What changed in this filing

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Item 1. Financial Statements

2026-05-05 compared with 2025-11-04 · 109 added, 251 removed, 251 unchanged (59% 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 September 30, 2025 and December 31, 2024

0 shares issued and outstanding at March 31, 2026 and December 31, 2025

Common stock;

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

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

11,475,608 and 11,456,061 shares issued and outstanding at March 31, 2026 and December 31, 2025, respectively

Capital deficit

7 unchanged sentences

(in thousands, except share and per share amounts)

Three Months Ended September 30,

Nine Months Ended September 30,

Total net sales

Cost of sales:

Products (exclusive of depreciation and amortization shown below)

Services (exclusive of depreciation and amortization shown below)

Depreciation and amortization

Total cost of sales

Operating expenses:

Selling, general and administrative (exclusive of depreciation and amortization shown below)

Depreciation and amortization

Total operating expenses

Three Months Ended March 31,

Cost of goods sold

Selling, general and administrative expenses

Income from operations

1 unchanged sentence

Interest, net

Loss on debt extinguishment

Other expense, net

Other income, net

Total other expense, net

Income before income taxes

Income tax (expense) benefit

Income before income taxes and equity in losses of unconsolidated affiliates

Income tax expense

Equity in losses of unconsolidated affiliates

Basic and diluted earnings per share:

10 unchanged sentences

(in thousands, except share amounts)

June 30, 2025

Shares issued under stock-based compensation plans

Stock-based compensation

Components of comprehensive income:

September 30, 2025

December 31, 2025

2 unchanged sentences

Components of comprehensive income:

September 30, 2025

June 30, 2024

Shares issued under stock-based compensation plans

Stock-based compensation

Repurchase and retirement of common shares

Components of comprehensive income:

September 30, 2024

March 31, 2026

December 31, 2024

1 unchanged sentence

Stock-based compensation

Repurchase and retirement of common shares

Components of comprehensive income:

September 30, 2024

March 31, 2025

See accompanying notes to condensed consolidated financial statements

3 unchanged sentences

(in thousands)

Nine Months Ended September 30,

Three Months Ended March 31,

Operating activities

4 unchanged sentences

Amortization of debt issuance costs

Loss on early extinguishment of debt

Deferred income taxes and other, net

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Capital expenditures for plant, equipment and leasehold improvements, net

Cash paid for acquisition, net of cash acquired

Cash used in investing activities

Financing activities

Proceeds from borrowings on debt

Payments on debt

Payments on finance leases and other obligations

Common stock repurchased

Debt issuance costs

Payment for debt early redemption premium

Payments on finance lease obligations

Taxes withheld and paid on stock-based compensation awards

Cash provided by (used in) financing activities

Net (decrease) increase in cash and cash equivalents

Cash used in financing activities

Net decrease in cash and cash equivalents

Cash and cash equivalents, beginning of period

2 unchanged sentences

Cash paid (refunded) during the period for:

Interest paid

Income taxes paid

4 unchanged sentences

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

Non-cash equity in losses of unconsolidated affiliates

See accompanying notes to condensed consolidated financial statements

6 unchanged sentences

CPI Card Group Inc.

(which, together with its subsidiary companies, is referred to herein as “CPI” or the “Company”) is a payments technology company providing a comprehensive range of payment cards and related digital solutions.

(which, together with its subsidiary companies, is referred to herein as “CPI” or the “Company”) is a payments technology company providing a comprehensive range of physical and digital payment solutions for U.S.

financial institutions, processors, fintechs, prepaid program managers, and more.

CPI is a leader in several areas of the U.S.

payment card solutions market, including debit and credit card production, personalization, and Software-as-a-Service-based (“SaaS-based”) instant issuance services.

payment card solutions market, including debit and credit card production, personalization, and Software-as-a-Service-based (“SaaS-based”) instant issuance solutions.

CPI is also a market leader in the production of “Prepaid Debit Cards,” defined as debit cards issued on the networks of the “Payment Card Brands” (Visa, Mastercard ® , American Express ® and Discover ® ) but not linked to a traditional bank account, and related secure packaging solutions.

CPI’s revenues are primarily generated from the production of and services related to secure debit and credit cards that are issued on the networks of the Payment Card Brands, including Prepaid Debit Cards.

