What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2025-03-26 compared with 2024-03-27 · 300 added, 242 removed, 487 unchanged (53% of the section changed)

1 unchanged sentence

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

Report of Independent Registered Public Accounting Firm

Report of Independent Registered Public Accounting Firm - Pannell Kerr Forster of Texas P.C.

Report of Independent Registered Public Accounting Firm - ADKF P.C.

Consolidated Balance Sheets as of December 31, 2024 and 2023

6 unchanged sentences

and Subsidiaries

San Antonio, Texas

Opinion on the Consolidated Financial Statements

We have audited the accompanying consolidated balance sheets of Usio, Inc.

and Subsidiaries (collectively referred to as the “Company”) as of December 31, 2023 and 2022, and the related consolidated statements of operations, changes in stockholders’ equity and cash flows, for each of the two years in the period ended December 31, 2023, and the related notes (collectively referred to as the "consolidated financial statements").

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2023 and 2022 and the results of its operations and its cash flows for each of the years in the two-year period ended December 31, 2023 in conformity with accounting principles generally accepted in the United States of America.

We have audited the accompanying consolidated balance sheet of Usio, Inc.

and Subsidiaries (collectively referred to as the “Company”) as of December 31, 2024, and the related consolidated statements of operations, changes in stockholders’ equity and cash flows, for the year ended December 31, 2024, and the related notes (collectively referred to as the "consolidated financial statements").

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2024 and the results of its operations and its cash flows for the year ended December 31, 2024 in conformity with accounting principles generally accepted in the United States of America.

Basis of Opinion

These consolidated financial statements are the responsibility of the Company's management.

Our responsibility is to express an opinion on the Company's consolidated financial statements based on our audits.

Our responsibility is to express an opinion on the Company's consolidated financial statements based on our audit.

We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB") and are required to be independent with respect to the Company in accordance with the U.S.

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.

The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.

As a part of our audits, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting.

As a part of our audit, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting.

Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

Our audit included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements.

Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.

We believe that our audits provide a reasonable basis for our opinion.

Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.

We believe that our audit provides a reasonable basis for our opinion.

Critical Audit Matter

The critical audit matters communicated below is a matter arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that:

(1) relate to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective or complex judgments.

The communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Deferred Tax Assets – Valuation Allowance

Description of the Matter

The Company recognizes deferred tax assets to the extent that it is expected that these assets are more likely than not to be realized.

The Company evaluates the realizability of the deferred tax assets, and to the extent that the Company estimates that it is more likely than not that a benefit will not be realized, the carrying amount of the deferred tax assets is reduced with a valuation allowance.

We identified the valuation of deferred tax assets as a critical audit matter because of the significant judgments made by management in projecting future taxable income.

How We Addressed the Matter in Our Audit

Our audit procedures related to projected future taxable income and the determination of whether it is more likely than not that the deferred tax assets will be realized included the evaluation of the reasonableness of management’s projected future taxable income.

We compared the forecast of future taxable income estimates to historical earnings and evaluated the inputs, assumptions and trends used by management for developing a forecast of future taxable income.

/s/ Pannell Kerr Forster of Texas, P.C.

Houston, Texas United States

March 26, 2025

We have served as the Company's auditor since 2024.

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Board of Directors and Stockholders

and Subsidiaries

Opinion on the Consolidated Financial Statements

We have audited the accompanying consolidated balance sheet of Usio, Inc.

and Subsidiaries (collectively referred to as the “Company”) as of December 31, 2023, and the related consolidated statement of operations, changes in stockholders’ equity and cash flows, for the year in the period ended December 31, 2023, and the related notes (collectively referred to as the "consolidated financial statements").

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2023 and the results of its operations and its cash flows for the year in the period ended December 31, 2023 in conformity with accounting principles generally accepted in the United States of America.

Basis of Opinion

These consolidated financial statements are the responsibility of the Company's management.

Our responsibility is to express an opinion on the Company's consolidated financial statements based on our audit.

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.

The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.

Accordingly, we express no such opinion.

Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements.

We believe that our audit provides a reasonable basis for our opinion.

Critical Audit Matters

22 unchanged sentences

March 27, 2024

We have served as the Company's auditor since 2004.

We served as the Company's auditor from 2004 to 2023.

CONSOLIDATED BALANCE SHEETS

3 unchanged sentences

$ 8,056,891 $ 7,155,687

Accounts receivable, net

Accounts receivable

5,053,639 5,564,138

Accounts receivable, tax credit

Settlement processing assets

55 unchanged sentences

88,051,484 91,865,831

Commitments and contingencies (Note 14)

Stockholders' Equity:

21 unchanged sentences

December 31, 2023

$ 82,591,109 $ 69,428,285

Cost of services

63,992,417 54,835,069

18,598,692 14,593,216

Selling, general and administrative:

Stock-based compensation

2,222,969 2,072,041

Other expenses

16,216,690 15,000,487

Depreciation and Amortization

2,081,533 2,735,118

Total operating expenses

20,521,192 19,807,646

Operating loss

( 1,922,500 ) ( 5,214,430 )

Other income:

Interest income

1,695,122 15,237

Other income (expense)

Interest expense

( 5,202 ) ( 4,051 )

Other income and (expense), net

1,739,920 11,186

(Loss) before income taxes

( 182,580 ) ( 5,203,244 )

Other income, net

Income (Loss) before income taxes

Federal income tax (benefit)

State income tax expense

292,524 280,000

$ ( 475,104 ) $ ( 5,483,244 )

(Loss) Per Share

Basic (loss) per common share:

$ ( 0.02 ) $ ( 0.27 )

Diluted (loss) per common share:

$ ( 0.02 ) $ ( 0.27 )

Net Income (Loss)

Earnings (Loss) Per Share

Basic income (loss) per common share:

Diluted income (loss) per common share:

Weighted average common shares outstanding (see Note 12)

20,105,968 20,379,386

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

2 unchanged sentences

Balance at December 31, 2022

26,807,145 $ 195,235 $ 93,100,129 $ ( 2,404,458 ) $ ( 6,842,195 ) $ ( 65,379,805 ) $ 18,668,906

Issuance of common stock under equity incentive plan

369,755 368 1,182,939 — ( 166,329 ) — 1,016,978

Warrant compensation cost

— — 20,963 — - — 20,963

Reversal of deferred compensation amortization that did not vest

( 132,000 ) ( 132 ) ( 255,428 ) — 145,498 — ( 110,062 )

Deferred compensation amortization

— — — — 1,165,126 — 1,165,126

Non-cash return of treasury stock

Purchase of treasury stock

— — — ( 1,344,569 ) — — ( 1,344,569 )

Net (loss) for the year

— — — — — ( 5,483,244 ) ( 5,483,244 )

