UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(Mark One)
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QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended
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TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from _________ to _________
Commission file number
(Exact name of registrant as specified in its charter)
| (State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
| (Address of principal executive offices) | (Zip Code) |
Registrant’s telephone number, including area code: (
Securities registered pursuant to Section 12(b) of the Exchange Act:
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Title of each class |
Trading Symbol |
Name of each exchange on which registered |
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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.
Indicated 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 during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer | ☐ | 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 to 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 is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes
As of July 31, 2025,
CoreCard Corporation
Index
Form 10-Q
| Page | ||
| Part I | Financial Information | |
| Item 1 | Financial Statements | |
| Consolidated Balance Sheets at June 30, 2025 and December 31, 2024 | 3 | |
| Consolidated Statements of Operations for the three and six months ended June 30, 2025 and 2024 | 4 | |
| Consolidated Statements of Comprehensive Income (Loss) for the three and six months ended June 30, 2025 and 2024 | 4 | |
| Consolidated Statements of Stockholders’ Equity for the three and six months ended June 30, 2025 and 2024 | 5 | |
| Consolidated Statements of Cash Flows for the six months ended June 30, 2025 and 2024 | 6 | |
| Notes to Consolidated Financial Statements | 7 | |
| Item 2 | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 15 |
| Item 3 | Quantitative and Qualitative Disclosures About Market Risk | 20 |
| Item 4 | Controls and Procedures | 20 |
| Part II | Other Information | |
| Item 1 | Legal Proceedings | 20 |
| Item 1A. | Risk Factors | 20 |
| Item 2 | Unregistered Sales of Equity Securities and Use of Proceeds | 20 |
| Item 3 | Defaults Upon Senior Securities | 20 |
| Item 4 | Mine Safety Disclosures | 20 |
| Item 5 | Other Information | 21 |
| Item 6 | Exhibits | 21 |
| Signatures | 21 |
Part I FINANCIAL INFORMATION
Item 1. Financial Statements
CoreCard Corporation
CONSOLIDATED BALANCE SHEETS
(in thousands, except share and per share amounts)
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As of |
June 30, 2025 |
December 31, 2024 |
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(unaudited) |
(audited) |
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ASSETS |
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Current assets: |
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Cash and cash equivalents |
$ | $ | ||||||
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Marketable securities |
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Accounts receivable, net |
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Other current assets |
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Total current assets |
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Investments |
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Property and equipment, at cost less accumulated depreciation |
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Other long-term assets |
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Total assets |
$ | $ | ||||||
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LIABILITIES AND STOCKHOLDERS’ EQUITY |
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Current liabilities: |
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Accounts payable |
$ | $ | ||||||
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Deferred revenue, current portion |
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Accrued payroll |
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Accrued expenses |
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Other current liabilities |
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Total current liabilities |
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Noncurrent liabilities: |
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Deferred revenue, net of current portion |
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Long-term lease obligation |
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Other long-term liabilities |
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Total noncurrent liabilities |
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| Total Liabilities | ||||||||
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Commitments and Contingencies (See Note 9) |
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Stockholders’ equity: |
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| Common stock, $ |
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Additional paid-in capital |
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Treasury stock, |
( |
) | ( |
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Accumulated other comprehensive loss |
( |
) | ( |
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Accumulated earnings |
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Total stockholders’ equity |
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Total liabilities and stockholders’ equity |
$ | $ | ||||||
The accompanying notes are an integral part of these consolidated financial statements.
CoreCard Corporation
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited, in thousands, except share and per share amounts)
| Three Months Ended June 30, |
Six Months Ended June 30, |
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2025 |
2024 |
2025 |
2024 |
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Revenue |
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Services |
$ | $ | $ | $ | ||||||||||||
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Products |
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Total net revenue |
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Cost of revenue |
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Services |
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Products |
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Total cost of revenue |
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Expenses |
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Marketing |
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General and administrative |
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Development |
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Income from operations |
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Investment loss |
( |
) | ( |
) | ( |
) | ( |
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Other income, net |
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Income before income taxes |
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Income taxes |
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Net income |
$ | $ | $ | $ | ||||||||||||
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Earnings per share: |
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Basic |
$ | $ | $ | $ | ||||||||||||
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Diluted |
$ | $ | $ | $ | ||||||||||||
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Basic weighted average common shares outstanding |
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Diluted weighted average common shares outstanding |
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CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(unaudited, in thousands)
| Three Months Ended June 30, |
Six Months Ended June 30, |
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2025 |
2024 |
2025 |
2024 |
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Net income |
$ | $ | $ | $ | ||||||||||||
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Other comprehensive income (loss): |
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Unrealized gain (loss) on marketable securities |
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Foreign currency translation adjustments |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
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Total comprehensive income |
$ | $ | $ | $ | ||||||||||||
The accompanying notes are an integral part of these consolidated financial statements.
CoreCard Corporation
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(unaudited, in thousands, except share amounts)
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Common Stock |
Additional Paid-In Capital |
Treasury Stock |
Accumulated Other Comprehensive Income (Loss) |
Accumulated Earnings |
Stockholders’ Equity |
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Shares |
Amount |
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Balance at December 31, 2023 |
$ | $ | $ | ( |
$ | $ | $ | |||||||||||||||||||||
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Common stock repurchased, including excise tax* |
( |
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) | ( |
) | ||||||||||||||||||||||
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Net income |
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Stock compensation expense |
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Unrealized gain (loss) on marketable securities |
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Foreign currency translation adjustment |
( |
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Balance at March 31, 2024 |
$ | $ | $ | ( |
) | $ | $ | $ | ||||||||||||||||||||
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Common stock repurchased, including excise tax* |
( |
) | ( |
) | ( |
) | ||||||||||||||||||||||
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Net income |
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Stock compensation expense |
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Unrealized gain (loss) on marketable securities |
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Foreign currency translation adjustment |
( |
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Balance at June 30, 2024 |
$ | $ | $ | ( |
) | $ | $ | $ | ||||||||||||||||||||
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Balance at December 31, 2024 |
$ | $ | $ | ( |
) | $ | ( |
) | $ | $ | ||||||||||||||||||
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Net income |
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Stock compensation expense |
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Unrealized gain (loss) on marketable securities |
( |
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Foreign currency translation adjustment |
( |
) | ( |
) | ||||||||||||||||||||||||
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Balance at March 31, 2025 |
$ | $ | $ | ( |
) | $ | ( |
) | $ | $ | ||||||||||||||||||
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Net income |
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Stock compensation expense |
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Unrealized gain (loss) on marketable securities |
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Foreign currency translation adjustment |
( |
) | ( |
) | ||||||||||||||||||||||||
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Balance at June 30, 2025 |
$ | $ | $ | ( |
) | $ | ( |
) | $ | $ | ||||||||||||||||||
*
The accompanying notes are an integral part of these consolidated financial statements.