The Company’s business consists of the following reportable segments:

● Debit and Credit:

primarily produces secure debit and credit cards and provides card services for U.S.

card-issuing financial institutions.

Services include personalization;

instant issuance, which provides customers the ability to issue an instant personalized debit or credit card on-demand within a customer location;

and other payment solutions such as digital push provisioning for mobile wallets;

● Prepaid Debit:

primarily provides secure packaging solutions, Prepaid Debit Cards, and other integrated prepaid card services to prepaid program managers in the U.S.;

primarily corporate expenses.

CPI’s revenues are primarily generated from the production of and related offerings of secure debit and credit cards that are issued on the networks of the Payment Card Brands, including Prepaid Debit Cards.

In connection with the Company’s increased strategic focus on expanding and developing additional proprietary integrated technological solutions for its customer base and to reflect the manner in which the Company’s Chief Operating Decision Maker (“CODM”), the Chief Executive Officer (“CEO”), manages the Company’s business, the Company implemented a revised segment structure to assess performance and allocate resources, beginning in the first quarter of 2026.

The changes in the Company’s segment structure primarily relate to the separation of the results of the Company’s proprietary integrated technological related solutions into a separate segment from the former Debit and Credit segment.

As of March 31, 2026, the Company’s business consists of the following reportable segments:

● Secure Card Solutions:

primarily produces secure debit and credit cards and provides card personalization services for U.S.

card-issuing financial institutions, including highly customizable, on-demand payment card solutions acquired through the purchase of Arroweye Solutions, Inc.

(“Arroweye”) during the second quarter of 2025;

● Prepaid Solutions:

primarily provides prepaid debit cards and secure packaging solutions and other integrated prepaid card services to prepaid program managers in the U.S.;

● Integrated Paytech:

primarily provides a SaaS-based instant issuance solution, which gives customers the ability to issue an instant personalized debit or credit card within a customer location;

and other digital payment solutions such as push provisioning for mobile wallets.

Refer to Note 11, “Segment Reporting,” for segment results for the three months ended March 31, 2026 and 2025 under the revised segment structure.

Basis of Presentation

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Actual results could differ from those estimates.

Business Combinations

The Company accounts for business combinations using the acquisition method of accounting, which requires that most assets (both tangible and intangible) and liabilities are recognized at fair value at the date of acquisition.

The excess of the purchase price over the fair value of net assets is recognized as goodwill.

Certain adjustments to the assessed fair values of the assets and liabilities made subsequent to the acquisition date, but within the measurement period, which is one year or less, are recorded as adjustments to goodwill.

Results of operations of the acquired company are included in the Company’s results from the date of the acquisition.

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.

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.

During the second quarter of 2025, the Company reassessed certain aspects of its revenue recognition practices under Accounting Standards Codification (“ASC”) 606, Revenue from Contracts with Customers (“ASC 606”), 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.

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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.

Additionally, in connection with the acquisition and integration of 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.

Customer Contracts

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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

In December 2023, the Financial Accounting Standards Board issued ASU 2023-09, Income Taxes (Topic 740):

Improvements to Income Tax Disclosures , which will require a disaggregated rate reconciliation disclosure as well as additional information regarding taxes paid on an annual basis.

Adoption of this accounting standard is effective for the Company for fiscal years beginning after December 15, 2024.

The Company has elected not to early adopt this accounting standard.

The adoption of this standard will result in additional income tax disclosures for the year ended December 31, 2025;

however, the Company does not anticipate that it will have a material impact on the Company’s consolidated financial position and results of operations.

In November 2024, the Financial Accounting Standards Board issued ASU 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40):

In December 2025, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2025-11, Interim Reporting (Topic 270):

Narrow-Scope Improvements , which clarifies the guidance in Topic 270 to improve the consistency of interim financial reporting.

The ASU provides a comprehensive list of required interim disclosures and introduces a disclosure principle requiring entities to disclose events since the end of the last annual reporting period that have a material impact on the entity.

Adoption of this accounting standard is effective for the Company for fiscal years beginning after December 15, 2027, and interim periods within annual reporting periods beginning after December 15, 2028.