Balance at December 31, 2023

27,044,900 $ 195,471 $ 94,048,603 $ ( 3,749,027 ) $ ( 5,697,900 ) $ ( 70,863,049 ) $ 13,934,098

Issuance of common stock under equity incentive plan

1,731,506 1,731 3,619,315 — ( 2,650,505 ) — 970,541

Issuance of common stock under employee stock purchase plan

Reversal of deferred compensation amortization that did not vest

( 115,000 ) ( 115 ) ( 188,088 ) — 103,091 — ( 85,112 )

Deferred compensation amortization

— — — — 1,337,539 — 1,337,539

Non-cash return of treasury stock

— — — ( 156,162 ) — — ( 156,162 )

Purchase of treasury stock

— — — ( 456,961 ) — — ( 456,961 )

Net (loss) for the year

— — — — — ( 475,104 ) ( 475,104 )

Balance at December 31, 2024

28,661,406 $ 197,087 $ 97,479,830 $ ( 4,362,150 ) $ ( 6,907,775 ) $ ( 71,338,153 ) $ 15,068,839

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

3 unchanged sentences

Operating Activities

$ ( 475,104 ) $ ( 5,483,244 )

Adjustments to reconcile net (loss) to net cash provided (used) by operating activities:

1,209,506 1,196,584

872,027 1,538,534

Net income (loss)

Adjustments to reconcile net income (loss) to net cash provided (used) by operating activities:

Loss on disposal of equipment

Deferred federal income tax

Employee stock-based compensation

2,190,369 2,072,041

Vendor stock-based compensation

Amortization of warrant costs

Non-cash revenue from return of treasury stock

( 156,162 ) —

Changes in operating assets and liabilities:

Accounts receivable

( 1,192,498 ) 607,853

Accounts receivable, tax credit

Prepaid expenses and other

6,318 ( 23,426 )

Operating lease right-of-use assets

374,701 6,630

84,547 ( 72,823 )

Accounts payable and accrued expenses

252,689 853,965

Operating lease liabilities

( 403,506 ) ( 24,052 )

Prepaid card load obligations

11,408,212 ( 16,420,132 )

Merchant reserves

400,594 ( 1,471,652 )

Customer deposits

311,609 189,929

Deferred revenue

Net cash provided (used) by operating activities

14,915,902 ( 17,036,477 )

Net cash provided by operating activities

Investing Activities

Purchases of property and equipment

( 834,964 ) ( 812,242 )

Sale of equipment

Net cash used by investing activities

( 834,964 ) ( 812,242 )

Financing Activities

Payments on equipment loan

( 56,992 ) ( 54,771 )

Proceeds from issuance of common stock

Purchases of treasury stock

( 456,961 ) ( 1,344,569 )

Net cash (used) by financing activities

( 513,953 ) ( 1,399,340 )

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

13,566,985 ( 19,248,059 )

Cash, cash equivalents, prepaid card loads, customer deposits and merchant reserves, beginning of year

32,343,501 51,591,560

Cash, Cash Equivalents, Prepaid Card Load Assets, Customer Deposits and Merchant Reserves, End of Year

45,910,486 32,343,501

Assets held for customers

Net cash provided (used) by financing activities

Change in cash, cash equivalents, customer deposits and merchant reserves

Cash, cash equivalents, customer deposits and merchant reserves, beginning of year

Cash, Cash Equivalents, Settlement Processing Assets, Prepaid Card Load Assets, Customer Deposits and Merchant Reserves, End of Year

Supplemental disclosures of cash flow information

Cash paid during the period for:

$ 5,202 $ 4,051

116,204 269,500

Non-cash operating activities:

Right of use assets obtained in exchange for operating lease liabilities

Non-cash investing and financing activities:

Issuance of deferred stock compensation

2,650,505 166,229

Non-cash transaction for acquisition of equipment in exchange for note payable

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

December 31, 2024

December 31, 2023

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

Cash and cash equivalents

Settlement processing assets

Prepaid card load assets

Customer deposits

Merchant reserves

Ending cash, cash equivalents, settlement processing assets, prepaid card load assets, customer deposits and merchant reserves:

Cash and cash equivalents

Settlement processing assets

Prepaid card load assets

Customer deposits

Merchant reserves

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

4 unchanged sentences

Usio, Inc., along with its subsidiaries, FiCentive, Inc., a Nevada corporation, and Zbill, Inc., a Nevada corporation, provides integrated electronic payment services, including credit and debit card-based processing services and transaction processing via the Automated Clearing House, or ACH network to billers and retailers.

The Company also has an additional wholly-owned subsidiary, Usio Output Solutions, Inc., which is the entity for the Output Solutions operations.

The Company also has an additional wholly-owned subsidiary, Usio Output Solutions, Inc., which is the entity for Output Solutions' operations.

In addition, the Company operates various product websites, such as www.usio.com, www.singularpayments.com, www.payfacinabox.com, www.ficentive.com, www.akimbocard.com, and www.usiooutput.com.

20 unchanged sentences

Revenue from Output Solutions is recognized when the related services are performed for printing and delivered to USPS for postage.

We also earn revenues from interest and fees earned on certain assets underlying customer balances.

Interest earned on assets directly related to our core business line operations are recorded in the revenue source underlying the associated customer balances.

Customer balances held on which the Company earns interest revenues include balances from our Automated Clearing House, or ACH, and complementary services, prepaid card services, and Output Solutions business lines.

Year Ended December 31,

7 unchanged sentences

20,618,996 20,496,195 122,801 1 %

Interest - ACH and complementary services

789,717 495,972 293,745 59 %

Interest - Prepaid card services

1,345,679 932,048 413,631 44 %

Interest - Output Solutions

150,928 47,116 103,812 220 %

Total Revenue

3 unchanged sentences

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

The deferred revenue balances are as follows:

Deferred revenues, beginning of period

Deferred revenues, end of period

Revenue recognized in the period from amounts included in deferred revenues at the beginning of the period

The Company had no deferred revenues in 2024 or 2023 .

Cash and Cash Equivalents:

3 unchanged sentences

Settlement processing assets and obligations represent intermediary balances arising in our settlement process for merchants.

The Company earns interest on these underlying processing assets, which is recognized as revenue in the ACH and complementary services business line.

Prepaid Card Load Assets:

1 unchanged sentence

These prepaid card load assets are carried on the Company's balance sheet with a corresponding liability.

The Company earns interest on these prepaid card load assets and obligations, which is recognized as revenue in the prepaid card services business line.

Customer Deposits:

1 unchanged sentence

These customer deposits are carried on the Company's balance sheet with a corresponding liability.

The Company earns interest on these customer deposits, which is recognized as revenue in the Output Solutions business line.

Merchant Reserves:

4 unchanged sentences

While this cash is not restricted in its use, the Company believes that designating this cash to collateralize Merchant Reserves strengthens its fiduciary standing with the Company's member sponsors and is in accordance with the guidelines set by the card networks.