CoreCard Corporation
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited, in thousands)
| Six Months Ended June 30, | ||||||||
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CASH PROVIDED BY (USED FOR): |
2025 |
2024 |
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OPERATING ACTIVITIES: |
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Net income |
$ | $ | ||||||
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Adjustments to reconcile net income to net cash provided by operating activities: |
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Depreciation and amortization |
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Stock-based compensation expense |
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Deferred income taxes |
( |
) | ( |
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Equity in loss of affiliate company |
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Changes in operating assets and liabilities: |
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Accounts receivable, net |
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Other current assets |
( |
) | ( |
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Other long-term assets |
( |
) | ||||||
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Accounts payable |
( |
) | ||||||
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Accrued payroll |
( |
) | ||||||
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Deferred revenue, current portion |
( |
) | ||||||
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Accrued expenses |
( |
) | ||||||
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Other current liabilities |
( |
) | ( |
) | ||||
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Deferred revenue, net of current portion |
( |
) | ( |
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Other long-term liabilities |
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Net cash provided by operating activities |
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INVESTING ACTIVITIES: |
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Purchases of property and equipment and capitalized internal-use software |
( |
) | ( |
) | ||||
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Proceeds from payments on notes receivable |
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Advances on notes receivable |
( |
) | ||||||
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Purchase of long-term investment |
( |
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Purchases of marketable securities |
( |
) | ( |
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Maturities of marketable securities |
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Net cash used for investing activities |
( |
) | ( |
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FINANCING ACTIVITIES: |
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Repurchases of common stock |
( |
) | ||||||
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Net cash used for financing activities |
( |
) | ||||||
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Effects of exchange rate changes on cash |
( |
) | ( |
) | ||||
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Net increase (decrease) in cash |
( |
) | ||||||
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Cash at beginning of period |
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Cash at end of period |
$ | $ | ||||||
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SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: |
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Cash paid during the period for income taxes |
$ | $ | ||||||
| Purchases of property and equipment and capitalized internal-use software, accrued but not paid | $ | $ | ||||||
The accompanying notes are an integral part of these consolidated financial statements.
CoreCard Corporation
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
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1. |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
Basis of Presentation
Throughout this report, the terms “we”, “us”, “ours”, “CoreCard” and “Company” refer to CoreCard Corporation, including its wholly-owned and majority-owned subsidiaries. The unaudited Consolidated Financial Statements presented in this Form 10-Q have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) applicable to interim financial statements. Accordingly, they do not include all of the information and notes required for complete financial statements. In the opinion of CoreCard management, these Consolidated Financial Statements contain all adjustments (which comprise only normal and recurring accruals) necessary to present fairly the financial position and results of operations as of and for the three and six month periods ended June 30, 2025 and 2024. The interim results for the three and six months ended June 30, 2025 are not necessarily indicative of the results to be expected for the full year. These statements should be read in conjunction with our Consolidated Financial Statements and notes thereto for the fiscal year ended December 31, 2024, as filed in our Annual Report on Form 10-K.
There have been no material changes in the Company’s significant accounting policies during the first half of 2025 as compared to the significant accounting policies described in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024 (the “2024 Form 10-K”).
Recent Accounting Pronouncements Not Yet Adopted
In December 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. This standard was issued to enhance the transparency and decision usefulness of income tax disclosures to provide information to better assess how an entity’s operations and related tax risks and tax planning and operational opportunities affect its tax rate and prospects for future cash flows. The amendments in this ASU address transparency about income tax information through disclosures primarily related to the rate reconciliation and income taxes paid information. The amendments in this ASU are effective for annual periods beginning after December 15, 2024. The ASU should be applied on a prospective basis. Retrospective application is permitted. We will adopt the updated accounting guidance in our Annual Report on Form 10-K for the year ended December 31, 2025. We are currently evaluating the impact the adoption of the new accounting guidance will have on our income tax disclosures.
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, requiring public entities to disclose additional information about specific expense categories in the notes to the financial statements on an interim and annual basis. ASU 2024-03 is effective for fiscal years beginning after December 15, 2026, and for interim periods beginning after December 15, 2027, with early adoption permitted. The Company is currently evaluating the impact of adopting ASU 2024-03.
We have considered all other recently issued accounting pronouncements and do not believe the adoption of such pronouncements will have a material impact on our Consolidated Financial Statements.
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2. |
REVENUE |
Disaggregation of Revenue
In the following table, revenue is disaggregated by type of revenue for the three and six months ended June 30, 2025 and 2024:
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Three Months Ended June 30, |
Six Months Ended June 30, |
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(in thousands) |
2025 |
2024 |
2025 |
2024 |
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License |
$ | $ | $ | $ | ||||||||||||
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Professional services |
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Processing and maintenance |
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Third party |
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Total |
$ | $ | $ | $ | ||||||||||||
Foreign revenues are based on the location of the customer. Revenues from customers by geographic areas for the three and six months ended June 30, 2025 and 2024 are as follows:
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Three Months Ended June 30, |
Six Months Ended June 30, |
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(in thousands) |
2025 |
2024 |
2025 |
2024 |
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United States |
$ | $ | $ | $ | ||||||||||||
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Middle East |
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European Union |
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Total |
$ | $ | $ | $ | ||||||||||||
Concentration of Revenue
The following table indicates the percentage of consolidated revenue represented by each customer that represented more than 10 percent of consolidated revenue in the three and six month periods ended June 30, 2025 and 2024. Most of our customers have multi-year contracts with recurring revenue as well as professional services fees that vary by period depending on their business needs.
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Three Months Ended June 30, |
Six Months Ended June 30, |
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2025 |
2024 |
2025 |
2024 |
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Customer A |
% | % | % | % | ||||||||||||
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3. |
NOTES RECEIVABLE |
In 2023, we entered into and advanced $
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4. |
INVESTMENTS |
As of June 30, 2025, we held a
As of June 30, 2025, we held a
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5. |
STOCK-BASED COMPENSATION |
At June 30, 2025, we had stock-based compensation plans in effect. In May 2025, shareholders approved the 2025 Employee Stock Incentive Plan (the “2025 Plan”), which authorizes the issuance of
During the quarter ended June 30, 2025, an aggregate of
Stock Options
As of June 30, 2025, there was unrecognized compensation cost related to stock options. There were options exercised during the three and six months ended June 30, 2025 or 2024. options expired unexercised during the quarter. The following table summarizes options as of June 30, 2025:
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Options Outstanding and Exercisable: |
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Range of |
Number |
Wgt. Avg. Contractual |
Wgt. Avg. |
Aggregate |
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$ |
- | $ |
$ | $ | ||||||||||||||||
| $ |
$ | $ | ||||||||||||||||||
| $ |
$ | $ | ||||||||||||||||||
| $ |
$ | $ | ||||||||||||||||||
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$ |
- | $ |
$ | $ | ||||||||||||||||
The estimated fair value of options granted is calculated using the Black-Scholes option pricing model with assumptions as previously disclosed in our 2024 Form 10-K.
The aggregate intrinsic value in the table above represents the total pre-tax intrinsic value (the difference between the Company’s closing stock price on the last trading day of the second quarter of 2025 and the exercise price, multiplied by the number of in-the-money options) that would have been received by the option holders had all option holders exercised their options on June 30, 2025. The amount of aggregate intrinsic value will change based on the market value of the Company’s stock.
Restricted Stock Units
Restricted Stock Units, or RSUs, generally vest at the end of a three-year vesting period. A summary of the Company’s RSU activity was as follows:
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Number of Restricted Stock Units |
Weighted-average grant date fair value per share |
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Balance as of December 31, 2024 |
$ | |||||||
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Granted |
-- | -- | ||||||
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Vested |
-- | -- | ||||||
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Canceled and forfeited |
( |
) | ||||||
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Balance as of June 30, 2025 |
$ | |||||||
Stock compensation expense was classified as follows for the three and six months ended June 30, 2025 and 2024:
|
Three Months Ended June 30, |
Six Months Ended June 30, |
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(in thousands) |
2025 |
2024 |
2025 |
2024 |
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General and administrative expense |
$ | $ | $ | $ | ||||||||||||
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Development expense |
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Total |
$ | $ | $ | $ | ||||||||||||
As of June 30, 2025, unrecognized compensation costs related to unvested RSUs was $
|
6. |
FAIR VALUE OF FINANCIAL INSTRUMENTS |
The carrying value of cash and cash equivalents, marketable securities, accounts receivable, notes receivable, accounts payable and certain other financial instruments (such as accrued expenses, and other current liabilities) included in the accompanying consolidated balance sheets approximates their fair value principally due to the short-term maturity of these instruments.