The Company is evaluating the impact of adoption of this standard and does not anticipate that it will have a material impact on the Company’s consolidated financial position, results of operations or cash flows.

In November 2024, the FASB issued ASU 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40):

Disaggregation of Income Statement Expenses , which will require disclosure of disaggregated information about certain expense captions presented in the income statement.

1 unchanged sentence

The requirements should be applied on a prospective basis while retrospective application is permitted.

The Company is evaluating the impact of adoption of this standard and does not anticipate that it will have a material impact on the Company’s consolidated financial position and results of operations.

Accounts Receivable

Accounts receivable consisted of the following:

September 30,

Trade accounts receivable

Unbilled accounts receivable

Less allowance for credit losses

Total accounts receivable, net

Inventories consisted of the following:

September 30,

Raw materials

2 unchanged sentences

Total inventories, net

Arroweye Acquisition

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 $ 45.8 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.

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.

All assets and liabilities have been recorded at fair value, excluding deferred tax liabilities.

The following table summarizes the preliminary allocations of purchase price:

Cash and cash equivalents

Accounts receivable

Prepaid expenses and other current assets

Plant, Equipment, Leasehold Improvements and Operating Lease Right-of-Use Assets

Intangible assets

Deferred income taxes

Accounts payable

Accrued expenses

Accrued long-term operating leases

Total purchase price

The goodwill recognized for Arroweye is primarily attributable to the assembled workforce and is recorded in the Debit and Credit segment.

The amount attributed to goodwill is not tax deductible.

The preliminary estimated fair values of the identifiable intangible assets acquired at the date of acquisition are as follows:

Weighted Average

Acquired technology

Customer relationships

Total identifiable intangible assets acquired

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.

The valuations of the intangible assets were derived using Level 3 inputs and require significant judgment and estimates, including the amount and timing of future cash flows and the determination of royalty and discount rates.

Plant, Equipment, Leasehold Improvements and Operating Lease Right-of-Use Assets

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

September 30,

Machinery and equipment

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Fair Value as of

Fair Value Measurement at September 30, 2025

September 30,

Fair Value Measurement at March 31, 2026

(Using Fair Value Hierarchy)

3 unchanged sentences

The aggregate fair value of the Company’s Senior Notes (defined in Note 6, “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 September 30, 2025, given the applicable variable interest rates.

The fair value measurement associated with the ABL Revolver (defined in Note 6, “Long-Term Debt”) approximates its carrying value as of March 31, 2026 and December 31, 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

2 unchanged sentences

Accrued rebates

Capitalized contract costs payable

Accrued interest

Current operating and financing lease liabilities

Income taxes payable

Total accrued expenses

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.

Other accrued expenses as of March 31, 2026, and December 31, 2025, 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 September 30, 2025, and December 31, 2024, long-term debt consisted of the following:

September 30,

As of March 31, 2026, and December 31, 2025, long-term debt consisted of the following:

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.

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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 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 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.

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 March 31, 2026, the remaining unamortized debt issuance costs recorded on the Senior Notes were $ 3.1 million and were reported as a reduction to the long-term debt balance.

The Company’s effective tax rates on pre-tax income were 34.4 % and 25.8 % for the three months ended March 31, 2026 and 2025, respectively.

The increase in the Company’s effective tax rate for the three months ended March 31, 2026, compared to the prior year related to decreased deductibility of stock-based compensation realized upon certain stock option exercises and restricted stock unit vesting and an increase in the valuation allowance related to states decoupling from recent favorable tax legislation changes.

For the three months ended March 31, 2026 and 2025, the effective tax rates differ from the U.S.

federal statutory income tax rate as follows:

September 30,

Tax at federal statutory rate

State taxes, net

Valuation allowance

Permanent items (1)

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(1) Includes the deductibility limitations on excess compensation.

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).

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.

Stockholders’ Deficit

Share Repurchases

On November 2, 2023, the Company's board of directors approved a share repurchase plan authorizing the Company to repurchase up to $ 20.0 million of the Company's common stock, par value $ 0.001 per share.

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

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

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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 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.