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:

December 31, 2023

December 31, 2022

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

Cash and cash equivalents

$ 5,709,117 $ 7,255,321

Prepaid card load assets

20,170,761 36,590,893

Customer deposits

1,554,122 1,364,193

Merchant reserves

4,909,501 6,381,153

$ 32,343,501 $ 51,591,560

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

Cash and cash equivalents

$ 7,155,687 $ 5,709,117

Prepaid card load assets

31,578,973 20,170,761

Customer deposits

1,865,731 1,554,122

Merchant reserves

5,310,095 4,909,501

$ 45,910,486 $ 32,343,501

The Company earns interest on these merchant reserves, which is recognized as revenue in our ACH and complementary services business line.

Accounts Receivable/Allowance for Estimated Credit Losses:

28 unchanged sentences

No customer accounted for more than 10% of revenues in 2024 or 2023 .

Fair Value of Financial Instruments:

Fair Value Measurements:

The Company utilizes valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs to the extent possible.

The Company determines fair value based on assumptions that market participants would use in pricing an asset or liability in the principal or most advantageous market.

When considering market participant assumptions in fair value measurements, the following fair value hierarchy distinguishes between observable and unobservable inputs, which are categorized in one of the following levels:

• Level 1 inputs - unadjusted quoted prices in active markets for identical assets or liabilities accessible to the reporting entity at the measurement date;

• Level 2 inputs - other than quoted prices included in Level 1 inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the asset or liability;

• Level 3 inputs - unobservable inputs for the asset or liability used to measure fair value to the extent that observable inputs are not available, thereby allowing for situations in which there is little, if any, market activity for the asset or liability at the measurement date.

Cash and cash equivalents, accounts receivable, accounts payable, accrued liabilities and short-term borrowings are reflected in the accompanying consolidated financial statements at cost, which approximates fair value because of the short-term maturity of these instruments.

15 unchanged sentences

The Company incurred approximately $ 20,173 and $ 16,500 in advertising costs in 2024 and 2023 , respectively.

Income Taxes:

Deferred tax assets and liabilities are recorded based on difference between financial reporting and tax basis of assets and liabilities and are measured using the enacted tax rates and laws that are expected to be in effect when the differences are expected to reverse.

Deferred tax assets are computed with the presumption that they will be realizable in future periods when taxable income is generated.

Predicting the ability to realize these assets in future periods requires a great deal of judgment by management.

generally accepted accounting principles prescribe a recognition threshold and measurement attribute for a tax position taken or expected to be taken in a tax return.

Income tax benefits that meet the “more likely than not” recognition threshold should be recognized.

Goodwill is amortized over 15 years for tax purposes.

Accounting for Income Taxes :

Our annual tax rate is based on our income, statutory tax rates, and tax planning opportunities available to us.

Tax laws are complex and subject to different interpretations by the taxpayer and respective government taxing authority.

Significant judgement is required in determining our tax expense and in evaluating our tax positions, including evaluating uncertainties.

We review our tax positions yearly and adjust the balances as new information becomes available.

Deferred tax assets represent amounts available to reduce income taxes payable on taxable income in future years.

Such assets arise because of temporary differences between the financial reporting and tax bases of assets and liabilities, as well as from net operating loss and tax credit carryforwards.

We evaluate the recoverability of these future tax deductions and credits by assessing the adequacy of future expected taxable income from all sources, including reversal of taxable temporary differences, forecasted operating earnings, and available tax planning strategies.

These rely heavily on estimates that are based on a number of factors, including historical data, and business forecasts.

To the extent deferred tax assets are not expected to be realized, we record a valuation allowance.

We recognize and measure uncertain tax positions in accordance with U.S.

GAAP, pursuant to which we only recognize the tax benefit from an uncertain tax position if it is more likely than not that the tax position will be sustained on examination by the taxing authorities.

As with all businesses, the Company’s tax returns are subject to periodic examination.

13 unchanged sentences

Earnings (Loss) Per Share:

Basic and diluted (loss) per common share are calculated by dividing earnings by the weighted average number of common shares outstanding during the period.

The Company’s basic net income (loss) per common share is based on the weighted average number of shares of common stock outstanding for the period.

Diluted net income (loss) per common share is calculated using the treasury stock method and is based on the weighted average number of common shares and all potentially dilutive common shares outstanding during the year which includes common stock options and warrants.

When a net loss per common share exists, all potentially dilutive common shares outstanding are anti-dilutive and are therefore excluded from the calculation of diluted weighted average shares outstanding.

See “Note 11 – Net Income (Loss) per Share” for further discussion.

Recently Adopted Accounting Pronouncements :

In June 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No.

2016 - 13, Financial Instruments - Credit Losses (Topic 326 ), to provide financial statement users with more decision-useful information about the expected credit losses on financial instruments and other commitments to extend credit held by a reporting entity at each reporting date.

To achieve this objective, the amendments in Topic 326 replace the incurred loss impairment methodology in current GAAP with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates.

Topic 326 is effective for fiscal years beginning after December 25, 2022, including interim periods within those fiscal years for smaller reporting companies.

We adopted this guidance effective January 1 2023 on a prospective basis.

Our financial statements were not materially impacted upon adoption.

For additional information, see "Note 4 - Valuation Accounts."

Accounting standards that have been issued or proposed by the FASB, the SEC or other standard setting bodies that do not require adoption until a future date are not expected to have a material impact on the consolidated financial statements upon adoption.

Reclassifications:

We have reclassified certain prior period amounts in the accompanying consolidated financial statements in order to be consistent with the current period presentation.

These reclassifications had no effect on net income, total assets, total liabilities or equity.

Property and Equipment

12 unchanged sentences

$ 3,194,818 $ 3,660,092

Akimbo Financial, Inc.

Acquisition ( 2015 )

On December 22, 2014, we acquired substantially all of the assets of Akimbo Financial, Inc.

The intangibles acquired in the acquisition consist of the customer list and contracts at cost of $ 396,824 (net of accumulated amortization of $ 396,824 at December 31, 2023 ) and goodwill of $ 9,759 .

The intangible asset was fully amortized as of December 31, 2017.

The fair value of the customer list and contracts was calculated using the net present value of the projected gross profit to be generated by the customer list over a period of 36 months beginning in January 2015 and was amortized over 3 years at $ 163,139 annually.

Goodwill was determined based on the purchase price paid over the assets acquired and has an indefinite life, which is tested for impairment annually.

Singular Payments, LLC Acquisition ( 2017 )

On September 1, 2017, we acquired all of the membership interest of Singular Payments, LLC.

The intangibles acquired in such acquisition consist of customer list assets of $ 5,000,000 at cost (net of accumulated amortization of $ 5,000,000 at December 31, 2023 ).