Financial instruments that potentially subject us to concentrations of credit risk consist principally of cash, marketable securities, trade accounts and notes receivable. Our available cash is held in accounts managed by third-party financial institutions. Cash may exceed the Federal Deposit Insurance Corporation, or FDIC, insurance limits. While we monitor cash balances on a regular basis and adjust the balances as appropriate, these balances could be impacted if the underlying financial institutions fail. To date, we have experienced no loss or lack of access to our cash; however, we can provide no assurances that access to our cash will not be impacted by adverse conditions in the financial markets.
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7. |
FAIR VALUE MEASUREMENTS |
In determining fair value, the Company uses quoted market prices in active markets. GAAP establishes a fair value measurement framework, provides a single definition of fair value, and requires expanded disclosure summarizing fair value measurements. GAAP emphasizes that fair value is a market-based measurement, not an entity specific measurement. Therefore, a fair value measurement should be determined based on the assumptions that market participants would use in pricing an asset or liability.
GAAP establishes a hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable input be used when available. Observable inputs are based on data obtained from sources independent of the Company that market participants would use in pricing the asset or liability. Unobservable inputs are inputs that reflect the company’s assumptions about the estimates market participants would use in pricing the asset or liability developed based on the best information available in the circumstances.
The hierarchy is measured in three levels based on the reliability of inputs:
• Level 1
Valuations based on quoted prices in active markets for identical assets or liabilities that we have the ability to access. Valuation adjustments and block discounts are not applied to Level 1 instruments.
• Level 2
Valuations based on quoted prices in less active, dealer or broker markets. Fair values are primarily obtained from third party pricing services for identical or comparable assets or liabilities.
• Level 3
Valuations derived from other valuation methodologies, including pricing models, discounted cash flow models and similar techniques, and not based on market, exchange, dealer, or broker-traded transactions. Level 3 valuations incorporate certain assumptions and projections that are not observable in the market and significant professional judgment is needed in determining the fair value assigned to such assets or liabilities.
In instances where the determination of the fair value measurement is based on inputs from different levels of the fair value hierarchy, the level in the fair value hierarchy within which the entire fair value measurement falls is based on the lowest level input that is significant to the fair value measurement in its entirety.
The fair value of equity method investments has not been determined as it was impracticable to do so due to the fact that the investee companies are relatively small, early-stage private companies for which there is no comparable valuation data available without unreasonable time and expense.
The following tables present the fair value hierarchy for assets and liabilities measured at fair value:
|
(In thousands) |
Level 1 |
Level 2 |
Level 3 |
Total Fair Value |
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|
Cash equivalents |
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|
Money market accounts |
$ | $ | $ | $ | ||||||||||||
|
Marketable securities |
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Corporate, municipal debt and treasury securities |
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Total assets |
$ | $ | $ | $ | ||||||||||||
The Company classifies money market funds, commercial paper, U.S. government securities, asset-backed securities and corporate securities within Level 1 or Level 2 of the fair value hierarchy because the Company values these investments using quoted market prices or alternative pricing sources and models utilizing market observable inputs.
There were no transfers of financial instruments between the fair value hierarchy levels during the six months ended June 30, 2025 or 2024.
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8. |
MARKETABLE SECURITIES |
The amortized cost, unrealized gain (loss), and estimated fair value of the Company's investments in securities available for sale consisted of the following:
|
June 30, 2025 |
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(In thousands) |
Amortized Cost |
Unrealized Gain |
Unrealized Loss |
Estimated Fair Value |
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|
Marketable securities |
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|
Corporate, municipal debt and treasury securities |
$ | $ | $ | − | $ | |||||||||||
The Company had no marketable securities in an unrealized loss position as of June 30, 2025. The Company did identify any marketable securities that were other-than-temporarily impaired as of June 30, 2025 and 2024. The Company does not intend to sell any marketable securities that have an unrealized loss as of June 30, 2025, and it is not more likely than not that the Company will be required to sell such securities before any anticipated recovery or maturity of such security. We recognized investment income of $
The following table summarizes the stated maturities of the Company’s marketable securities:
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June 30, 2025 |
December 31, 2024 |
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|
(In thousands) |
Amortized Cost |
Fair Value |
Amortized Cost |
Fair Value |
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|
Due within one year |
$ | $ | $ | $ | ||||||||||||
|
Due after one year through four years |
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|
Total |
$ | $ | $ | $ | ||||||||||||
|
9. |
COMMITMENTS AND CONTINGENCIES |
Leases
We have noncancelable operating leases for offices and data centers expiring at various dates through April 2030. These operating leases are included in other long-term assets on the Company's June 30, 2025 and December 31, 2024 Consolidated Balance Sheets and represent the Company’s right to use the underlying asset for the lease term. The Company’s obligation to make lease payments are included in other current liabilities and long-term lease obligation on the Company's June 30, 2025 and December 31, 2024 Consolidated Balance Sheets. Operating lease right-of-use assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. Because the rate implicit in each lease is not readily determinable, the Company uses its incremental borrowing rate to determine the present value of the lease payments.
Supplemental Information–Leases
Supplemental information related to our right-of-use assets and related lease liabilities is as follows:
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June 30, 2025 |
December 31, 2024 |
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Right-of-use asset, net and lease liabilities (in thousands) |
$ | $ | ||||||
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Weighted average remaining lease term (years) |
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Weighted average discount rate |
% | % | ||||||
For the six months ended June 30, 2025 and 2024, cash paid for operating leases included in operating cash flows was $
Maturities of our operating lease liabilities as of June 30, 2025 is as follows:
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Operating Leases |
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(in thousands) |
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2025 |
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2026 |
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2027 |
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2028 |
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2029 |
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Thereafter |
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Total lease payments |
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Less imputed interest |
( |
) | ||
| Total lease liabilities | ||||
Lease expense for the three and six months ended June 30, 2025 and 2024 consisted of the following:
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Three Months Ended June 30, |
Six Months Ended June 30, |
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(in thousands) |
2025 |
2024 |
2025 |
2024 |
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Cost of Revenue |
$ | $ | $ | $ | ||||||||||||
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General and Administrative |
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Development |
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Total |
$ | $ | $ | $ | ||||||||||||
Retention Liability
On May 7, 2025, the Board of Directors approved a retention program for employees who, as of July 31, 2024, have been employees of the Company for more than years, which includes our President and Chief Executive Officer, and our Chief Financial Officer and Corporate Secretary. Under the program, we agreed to make a cash retention payment to each covered employee equal to the amount, if any, by which the employee’s 2024 base salary exceeds the value, measured as of close of trading on December 31, 2028, of the shares of restricted stock granted to such employee in 2024 and 2025 that are vested as of December 31, 2028. Employees must remain actively and continuously employed, in good standing, through December 31, 2028, and the program may be cancelled in connection with an acquisition of the Company by a buyer with a market capitalization in excess of $1 billion if the restricted stock granted to the covered employees in 2024 and 2025 vests within 30 days after closing. We expect to evaluate the liability and corresponding service cost associated with the program on a quarterly basis. The program is not evidenced by a formal written plan document or formal written agreements with the covered employees.. The maximum liability under this plan is approximately $
Legal Matters
There are no pending or threatened legal proceedings. However, in the ordinary course of business, from time to time we may be involved in various pending or threatened legal actions. The litigation process is inherently uncertain and it is possible that the resolution of such matters might have a material adverse effect upon our financial condition and/or results of operations. We accrue for unpaid legal fees for services performed to date.
