents

Cash and cash equivalents, beginning of period

8 unchanged sentences

Accounts payable and accrued expenses for capital expenditures for plant, equipment and leasehold improvements

Unsettled share repurchases included in accrued expenses

See accompanying notes to condensed consolidated financial statements

36 unchanged sentences

Acquisition-related costs are expensed as incurred and included in “Selling, general, and administrative expenses” in the Company’s condensed consolidated statement of operations and comprehensive income.

Products Net Sales

The Company reassessed certain aspects of its revenue recognition practices under ASC 606, Revenue from Contracts with Customers , and the legal enforceability of certain contract terms based on evolving business practices where the Company and a customer deviate from contract terms after an order is placed but before it is shipped.

This assessment highlights the Company’s approach relating to goods that are in production but not yet shipped, reflecting its emphasis on maintaining long-term customer relationships.

Such deviations may impact the legal enforceability of payment terms for goods that are in the process of being produced but not shipped.

Revenue Recognition

During the second quarter of 2025, the Company reassessed certain aspects of its revenue recognition practices under ASC 606, Revenue from Contracts with Customers , and the legal enforceability of certain contract terms based on evolving business practices where the Company and a customer deviate from contract terms after an order is placed but before it is shipped.

This assessment highlights the Company’s approach relating to goods that are in production but have not yet shipped, reflecting its emphasis on maintaining long-term customer relationships.

Such deviations may impact the legal enforceability of payment terms for goods that are in the process of being produced but have not shipped.

As a result, the Company concluded that certain contracts no longer meet the criteria for over-time revenue recognition under ASC 606.

Effective prospectively beginning in the second quarter of 2025, the Company now recognizes revenue for these contracts at a point in time, typically upon shipment or customer acceptance.

Effective prospectively beginning in the second quarter of 2025, the Company began recognizing revenue for these contracts at a point in time, typically upon shipment or customer acceptance.

Additionally, in connection with the acquisition and integration of Arroweye Solutions, Inc.

("Arroweye") during the second quarter of 2025, the Company assessed Arroweye’s customer contracts and determined that Arroweye revenue should also be recognized at point-in-time.

Services Net Sales

Net sales for “Services” are recognized as the services are performed.

Items included in “Services” net sales include the personalization and fulfillment of payment cards, including SaaS-based personalization of instant issuance solutions, and the providing of tamper-evident secure packaging and fulfillment services to prepaid program managers.

As applicable, for work performed but not billed, the Company estimates revenue by taking actual costs incurred and applying historical margins for similar types of contracts.

Customer Contracts

10 unchanged sentences

Recent Accounting Pronouncements

Recently Adopted Accounting Pronouncements

In September 2025, the Financial Accounting Standards Board issued ASU 2025-06, Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40) , to clarify and modernize the accounting for costs related to internal-use software.

Although adoption of this accounting standard would have been effective for the Company for fiscal years beginning after December 15, 2027, the Company elected to early adopt the standard in the third quarter of 2025.

The application of ASU 2025-06 does not have a material impact on the Company’s consolidated financial position and results of operations.

Recently Issued Accounting Pronouncements

12 unchanged sentences

Accounts receivable consisted of the following:

September 30,

Trade accounts receivable

3 unchanged sentences

Inventories consisted of the following:

September 30,

Raw materials

4 unchanged sentences

On May 6, 2025, the Company acquired Arroweye, a leading provider of digitally-driven, on-demand payment card solutions for the U.S.

market, based in Las Vegas, Nevada, for a purchase price of $ 45.6 million, subject to customary post-closing working capital adjustments.

As of June 30, 2025, the estimated adjusted purchase price was $ 46.0 million.

market based in Las Vegas, Nevada, for a purchase price of $ 45.8 million.

The acquisition was funded through a combination of cash on hand and the Company’s available capacity under the ABL Revolver (defined in Note 8, “Long-Term Debt”), with $ 1.5 million of the purchase price held in escrow.

The Company incurred $ 2.3 million of acquisition-related costs during the six months ended June 30, 2025, which are presented in “Selling, general and administrative” expenses in the Company’s condensed consolidated statement of operations and comprehensive income.

The final consideration and the final purchase price allocation are subject to an additional working capital adjustment, further analysis of tax balances, final valuation of identifiable intangible assets, and other items.