The fair value of the customer list was calculated using the net present value of the projected gross profit to be generated by the customer list over 60 months beginning in September 2017 and ending in August 2022.

Amortization expense in 2023 and 2022 was $ 0 and $ 666,667 respectively.

Information Management Solutions, LLC Acquisition ( 2020 )

2 unchanged sentences

The fair value of the customer list was calculated using the net present value of the projected gross profit to be generated by the customer list over 60 months beginning in January 2021 and ending in December 2025.

Annual amortization expense will be $ 871,867 per year through the year 2025.

Annual amortization expense is $ 871,867 per year through the year 2025.

Valuation Accounts

9 unchanged sentences

755,494 71,034 — — 826,528

Accounts receivables, net and contract liabilities consist of the following as of:

December 31, 2024

December 31, 2023

January 1, 2023

$ 6,548,251 $ 5,564,138 $ 4,375,167

Related Party

Accounts receivable, net

$ 6,548,251 $ 5,564,138 $ 4,375,167

Contract liabilities

Equipment Loans

4 unchanged sentences

The financing is at an interest rate of 3.95 %.

Current year payments on the Equipment Loan were $ 54,634 .

The Equipment Loan was paid off in its entirety in 2024 with total year payments of $ 14,536 .

On October 1, 2023, the Company entered into a debt arrangement to finance $ 811,819 for the purchase of an Output Solutions folder and inserter.

2 unchanged sentences

Current year payments on the Equipment Loan were $ 146,074 .

December 31, 2024, the Company maintains an undrawn line of credit and an outstanding letter of credit,

both of which were established in connection with a bond required for the Company's appeal of the court’s decision in the KDHM lawsuit.

Line of Credit

The Company has an unsecured revolving line of credit with a maximum borrowing capacity of $ 475,000 .

The facility was established on May 29, 2024, and matures on June 5, 2026.

As of December 31, 2024, no amounts had been drawn under this line of credit since its origination.

This line of credit was secured to support the bond requirement in the KDHM lawsuit appeal but remains fully available.

Letter of Credit

The Company has an irrevocable letter of credit in the amount of $ 474,229 , issued on June 3, 2024, with a maturity date of July 3, 2025.

This letter of credit was obtained as part of the bonding requirement for the KDHM lawsuit appeal and has not been drawn upon since its issuance.

These credit facilities were arranged to comply with legal requirements related to the Company’s appeal and provide additional liquidity resources if needed.

Management continues to monitor its financial position and believes that existing cash balances, along with these credit facilities, are sufficient to meet operational needs and legal obligations.

Future payments on current debt arrangements are as follows at December 31, 2024 :

Year ended December 31,

Remaining Balance

$ 147,581 $ 571,862

158,043 413,819

169,048 244,771

180,818 63,953

Total payments

Accrued Expenses

1 unchanged sentence

Accrued commissions

$ 425,486 $ 2,433,353

Reserve for processing losses

897,116 826,528

Other accrued expenses

881,925 246,444

Accrued taxes

474,561 294,953

Accrued salaries

Total accrued expenses

$ 3,366,925 $ 3,801,278

Operating Leases

The Company leases approximately 10,535 square feet of office space for its San Antonio, TX executive offices and operations.

On October 19, 2021 we renewed our lease, to run concurrently with our additional leased space in the same building.

The lease expires on December 31, 2025.

Rental expense under the operating lease was $ 165,817 and $ 157,682 for the years ended December 31, 2024 and 2023 , respectively.

The lease expires on July 31, 2024.

On March 15, 2021, we entered into a lease amendment to our existing lease in San Antonio, Texas commencing April 1, 2021.

On October 19, 2021 we renewed our lease, to run concurrently with our additional leased space in the same building.

The lease expires on December 31, 2025.

The incremental space leased is 2,734 square feet.

The incremental annual rent during the lease term ranges from $ 57,000 to $ 60,000 .

Rental expense for the years ended December 31, 2024 and 2023 was $ 49,653 and $ 48,113 , respectively.

On October 19, 2021, the Company entered into a lease amendment to the existing lease in San Antonio, Texas commencing April 1, 2022.

The lease expires on December 31, 2025.

The incremental space lease is 6,628 square feet.

The incremental annual rent during the lease term ranges from $ 144,000 to $ 156,000 .

Rental expense for the years ended December 31, 2024 and 2023 was $ 109,355 and $ 75,269 , respectively.

The Company leased approximately 3,794 square feet of office space for its Nashville, Tennessee sales offices and operations.

1 unchanged sentence

The lease expired on April 30, 2023.

We did enter into a lease extension, or new lease agreement in Nashville, Tennessee upon the expiration of the lease agreement.

We did not enter into a lease extension, or new lease agreement in Nashville, Tennessee upon the expiration of the lease agreement.

The Company assumed a lease in San Antonio, Texas as a part of the Information Management Solutions, LLC acquisition for its Output Solutions employees and warehouse operations.

The lease has a remaining life of 45 months and expires on September 30, 2024.

The lease had a remaining life of 45 months and expired on September 30, 2024.

On September 16, 2024 the Company entered into a lease amendment commencing on October 1, 2024, extending the term of the existing lease for a period of 60 months, expiring on September 30, 2029.

The space leased is 22,400 square feet.

2 unchanged sentences

On January 1, 2021, we entered into a lease in Austin, Texas commencing on January 1, 2021 for our Austin technology organization.

The lease is for a period of 25 months and expires on January 31, 2023.

The space leased is 1,890 square feet.

Rental expense for the years ended December 31, 2023 and 2022 was $ 79,467 and $ 83,610 respectively.

On January 31, 2024, the Company entered into a lease amendment commencing on February 1, 2024, extending the term of the existing lease for a period of 24 months and expiring on January 31, 2027.

On March 15, 2021, we entered into a lease amendment to our existing lease in San Antonio, Texas commencing April 1, 2021 and expiring on September 30, 2024 running concurrently with the existing lease.

The incremental space leased is 2,734 square feet.

The incremental annual rent during the lease term ranges from $ 56,047 to $ 60,148 .

The space leased is 1,890 square feet.

Rental expense for the years ended December 31, 2024 and 2023 was $ 83,610 and $ 79,467 , respectively.

On October 19, 2021, the Company entered into a lease amendment to the existing lease in San Antonio, Texas commencing April 1, 2022 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 .

Rental expense for the year ended December 31, 2023 and 2022 was $ 104,375 and $ 75,269 respectively.

The Company has various copier equipment with leases that have not expired.

Rental expense under the operating lease was $ 6,546 and $ 12,729 for the years ended December 31, 2023 and 2022 , respectively.

Rental expense under the operating leases was $ 8,921 and $ 6,546 for the years ended December 31, 2024 and 2023 , respectively.