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10. |
SEGMENT INFORMATION |
The Company operates as operating segment. The Company's chief operating decision maker ("CODM") is its chief executive officer, who reviews financial information presented on a consolidated basis. The CODM uses consolidated operating margin and net income to assess financial performance and allocate resources. These financial metrics are used by the CODM to make key operating decisions, such as the determination of the rate at which the Company seeks to grow its operating margin and the allocation of resources between cost of revenues, marketing, development, and general and administrative expenses.
The following table presents selected financial information with respect to the Company’s single operating segment for the three and six months ended June 30, 2025 and 2024:
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Three months ended June 30, |
Six months ended June 30, |
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(in thousands, except per share data): |
2025 |
2024 |
2025 |
2024 |
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Revenue |
$ | $ | $ | $ | ||||||||||||
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Less: |
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Cost of revenue |
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Marketing |
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General and administrative |
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Development |
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Operating Income |
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Operating Margin |
% | % | % | % | ||||||||||||
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Other income (expense) |
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Investment loss |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
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Other income |
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Income before income taxes |
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Provision for income taxes |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
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Net income |
$ | $ | $ | $ | ||||||||||||
|
11. |
INCOME TAXES |
We recognize deferred tax liabilities and assets for the expected future tax consequences of events that have been included in the financial statements or tax returns. Deferred tax liabilities and assets are determined based on the difference between the financial statement and tax bases of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. Deferred tax assets are recognized, net of a valuation allowance, for the estimated future tax effects of deductible temporary differences and tax credit carry-forwards. A valuation allowance against deferred tax assets is recorded when, and if, based upon available evidence, it is more likely than not that some or all deferred tax assets will not be realized.
There were unrecognized tax benefits at June 30, 2025 and December 31, 2024. Our policy is to recognize interest and penalties accrued on any unrecognized tax benefits as a component of income tax expense. There were accrued interest or penalties associated with any unrecognized tax benefits, nor was any interest expense recognized during the periods presented. We have determined we have no uncertain tax positions.
We file a consolidated U.S. federal income tax return for all subsidiaries in which our ownership equals or exceeds 80%, as well as individual subsidiary returns in various states and foreign jurisdictions. With few exceptions we are no longer subject to U.S. federal, state and local or foreign income tax examinations by taxing authorities for returns filed more than three years ago.
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12. |
SUBSEQUENT EVENTS |
Proposed Merger with Euronet Worldwide Inc.
On July 30, 2025, the Company, entered into an Agreement and Plan of Merger (the “Merger Agreement”) by and among the Company, Euronet Worldwide, Inc., a Delaware corporation (“Euronet”), and Genesis Merger Sub Inc., a Georgia corporation and wholly owned subsidiary of Euronet (“Merger Sub”). Pursuant to the Merger Agreement, and upon the terms and subject to the conditions therein and in accordance with the Georgia Business Corporation Code, Merger Sub will merge with and into the Company (the “Merger”), with the Company surviving the Merger and continuing as a wholly owned subsidiary of Euronet. The respective boards of directors of the Company and Euronet have approved the Merger Agreement, and the board of directors of the Company has recommended that the Company’s shareholders adopt the Merger Agreement.
Subject to the terms and conditions set forth in the Merger Agreement, at the effective time of the Merger (the “Effective Time”), each issued and outstanding share of common stock, par value $
|
● |
if the volume weighted average price per share of Euronet Common Stock on Nasdaq for the fifteen consecutive trading days ending on, and including, the second full trading day prior to the Effective Time (the “Euronet Stock Price”) is equal to or less than $ |
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● |
if the Euronet Stock Price is greater than $ |
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if the Euronet Stock Price is greater than or equal to $ |
The proposed transaction values the Company at approximately $
If the Merger is consummated, the Company Common Stock will be delisted from The New York Stock Exchange and deregistered under the Securities Exchange Act of 1934, as amended. Following the closing of the Merger, the Euronet Common Stock will continue to be listed on the NASDAQ Global Select Market (“Nasdaq”) under the ticker symbol “EEFT.”
Changes in Tax Legislation
On July 4, 2025, the One Big Beautiful Bill Act (“OBBBA”) was enacted into law in the U.S. The OBBBA permanently extends certain expiring provisions from the Tax Cuts and Jobs Act of 2017, including accelerated tax recovery for certain capital investments and research and development expenditures and the business interest expense limitation. Additionally, the OBBBA includes changes to the taxation of foreign income for U.S.-domiciled businesses. While we are currently evaluating the impact that the OBBBA may have on the Company and our consolidated financial statements, we do anticipate a decrease in our current year cash tax liability as a result of the OBBBA.
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
In addition to historical information, this Form 10-Q may contain forward-looking statements relating to CoreCard. All statements, trend analyses and other information relative to markets for our products and trends in revenue, gross margins and anticipated expense levels, as well as other statements including words such as “anticipate”, “believe”, “plan”, “estimate”, “expect”, and “intend”, and other similar expressions, constitute forward-looking statements. Prospective investors are cautioned that any such forward-looking statements are not guarantees of future performance and involve risks and uncertainties including those factors described below under “Factors That May Affect Future Operations”, and that actual results may differ materially from those contemplated by such forward-looking statements. CoreCard undertakes no obligation to update or revise forward-looking statements to reflect changed assumptions, the occurrence of unanticipated events or changes in future operating results.
For purposes of this discussion and analysis, we are assuming and relying upon the reader’s familiarity with the information contained in Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations, in the Form 10- K for the year ended December 31, 2024 as filed with the Securities and Exchange Commission.
Overview
CoreCard Corporation, a Georgia corporation, and its predecessor companies have operated since 1973 and its securities have been publicly traded since 1980. In this report, sometimes we use the terms “Company”, “CoreCard”, “us”, “ours”, “we”, “Registrant” and similar words to refer to CoreCard Corporation and subsidiaries. Our executive offices are located in Norcross, Georgia and our website is www.corecard.com.
We are primarily engaged in the business of providing technology solutions and processing services to the financial technology and services market, commonly referred to as the FinTech industry.
Our operations are conducted through our affiliate companies located in Romania, India, the United Arab Emirates and Colombia, as well as our corporate office in Norcross, Georgia which provides significant administrative, human resources and executive management support. CoreCard’s foreign subsidiaries that perform software development and testing as well as processing operations support are CoreCard SRL in Romania, CoreCard Software Pvt Ltd in India, CoreCard Colombia SAS in Colombia and CoreCard Software DMCC in the United Arab Emirates.
Our results vary in part depending on the size and number of software licenses recognized as well as the value and number of professional services contracts recognized in a particular period. As we continue to grow our Processing Services business, we continue to gain economies of scale on the investments we have made in the infrastructure, resources, processes and software features developed over the past number of years to support this growing side of our business. We are adding new processing customers at a faster pace than we are adding new license customers, resulting in steady growth in the processing revenue stream.