Additionally, the Company incurred $ 4.1 million of acquisition and integration costs during the nine months ended September 30, 2025, which are presented in “Selling, general and administrative” expenses in the Company’s condensed consolidated statement of operations and comprehensive income.

The final purchase price allocation is subject to further analysis of tax balances, final valuation of identifiable intangible assets, and other items.

The Arroweye financial results are included in the Company's Debit and Credit segment from the date of acquisition.

18 unchanged sentences

Total identifiable intangible assets acquired

The fair values of the trademark and customer relationships were determined using, in respective order, the relief from royalty and excess earnings methodologies of the income approach.

The fair values of the trademark and customer relationships were determined using the relief from royalty and excess earnings methodologies of the income approach, respectively.

The fair value of acquired technology was determined using the cost to replace methodology of the cost approach.

2 unchanged sentences

Plant, equipment, leasehold improvements and operating lease right-of-use assets consisted of the following:

September 30,

Machinery and equipment

16 unchanged sentences

Fair Value as of

Fair Value Measurement at June 30, 2025

Fair Value Measurement at September 30, 2025

September 30,

(Using Fair Value Hierarchy)

3 unchanged sentences

The aggregate fair value of the Company’s Senior Notes (defined in Note 8, “Long-Term Debt”) was based on quoted prices for identical or similar liabilities in markets that are not active and, as a result, they are classified as Level 2 inputs.

The fair value measurement associated with the ABL Revolver approximates its carrying value as of June 30, 2025, given the applicable variable interest rates.

The fair value measurement associated with the ABL Revolver approximates its carrying value as of September 30, 2025, given the applicable variable interest rates.

The carrying amounts for cash and cash equivalents, accounts receivable and accounts payable each approximate fair value due to their short-term nature.

1 unchanged sentence

Accrued expenses consisted of the following:

September 30,

Accrued payroll and related employee expenses

7 unchanged sentences

Total accrued expenses

Other accrued expenses as of June 30, 2025, and December 31, 2024, consisted primarily of miscellaneous accruals for invoices not yet received, self-insurance claims incurred but yet to be reported, and accrued restructuring and severance.

Other accrued expenses as of September 30, 2025, and December 31, 2024, consisted primarily of miscellaneous accruals for invoices not yet received, accrued sales and use tax, and self-insurance claims incurred but not yet reported.

Long-Term Debt

As of June 30, 2025, and December 31, 2024, long-term debt consisted of the following:

As of September 30, 2025, and December 31, 2024, long-term debt consisted of the following:

September 30,

Unamortized deferred financing costs

4 unchanged sentences

The Senior Notes mature on July 15, 2029 and interest is payable on January 15 and July 15 of each year.

On July 15, 2025, the Company used available capacity under the ABL Revolver (defined below) to redeem $ 20.0 million of its outstanding $ 285.0 million aggregate principal amount Senior Notes.

The redemption was made pursuant to the terms of the indenture governing the Senior Notes, at a redemption price of 103.000 % of par plus accrued and unpaid interest to the date of redemption.

The Company has obligations to make an offer to repay the Senior Notes requiring prepayment in advance of the maturity date upon the occurrence of certain events, including a change of control and certain asset sales.

On the Closing Date, the Company and CPI CG Inc.

as borrower (the “Borrower”), entered into a credit agreement with JPMorgan Chase Bank, N.A., as lender, administrative agent and collateral agent, providing for an asset-based, senior secured revolving credit facility (the “ABL Revolver”) of up to $ 75.0 million.

as borrower (the “Borrower”), entered into a credit agreement with JPMorgan Chase Bank, N.A., as lender, administrative agent and collateral agent (“JPMorgan”), providing for an asset-based, senior secured revolving credit facility (the “ABL Revolver”) of up to $ 75.0 million.

The ABL Revolver matures on the earliest to occur of July 11, 2029, and the date that is 91 days prior to the maturity of the Senior Notes.

On July 2, 2025, the Company, the Borrower, and JPMorgan entered into Amendment No.

1 to Credit Agreement (the “Amendment”), which amends the ABL Revolver to, among other things, increase the available borrowing capacity from $ 75.0 million to $ 100.0 million.

The Amendment did not modify the maturity date of the ABL Revolver nor the interest rate.

