What changed in this filing

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Item 1. Financial Statements

2021-11-10 compared with 2021-08-12 · 176 added, 91 removed, 667 unchanged (29% of the section changed)

1 unchanged sentence

CONDENSED CONSOLIDATED BALANCE SHEETS

June 30, 2021

September 30, 2021

December 31, 2020

36 unchanged sentences

6,035,761  

Deferred tax asset

Deferred tax asset, net

1,394,000  

55 unchanged sentences

Preferred stock, $0.01 par value, 10,000,000 shares authorized;

- 0 - shares outstanding at June 30, 2021 (unaudited) and December 31, 2020, respectively

- 0 - shares outstanding at September 30, 2021 (unaudited) and December 31, 2020, respectively

Common stock, $0.001 par value, 200,000,000 shares authorized;

26,261,016 and 26,260,776 issued, and 24,954,529 and 24,974,995 outstanding at June 30, 2021 (unaudited) and December 31, 2020, respectively

26,289,288 and 26,260,776 issued, and 24,962,750 and 24,974,995 outstanding at September 30, 2021 (unaudited) and December 31, 2020, respectively

194,746  

4 unchanged sentences

Treasury stock, at cost;

1,306,487 and 1,285,781 shares at June 30, 2021 (unaudited) and December 31, 2020, respectively

1,326,538 and 1,285,781 shares at September 30, 2021 (unaudited) and December 31, 2020, respectively

( 2,364,071 )  

14 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

Three Months Ended June 30,

Six Months Ended June 30,

Three Months Ended September 30,

Nine Months Ended September 30,

Cost of services

10 unchanged sentences

Income (loss) before income taxes

Income tax expense (benefit)

Income tax expense

Net income (loss)

5 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Six Months Ended June 30,

Nine Months Ended September 30,

Operating activities:

18 unchanged sentences

Proceeds from PPP Loan Program

Proceeds from public offering, net of expenses

Proceeds from private offering

Proceeds from equipment loan

1 unchanged sentence

Purchases of treasury stock

Net cash provided by financing activities

Net cash (used) provided by financing activities

Change in cash, cash equivalents, prepaid card load assets, customer deposits and merchant reserves

70 unchanged sentences

$ 16,785,297  

Issuance of common stock under equity incentive plan

49,322  

108,146  

20,785  

129,007  

Warrant compensation costs

Cashless warrant exercise

19,950  

( 20 )  

Reversal of deferred compensation amortization that did not vest

( 41,000 )  

( 41 )  

( 77,164 )  

52,434  

Deferred compensation amortization

239,331  

Purchase of treasury stock costs

( 119,086 )  

Net income for the period

141,234  

Balance at September 30, 2021

26,289,288  

$ 194,746  

$ 89,702,612  

$ ( 2,364,071 )  

$ ( 4,954,584 )  

$ ( 65,418,706 )  

$ 17,159,997  

Balance at December 31, 2019

48 unchanged sentences

$ 6,018,883  

Issuance of common stock under equity incentive plan

32,323  

149,961  

149,993  

Warrant compensation cost

Cashless warrant exercise

27,051  

( 27 )  

Reversal of deferred compensation amortization that did not vest

( 450,000 )  

( 450 )  

( 791,550 )  

594,900  

Issuance of common stock, public offering

4,705,883  

7,253,220  

7,257,925  

Issuance of common stock, private offering

1,796,407  

2,998,203  

3,000,000  

Deferred compensation amortization

312,232  

Purchase of treasury stock

( 97,863 )  

Net (loss) for the period

( 936,017 )  

Balance at September 30, 2020

25,887,785  

$ 194,318  

$ 88,392,782  

$ ( 2,065,763 )  

$ ( 5,793,116 )  

$ ( 65,211,183 )  

$ 15,517,038  

The accompanying notes are an integral part of these consolidated financial statements.

27 unchanged sentences

The following table presents the Company's revenues by source:

Three Months Ended June 30,

Six Months Ended June 30,

Three Months Ended September 30,

Nine Months Ended September 30,

ACH and complementary service revenue

24 unchanged sentences

The advance consideration received from a customer is deferred until the Company provides the customer that product or service.

The deferred revenues totaled $ 44,118  and $ 66,572  at June 30, 2021 and December 31, 2020 , respectively.

The deferred revenues totaled $ 30,882  and $ 66,572  at September 30, 2021 and December 31, 2020 , respectively.