The weighted average remaining lease term is 3.49 years.

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In 2024 , the operating lease expense of $ 660,000 consisted of $ 544,000 of fixed operating expense and $ 116,000 of interest expense.

We believe that our existing and new properties will be adequate to meet our needs through December 31, 2025.

The maturities of lease liabilities are as follows at December 31, 2024 :

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Total lease liabilities

Less current portion

Long-term portion

Related Party Transactions

During the year ended December 31, 2023 and 2022 , the Company purchased $ 24,389 and $ 22,835 , respectively, of corporate imprinted sportswear, promotional items and caps from Angry Pug Sportswear.

During the years ended December 31, 2024 and 2023 , the Company purchased $ 21,900 and $ 24,389 , respectively, of corporate imprinted sportswear, promotional items and caps from Angry Pug Sportswear.

Louis Hoch, Chairman, President, Chief Executive Officer, and Chief Operating Officer is a 50 % owner of Angry Pug Sportswear.

Officers and Directors

On January 6, 2022, we repurchased 11,361 shares for $ 47,930 in a private transaction at the closing price on January 6, 2022 of $ 4.21 per share from Tom Jewell, the Company's former Chief Financial Officer, to cover his share of taxes.

On October 4, 2022, we repurchased 26,234 shares for $ 42,761 in a private transaction at the closing price on October 4, 2022 of $ 1.63 per share from Louis Hoch, the Company's Chairman, President, Chief Executive Officer and Chief Operating Officer, to cover his share of taxes.

On November 18, 2023 we repurchased 2,619 shares for $ 4,452 in a private transaction at a closing price on November 18, 2023 of $ 1.70 per share from Tom Jewell, the Company's former Chief Financial Officer, to cover his share of taxes.

On November 18, 2023 we repurchased 3,927 shares for $ 6,675 in a private transaction at a closing price on November 18, 2023 of $ 1.70 per share from Louis Hoch, the Company's Chairman, President, Chief Executive Officer and Chief Operating Officer, to cover his share of taxes.

On February 8, 2022, the Company granted 1,000 RSUs with a 3 -year vesting period to Houston Frost as a performance bonus at an issue price of $ 3.32 per share.

On June 26, 2022, the Company granted 66,667 RSUs with a 3 -year vesting period to Elizabeth Michelle Miller for joining the Board of Directors at an issue price of $ 2.28 per share.

Effective on February 17, 2023, the Company entered into an employment agreement with Greg Carter, the Company’s Executive Vice President, Payment Acceptance.

Under the terms of this agreement, Mr.

Carter will receive an annual salary of $250,000, Override/Commissions of 10 % of the actual cash commissions paid to salespersons under direct management of Mr.

Carter, to be paid quarterly, and the payment of a one -time signing bonus of $ 40,000 .

On February 8, 2023, the Company granted 1,403,000 shares of restricted common stock with a 10 -year vesting period and 273,000 RSUs with a 3 -year vesting period to employees and Directors as a performance bonus at an issue price of $ 1.75 per share.

Executive officers and Directors included in the 10 -year restricted stock grant were Louis Hoch ( 330,000 shares), Tom Jewell ( 200,000 shares), Greg Carter ( 100,000 shares) and Houston Frost ( 100,000 shares).

Executive officers included in the RSU grant were Louis Hoch ( 33,000 RSUs), Tom Jewell ( 21,000 RSUs), Greg Carter ( 12,000 RSUs) and Houston Frost ( 12,000 RSUs).

On March 16, 2023, the Company granted 69,000 RSUs with a 3 -year vesting period to Directors as a performance bonus at an issue price of $ 1.60 per share.

On December 29, 2024, we withheld 208,615 shares of our common stock for $ 302,492 in a private transaction based on the $ 1.45 per share closing price on December 29, 2024 from Louis Hoch, the Company's Chairman, President, Chief Executive Officer and Chief Operating Officer, to cover his share of taxes in connection with equity grants.

On November 18, 2024, we withheld 3,935 shares of our common stock for $ 5,784 in a private transaction based on the $ 1.47 per share closing price on November 18, 2024 from Louis Hoch, the Company's Chairman, President, Chief Executive Officer and Chief Operating Officer, to cover his share of taxes in connection with equity grants.

On June 21, 2024, the Company granted 966,000 shares of restricted common stock with a 10 -year vesting period and 277,200 restricted stock units ("RSUs") with a 3 -year vesting period to officers and employees as a performance bonus at an issue price of $ 1.55 per share.

RSUs vest in equal tranches over their 3 -year vesting period, while 10 -year grants are cliff vesting, and vest in full at the conclusion of their 10 -year vesting period.

Upon vesting, employees and Directors will receive issued shares.

Executive officers and Directors included in the 10 -year restricted stock grant were Louis Hoch ( 160,000 shares), Michael White ( 120,000 shares), Greg Carter ( 80,000 shares), and Houston Frost ( 40,000 shares).

Executive officers included in the RSU grant were Louis Hoch ( 21,000 RSUs), Michael White ( 18,000 RSUs), Greg Carter ( 18,000 RSUs),and Houston Frost ( 12,000 RSUs).

On June 21, 2024, the Company granted 84,000 RSUs with a 3 -year vesting period to Non-employee Directors as a performance bonus at an issue price of $ 1.55 per share.

Directors included in the RSU grant were Blaise Bender ( 21,000 RSUs), Brad Rollins ( 21,000 RSUs), Ernesto Beyer ( 21,000 RSUs) and Michelle Miller ( 21,000 RSUs).

On February 24, 2024, we withheld 2,075 shares of our common stock for $ 3,258 in a private transaction based on the $ 1.57 per share closing price on February 24, 2024 from Tom Jewell, the Company's former Chief Financial Officer, to cover his share of taxes in connection with equity grants.

On February 24, 2024, we withheld 4,911 shares of our common stock for $ 7,710 in a private transaction based on the $ 1.57 per share closing price on February 24, 2024 from Louis Hoch, the Company's Chairman, President, Chief Executive Officer and Chief Operating Officer, to cover his share of taxes in connection with equity grants.

On November 30, 2023, Tom Jewell, the Senior Vice President, Chief Financial Officer, and principal financial and accounting officer of the Company notified the Company of his intention to retire.

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Jewell will also receive all employee benefits including, but not limited to, health, dental, vision and life insurances that he was receiving prior to his execution of the Agreement until April 18, 2024.

Deferred income taxes reflect the net tax effect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes.

Significant components of the Company’s deferred tax asset are as follows at December 31:

Executive officers included in the RSU grant were Louis Hoch ( 33,000 RSUs), Tom Jewell ( 21,000 RSUs), Greg Carter ( 12,000 RSUs) and Houston Frost ( 12,000 RSUs).