Borrowings under the ABL Revolver bear interest at a rate per annum that ranges based on the applicable term secured overnight financing rate as administered by the Federal Reserve Bank of New York plus 1.50 % to 1.75 % (subject, in each case, to a credit spread adjustment of 0.10 % ), based on the average daily borrowing capacity under the ABL Revolver over the most recently completed month.

The unused portion of the ABL Revolver commitment accrues a commitment fee, which ranges from 0.375 % to 0.50 % per annum, based on the average daily excess availability under the ABL Revolver over the immediately preceding month.

As of June 30, 2025, the Company had $ 30.0 million of outstanding borrowings on the ABL Revolver.

As of September 30, 2025, the Company had $ 47.0 million of outstanding borrowings on the ABL Revolver.

Deferred Financing Costs

Certain costs incurred with borrowings are reflected as a reduction to the long-term debt balance.

These costs are amortized as an adjustment to interest expense over the life of the borrowing.

As of June 30, 2025, the remaining unamortized debt issuance costs recorded on the Senior Notes were $ 4.1 million and were reported as a reduction to the long-term debt balance.

The remaining unamortized debt issuance costs on the ABL Revolver were $ 1.4 million and were recorded as other assets on the condensed consolidated balance sheet as of June 30, 2025.

The Company’s effective tax rates on pre-tax income were 61.4 % and 27.7 % for the three months ended June 30, 2025 and 2024, respectively, and 32.0 % and 28.2 % for the six months ended June 30, 2025 and 2024, respectively.

The increase in the Company’s effective tax rate for the three months and six months ended June 30, 2025, compared to the prior year related to limitations on deductibility of executive compensation and non-deductible acquisition-related costs and increased state tax expenses related to the acquisition of Arroweye.

For the six months ended June 30, 2025 and 2024, the effective tax rates differ from the U.S.

Certain costs incurred with borrowings are amortized as an adjustment to interest expense over the life of the borrowing.

As of September 30, 2025, the remaining unamortized debt issuance costs recorded on the Senior Notes were $ 3.6 million and were reported as a reduction to the long-term debt balance.

The remaining unamortized debt issuance costs on the ABL Revolver were $ 1.4 million and were recorded as other assets on the condensed consolidated balance sheet as of September 30, 2025.

The Company’s effective tax rates on pre-tax income were 38.3 % and ( 57.9 )% for the three months ended September 30, 2025 and 2024, respectively, and 34.0 % and 24.0 % for the nine months ended September 30, 2025 and 2024, respectively.

The increase in the Company’s effective tax rate for the three months and nine months ended September 30, 2025, compared to the prior year related to limitations on deductibility of executive compensation and non-deductible acquisition-related costs, decreased deductibility of stock-based compensation realized upon certain stock option exercises and restricted stock unit vesting and increased state tax expenses related to the acquisition of Arroweye.

For the nine months ended September 30, 2025 and 2024, the effective tax rates differ from the U.S.

federal statutory income tax rate as follows:

September 30,

Tax at federal statutory rate

3 unchanged sentences

(1) Includes the deductibility limitations on excess compensation.

As part of the acquisition of Arroweye completed on May 6, 2025, the Company acquired operating loss (NOL) carryforwards of over $ 85.8 million.

As part of the acquisition of Arroweye completed on May 6, 2025, the Company acquired net operating loss (NOL) carryforwards of over $ 86.1 million, net of a valuation allowance of $ 55.7 million.

The utilization of these NOLs will be subject to applicable limitations and include both NOLs with a 20-year carryover period ($ 72.4 million), as well as NOLs with no expiration period ($ 13.7 million).

Due to the likelihood of expiration, a gross valuation allowance was calculated of $ 46.5 million and a net deferred tax asset (DTA) value of $ 8.6 million was recorded, specifically related to the NOLs.

During the three and six months ended June 30, 2025, the Company utilized $ 2.2 million of these NOL carryforwards to offset a portion of its taxable income for the period.

This resulted in the utilization of approximately $ 0.5 million of the DTA and a corresponding reduction of the current income tax liability.

During the nine months ended September 30, 2025, the Company utilized $ 2.9 million of these NOL carryforwards to offset a portion of its taxable income for the period.

The remaining unutilized DTA, net of valuation allowance, specifically related to acquired NOLs is $ 6.0 million, which the Company expects to use in future periods, subject to applicable limitations.