Cash and Cash Equivalents:

16 unchanged sentences

The reconciliation of cash and cash equivalents to cash, cash equivalents, prepaid card load assets, customer deposits and merchant reserves is as follows for each period presented:

Six Months Ended June 30,

Nine Months Ended September 30,

Beginning cash, cash equivalents, prepaid card load assets, customer deposits and merchant reserves:

32 unchanged sentences

Estimates for doubtful account losses are variable based on the volume of transactions processed and could increase or decrease accordingly.

The allowance for estimated doubtful accounts was $ 260,712  and $ 205,522  at June 30, 2021 and December 31, 2020 , respectively.

The allowance for estimated doubtful accounts was $ 261,500  and $ 205,522  at September 30, 2021 and December 31, 2020 , respectively.

Inventory is stated at the lower of cost or net realizable value.

At March 31, 2021 and December 31, 2020, inventory consisted primarily of printing and paper supplies used for Output solutions.

At September 30, 2021  and December 31, 2020, inventory consisted primarily of printing and paper supplies used for Output solutions.

Accounting for Internal Use Software:

2 unchanged sentences

The Company ceases capitalization of such costs no later than the point at which the project is substantially complete and ready for its intended purpose.

In the six  months ended June 30, 2021 and June 30, 2020 , the Company capitalized $ 388,349  and $ 313,983 , respectively.

In the nine  months ended September 30, 2021 and September 30, 2020 , the Company capitalized $ 561,177  and $ 492,294 , respectively.

Valuation of Long-Lived and Intangible Assets:

7 unchanged sentences

No impairment losses were recorded in 2020  or during the 

six months ended June 30, 2021 .

nine months ended September 30, 2021 .

Management is not aware of any impairment changes that may currently be required;

8 unchanged sentences

Estimates for processing losses are variable based on the volume of transactions processed and could increase or decrease accordingly.

At June 30, 2021 and December 31, 2020 , the Company’s reserve for processing losses was $ 575,149  and $ 515,199  respectively.

At September 30, 2021 and December 31, 2020 , the Company’s reserve for processing losses was $ 608,149  and $ 515,199  respectively.

Legal Proceedings:

39 unchanged sentences

The Company leases facilities and office equipment under various operating leases, which generally are expected to be renewed or replaced by other leases.

For the quarters ended June 30, 2021  and 2020 , operating lease expenses totaled $ 116,535  and $ 61,049 , respectively.  For the six months ended June 30, 2021  and 2020 , operating lease expenses totaled $ 220,666  and $ 128,693 , respectively.  

Operating lease liabilities as of June 30, 2021 will require the following payments:

For the quarters ended September 30, 2021  and 2020 , operating lease expenses totaled $ 117,689  and $ 58,039 , respectively. 

For the nine months ended September 31, 2021  and 2020 , operating lease expenses totaled $ 338,355  and $ 186,731 , respectively.  

Operating lease liabilities as of September 30, 2021 will require the following payments:

2021 (excluding the nine months ended September 30, 2021)

$ 154,018  

11 unchanged sentences

Accrued expenses consisted of the following balances:

June 30, 2021

September 30, 2021

December 31, 2020

Accrued commissions

$ 699,942  

$ 373,154  

Reserve for merchant losses

608,149  

515,199  

Other accrued expenses

80,935  

225,412  

Accrued taxes

270,136  

132,363  

Accrued salaries

87,064  

217,816  

Total accrued expenses

$ 1,746,226  

$ 1,463,944  

Equipment Loan

3 unchanged sentences

Annual payments are $ 58,821 .

The financing is at an interest rate of 3.95 %.

Current year payments on the Equipment Loan were $ 26,446 .

Stockholders' Equity

2 unchanged sentences

30,000 warrants vested immediately upon the date on which the first financial transaction was processed on a card account issued under the prepaid agreement, which occurred on October 5, 2018.

120,000 warrants will vest annually over 4 years in 30,000 warrant increments beginning on July 31, 2019 and becoming fully vested on July 31, 2022.

120,000 warrants vest annually over 4 years in 30,000 warrant increments beginning on July 31, 2019 and becoming fully vested on July 31, 2022.

The exercise price for the 30,000 warrants that vested immediately on October 5, 2018 was $ 1.80 per share.

8 unchanged sentences

The fair value of the warrants was $ 135,764 which will be amortized over the life of the warrants as a reduction of revenues.

The reduction of revenues recorded for the six months ended June 30, 2021 and 2020 was $ 17,970 .

The reduction of revenues recorded for the nine months ended September 30, 2021 and 2020 was $ 26,955 .

On August 12, 2020, the Company issued 27,051 shares of common stock to University FanCards, LLC in a cashless exercise at $ 3.46 per common share in exchange for 60,000 warrants exercised by FanCards, LLC.

On February 5, 2021, the Company issued 19,795  shares of common stock to University FanCards, LLC in a cashless exercise at $ 5.88  per common share in exchange for 30,000 warrants exercised by FanCards, LLC.

On September 1, 2021, the Company issued 19,950  shares of common stock to University FanCards, LLC in a cashless exercise at $ 5.97 per common share in exchange for 30,000 warrants exercised by FanCards, LLC.

On December 

15, 2020, the Company issued to Information Management Solutions, LLC warrants to purchase 945,599 unregistered warrants to purchase shares of Usio, Inc.

15, 2020, the Company issued to Information Management Solutions, LLC warrants to purchase 945,599 unregistered shares of Usio, Inc.

or 945,599 shares of common stock, $ 0.001 par value per share, with an exercise price of $ 4.23 . 

20 unchanged sentences

The following is a reconciliation of the numerators and the denominators of the basic and diluted per share computations for net income (loss) for the 

three and six months ended June 30, 2021 and June 30, 2020 .

Three Months Ended June 30,

Six Months Ended June 30,

three and nine months ended September 30, 2021 and September 30, 2020 .

Three Months Ended September 30,

Nine Months Ended September 30,

Numerator for basic and diluted income (loss) per share, net income (loss) available to common shareholders

3 unchanged sentences

$ ( 3,059,195 )

Denominator for basic income (loss) per share, weighted average shares outstanding

Denominator for basic (loss) per share, weighted average shares outstanding

20,033,515  

17 unchanged sentences

$ ( 0.02 )  

The awards and options to purchase shares of common stock that were outstanding at June 30, 2021 and June 30, 2020 that were not included in the computation of diluted earnings per share because the effect would have been anti-dilutive, are as follows:

Six Months Ended June 30,

The awards and options to purchase shares of common stock that were outstanding at September 30, 2021 and September 30, 2020 that were not included in the computation of diluted earnings per share because the effect would have been anti-dilutive, are as follows:

Nine Months Ended September 30,

Anti-dilutive awards and options

15 unchanged sentences

Related Party Transactions

During the six months ended June 30, 2021 and the year ended December 31, 2020 , the Company purchased a total of $ 2,890  and $ 9,886 , respectively, of corporate imprinted sportswear and caps from Angry Pug Sportswear.

During the nine months ended September 30, 2021 and the year ended December 31, 2020 , the Company purchased a total of $ 3,957  and $ 9,886 , respectively, of corporate imprinted sportswear and caps from Angry Pug Sportswear.

Louis Hoch, the Company’s President and Chief Executive Officer, is a 50 % owner of Angry Pug Sportswear.

21 unchanged sentences

The efforts have included the disbursement of funds to encourage vaccinations. 

The Company has recently experienced some difficulty in recruiting and retaining certain categories of employees due to limited resource availability. 

The Company continues to monitor resource availability and is taking necessary steps to retain employees and recruit employees to fill open positions.

The impacts and recovery from the COVID- 19 pandemic are still a work in process. 

2 unchanged sentences

Subsequent Events

On October 19, 2021, the Company entered into a lease amendment to the existing lease in San Antonio, Texas commencing on December 1, 2021 and expiring on September 24, 2024 running concurrently with the existing lease. 

The incremental space lease is 6,628 square feet. 

 The incremental annual rent during the lease term ranges from $ 135,874 to $ 145,816 .

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

14 unchanged sentences

With the acquisition of the assets of IMS in December 2020, we now offer additional services relating to electronic bill presentment, document composition, document decomposition and printing and mailing services.

During the second quarter of 2021, the amount of credit card transactions processed increased by 100% versus the second quarter of 2020. 

The volume of credit card dollars processed during the second quarter of 2021 increased by 55% compared to the same time period in 2020.

During the third quarter of 2021, the amount of credit card transactions processed increased by 76% versus the third quarter of 2020. 

The volume of credit card dollars processed during the third quarter of 2021 increased by 43% compared to the same time period in 2020.

Both credit card transactions processed and dollars processed were the highest in our history. 

The continued growth in credit card metrics was primarily attributable to our PayFac growth initiatives driving increased penetration across multiple industries including healthcare and legal. 

ACH (eCheck) transaction counts during the second quarter of 2021 increased by 155% compared to the second quarter of 2020.

Returned check transactions processed during the second quarter of 2021 increased by 133% compared to the second quarter of 2020. 

Electronic check dollars processed during the second quarter of 2021 increased by 133% compared to the second quarter of 2020.

ACH (eCheck) transaction counts during the third quarter of 2021 increased by 86% compared to the third quarter of 2020.

Returned check transactions processed during the third quarter of 2021 increased by 100% compared to the third quarter of 2020. 

Electronic check dollars processed during the third quarter of 2021 increased by 100% compared to the third quarter of 2020.

The increases in eCheck transactions, returned check transactions and electronic check dollar volumes processed were primarily attributable to higher activity levels primarily in the cryptocurrency and FinTech lending industries. 

Prepaid card load volumes processed during the second quarter of 2021 increased by 65% compared to the second quarter of 2020.

Prepaid card transaction counts processed during the second quarter of 2021 increased by 63% compared to the second quarter of 2020.

These increases occurred primarily due to the continued associations with many government assistance programs including organizations such as Greater Washington Community Foundation (Washington DC Program), United Way of Central and Northeastern Connecticut, Mayor's Fund for Los Angeles, New York Immigration Coalition, One Fair Wage, Inc., Dorcas International of Rhode Island, National Domestic Workers Alliance, Alliance for Open Society International (City of Baltimore) and Compton Community Development Corporation (Compton Pledge Guaranteed Income Program).

Total dollar volumes processed for the second quarter of 2021 were $2.730 billion compared to $694 million processed in the second quarter of 2020.

Prepaid card load volumes processed during the third quarter of 2021 increased by 2% compared to the third quarter of 2020.

Prepaid card transaction counts processed during the third quarter of 2021 increased by 115% compared to the third quarter of 2020.

Prepaid card purchase volume during the third quarter of 2021 increased by 18% compared to the third quarter of 2020. These increases occurred primarily due to the continued associations with many government assistance programs including organizations such as New York City Economic Development Corporation, City of Houston, Harris County, TX, Open Society International (City of Baltimore), and Greater Washington Community Foundation (Washington DC) with their vaccine incentive and cash disbursement programs. 

We also continue to support numerous guaranteed income programs including the Arlington Community Foundation, E.A.T (Equity and Transformation) Chicago, and Hudson UP, the City of Denver's Basic Income Project.

Total dollar volumes processed for the third quarter of 2021 were $2.1 billion compared to $852 million processed in the third quarter of 2020.

Critical Accounting Policies

9 unchanged sentences

Our revenues are principally derived from providing integrated electronic payment services to merchants and businesses, including credit and debit card-based processing services and transaction processing via the Automated Clearing House, or ACH, network and the program management and processing of prepaid debit cards.  With the acquisition of the assets of IMS in December 2020, we now offer additional services relating to electronic bill presentment, document composition, document decomposition and printing and mailing services through our Output Solutions entity.

Three Months Ended June 30,

Three Months Ended September 30,

ACH and complementary service revenue

3 unchanged sentences

Total Revenue

Six Months Ended June 30,

Nine Months Ended September 30,

ACH and complementary service revenue

3 unchanged sentences

Total Revenue

Revenues for the quarter ended June 30, 2021 increased by 118.8% to $15.2 million, as compared to $7.0 million for the quarter ended June 30, 2020.

Revenues for the quarter ended September 30, 2021 increased by 94.4% to $15.8 million, as compared to $8.1 million for the quarter ended September 30, 2020.

Excluding the impact of the Output Solutions revenues, the organic growth was 51% versus the same period last year.

The revenue increases were across all business lines including incremental revenues from our Output Solutions plus double-digit gains in our other business lines as referenced above. 

During the second quarter we saw a continued rebound in our ACH and complementary service category from strong transaction growth in our cryptocurrency and FinTech lending businesses. 

For the six months ended June 30, 2021, revenues increased by 94.8% to $28.7 million, as compared to $14.7 million for the six months ended June 30, 2020.

During the third quarter we saw continued growth in our ACH and complementary service category from strong transaction growth in our cryptocurrency and FinTech lending businesses. 