On March 16, 2023, the Company granted 69,000 RSUs with a 3 -year vesting period to Directors as a performance bonus at an issue price of $ 1.60 per share.

Directors included in the RSU grant were Blaise Bender ( 21,000 RSUs), Brad Rollins ( 21,000 RSUs), Ernesto Beyer ( 21,000 RSUs) and Michelle Miller ( 6,000 RSUs).

On November 18, 2023 we withheld 2,619 shares for $ 4,452 in a private transaction at a closing price on November 18, 2023 of $ 1.70 per share from Tom Jewell, the Company's former Chief Financial Officer, to cover his share of taxes.

On November 18, 2023 we withheld 3,927 shares for $ 6,675 in a private transaction at a closing price on November 18, 2023 of $ 1.70 per share from Louis Hoch, the Company's Chairman, President, Chief Executive Officer and Chief Operating Officer, to cover his share of taxes.

Deferred tax assets and liabilities are recorded based on the difference between financial reporting and tax basis of assets and liabilities and are measured by the enacted tax rates and laws that are expected to be in effect when the differences are expected to reverse.

Deferred tax assets are computed with the presumption that they will be realizable in future periods when taxable income is generated.

Predicting the ability to realize these assets in future periods requires judgment by management.

GAAP prescribes a recognition threshold and measurement attribute for a tax position taken or expected to be taken in a tax return.

Income tax benefits that meet the “more likely than not” recognition threshold are recognized.

The Company has recognized a deferred tax asset of approximately $ 4.6 million recorded net of a valuation allowance of approximately $ 2.7 million.

Management considered the realizability of this asset in light of historical operating results and forecasted results, and determined that more likely than not that the Company will have taxable income in the future, and elected to decrease the valuation allowance by approximately $ 3.6 million during 2024.

The Company reviews the assessment of the deferred tax asset and valuation allowance on an annual basis or more often when events indicate that a change to the valuation allowance may be warranted.

If applicable, the Company would recognize interest expense and penalties related to uncertain tax positions in interest expense.

As of December 31, 2024 , the Company had not accrued any interest or penalties related to uncertain tax provisions.

Significant components of the Company’s deferred tax assets are as follows at December 31:

Deferred tax assets:

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1,119,000 1,649,000

Processing losses

188,394 175,673

61,000 124,000

7,369,306 8,169,281

Valuation Allowance

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$ 4,580,440 $ 1,504,000

Management has reviewed its net deferred asset position, and due to the history of operating losses has determined that the application of a valuation allowance at December 31, 2023 and 2022 is warranted.

If applicable, the Company would recognize interest expense and penalties related to uncertain tax positions in interest expense.

As of December 31, 2023 , the Company had not accrued any interest or penalties related to uncertain tax provisions.

The Company has net operating loss carryforwards for tax purposes of approximately $ 23.3 million.

Net operating loss carryforwards prior to 2017 are available to offset taxable income of future periods and expire 20 years after the loss was generated.

The schedule below outlines when our pre- 2017 net operating losses were generated and the year they may expire.

At December 31, 2024 , the Company had available net operating loss carryforwards of approximately $ 21.8 million.

Net operating loss carryforwards ("NOLs") generated during or prior to 2017 are available to offset taxable income of future periods and expire 20 years after the loss was generated.

Net operating loss carryforwards generated after 2017 do not expire.

Our ability to use our NOLs during this period will be dependent on our ability to generate taxable income, and the NOLs could expire before we generate sufficient taxable income.

Pursuant to Sections 382 and 383 of the Internal Revenue Code ("IRC"), federal and state tax laws impose significant restrictions on the utilization of net operating loss and other tax carryforwards in the event of a change in ownership of the Company.

The Company does not expect IRC Sections 382 and 383 to significantly impact the utilization of its NOLs and other tax carryforwards.

If we were to experience an "ownership change," as determined under Section 382 of the IRC, our ability to offset taxable income arising after the ownership change with NOLs arising prior to the ownership change would be limited, possibly substantially.

An ownership change would establish an annual limitation on the amount of our pre-change NOLs we could utilize to offset our taxable income in any future taxable year to an amount generally equal to the value of our stock immediately prior to the ownership change multiplied by the long-term tax-exempt rate.

In general, an ownership change will occur if there is a cumulative increase in our ownership of more than 50 percentage points by one or more "5% shareholders" (as defined in the IRC) at any time during a rolling three -year period.

The schedule below outlines when the Company's net operating losses for 2017 and prior years were generated and the year they may expire.

$ 1,275,415 2025

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1,267,336 2037

Effective for tax years ending in 2018 or later, net operating losses cannot be carried back but can be carried forward to future tax years indefinitely, subject to annual limitations for utilization.

Net operating losses generated in 2018 and later total approximately $ 13,023,000 .

As of December 31, 2024 , there are NOLs totaling approximately $ 13.0 million that have been generated since 2017 that do not expire, and can be carried forward to future years to offset taxable income.

The schedule below outlines when the Company's net operating losses for 2018 and later years were generated.

Total loss carryforwards

The tax provision for federal and state income tax is as follows for the years ended December 31:

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Federal expense (benefit)

Expense for income taxes

( 3,076,440 ) —

The reconciliation of federal income tax computed at the U.S.

federal statutory tax rates to total income tax expense is as follows for the years ended December 31:

Expense (benefit) for income taxes

$ ( 2,627,213 ) $ 292,524

The reconciliation of federal income tax expense (benefit) computed at the U.S.

federal statutory tax rates to total income tax expense (benefit) is as follows for the years ended December 31:

Income tax (benefit) at 21 %

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458,460 1,399,570

Federal income tax (benefit)

348,552 292,524

Income tax expense

Income tax expense (benefit)

$ ( 2,627,213 ) $ 292,524

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The number of shares of common stock reserved for issuance under the 2015 Equity Incentive Plan will automatically increase, with no further action by the stockholders, on the first business day of each fiscal year during the term of the 2015 Equity Incentive Plan, beginning January 1, 2016, in an amount equal to 5 % of the issued and outstanding shares of common stock on the last day of the immediately preceding year, or such lesser amount if so determined by the Board or the Plan Administrator.

During 2023 , the Company granted 273,000 shares of stock to several employees as incentive compensation or new-hire bonuses.

During 2024 , the Company issued 966,000 shares of common stock to several employees as incentive compensation or new-hire bonuses.

During 2024 , the Company granted 277,200 restricted stock units to employees and directors as a new hire bonus or as incentive compensation.

Treasury Stock :

The Company purchased 26,606 shares of common stock with a value of $ 47,382 to cover the employee's share of tax liabilities related to the vesting of commons stock and restricted stock units in 2023.

The Company withheld 408,305 shares of common stock with a value of $ 597,568 to cover the employee's share of tax liabilities related to the vesting of commons stock and restricted stock units in 2024 .