3 unchanged sentences

This authorization expired on December 31, 2024, with a remaining unused authorized amount of $ 11.2 million.

During the six months ended June 30, 2024, the Company repurchased 352,750 shares of its common stock at an average price of $ 18.14 per sha re, excluding commissions, or $ 6.4 million in aggregate, on a trade date basis.

As a result of certain of these share repurchases, the Company was obligated to purchase 120,534 shares from one of the Company’s significant stockholders at an average price of $ 18.23 per share in the subsequent quarter, in accordance with the stock repurchase agreem ents entered into with Tricor Pacific Capital Partners (Fund IV) US, LP.

During the nine months ended September 30, 2024, the Company repurchased 473,284 shares of its common stock at an average price of $ 18.16 per share, excluding commissions, or $ 8.6 million in aggregate, on a trade date basis.

This amount included 364,848 shares purchased from one of the Company’s significant stockholders at an average price of $ 18.09 per share, in accordance with the stock repurchase agreements with Tricor Pacific Capital Partners (Fund IV) US, LP.

The Company did no t repurchase any shares of its common stock during the nine months ended September 30, 2025.

Earnings per Share

1 unchanged sentence

Diluted earnings per share reflects the potential dilution that could occur if outstanding stock options at the presented dates are exercised and shares of restricted stock have vested.

For the three months ended June 30, 2025 and 2024, 9,363 and 15,185 potentially dilutive securities, respectively, and for the six months ended June 30, 2025 and 2024, 10,693 and 24,298 , respectively, were excluded from the calculation of diluted earnings per share.

For the three months ended September 30, 2025 and 2024, 22,751 and 5,728 potentially dilutive securities, respectively, and for the nine months ended September 30, 2025 and 2024, 15,589 and 24,298 , respectively, were excluded from the calculation of diluted earnings per share.

The effect of these shares was anti-dilutive under the treasury stock method, as the assumed proceeds of the options and restricted stock per unit were above our average share price during the periods.

The following table sets forth the computation of basic and diluted earnings per share:

Three Months Ended June 30,

Six Months Ended June 30,

Three Months Ended September 30,

Nine Months Ended September 30,

Basic weighted-average common shares outstanding

17 unchanged sentences

On August 31, 2022, the Company entered into Delaware’s Voluntary Disclosure Agreement Program in order to voluntarily comply with Delaware’s abandoned property law in exchange for certain protections and benefits.

The Company continues to work in good faith to complete a review of its books and records related to unclaimed or abandoned property during the periods required under the program.

Any potential loss, or range of loss, that may result from this matter is not currently reasonably estimable.

In October 2025, the Company reached a preliminary settlement to resolve the matter for an immaterial amount.

Stock-Based Compensation

2 unchanged sentences

Effective January 30, 2024, the Company’s stockholders approved an amendment to the Omnibus Plan to increase the total number of shares of the Company’s common stock reserved and available for issuance thereunder by 1,000,000 shares, resulting in a total of 3,200,000 shares issuable under the Omnibus Plan.

As of June 30, 2025, there were 780,053 shares of common stock available for grant under the Omnibus Plan.

As of September 30, 2025, there were 727,878 shares of common stock available for grant under the Omnibus Plan.

In January 2024, the Company granted 60,000 performance stock units (PSU) in connection with the appointment of its Chief Executive Officer (“CEO”), with a grant date fair value of $ 0.9 million using a Monte Carlo simulation model.

2 unchanged sentences

The PCA will vest on December 31, 2025, subject to continuous employment and the achievement of certain Company performance goals including the Company’s relative total shareholder return of stock against the Russell 2000 index.

Because the award is liability-classified, the award is remeasured at fair value at each reporting date and at settlement, which changes recognized as stock-based compensation expense.

During the six months ended June 30, 2025, the Company granted 112,828 restricted stock units at a weighted average grant date fair value of $ 24.95 , and as of June 30, 2025, there were 545,360 outstanding restricted stock units at a weighted average grant date fair value of $ 22.23 .

As of June 30, 2025, there were 747,937 options outstanding at a weighted average exercise price of $ 21.46 .

No options were granted during the six months ended June 30, 2025.