For the nine months ended September 30, 2021, revenues increased by 95% to $44.5 million, as compared to $22.9 million for the nine months ended September 30, 2020.

Excluding the impact of the Output Solutions revenues, the organic growth was 47% versus the same period last year.

5 unchanged sentences

Cost of service fees also include fees paid to referral agents and partners.

Cost of services increased by $5.4 million, or 96% to $11.1 million for the quarter ended June 30, 2021, as compared to $5.7 million for the same period in the prior year.

Cost of services increased by $10.1 million, or 88% to $21.7 million for the six months ended June 30, 2020, as compared to $11.5 million for the same period in the prior year.

The increases in the quarter and six-month period ended June 30, 2020, as compared to the same period in the prior year, were primarily due to the increased costs associated with higher revenues plus incremental costs associated with the Output Solutions business.

Cost of services increased by $5.4 million, or 84% to $11.8 million for the quarter ended September 30, 2021, as compared to $6.4 million for the same period in the prior year.

Cost of services increased by $15.5 million, or 87% to $33.4 million for the nine months ended September 30, 2021, as compared to $17.9 million for the same period in the prior year.

The increases in the quarter and nine-month period ended September 30, 2021, as compared to the same period in the prior year, were primarily due to the increased costs associated with higher revenues plus incremental costs associated with the Output Solutions business.

Gross profit is the net profit existing after the cost of services.

Gross profits increased by 221% to $4.1 million for the quarter ended June 30, 2021, as compared to $1.3 million for the same period in the prior year.

Gross profits for the six months ended June 30, 2020 increased by 119% to $7.0 million as compared to $3.2 million for the same period in the prior year. 

The increase in gross profit for the quarter and six months ended June 30, 2021, as compared to the same period in the prior year, was primarily a result of incremental profits from our existing business lines plus the incremental profits of our Output Solutions business.  The gross margin percentage was 27.1% for the quarter ended June 30, 2021 as compared to 

Gross profits increased by 134% to $4.0 million for the quarter ended September 30, 2021, as compared to $1.7 million for the same period in the prior year.

Gross profits for the nine months ended September 30, 2021 increased by 124% to $11.1 million as compared to $4.9 million for the same period in the prior year. 

The increase in gross profit for the quarter and nine months ended September 30, 2021, as compared to the same period in the prior year, was primarily a result of incremental profits from our existing business lines plus the incremental profits of our Output Solutions business.  The gross margin percentage was 25.5% for the quarter ended September 30, 2021 as compared to 

in the prior year period. 

The gross margin percentage was 24.5% for the six months ended  June 30, 2021 as compared to 

The gross margin percentage was 24.9% for the nine months ended  September 30, 2021 as compared to 

21.6% in the prior year period.

The increase in gross margin percentage in the quarter and six months ended June 30, 2021, as compared to the same periods in the prior year, are attributable to product mix shifts to higher profit transactions.

The increase in gross margin percentage in the quarter and nine months ended September 30, 2021, as compared to the same periods in the prior year, are attributable to product mix shifts to higher profit transactions plus overall margin improvements.

Stock-based Compensation

Stock-based compensation expenses were $317,285 for the quarter ended June 30, 2021 as compared to $348,393 for the quarter ended June 30, 2020 

and $317,285 for the six months ended June 30, 2021 as compared to $348,393 for the quarter ended June 30, 2020, both relatively unchanged versus the prior year periods.

Stock-based compensation expenses were $343,567 for the quarter ended September 30, 2021 as compared to $267,223 for the quarter ended September 30, 2020, an increase of 28.6%. 

The prior year period was lower than normal due the reversal of stock compensation expense due to stock cancellations. 

Stock compensation expense for the nine months ended September 30, 2021 was $988,567 as compared to $903,326 for the nine months ended September 30, 2020, an increase of 9.4%.

Other Selling, General and Administrative Expenses

Other selling, general and administrative expenses (SG&A) were $2.8 million for the quarter ended June 30, 2021 as compared to $1.9 million in the prior year, a 53% increase versus the prior year period. 

Other SG&A expenses for the six months ended June 30, 2021 increased to $5.5 million from $4.0 million, a 38% increase. 

The increase in other SG&A for the quarter and six months ended June 30, 2021 reflects the incremental costs associated with our Output Solutions business and our continued investment in our prepaid and PayFac growth initiatives.  

Other selling, general and administrative expenses (other SG&A) were $2.8 million for the quarter ended September 30, 2021 as compared to $2.0 million in the prior year, a 44% increase versus the prior year period. 

Other SG&A expenses for the nine months ended September 30, 2021 increased to $8.3 million from $6.0 million, a 40% increase. 

The increase in other SG&A for the quarter and nine months ended September 30, 2021 reflects the incremental costs associated with our Output Solutions business and our continued investment in our prepaid and PayFac growth initiatives.  

Depreciation and Amortization  

Depreciation and amortization totaled $0.6 million and $0.4 million for the quarters ended June 30, 2021 and June 30, 2020, respectively and $1.2 million and $0.8 million for the six month ended June 30, 2021 and June 30, 2020, respectively. 

Depreciation and amortization totaled $0.6 million and $0.4 million for the quarters ended September 30, 2021 and September 30, 2020, respectively and $1.9 million and $1.2 million for the nine months ended September 30, 2021 and September 30, 2020, respectively. 

The incremental expense was primarily associated with the amortization of the IMS customer list asset.

Other Income (Expense)

Other income and expense, net was $685 for the quarter ended June 30, 2021 compared to other income of $1,525 for the quarter ended June 30, 2020. 

For the six months ended June 30, 2021 and June 30, 2020, respectively, other income and expense, net was $3,152 and $13,369, respectively. 

Other income and expense, net was $287 for the quarter ended September 30, 2021 compared to other income of $10,343 for the quarter ended September 30, 2020. 

For the nine months ended September 30, 2021 and September 30, 2020, respectively, other income and expense, net was $3,439 and $23,712, respectively. 

Lower interest-bearing merchant reserves and lower interest rates drove the lower interest income and reflects interest expense associated with our equipment loan.

Net Income (Loss)

We reported net income of $0.2 million for the quarter ended June 30, 2021, as compared to a net loss of $1.3 million for the same period in the prior year.  We reported a net loss of $0.5 million for the period ended June 30, 2021 compared to a net loss of $2.1 million for the same period in the prior year. 

The net income improvement in the current quarter and the six month periods was attributable to increases in revenues and profits of the entity.

We reported net income of $0.1 million for the quarter ended September 30, 2021, as compared to a net loss of $0.9 million for the same period in the prior year.  We reported a net loss of $0.4 million for the nine months ended September 30, 2021 compared to a net loss of $3.1 million for the same period in the prior year. 

The net income improvement in the current quarter and the nine month periods was attributable to increases in revenues and profits of the entity.

We may incur future operating losses.

5 unchanged sentences

Liquidity and Capital Resources

At June 30, 2021, we had $5.6 million of cash and cash equivalents, as compared to $5.0 million of cash and cash equivalents at December 31, 2020.

At September 30, 2021, we had $5.9 million of cash and cash equivalents, as compared to $5.0 million of cash and cash equivalents at December 31, 2020.

We received funding under the Paycheck Protection Program, or PPP, as part of the Coronas Aid, Relief and Economic Security Act, or CARES Act, administered by the U.S.

Small Business Administration. 

We received total proceeds of $813,500 bearing interest at a rate of 1% per annum with a maturity date of April 15, 2022. 

We used the proceeds for payroll costs and other permitted expenses. 

Under the terms of the PPP, the principal could be forgiven if the loan proceeds were used for qualifying expenses as described in the CARES act, such as for payroll costs, benefits, rents and utilities. 

The Company's loan forgiveness was approved in full by the U.S.

Small Business Administration on December 14, 2020 and was accounted for as income in 2020 under FASB ASC 470. 

On July 1, 2020, Topline Capital Partners, LP purchased 1,796,407 unregistered shares of common stock at an offering price of $1.67 per share in a private offering.

4 unchanged sentences

The net proceeds to the Company from the public offering were $7.4 million, after deducting the offering expenses and fees payable by the Company.

We reported a net income of $0.2 million for the quarter ended June 30, 2021 and a net loss of $0.5 million for the six months ended June 30, 2021.

At June 30, 2021, we had an accumulated deficit of $65.6 million.

Additionally, we had working capital of $6.3 million and $5.6 million at June 30, 2021 and December 31, 2020, respectively.

Net cash provided by operating activities, including merchant reserve funds, prepaid card load assets, customer deposits and net operating lease assets was $2.6 million and $16.4 million for the six months ended June 30, 2021 and June 30, 2020, respectively.