We receive license revenue and professional services revenue, including such revenue from Goldman Sachs Group, Inc. (“Goldman”), which was added as a customer in 2018 and is referred to as “Customer A” in the Notes to Consolidated Financial Statements. In total, this customer represented 63% and 61% of our consolidated revenues in the first six months of 2025 and 2024, respectively. On October 23, 2024, we executed an Omnibus Amendment with Goldman covering the following agreements between the Company and Goldman:
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● |
Software License and Support Agreement, dated as of October 16, 2018 (the “SLSA”); |
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Master Professional Services Agreement, dated as of August 1, 2019 (the “MPSA”, and together with the SLSA, the “Agreements”); |
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● |
Schedule of Work No. 1 to Professional Services Agreement, dated as of August 1, 2019, and Amendment No. 2 to Schedule of Work No. 1, dated as of January 13, 2021 (“SOW 1”); and |
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● |
Schedule of Work No. 2 to Professional Services Agreement, dated as of August 1, 2019, and Amendment No. 2 to Schedule of Work No. 2, dated as of January 13, 2021 (“SOW 2”, and together with SOW 1, the “SOWs”). |
The Omnibus Amendment, which is effective as of October 23, 2024, extends the Support Services term of the SLSA through December 31, 2030, and extends the term of the SOWs through December 31, 2030. Among other things, the Amendment also (i) provides for increased monthly fees under SOW 2 starting January 2025, and (ii) allows Goldman to terminate the agreements no earlier than January 1, 2027, with termination payments due if terminated prior to December 31, 2030. All other material terms of the Agreements and SOWs, as amended, remain unchanged.
The amount and timing of future revenues from Goldman will be dependent on various factors not in our control such as the number of accounts on file and the level of customization needed by the customer and whether the customer continues the credit card line of business. License revenue from this customer, similar to other license arrangements, is tiered based on the number of active accounts on the system. Once the customer achieves each tier level, they receive a perpetual license up to that number of accounts; inactive accounts do not count toward the license tier. The customer receives an unlimited perpetual license at a maximum tier level that allows them to utilize the software for any number of active accounts. Support and maintenance fees are charged based on the tier level achieved and increase at new tier levels.
Goldman recently announced the transition of its General Motors co-branded credit card to a new issuer, which is processed under our agreement with Goldman, with an expected close in 2025. Sale of the loans by Goldman will not affect the maintenance revenue that we receive under the agreement, which is set based on the most recently achieved license tier. However, the removal of active accounts following a sale of the loans will proportionately increase the number of accounts that will need to be added to earn the license fees attributable to the next license tier under the agreement. Additionally, selling one of their two portfolios, combined with their narrowed focus on consumer-related activities, could make it more likely that Goldman will exit the credit card business. In addition, Apple Inc. could decide to replace Goldman with a new credit card partner in the future with respect to its Apple Card portfolio.
The infrastructure of our multi-customer environment is designed to be scalable for the future. A significant portion of our expense is related to personnel, including approximately 1,000 employees located in India, Romania, the United Arab Emirates and Colombia. In October 2020, we opened a new office in Dubai, the United Arab Emirates to support CoreCard’s expansion of processing services into new markets in the Asia Pacific, Middle East, Africa and European regions. In October 2021, we opened a new location in Bogotá, Colombia to support existing customers and continued growth. Our ability to hire and train employees on our processes and software impacts our ability to onboard new customers and deliver professional services for software customizations. In addition, we have certain corporate office expenses associated with being a public company that impact our operating results.
Our revenue fluctuates from period to period and our results are not necessarily indicative of the results to be expected in future periods. It is difficult to predict the level of consolidated revenue on a quarterly or annual basis for a number of reasons, including the following:
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● |
Software license revenue in a given period may consist of a relatively small number of contracts and contract values can vary considerably depending on the software product and scope of the license sold. Consequently, even minor delays in delivery under a software contract (which may be out of our control) could have a significant and unpredictable impact on the consolidated revenue that we recognize in a given quarterly or annual period. |
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● |
Customers may decide to postpone or cancel a planned implementation of our software for any number of reasons, which may be unrelated to our software or contract performance, but which may affect the amount, timing and characterization of our deferred and/or recognized revenue. |
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Customers typically require our professional services to modify or enhance their CoreCard software implementation based on their specific business strategy and operational requirements, which vary from customer to customer and period to period. |
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● |
The timing of new processing customer implementations is often dependent on third party approvals or processes which are typically not under our direct control. |
We continue to believe that we have a strong cash position, and we intend to use cash balances to support the domestic and international operations associated with our CoreCard business and to expand our operations in the FinTech industry through financing the growth of CoreCard and, if appropriate opportunities become available, through acquisitions of businesses in this industry. In May 2022, the Board of Directors of the Company (the “Board”) authorized a new $20 million share repurchase program, and we had approximately $7.1 million of authorized share repurchases remaining as of June 30, 2025.
Proposed Merger with Euronet Worldwide Inc.
On July 30, 2025, CoreCard Corporation, a Georgia corporation (the “Company”), entered into an Agreement and Plan of Merger (the “Merger Agreement”) by and among the Company, Euronet Worldwide, Inc., a Delaware corporation (“Euronet”), and Genesis Merger Sub Inc., a Georgia corporation and wholly owned subsidiary of Euronet (“Merger Sub”). Pursuant to the Merger Agreement, and upon the terms and subject to the conditions therein and in accordance with the Georgia Business Corporation Code, Merger Sub will merge with and into the Company (the “Merger”), with the Company surviving the Merger and continuing as a wholly owned subsidiary of Euronet. The respective boards of directors of the Company and Euronet have approved the Merger Agreement, and the board of directors of the Company has recommended that the Company’s shareholders adopt the Merger Agreement.
Subject to the terms and conditions set forth in the Merger Agreement, at the effective time of the Merger (the “Effective Time”), each issued and outstanding share of common stock, par value $0.01 per share, of the Company (“Company Common Stock”) (other than such shares owned by the Company, Euronet or Merger Sub or owned by any wholly owned subsidiary of Euronet (other than Merger Sub) or of the Company will be converted into the right to receive: (i) a number of shares of Euronet’s common stock, par value $0.02 per share (the “Euronet Common Stock”), equal to the Exchange Ratio (as defined below) and (ii) any cash payable in lieu of fractional shares, without interest and subject to any applicable withholding taxes (collectively, the “Per Share Merger Consideration”). Under the terms of the Merger Agreement, the “Exchange Ratio” means:
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● |
if the volume weighted average price per share of Euronet Common Stock on Nasdaq for the fifteen consecutive trading days ending on, and including, the second full trading day prior to the Effective Time (the “Euronet Stock Price”) is equal to or less than $95.4798, then 0.3142; |
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if the Euronet Stock Price is greater than $95.4798 but less than $107.7997, then the quotient obtained by dividing $30.00 by the Euronet Stock Price, rounded to four decimal places; or |
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if the Euronet Stock Price is greater than or equal to $107.7997, then 0.2783. |
The proposed transaction values the Company at approximately $248 million, or $30 per share of Company Common Stock.
As a result of the Merger Agreement, (i) each outstanding and unvested Company restricted stock unit (“RSU”) award will become vested and will automatically be converted into the right to receive the Per Share Merger Consideration in respect of each share of Company Common Stock subject to such Company RSU, and (ii) each Company stock option that is outstanding and unexercised immediately prior to the Effective Time will become fully vested and exercisable, and will be automatically terminated, and will be converted into the right to receive an amount in cash in respect of each share subject thereto equal to the excess of (x) the product of the Exchange Ratio multiplied by the Euronet Stock Price over (y) the per share exercise price.
If the Merger is consummated, the Company Common Stock will be delisted from The New York Stock Exchange and deregistered under the Securities Exchange Act of 1934, as amended. Following the closing of the Merger, the Euronet Common Stock will continue to be listed on the NASDAQ Global Select Market (“Nasdaq”) under the ticker symbol “EEFT.”
The Merger Agreement contains customary representations, warranties and covenants, including, among others, covenants requiring (i) each of the Company and Euronet to conduct its respective businesses in the ordinary course of business consistent with past practice during the period between the execution of the Merger Agreement and the Effective Time, (ii) each of the Company and Euronet to use reasonable best efforts to obtain required government approvals, subject to certain exceptions, and (iii) the preparation and filing of a registration statement on Form S-4 containing a proxy statement/prospectus with the U.S. Securities and Exchange Commission (“SEC”) in connection with the Merger. The Merger Agreement also includes covenants requiring the Company (x) not to solicit, or enter into discussions with third parties relating to, alternative business combination transactions during the period between the execution of the Merger Agreement and the Effective Time, subject to certain exceptions, and (y) to call and hold a special meeting of the Company’s shareholders to approve the Merger and, subject to certain customary “fiduciary out” exceptions, not to withdraw, change, amend, modify or qualify in a manner adverse to Euronet the recommendation of the Company’s board of directors that the Company’s shareholders vote to adopt the Merger Agreement and the Merger.
The consummation of the Merger is subject to certain closing conditions set forth in the Merger Agreement, including: (i) adoption of the Merger Agreement by the Company’s shareholders (the “Company Shareholder Approval”), (ii) the expiration or termination of the waiting period under the United States Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the “HSR Act”), (iii) the absence of certain orders or laws preventing consummation of the Merger, (iv) the effectiveness of the registration statement on Form S-4 to be filed by Euronet with the SEC in connection with the Merger and (v) the authorization for listing on Nasdaq of the shares of Euronet Common Stock to be issued in connection with the Merger. The obligation of each party to consummate the Merger is also subject to other customary closing conditions, including, among others, (a) the absence of a material adverse effect with respect to the other party, (b) the accuracy of the other party’s representations and warranties, subject to certain materiality standards set forth in the Merger Agreement, (c) compliance in all material respects with the other party’s obligations under the Merger Agreement and (d) the receipt of a tax opinion from their respective counsel to the effect that the Merger will qualify for federal income tax purposes as a “reorganization” within the meaning of Section 368(a) of the Internal Revenue Code of 1986, as amended.
The Merger Agreement contains certain termination rights, including (1) the right of either party to terminate the Merger Agreement if (a) the parties mutually consent to terminate in writing, (b) there has been a breach of any representation, warranty, covenant or agreement made by the other party in the Merger Agreement such that a closing condition would not be satisfied (subject to cure rights), (c) the Merger does not occur by January 30, 2026 (which date will be automatically extended by up to two three-month periods to July 30, 2026 if the only then-outstanding closing conditions relate to clearance under the HSR Act or other applicable antitrust laws) (such date, as may be extended, the “Outside Date”), (d) there is a final, non-appealable order, injunction, decree or ruling permanently restraining, enjoining or otherwise prohibiting the consummation of the Merger; or (e) the Company is unable to obtain the Company Shareholder Approval; (2) the right of Euronet to terminate the Merger Agreement if, prior to the Company Shareholder Approval, the Company’s board of directors changes its recommendation in favor of the Merger; and (3) the right of the Company to terminate the Merger Agreement, prior to receiving the Company Shareholder Approval, in order to enter into a definitive agreement for a superior proposal (so long as the Company complies in all material respects with the non-solicitation provisions in the Merger Agreement).
The Merger Agreement provides that the Company must pay Euronet a termination fee equal to $7.5 million if the Merger Agreement is terminated in certain circumstances, including (i) in the circumstances described in clauses (2) and (3) in the preceding paragraph; (ii) if either party terminates the Merger Agreement due to the failure to obtain the Company Shareholder Approval, an acquisition proposal is made public and not publicly withdrawn at least two business days prior to the Company’s shareholders’ meeting and within 12 months of such termination, an acquisition proposal is consummated or a definitive agreement is entered into with respect to an acquisition proposal; or (iii) if (a) prior to the termination of the Merger Agreement, an acquisition proposal is made to the Company or becomes publicly disclosed and is not withdrawn prior to such termination, (b) either party terminates the Merger Agreement because the Outside Date has been reached or Euronet terminates the Merger Agreement due to the Company’s breach of one or more covenants of the Merger Agreement after the receipt of such acquisition proposal and (c) within 12 months of such termination, an acquisition proposal is consummated or a definitive agreement is entered into with respect to an acquisition proposal.
Subject to satisfaction of the closing conditions in the Merger Agreement, the closing of the Merger is expected to occur in the fourth quarter of 2025.
Results of Operations
The following discussion should be read in conjunction with the Consolidated Financial Statements and the Notes to Consolidated Financial Statements presented in this quarterly report.
Revenue – Total revenue in the three and six month periods ended June 30, 2025 was $17,594,000 and $34,282,000, respectively, which represents increases of 28 percent compared to the respective periods in 2024.
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Revenue from services was $17,594,000 and $34,282,000 in the three and six month periods ended June 30, 2025, respectively, which represents increases of 28 percent compared to the respective periods in 2024. Revenue in the second quarter and first six months of 2025 was higher due to an increase in the number and value of professional services contracts completed during 2025, primarily related to higher professional services revenue from our largest customer, Goldman Sachs Group, Inc. We also experienced increased revenue from transaction processing services and software maintenance and support services in the second quarter of 2025 as compared to the second quarter of 2024 due to an increase in the number of customers and accounts on file. The increased revenue from transaction processing services and software maintenance and support services in the first six months of 2025, was partially offset by the acceleration of approximately $500,000 of processing revenue from a customer that was acquired in 2023 and, as a result, formally terminated their contract in the first quarter of 2024. We expect that processing services will continue to grow as our customer base increases; however, the time required to implement new customer programs could be delayed due to third party integration and approval processes. It is difficult to predict with accuracy the number and value of professional services contracts that our customers will require in a given period. Customers typically request our professional services to modify or enhance their CoreCard software implementation based on their specific business strategy and operational requirements, which vary from customer to customer and period to period. |
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Revenue from products, which is primarily software license fees, was $0 in the three and six month periods ended June 30, 2025 and 2024, respectively. No new license tiers were achieved in 2025 or the first six months of 2024. |
Cost of Revenue – Total cost of revenue was 55 percent of total revenue in the three and six month periods ended June 30, 2025, respectively, compared to 66 percent and 69 percent in the corresponding periods of 2024. The decrease in cost of revenue as a percentage of revenue is primarily driven by higher rates for professional services, primarily from the increased managed services revenue from Goldman, partially offset by higher low-margin third-party revenues. Cost of revenue includes costs to provide annual maintenance and support services to our installed base of licensed customers, costs to provide professional services, and costs to provide our financial transaction processing services. The cost and gross margins on such revenues can vary considerably from period to period depending on the customer mix, customer requirements and project complexity as well as the mix of our U.S. and offshore employees working on the various aspects of services provided. In addition, we continue to devote the resources necessary to support our growing processing business, including direct costs for regulatory compliance, infrastructure, network certifications, and customer support. Investments in our infrastructure are in anticipation of adding customers in future periods. As such, we will not experience economies of scale unless we add additional customers, as anticipated. This may be subject to change in the future if new regulations or processing standards are implemented causing us to incur additional costs to comply.
Operating Expenses – In the three and six month periods ended June 30, 2025, total operating expenses from consolidated operations increased 49 percent and 48 percent compared to the corresponding periods in 2024, respectively. Development expenses were 63 percent and 66 percent higher in the three and six month periods in 2025, respectively, as compared to the same periods in 2024, primarily due to higher bonus accruals in the 2025 periods. General and administrative expenses were 37 percent and 31 percent higher in the three and six month periods ended June 30, 2025, respectively, as compared to the same periods in 2024, primarily due to higher bonus accruals in the 2025 periods. Marketing expenses decreased 40 percent and 10 percent for the three and six month periods in 2025, respectively, as compared to the same periods in 2024. Our client base continues to increase with minimal marketing efforts as we continue to have prospects contact us via online searches; however, we will continue to re-evaluate our marketing expenditures as needed to competitively position the Processing Services business.
Investment Loss – In the three and six months ended June 30, 2025, we recorded $145,000 and $580,000 of investment losses, respectively, compared to investment losses of $199,000 and $438,000 for the three and six months ended June 30, 2024, respectively. The investment loss primarily relates to our equity method investment in a privately held identity and professional services company with ties to the FinTech industry (see Note 4). The privately held company has incurred losses as they invest in future growth.
Other Income, net – In the three and six months ended June 30, 2025, we recorded income of $169,000 and $306,000, respectively, compared to income of $235,000 and $526,000 for the comparable 2024 periods.
Income Taxes – Our effective tax rates for the three and six months ended June 30, 2025 were 26.2 percent and 25.1 percent compared to effective tax rates of 24.4 and 24.8 percent for the respective periods in 2024.
Liquidity and Capital Resources
Our cash and cash equivalents balance at June 30, 2025, was $26,621,000 compared to $19,481,000 at December 31, 2024. During the six months ended June 30, 2025, cash provided by operations was $10,716,000 compared to cash provided by operations of $2,341,000 for the six months ended June 30, 2024. The increase in cash provided by operations is primarily due to lower accounts receivable, higher net income, higher accounts payable and accrued payroll, partially offset by higher other current assets and lower depreciation expense.
During the six months ended June 30, 2025, we invested $945,000 in publicly traded multi sector corporate and municipal debt securities, offset by related maturities of $869,000, which is described in more detail in Note 8 to the Consolidated Financial Statements.
During the six months ended June 30, 2025, we used $3,105,000 of cash, compared to $2,753,000 of cash during the six months ended June 30, 2024, to acquire computer equipment and related software and for personnel and contractor development costs for the development of a new processing platform and to enhance our existing processing environment in the U.S.
We expect to have sufficient liquidity from cash on hand as well as projected customer payments to support our operations and capital equipment purchases in the foreseeable future. Currently we expect to use cash in excess of what is required for our current operations for opportunities we believe will expand our FinTech business, as exemplified in transactions described in Note 3 and 4 to the Consolidated Financial Statements, although there can be no assurance that appropriate opportunities will arise. In May 2022, the Board authorized an additional $20 million for our share repurchase program. We made no share repurchases for the six months ended June 30, 2025, and share repurchases of $3.7 million for the six months ended June 30, 2024. We had approximately $7.1 million of authorized share repurchases remaining as of June 30, 2025.
Off-Balance Sheet Arrangements
We do not currently have any off-balance sheet arrangements that are reasonably likely to have a current or future material effect on our financial condition, liquidity or results of operations.
Critical Accounting Policies and Estimates
The discussion and analysis of our financial condition and results of operations is based upon our Consolidated Financial Statements which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amount of assets, liabilities, revenues and expenses. We consider certain accounting policies related to revenue recognition and valuation of investments to be critical policies due to the estimation processes involved in each. Management discusses its estimates and judgments with the Audit Committee of the Board of Directors. For a detailed description on the application of these and other accounting policies, see Note 1 to the Consolidated Financial Statements contained in our Annual Report on Form 10-K for the fiscal year ended December 31, 2024 (the “2024 Form 10-K”). Reference is also made to the discussion of the application of these critical accounting policies and estimates contained in Management’s Discussion and Analysis of Financial Condition and Results of Operations in our 2024 Form 10-K. During the six-month period ended June 30, 2025, there were no significant or material changes in the application of critical accounting policies.
Factors That May Affect Future Operations
Future operations are subject to risks and uncertainties that may negatively impact our future results of operations or projected cash requirements. It is difficult to predict future quarterly and annual results with certainty.
Among the numerous factors that may affect our consolidated results of operations or financial condition are the following:
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Goldman Sachs Group, Inc., our largest customer, represented 63% of our consolidated revenues for the six months ended June 30, 2025. In the event of material failures to meet contract obligations related to the services provided, there is risk of breach of contract and loss of the customer and related future revenues. Additionally, loss of the customer and related future revenues or a reduction in revenues could result if they or their customers choose an alternative service provider, build an in-house solution, or decide to exit the business or service line that falls under the services that we provide for them. Goldman Sachs Group, Inc., recently announced the transition of its General Motors co-branded credit card to a new issuer, with an expected close in 2025. They continue to narrow the focus of their consumer-related activities, which makes it more likely that they exit the remaining business line that we support. In addition, Apple Inc. could decide to replace Goldman with a new credit card partner in the future with respect to its Apple Card portfolio. |
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The Merger is subject to conditions, some or all of which may not be satisfied, and the Merger may not be completed on a timely basis, if at all. The completion of the Merger is subject to certain closing conditions, including, among others, (i) adoption of the Merger Agreement by the Company’s shareholders (the “Company Shareholder Approval”), (ii) the expiration or termination of the waiting period under the United States Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the “HSR Act”), (iii) the absence of certain orders or laws preventing consummation of the Merger, (iv) the effectiveness of the registration statement on Form S-4 to be filed by Euronet with the SEC in connection with the Merger and (v) the authorization for listing on Nasdaq of the shares of Euronet Common Stock to be issued in connection with the Merger. The obligation of each party to consummate the Merger is also subject to other customary closing conditions, including, among others, (a) the absence of a material adverse effect with respect to the other party, (b) the accuracy of the other party’s representations and warranties, subject to certain materiality standards set forth in the Merger Agreement, (c) compliance in all material respects with the other party’s obligations under the Merger Agreement and (d) the receipt of a tax opinion from their respective counsel to the effect that the Merger will qualify for federal income tax purposes as a “reorganization” within the meaning of Section 368(a) of the Internal Revenue Code of 1986, as amended. Further, either we or Euronet may terminate the Merger Agreement if the Merger has not been consummated by January 30, 2026 (which date will be automatically extended by up to two three-month periods to July 30, 2026 if the only then-outstanding closing conditions relate to clearance under the HSR Act or other applicable antitrust laws). However, this right to terminate the Merger Agreement will not be available to any party whose failure to perform any of its obligations under the Merger Agreement has been a proximate cause of, or been a primary factor in the failure of the Merger to have been consummated on or by such date. The Merger Agreement may also be terminated in certain other circumstances. Failure to complete the Merger in a timely manner or at all could have material adverse effects on our ongoing business, financial condition, financial results and stock price. |
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Similarly, delays in the completion of the Merger could, among other things, result in additional transaction costs, loss of revenue or other negative effects associated with uncertainty about completion of the Merger. |
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Because the market price of the Euronet Common Stock may fluctuate, our shareholders cannot be certain of the precise value of the merger consideration they may receive in our pending Merger with Euronet. |
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If the Merger is not completed, we may owe a termination fee of $7.5 million to Euronet in certain circumstances. |
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The Merger Agreement contains provisions that limit our ability to pursue alternatives to the Merger, could discourage a potential competing acquiror from making a favorable alternative transaction proposal to us and, in specified circumstances, could require us to pay a termination fee to Euronet. |
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If the Merger Agreement is terminated and our board of directors seeks another business combination, our shareholders cannot be certain that we will be able to find a party willing to enter into a transaction on terms equivalent to or more attractive than the terms that Euronet has agreed to in the Merger Agreement. |