Because the award is liability-classified, the award is remeasured at fair value at each reporting date and at settlement, with changes recognized as stock-based compensation expense.

During the nine months ended September 30, 2025, the Company granted 181,169 restricted stock units at a weighted average grant date fair value of $ 21.41 .

As of September 30, 2025, there were 534,679 outstanding restricted stock units at a weighted average grant date fair value of $ 21.49 .

As of September 30, 2025, there were 730,364 options outstanding at a weighted average exercise price of $ 21.33 .

No options were granted during the nine months ended September 30, 2025.

Options have seven-year terms and are issued with exercise prices equal to the fair market value of the Company’s common stock on the grant date.

9 unchanged sentences

The Company’s chief operating decision maker uses EBITDA to perform periodic reviews and comparison of operating trends and to identify strategies to improve the allocation of resources amongst segments.

As of June 30, 2025, the Company’s reportable segments were as follows:

As of September 30, 2025, the Company’s reportable segments were as follows:

● Debit and Credit,

● Prepaid Debit;

● Prepaid Debit, and

Debit and Credit Segment

9 unchanged sentences

Performance Measures of Reportable Segments

Net sales and EBITDA of the Company’s reportable segments, as well as a reconciliation of total segment EBITDA to income from operations and net income for the three and six months ended June 30, 2025 and 2024, were as follows:

Three Months Ended June 30, 2025

Net sales and EBITDA of the Company’s reportable segments, as well as a reconciliation of total segment EBITDA to income from operations and net income for the three and nine months ended September 30, 2025 and 2024, were as follows:

Three Months Ended September 30, 2025

Debit and Credit

10 unchanged sentences

Depreciation and amortization

Other income (expense)

Other expense

Gross profit margin

EBITDA margin

Six Months Ended June 30, 2025

Nine Months Ended September 30, 2025

Debit and Credit

10 unchanged sentences

Depreciation and amortization

Other income (expense)

Other (expense) income

Gross profit margin

EBITDA margin

Three Months Ended June 30, 2024

Three Months Ended September 30, 2024

Debit and Credit

13 unchanged sentences

EBITDA margin

Six Months Ended June 30, 2024

Nine Months Ended September 30, 2024

Debit and Credit

10 unchanged sentences

Depreciation and amortization

Other income (expense)

Other expense

Gross profit margin

3 unchanged sentences

Reconciliation of Net Income to EBITDA

Three Months Ended June 30,

Six Months Ended June 30,

Three Months Ended September 30,

Nine Months Ended September 30,

Interest, net

Income tax expense

Income tax expense (benefit)

Depreciation and amortization

Balance Sheet Data of Reportable Segments

Total assets of the Company’s reportable segments as of June 30, 2025, and December 31, 2024, were as follows:

Total assets of the Company’s reportable segments as of September 30, 2025, and December 31, 2024, were as follows:

September 30,

Debit and Credit

1 unchanged sentence

Capital Expenditures of Reportable Segments

Total capital expenditures of the Company’s reportable segments as of June 30, 2025 and 2024, were as follows:

Six Months Ended June 30,

Total capital expenditures of the Company’s reportable segments as of September 30, 2025 and 2024, were as follows:

Nine Months Ended September 30,

Debit and Credit

2 unchanged sentences

Subsequent Events

On July 2, 2025, the Company and the Borrower entered into Amendment No.

1 to Credit Agreement (the “Amendment”), which amends the ABL Revolver to, among other things, increase the available borrowing capacity to $ 100.0 million from $ 75.0 million.

The amendment did not modify the maturity date of the agreement nor the interest rate.

On July 15, 2025, the Company redeemed $ 20.0 million of its outstanding $ 285.0 million aggregate principal amount Senior Notes.

The redemption was made pursuant to the terms of the indenture governing the terms of the Senior Notes, at a redemption price of 103.000 % of par plus accrued and unpaid interest to the date of redemption.

On October 7, 2025, the Company acquired a 20 % equity interest in Gift Card Co Pty Ltd, doing business as “Karta,” a digital card technology company and prepaid program manager based in Australia.

Total consideration for the transaction was $ 10.0 million, with $ 2.5 million paid in cash upon closing, and the remaining $ 7.5 million will be recorded as contingent consideration.

The Company determined it will exercise significant influence and therefore the investment will be accounted for as an equity method investment.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements