What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2025-05-14 compared with 2024-11-06 · 210 added, 194 removed, 359 unchanged (53% of the section changed)

1 unchanged sentence

CONDENSED CONSOLIDATED BALANCE SHEETS

September 30, 2024

March 31, 2025

December 31, 2024

4 unchanged sentences

4,569,616 5,053,639

Accounts receivable, tax credit

Settlement processing assets

58 unchanged sentences

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

- 0 - shares outstanding at September 30, 2024 (unaudited) and December 31, 2023, respectively

- 0 - shares outstanding at March 31, 2025 (unaudited) and December 31, 2024, respectively

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

29,811,487 and 28,671,606 issued, and 27,216,864 and 26,332,523 outstanding at September 30, 2024 (unaudited) and December 31, 2023, respectively

30,038,355 and 29,902,415 issued, and 26,527,906 and 26,609,651 outstanding at March 31, 2025 (unaudited) and December 31, 2024, respectively

30,038 198,317

2 unchanged sentences

Treasury stock, at cost;

2,594,623 and 2,339,083 shares at September 30, 2024 (unaudited) and December 31, 2023, respectively

3,510,449 and 3,292,764 shares at March 31, 2025 (unaudited) and December 31, 2024, respectively

( 6,122,232 ) ( 5,770,592 )

9 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

Three Months Ended September 30,

Nine Months Ended September 30,

Three Months Ended March 31,

$ 22,009,050 $ 20,970,386

Cost of services

17,199,907 16,116,691

4,809,143 4,853,695

Selling, general and administrative expenses:

Stock-based compensation

410,062 499,273

4,142,895 4,060,225

Depreciation and amortization

495,770 576,154

Total selling, general and administrative

5,048,727 5,135,652

Operating (loss)

( 239,584 ) ( 281,957 )

Other income and (expense):

Interest income

79,011 115,354

Interest expense

( 11,843 ) ( 13,585 )

Other income, net

67,168 101,769

(Loss) before income taxes

Federal income tax (benefit)

( 172,416 ) ( 180,188 )

State income tax expense

Income tax expense (benefit)

Net income (loss)

Basic income (loss) per common share:

Diluted income (loss) per common share:

62,554 70,000

Income tax expense

62,554 70,000

$ ( 234,970 ) $ ( 250,188 )

Basic (loss) per common share:

$ ( 0.01 ) $ ( 0.01 )

Diluted (loss) per common share:

$ ( 0.01 ) $ ( 0.01 )

Weighted average common shares outstanding

26,615,947 26,375,762

See the accompanying notes to the condensed interim consolidated financial statements.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Nine Months Ended September 30,

Three Months Ended March 31,

Operating activities:

Net income (loss)

$ ( 234,970 ) $ ( 250,188 )

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

1,053,761 905,701

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

277,773 358,187

Deferred federal income tax

217,997 217,967

1 unchanged sentence

410,062 499,273

Vendor stock-based compensation

Non-cash revenue from returned common stock

— ( 156,162 )

Changes in current assets and current liabilities:

1 unchanged sentence

484,023 701,911

Accounts receivable, tax credit

Prepaid expenses and other

7 unchanged sentences

( 160,253 ) ( 107,243 )

Prepaid card load obligations

( 9,513,406 ) 38,668,841

Merchant reserves

2 unchanged sentences

( 11,636 ) ( 57,468 )

Net cash provided by (used in) operating activities

Net cash provided by operating activities

1,374,210 88,661

10 unchanged sentences

( 351,640 ) ( 44,823 )

Net cash (used in) financing activities

Assets held for customers

3,953,121 ( 6,748,838 )

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

Net cash provided by (used in) financing activities

3,576,886 ( 6,808,092 )

Cash, cash equivalents, prepaid card load assets, customer deposits and merchant reserves, beginning of period

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

4,637,842 ( 6,896,181 )

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

Cash, cash equivalents, settlement processing assets, prepaid card load assets, customer deposits and merchant reserves, beginning of period

87,618,491 90,810,089

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

$ 92,256,333 $ 83,913,908

Supplemental disclosure of cash flow information:

1 unchanged sentence

$ 11,843 $ 13,585

Non-cash operating activities:

Right of use assets obtained in exchange for operating lease liabilities

Non-cash financing activity:

Issuance of deferred stock compensation

1,497,300 2,478,506

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:

September 30,

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

Three Months Ended March 31,

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

Cash and cash equivalents

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

Settlement processing assets

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

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

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

Cash and cash equivalents

$ 8,392,317 $ 7,396,285

Settlement processing assets

Prepaid card load assets

22,065,567 58,839,602

Customer deposits

1,824,820 1,578,498

Merchant reserves

4,892,601 5,336,545

$ 37,175,305 $ 73,150,930

See the accompanying notes to the condensed interim consolidated financial statements.

3 unchanged sentences

Balance at December 31, 2024

29,902,415 $ 198,317 $ 99,676,457 $ ( 5,770,592 ) $ ( 6,914,563 ) $ ( 68,032,656 ) $ 19,156,963

Adjustment to par value of common stock

— ( 168,415 ) 168,415 — — — —

Issuance of common stock under equity incentive plan

128,053 128 136,276 — — — 136,404

Issuance of common stock under employee stock purchase plan

7,887 8 11,507 — — — 11,515

Deferred compensation amortization

— — — — 273,658 — 273,658

Purchase of treasury stock costs

— — — ( 351,640 ) — — ( 351,640 )

Net (loss) for the period

— — — — — ( 234,970 ) ( 234,970 )

Balance at March 31, 2025

Issuance of common stock under equity incentive plan

Issuance of common stock under employee stock purchase plan

Reversal of deferred compensation amortization that did not vest

Deferred compensation amortization

Purchase of treasury stock costs

Net income for the period

Balance at June 30, 2024

Issuance of common stock under equity incentive plan

Issuance of common stock under employee stock purchase plan

Deferred compensation amortization

Purchase of treasury stock costs

Net income for the period

Balance at September 30, 2024

30,038,355 $ 30,038 $ 99,992,655 $ ( 6,122,232 ) $ ( 6,640,905 ) $ ( 68,267,626 ) $ 18,991,930

Balance at December 31, 2023

Issuance of common stock under equity incentive plan

Deferred compensation amortization

Purchase of treasury stock costs

Net income for the period

Balance at March 31, 2023

Issuance of common stock under equity incentive plan

Reversal of deferred compensation amortization that did not vest

Deferred compensation amortization

Purchase of treasury stock costs

Non-cash return of common stock

Net income for the period

Balance at June 30, 2023

28,671,606 $ 197,087 $ 97,479,830 $ ( 4,362,150 ) $ ( 6,907,775 ) $ ( 71,338,153 ) $ 15,068,839

Issuance of common stock under equity incentive plan

107,600 107 153,118 — — — 153,225

Deferred compensation amortization

— — — — 346,047 — 346,047

Purchase of treasury stock costs

— — — ( 44,823 ) — — ( 44,823 )

Net (loss) for the period

Balance at September 30, 2023

— — — — — ( 250,188 ) ( 250,188 )

Balance at March 31, 2024

28,779,206 $ 197,194 $ 97,632,948 $ ( 4,406,973 ) $ ( 6,561,728 ) $ ( 71,588,341 ) $ 15,273,100

See the accompanying notes to the condensed interim consolidated financial statements.

7 unchanged sentences

Results of operations for interim periods are not necessarily indicative of results that may be expected for any other interim periods or the full fiscal year.

References in this quarterly report to "the quarter" or the "third quarter" mean the three month period ended September 30, 2024 or 2023, as the case may be and unless otherwise noted.

References in this quarterly report to "the quarter" or the "first quarter" mean the three month period ended March 31, 2025 or 2024 , as the case may be and unless otherwise noted.

Change in Accounting Policy:

On December 31, 2024, we changed our policy for cash flows presentation purposes to include settlement processing assets as cash and cash equivalents consistent with the accounting treatment for other forms of cash assets held for customers and controlled by the Company.

Additionally, we changed the presentation for prepaid card load obligations on the statement of cash flows from an operating activity to a financing activity.

Per Accounting Standards Codification 230 and related interpretations, funds held on behalf of others can be reported as either operating activities or financing activities within the statement of cash flows depending on the obligations surrounding the funds being held.

Upon further assessment of changes in our operations over time, it was determined that reflecting these activities as assets held for customers within financing activities provides a more predictable measure of operating cash flows.

Accordingly, this change in presentation is accounted for retrospectively, with each comparable period being revised to reflect the new change in presentation.

As a result of the change in presentation of prepaid card load obligations to be included as a component of assets held for customers, operating cash flows for the three months ended March 31, 2024 were increased by $ 2.9 million with a corresponding decrease in assets held for customers reflected as a financing activity.

The election to include settlement processing assets as part of cash and cash equivalents further decreased assets held for customers by an additional $ 3.9 million.

This policy change had no effect on working capital, total assets, total liabilities, total equity or net loss as of and for the period ended March 31, 2024.

Use of Estimates:

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.

The preparation of financial statements in conformity with U.S.

generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.

Actual results could differ from those estimates.

Accounting for Income Taxes:

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

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 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 upon examination by the taxing authorities.

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

The Company’s federal returns for the past four years remain open to examination.

The Company is subject to the Texas franchise tax and Tennessee franchise tax.

Management is not aware of any tax positions that would have a significant impact on its financial position.

Revenue Recognition:

2 unchanged sentences

The Company complies with ASC 606 - 10 and reports revenues at gross as a principal versus net as an agent.

Although some of the Company's processing agreements vary with respect to specific credit risks, the Company has determined that for each agreement it is acting in the principal role.

Although some of the Company's processing agreements vary with respect to specific credit risks, the Company has determined for each agreement that it is acting in the principal role.

Merchants may be charged for these processing services at a bundled rate based on a percentage of the dollar amount of each transaction and, in some instances, additional fees are charged for each transaction.

4 unchanged sentences

Sales taxes billed are reported directly as a liability to the taxing authority and are not included in revenue.

Usio Output Solutions, Inc.

("Output Solutions"), a wholly-owned subsidiary of Usio, Inc., provides bill preparation, presentment and mailing services.

Revenue from Output Solutions is recognized when the related services are performed for printing and delivered to the United States Postal Services, or USPS, for postage.

Our wholly-owned subsidiary, Usio Output Solutions, Inc., or Output Solutions, provides bill preparation, presentment and mailing services.

Revenue from Output Solutions is recognized when the related services are performed for printing and delivered to the United States Postal Service, or USPS, for postage.

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

2 unchanged sentences

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

Three Months Ended September 30,

Nine Months Ended September 30,

Three Months Ended March 31,

ACH and complementary services

19 unchanged sentences

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 and Obligations:

The Company maintains pre-funding accounts for its customers to facilitate prepaid card loads as initiated by the customer.

Prepaid Card Load Assets:

The Company maintains pre-funding accounts for its customers to facilitate prepaid card loads as initiated by our customer.

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

As the prepaid business line expands, card load assets will increase as funds are sent from customers to the Company.

As customers begin to load cash onto cards, the balance of both the prepaid card asset and corresponding liability decrease.

As these balances decrease, the Company recognizes processing revenue and cardholder fees.

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

6 unchanged sentences

The merchant reserve assets are carried on the Company's balance sheet with a corresponding liability.

Merchant reserves are established for each merchant and funds are collected and held as collateral to minimize contingent liabilities associated with any losses that may occur.

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

Merchant Reserves are set for each merchant.

Funds are collected from each merchant and held as collateral to minimize contingent liabilities associated with any losses that may occur under the merchant agreement.