In addition, the Company repurchased 408,305 shares of common stock on the open market with a value of $ 810,874 as part of its stock buy-back program in 2024 .

The Company withheld 26,606 shares of common stock with a value of $ 47,382 to cover the employee's share of tax liabilities related to the vesting of common stock and restricted stock units in 2023 , in addition to 222,683 shares of common stock on the open market with a value of $ 410,860 as part of its stock buy-back program.

Stock Awards :

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The majority of the shares granted to those employees vest 10 years from the grant date and are forfeited in the event that the recipient’s employment relationship with the Company is terminated prior to vesting.

Stock awards that have not yet vested are fully participating shares for the purposes of calculating earnings per share.

During 2024 , a portion of the restricted stock awards were granted, but not issued and are not listed as outstanding in the financial statements for 2024 .

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Weighted Average

Aggregate Intrinsic

Exercise Price

Remaining Life

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provided that before the date of any such increase, our board of directors may determine that there will be no increase or that such increase will be for a lesser number of shares.

As of the date hereof, no shares of our common stock have been purchased under the ESPP.

As of December 31, 2024 , 66,959 shares of our common stock have been purchased under the ESPP.

Stock Warrants :

On December 15, 2020, the Company issued warrants to purchase 945,599 unregistered warrants to purchase shares of Usio, Inc.

for 945,599 shares of our common stock, with an exercise price of $ 4.23 to IMS.

On December 15, 2020, the Company issued warrants to purchase 945,599 unregistered shares of our common stock, with an exercise price of $ 4.23 to IMS.

The warrants were valued using the Black-Scholes option pricing model.

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(ii) the risk-free interest rate is 0.09%;

(iii) the contractual life is 5 years;

(iii) the contractual life is five years;

(iv) the dividend yield of 0%;

and (v) the volatility is 59.9%.

The fair value of the warrants amounted to $ 552,283 and will be recorded as an increase in the customer list asset and have a term of five years from time of vest.

Net (Loss) per Share

Basic (loss) per share (EPS) was computed by dividing net income by the weighted average number of shares of common stock outstanding during the period.

Diluted EPS differs from basic EPS due to the assumed conversion of potentially dilutive options that were outstanding during the period.

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

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

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

Effect of dilutive securities-stock options and restricted awards

Denominator for diluted (loss) per share, adjusted weighted average shares and assumed conversion

Basic (loss) per common share

Diluted (loss) per common share and common share equivalent

The awards and options to purchase shares of common stock that were outstanding at December 31, 2023 and 2022 that were not included in the computation of diluted (loss) per share because the effect would have been anti-dilutive, are as follows:

Anti-dilutive awards and options

The fair value of the warrants amounted to $ 552,283 and was recorded as an increase in the customer list asset and have a term of five years from time of vest.

Net Income (Loss) per Share

Basic net income (loss) per share (EPS) was computed by dividing net income by the weighted average number of shares of common stock outstanding during the period in addition to stock awards that have not yet vested, as they are fully participating shares for the calculation of earnings per share.

Diluted EPS differs from basic EPS due to the assumed conversion of potentially dilutive options and warrants that were outstanding during the period using the treasury stock method.

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

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

$ 3,305,497 $ ( 475,104 )

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

26,852,129 26,490,868

Effect of dilutive securities-stock options and warrants

Denominator for diluted net income (loss) per share, adjusted weighted average shares and assumed conversion

26,852,129 26,490,868

Basic net income (loss) per common share

$ 0.12 $ ( 0.02 )

Diluted net income (loss) per common share and common share equivalents

$ 0.12 $ ( 0.02 )

The warrants to purchase shares of common stock that were outstanding at December 31, 2024 and 2023 that were not included in the computation of diluted net income (loss) per share because the effect would have been anti-dilutive, are as follows:

Anti-dilutive warrants

945,599 945,599

Concentration of Credit Risk and Significant Customers

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No customers account for more than 10% of the revenues of the company.

Legal Proceedings

Commitments and Contingencies

BEN KAUDER, NINA PIOLETTI, & TRIPLE PAY PLAY, INC.

2 unchanged sentences

Augustine, Florida.

Ben Kauder and Nina Pioletti were executives of Singular;

after the acquisition, USIO hired them as executive-level employees.

Ben Kauder and Nina Pioletti were executives of Singular and, after the acquisition, Usio hired them as executive-level employees.

Usio hired Kauder to serve as Senior Vice President of Integrated Payments, and Pioletti was hired to serve as Director of Sales.

As a condition of employment, Kauder and Pioletti agreed to be bound by certain USIO policies, including as it relates to preserving the confidentiality of USIO’s proprietary information.

As a condition of employment, Kauder and Pioletti agreed to be bound by certain Usio policies, including as related to preserving the confidentiality of Usio’s proprietary information.

As Usio executives, Kauder and Pioletti were afforded access to and contributed to the development of Usio’s trade secrets and other proprietary information not generally known by the public at large, including but not limited to, financial information, marketing plans, cost and operational/strategic plans, and sales presentations.

In May 2021, Kauder resigned from USIO followed by Pioletti in July of 2022.

Thereafter, Kauder and Pioletti formed Triple Pay Play, another payment processing company which competes with the same services as USIO.

In May 2021, Kauder resigned from Usio followed by Pioletti in July 2022.

Thereafter, Kauder and Pioletti formed Triple Pay Play, another payment processing company which directly competes with Usio.

Upon information and belief, Kauder and Pioletti were working to form Triple Pay Play while employed by Usio, during Usio business hours, and while using Usio resources and Usio property.

On or about June 21, 2023, USIO filed suit against Ben Kauder, Nina Pioletti and Triple Pay Play for breach of contract and misappropriation of trade secrets and unfair business competition.

On July 6, 2023, Ben Kauder, Nina Pioletti and Triple Pay Play filed a Motion to Dismiss for Lack of Jurisdiction.

On or about June 21, 2023, Usio filed suit against Kauder, Pioletti and Triple Pay Play for breach of contract and misappropriation of trade secrets and unfair business competition.

On July 6, 2023, Kauder, Pioletti and Triple Pay Play filed a Motion to Dismiss for Lack of Jurisdiction.

The motion was granted.

Subsequently, in February of 2024, USIO refiled its case in Tennessee, where Kauder, Nina, and Triple Pay Play reside.

Currently, this case is in the early-stage discovery.

Subsequently, in February 2024, Usio refiled its case in Tennessee, where Kauder, Pioletti, and Triple Pay Play reside.

On May 3, 2024, Kauder, Pioletti and Triple Pay Play filed a Motion to Dismiss Usio’s Complaint;

this motion was heard August 5, 2024.

On March 14, 2025 the motion was denied, with future proceedings to continue at a date yet to be determined.

We have not recorded a contingency in relation to this case, as we consider the risk of loss remote as related to this lawsuit.

GREENWICH BUSINESS CAPITAL, LLC

On or about September 25, 2019, Usio, Inc., (USIO) and Greenwich Business Capital LLC (“GBC”), entered into an Agreement for payment processing services (the “Agreement”).

Pursuant to the terms of the Agreement, USIO effectively terminated the Agreement with GBC on October 31, 2023, by providing Greenwich with a 30 -days written notice as required by the Agreement.

On November 13, 2023, GBC filed lawsuit against USIO, alleging violations of the NACHA rules.

In early March of 2024, USIO filed a Motion to Dismiss for improper venue and failure to state a claim.

The motion is set to be heard in May of 2024.

On or about September 25, 2019, Usio and Greenwich Business Capital LLC, or GBC, entered into an Agreement for payment processing services.

Usio effectively terminated the agreement with GBC on October 31, 2023, by providing GBC with the requisite 30 -days written notice.

On November 13, 2023, GBC filed lawsuit against Usio, alleging violations of the NACHA rules in the State of Rhode Island Kent Superior Court.

In early March 2024, Usio filed a Motion to Dismiss for improper venue and failure to state a claim.

On May 20, 2024, Usio’s Motion to Dismiss was heard in the State of Rhode Island Kent Superior Court.

On December 6, 2024, the Judge ruled in favor of Usio and dismissed the case.

We did not record a contingency in relation to this case.

On September 1, 2021, KDHM, LLC, an entity owned by the former owners of IMS, sued PDS Acquisition Corp, now known as Usio Output Solutions, Inc., in the 73rd District Court of Bexar County, Texas claiming a breach of the asset purchase agreement executed by the parties on December 14, 2020.

The lawsuit alleges that due to a mistake, accident, or inadvertence, certain customer deposits in the amount of $ 317,000 were improperly transferred to us.

We believe that plaintiff's claims in the lawsuit have no merit and contradict the express terms of the asset purchase agreement.

As a result of this post-sale dispute, we discovered that KDHM, LLC and its principals made certain misrepresentations and breached the terms of the asset purchase agreement.

We believe that plaintiff's claims contradict the express terms of the asset purchase agreement, and we intend to continue to vigorously defend this matter.

As a result of this post-sale dispute, we subsequently discovered that KDHM, LLC and its principals made certain misrepresentations and breached the terms of the asset purchase agreement.

On September 28, 2021, we filed an answer generally denying the plaintiff’s allegations.

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KDHM and third -party defendants, its principals Henry Minten and Thomas Dowe, affirmatively represented and warranted in section 3.1 (e) of the asset purchase agreement that “[t]he Annual Financial Statements and the Interim Financial Statements have been prepared from the books and records of Seller in accordance with GAAP applied on a consistent basis.”

We also discovered that KDHM by and through its principals failed to disclose that $ 305,000 in additional customer deposits existed and that these deposits were not conveyed to us as required by the asset purchase agreement.

KDHM, Minten and Dowe provided us with fraudulent and misleading profit and loss statements that did not disclose these additional customer deposits.

We subsequently discovered that KDHM by and through its principals failed to disclose that $ 305,000 in additional customer deposits existed and that these deposits were not conveyed to us as required by the asset purchase agreement.

We believe that KDHM, Minten and Dowe provided us with fraudulent and misleading financial statements that did not disclose these additional customer deposits.

KDHM and the defendants do not dispute that these additional customer deposits existed and that they were purchased by Usio.

However, despite a written representation that these funds would be returned, KDHM and its principals have held these funds hostage.

Section 2.1 (b)( x ) of the asset purchase agreement provides that the purchased assets include “All of Seller’s deposits from its customer, including without limitation, those customer deposits listed on Schedule 2.1 (b)(xi) of the Disclosure Schedules.” Finally, we discovered that KDHM did not provide us with all customer lists, which are identified as purchased assets under the agreement.

In our counterclaims and third -party petition, we assert causes of action for fraud, breach of contract and conversion.

On August 18, 2023, the judge granted a summary motion entitling KDHM to deposits for customer accounts that were printed and mailed prior to the acquisition, and Usio Output Solutions, Inc.

was entitled to deposits for accounts that were not yet printed and printed but not yet mailed prior to the acquisition.

Section 2.1 (b)( x ) of the asset purchase agreement provides that the purchased assets include “All of Seller’s deposits from its customers, including without limitation, those customer deposits listed on Schedule 2.1 (b)(xi) of the Disclosure Schedules.” Finally, we discovered that KDHM did not provide us with all customer lists, which are identified as purchased assets under the agreement.

On August 18, 2023, the judge granted a summary motion entitling KDHM to deposits for customer accounts that were printed and mailed prior to the acquisition, and Output Solutions was entitled to deposits for accounts that were not yet printed and printed but not yet mailed prior to the acquisition.

Usio has requested a reconsideration of the motion, as it does not consider that deposits are only owed to KDHM if they were earned and offset against accounts receivable.

On March 4, 2024, the court held a hearing on KDHM’s Supplemental Rule 166 (G) Motion;

the court granted the motion in favor of KDHM.

However, USIO believes the court erred in granting the motion and ultimately filed a motion for reconsideration on March 19, 2024.

Usio’s Motion for Reconsideration of Order Granting Plaintiff’s Supplemental Rule 166 (g) Motion is set to be heard on March 28, 2024.

On March 4, 2024, the court held a hearing on KDHM’s Supplemental Rule 166 (G) Motion and the court granted the motion in favor of KDHM.

However, Usio believes the court erred in granting the motion and filed a motion for reconsideration on March 19, 2024.

On March 28, 2024, the court heard Usio’s Motion for Reconsideration of Order Granting Plaintiff’s Supplemental Rule 166 (g).

On May 2, 2024, the court denied Usio’s motion.

On July 12, 2024, we filed an appeal on the lower court's decision, which is pending review.

As part of the July 12, 2024 appeal, Usio was required to obtain a bond in the amount of $ 474,229 .

See Note 5 for more information.

We have not recorded a contingency in relation to this case, as we consider the risk of loss remote as related to this lawsuit.

OTHER PROCEEDINGS

1 unchanged sentence

While we believe that such matters are currently not material, there can be no assurance that matters arising in the ordinary course of business for which we are or could become involved in litigation will not have a material adverse effect on our business, financial condition, or results of operations.

Subsequent Events

On March 24, 2025 the Board of Directors authorized a renewal of the Company's buy-back program, with a limit up to $ 4 million of the Company's common stock with a three year duration or the date the Board of Directors, at its sole discretion, terminates or suspends the program.

The program is used for the purchase of stock from employees and directors, and for open-market purchases through a broker.

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.

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

What changed 10-K

Item 8. Financial Statements and Supplementary Data