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Time and resources committed by our management to matters relating to the Merger could otherwise have been devoted to pursuing other beneficial opportunities for our Company. |
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We may experience negative reactions from the financial markets or from our customers, business partners or employees as a result of the announcement of the Merger Agreement. |
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We are subject to certain restrictions on the conduct of our business prior to completing the Merger, which may restrict our ability to execute on certain business strategies without Euronet’s prior written consent. |
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We may be unable to attract or retain key employees during the pendency of the Merger. |
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Litigation may arise in connection with the Merger, which could be costly, prevent consummation of the Merger, divert management’s attention, and otherwise harm our business. In addition, if the Merger is not consummated for any reason, litigation could also be filed in connection with the failure to consummate the Merger. Any litigation related to the Merger may result in negative publicity or an unfavorable impression of us, which could adversely affect the price of our common stock, impair our ability to recruit or retain employees, damage our relationships with our customers and other business partners, or otherwise harm our operations and financial performance. |
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Weakness or instability in the global financial markets could have a negative impact due to potential customers (most of whom perform some type of financial services) delaying decisions to purchase software or initiate processing services. |
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Increased federal and state regulations and reluctance by financial institutions to act as sponsor banks for prospective customers could result in losses and additional cash requirements. |
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Delays in software development projects could cause our customers to postpone implementations or delay payments, which would increase our costs and reduce our revenue and cash. |
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We could fail to deliver software products which meet the business and technology requirements of our target markets within a reasonable time frame and at a price point that supports a profitable, sustainable business model. |
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Our processing business is impacted, directly or indirectly, by more regulations than our licensed software business. If we fail to provide services that comply with (or allow our customers to comply with) applicable regulations or processing standards, we could be subject to financial or other penalties that could negatively impact our business. |
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A security breach in our platform could expose confidential information of our customers’ account holders, hackers could seize our digital infrastructure and hold it for ransom or other cyber risk events could occur and create material losses in excess of our insurance coverage. |
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Software errors or poor-quality control may delay product releases, increase our costs, result in non-acceptance of our software by customers or delay revenue recognition. |
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We could fail to expand our base of customers as quickly as anticipated, resulting in lower revenue and profits and increased cash needs. |
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We could fail to retain key software developers and managers who have accumulated years of know-how in our target markets and company products or fail to attract and train a sufficient number of new software developers and testers to support our product development plans and customer requirements at projected cost levels. |
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Increasing and changing government regulations in the United States and foreign countries related to such issues as data privacy, financial and credit transactions could require changes to our products and services which could increase our costs and could affect our existing customer relationships or prevent us from getting new customers. |
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Delays in anticipated customer payments for any reason would increase our cash requirements and could adversely impact our profits. |
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Competitive pressures (including pricing, changes in customer requirements and preferences, and competitor product offerings) may cause prospective customers to choose an alternative product solution, resulting in lower revenue and profits (or losses). |
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Our future capital needs are uncertain and depend on a number of factors; additional capital may not be available on acceptable terms, if at all. |
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Volatility in the markets, including as a result of political instability, civil unrest, war or terrorism, or pandemics or other natural disasters, such as the recent outbreak of coronavirus, could adversely affect future results of operations and could negatively impact the valuation of our investments. |
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Other general economic and political conditions, including heightened or uncertain tariffs, inflation, volatility in interest rates, changes in trade policies and the results thereof, could cause customers to reduce spending, or delay or cancel payments or purchases. |
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Not required for smaller reporting companies.
Item 4. Controls and Procedures
As of the end of the period covered by this report, the Company carried out an evaluation, under the supervision and with the participation of the Company’s management, including the Company’s Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures pursuant to Rule 13a-15(b) under the Exchange Act. Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the Company’s disclosure controls and procedures are effective. There were no significant changes in the Company’s internal control over financial reporting or in other factors identified in connection with this evaluation that occurred during the period covered by this report that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.
Part II. OTHER INFORMATION
Item 1. Legal Proceedings
From time to time, we may be involved in certain claims and litigation arising out of the ordinary course and conduct of business. Management assesses such claims and, if it considers that it is probable that an asset had been impaired or a liability had been incurred and the amount of loss can be reasonably estimated, provisions for loss are made based on management’s assessment of the most likely outcome. We are not currently a party to or aware of any proceedings that we believe will have, individually or in the aggregate, a material adverse effect on our business, financial condition, or results of operations.
Item 1A. Risk Factors
As a smaller reporting company, we are not required to make disclosures under this Item.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Repurchases of Securities
In May 2022, the Board authorized an additional $20 million for our share repurchase program. Under this program, which was publicly announced in November 2018, we are authorized to repurchase shares through open market purchases, privately-negotiated transactions or otherwise in accordance with applicable federal securities laws, including through Rule 10b5-1 trading plans and under Rule 10b-18 of the Exchange Act. The repurchase program does not have an expiration date and may be suspended or discontinued at any time. We had approximately $7.1 million of authorized share repurchases remaining at June 30, 2025. During the quarter ended June 30, 2025, we did not purchase any shares of common stock pursuant to our share repurchase program.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Mine Safety Disclosures
Not applicable.
Item 5. Other Information
Rule 10b5-1 Plans
During the fiscal quarter ended June 30, 2025, director or officer of the Company adopted or terminated a “Rule 10b5-1 trading arrangement” or “Non-Rule 10b5-1 trading arrangement” as each term is defined in Item 408 of Regulation S-K.
Item 6. Exhibits
The following exhibits are filed or furnished with this report:
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Agreement and Plan of Merger by and among Euronet Worldwide, Inc., Genesis Merger Inc., and CoreCard Corporation dated July 30, 2025 (incorporated by reference to Exhibit 2.1 of the Company’s Form 8-K filed with the SEC on July 31, 2025). |
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CoreCard Corporation 2025 Employee Stock Incentive Plan (incorporated by reference to Appendix A of the Company’s definitive proxy statement on Schedule 14A filed with the SEC on April 14, 2025). |
| 31.1 | Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |
| 31.2 | Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |
| 32.1 | Certification of Chief Executive Officer and Chief Financial Officer furnished as required by Section 906 of the Sarbanes-Oxley Act of 2002. |
| 101.INS** | Inline XBRL Instance |
| 101.SCH** | Inline XBRL Taxonomy Extension Schema |
| 101.CAL** | Inline XBRL Taxonomy Extension Calculation |
| 101.DEF** | Inline XBRL Taxonomy Extension Definitions |
| 101.LAB** | Inline XBRL Taxonomy Extension Labels |
| 101.PRE** | Inline XBRL Taxonomy Extension Presentation |
| 104 | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) |
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XBRL information is furnished and not filed or a part of a registration statement or prospectus for purposes of sections 11 or 12 of the Securities Act of 1933, as amended, is deemed not filed for purposes of section 18 of the Securities Exchange Act of 1934, as amended, and otherwise is not subject to liability under these sections. |
SIGNATURES
Pursuant to the requirements 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.
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CORECARD CORPORATION |
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| Registrant | |||
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Date: August 14, 2025 |
By: |
/S/ J. Leland Strange |
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J. Leland Strange |
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Chief Executive Officer, President |
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| Date: August 14, 2025 | By: | /S/ Matthew A. White | |
| Matthew A. White | |||
| Chief Financial Officer | |||