Excluding merchant reserves, prepaid card load assets, customer deposits and lease right-of-use assets and liabilities, our cash provided by operating activities was $1.1 million and cash used by operating activities was $0.7 million for the six months ended June 30, 2021 and June 30, 2020, respectively.

We reported a net income of $0.1 million for the quarter ended September 30, 2021 and a net loss of $0.4 million for the nine months ended September 30, 2021.

At September 30, 2021, we had an accumulated deficit of $65.4 million.

Additionally, we had working capital of $6.9 million and $5.6 million at September 30, 2021 and December 31, 2020, respectively.

Net cash provided by operating activities, including merchant reserve funds, prepaid card load assets, customer deposits and net operating lease assets was $8.7 million and $4.6 million for the nine months ended September 30, 2021 and September 30, 2020, respectively.

Excluding merchant reserves, prepaid card load assets, customer deposits and lease right-of-use assets and liabilities, our cash provided by operating activities was $2.0 million and cash used by operating activities was $1.0 million for the nine months ended September 30, 2021 and September 30, 2020, respectively.

We continue to invest resources and infrastructure in our business to achieve scale across all business lines.

Net cash used by investing activities was $533,854 and $334,688 for the six months ended June 30, 2021 and June 30, 2020, respectively.

Net cash used by investing activities was $999,493 and $582,347 for the nine months ended September 30, 2021 and September 30, 2020, respectively.

The primary drivers of our investing activities were capital expenditures associated with capitalized software development costs and other capital investments associated with growing our business lines and associated employee counts.

Net cash provided from financing activities for the six months ended June 30, 2021 and June 30, 2020 was $73,511 and $731,052, respectively. 

The 2021 cash provided from financing activities was primarily a result of proceeds from our equipment loan. 

The 2020 net funds provided from financing activities was the proceeds of our PPP loan.

Net cash used by financing activities for the nine months ended September 30, 2021 

was $58,800 and net cash provided by financing activities for the nine months ended September 30, 2020 was $10,891,114, respectively. 

The 2021 cash used by financing activities was 

net proceeds from our equipment loan offset by treasury stock transactions. 

The 2020 net funds provided by financing activities was the net proceeds from our public and private stock offerings plus proceeds from our PPP loan.

Material Trends and Uncertainties

The ongoing COVID-19 pandemic has had a notable impact on general economic conditions, including but not limited to the temporary closures of many businesses, “shelter in place”

and other governmental regulations, reduced consumer spending due to both job losses and other effects attributable to the COVID-19 pandemic.

There remain many uncertainties as a result of the pandemic.  As a result of the spread of COVID-19, economic uncertainties could continue to impact our operations.

Any potential incremental financial impact is unknown at this time.

At this time, certain states are considering reinstatement of select mandated operating restrictions and continued efforts are underway to provide vaccinations to as many people as possible.

During 2020 and 2021, the government issued several rounds of COVID-19 relief and stimulus payments and other programs to stimulate economic activity and facilitate an economic recovery.  

In April and May 2020, our business was initially adversely affected as doctor's offices, dental offices, veterinarian offices and non-bank consumer lending accounts were ordered closed in connection with curbing the spread of the pandemic. 

 As these doctors, dental and veterinarian offices re-opened, these businesses quickly recovered and returned to levels higher than pre-COVID. 

 Consumer lending merchants were adversely affected by COVID relief payments made during the pandemic and a pause placed on past due amounts owed. 

 The level of activity for consumer lending merchants has somewhat returned to pre-COVID levels. 

We received an increase in revenues in our prepaid business line, as we were able to work in conjunction with major cities across the U.S.

to use our prepaid debit cards to facilitate the transfer of money via our debit cards from city foundations to the local residents in need of financial assistance. 

The efforts have included the disbursement of funds to encourage vaccinations. 

The impacts and recovery from the COVID-19 pandemic are still a work in process. 

To date, we have not been adversely impacted in the magnitude that other payment processors were, as our customer base had limited exposure to retail facing businesses. 

 Within that framework, we will continue to monitor the overall impact on our operations and take necessary steps to ensure the safety of our employees and the well-being of our customers.

Please refer of our Covid-19 risks described in Note 10 to our financial statements.

Off-Balance Sheet Arrangements

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What changed 10-Q

Item 1. Financial Statements