For the three months ended March 31, 2026 and 2025, 51,954 and 18,390 potentially dilutive securities, 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 September 30,

Nine Months Ended September 30,

Three Months Ended March 31,

Basic weighted-average common shares outstanding

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The Company believes that the ultimate resolution of any such matters will not have a material adverse effect on its business, financial condition or results of operations.

Voluntary Disclosure Program

The Company is subject to unclaimed or abandoned property (escheat) laws which require it to turn over to state governmental authorities the property of others held by the Company that has been unclaimed for specified periods of time.

Property subject to escheat laws generally relates to uncashed checks, trade accounts receivable credits and unpaid payable balances.

During the second quarter of 2022, the Company received a letter from the Delaware Secretary of State inviting the Company to participate in the Delaware Secretary of State’s Abandoned or Unclaimed Property Voluntary Disclosure Agreement Program to avoid being sent an audit notice by the Delaware Department of Finance.

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.

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

Stock-Based Compensation

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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 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.

The PSU award will vest, subject to continuous employment, in equal one -third increments upon the attainment of the rolling weighted average closing price of the Company’s common stock equaling or exceeding each of $ 35.00 , $ 50.00 , and $ 65.00 , in each case, for at least 90 consecutive trading days during the five-year performance period commencing on the grant date.

In February 2025, the Company granted executives a performance cash award (PCA) with a grant date fair value of $ 2.0 million using a Monte Carlo simulation model.

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, 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.

As of March 31, 2026, there were 701,979 shares of common stock available for grant under the Omnibus Plan.

In March 2026, the Company granted certain executives two performance cash awards (PCAs) with a total grant date fair value of $ 3.4 million using a Monte Carlo simulation model.

These PCAs will vest on December 31, 2026 and December 31, 2028 and are expected to settle in the first quarters of 2027 and 2029, respectively, 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.

As 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 three months ended March 31, 2026, the Company granted 81,858 restricted stock units at a weighted average grant date fair value of $ 14.51 .

As of March 31, 2026, there were 570,690 outstanding restricted stock units at a weighted average grant date fair value of $ 19.57 .

As of March 31, 2026, there were 597,934 options outstanding at a weighted average exercise price of $ 14.98 .

No options were granted during the three months ended March 31, 2026.

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.

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Segment Reporting

The Company’s chief operating decision maker is its CEO, who is charged with the management of the Company and is responsible for the evaluation of operating performance and decision-making about the allocation of resources to operating segments based on the measures of net sales and EBITDA .

The Company’s CODM is its CEO, who is charged with the management of the Company and is responsible for the evaluation of operating performance and decision-making about the allocation of resources to operating segments based on the measures of revenue and EBITDA .

As the Company uses the term, “EBITDA” is defined as income before interest expense, income taxes, depreciation and amortization.

The Company’s chief operating decision maker believes EBITDA is a meaningful measure and is useful as a supplement to GAAP measures as it represents a transparent view of the Company’s operating performance that is unaffected by fluctuations in property, equipment and leasehold improvement additions.

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

● Debit and Credit,

● Prepaid Debit, and

Debit and Credit Segment

The Debit and Credit segment primarily produces secure debit and credit cards and provides card services, including digital services, for U.S.

card-issuing financial institutions.

Products produced by this segment primarily include payment cards, including contact, contactless, eco-focused, and magnetic stripe cards.

This segment also provides personalization services;

instant issuance solutions, which provide customers the ability to issue an instant personalized debit or credit card on-demand within a customer location;

and other payment solutions such as digital push provisioning for mobile wallets.

Prepaid Debit Segment

The Prepaid Debit segment primarily provides integrated prepaid card services to prepaid program managers primarily in the U.S., including payment cards issued on the networks of the Payment Card Brands and related tamper-evident secure packaging.

The Other segment includes corporate expenses.

The Company’s CODM believes EBITDA is a meaningful measure and is useful as a supplement to GAAP measures as it represents a transparent view of the Company’s operating performance that is unaffected by fluctuations in property, equipment and leasehold improvement additions.

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

Effective for the quarter ending March 31, 2026, the Company implemented a change in the structure of its reportable segments to align with its internal management reporting and operating structure and consistent with the Company’s increased strategic focus on expanding and developing additional proprietary integrated technological solutions for its customer base.

This change was made to reflect the revised manner in which the Company’s CODM manages the Company’s business, including for performance assessment and resource allocation.

Operating results for prior periods have been recast to conform to the current period presentation.

The updated information reflects only reclassification of prior period segment data and does not represent a restatement of previously issued financial statements.

As of March 31, 2026, the Company’s reportable segments were as follows:

● Secure Card Solutions:

primarily produces secure debit and credit cards and provides card personalization services for U.S.

card-issuing financial institutions, including highly customizable, on-demand payment card solutions acquired through the purchase of Arroweye during the second quarter of 2025;

● Prepaid Solutions:

primarily provides prepaid debit cards and secure packaging solutions and other integrated prepaid card services to prepaid program managers in the U.S.;

● Integrated Paytech:

primarily provides a SaaS-based instant issuance solution, which gives customers the ability to issue an instant personalized debit or credit card within a customer location;

and other digital payment solutions such as push provisioning for mobile wallets.

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 nine months ended September 30, 2025 and 2024, were as follows:

Three Months Ended September 30, 2025

Debit and Credit

Prepaid Debit

Intersegment Eliminations

Total net sales

Cost of sales

Depreciation and amortization

Total cost of sales

Operating expenses

Income (loss) from operations

EBITDA by segment:

Income (loss) from operations

Depreciation and amortization

Other expense

Gross profit margin

EBITDA margin

Nine Months Ended September 30, 2025

Debit and Credit

Prepaid Debit

Intersegment Eliminations

Total net sales

Cost of sales

Depreciation and amortization

Total cost of sales

Operating expenses

Income (loss) from operations

EBITDA by segment:

Income (loss) from operations

Depreciation and amortization

Other (expense) income

Gross profit margin

EBITDA margin

Three Months Ended September 30, 2024

Debit and Credit

Prepaid Debit

Revenue 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 months ended March 31, 2026 and 2025, were as follows:

Three Months Ended March 31, 2026

Secure Card Solutions

Prepaid Solutions

Integrated Paytech

Total Reportable Segments

Intersegment Eliminations

Total net sales

Cost of sales

Depreciation and amortization

Total cost of sales

Operating expenses

Cost of goods sold

Selling, general and administrative expenses

Income (loss) from operations

2 unchanged sentences

Depreciation and amortization

Other income (expense)

Other income (expense), net

Gross profit margin

EBITDA margin

Nine Months Ended September 30, 2024

Debit and Credit

Prepaid Debit

Three Months Ended March 31, 2025

Secure Card Solutions

Prepaid Solutions

Integrated Paytech

Total Reportable Segments

Intersegment Eliminations

Total net sales

Cost of sales

Depreciation and amortization

Total cost of sales

Operating expenses

Cost of goods sold

Selling, general and administrative expenses

Income (loss) from operations

2 unchanged sentences

Depreciation and amortization

Other expense

Other (expense) income, net

Gross profit margin

1 unchanged sentence

Calculation not meaningful.

Exclusive of depreciation and amortization.

Reconciliation of Net Income to EBITDA

Three Months Ended September 30,

Nine Months Ended September 30,

Three Months Ended March 31,

Interest, net

Income tax expense (benefit)

Income tax expense

Depreciation and amortization

Balance Sheet Data of Reportable Segments

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

Prepaid Debit

Capital Expenditures of Reportable Segments

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

Prepaid Debit

Total capital expenditures

Subsequent Events

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.

Goodwill by Reportable Segment

Under the Company’s reportable segment structure as of December 31, 2025, the Company reported all of its goodwill in the former Debit and Credit segment.

In connection with the implementation of the Company’s revised segment structure in the first quarter of 2026, a portion of the Company’s goodwill in the former Debit and Credit segment as of December 31, 2025 is now included in the Integrated Paytech segment.

As a result, total goodwill of the Company’s reportable segments as of March 31, 2026, and December 31, 2025, were as follows under the revised segment structure:

Secure Card Solutions

Integrated Paytech

Total goodwill

Balance Sheet Data and Capital Expenditures of Reportable Segments

The Company does not report assets or capital expenditures by segment as the Company’s CODM does not use this information to evaluate reportable segments.

Accordingly, the Company does not regularly provide such information by segment to the CODM.

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