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 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:

The Company maintains an allowance for estimated credit losses resulting from the inability or failure of the Company’s customers to make required payments.

The Company determines the allowance based on an account-by-account review, taking into consideration such factors as the age of the outstanding balance, historical pattern of collections, and financial condition of the customer to conform with Accounting Standards Update (ASU) Topic 326 .

During the nine months ended September 30, 2024 and the year ended December 31, 2023, there were no credit losses incurred.

In the past, losses incurred by the Company due to credit losses were within its expectations.

If the financial conditions of the Company’s customers were to deteriorate, resulting in an impairment of their ability to make contractual payments, additional losses may be incurred in future periods.

Accounts receivable are reported as outstanding principal net of an allowance for expected credit losses of $ 324,000 at March 31, 2025 and December 31, 2024 .

The Company maintains an allowance for credit losses for estimated losses resulting from the inability or failure of its customers to make required payments.

Past losses incurred by the Company due to credit losses have been within its expectations.

If the financial condition of its customers deteriorates, resulting in an impairment of their ability to make contractual payments, additional allowances might be required.

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

The allowance for credit losses was $ 289,000 at September 30, 2024 and $319,000 at December 31, 2023 .and carried on the Company's balance sheet in accounts receivable, and in the statement of cash flows as a change in accounts receivable.

The Company normally does not charge interest on accounts receivable.

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

At September 30, 2024 and December 31, 2023 , inventory consisted primarily of printing and paper supplies used for Output Solutions.

At March 31, 2025 and December 31, 2024 , inventory consisted primarily of printing and paper supplies used for Output Solutions.

Property and Equipment:

Property and equipment are stated at cost.

Depreciation and amortization are computed on a straight-line method over the estimated useful lives of the related assets, ranging from three to ten years.

Leasehold improvements are amortized over the lesser of the estimated useful lives or remaining lease period.

Expenditures for maintenance and repairs are charged to expense as incurred.

Accounting for Internal Use Software:

The Company capitalizes the costs associated with software being developed or obtained for internal use when both the preliminary project stage is completed and it is probable that computer software being developed will be completed and placed in service.

The Company capitalizes the costs associated with software being developed or obtained for internal use until both the preliminary project stage is substantially completed and it is probable that computer software being developed will be completed and placed in service.

Capitalized costs include only (i) external direct costs of materials and services consumed in developing or obtaining internal-use software, (ii) payroll and other related costs for employees who are directly associated with and who devote time to the internal-use software project, and (iii) interest costs incurred, when material, while developing internal-use software.

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.

During the nine months ended September 30, 2024 and September 30, 2023 , the Company capitalized software costs of $ 575,882 and $ 513,593 , respectively.

During the three months ended March 31, 2025 and March 31, 2024 , the Company capitalized software costs of $ 290,650 and $ 115,473 , respectively.

Concentration of Credit Risk:

Financial instruments that potentially expose the Company to credit risk consist of cash and cash equivalents, and accounts receivable.

The Company is exposed to credit risk on its cash and cash equivalents in the event of default by the financial institutions to the extent account balances exceed the amount insured by the FDIC, which is $250,000.

Accounts receivable potentially subject the Company to concentrations of credit risk.

The Company’s customer base operates in a variety of industries and is geographically dispersed.

The Company closely monitors extensions of credit.

Estimated credit losses have been recorded in the consolidated financial statements.

Recent credit losses have been within management's expectations.

No customer accounted for more than 10% of revenues in 2025 or 2024 .

Valuation of Long-Lived and Intangible Assets:

5 unchanged sentences

When management determines that the carrying value of long-lived and intangible assets may not be recoverable, impairment is measured as the excess of the assets’ carrying value over the estimated fair value.

No impairment losses were recorded in 2023 or during the nine months ended September 30, 2024 .

No impairment losses were recorded in 2024 or during the three months ended March 31, 2025 .

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

however, the Company cannot predict the occurrence of events that might adversely affect the reported values in the future.

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.

Impairment of Long-Lived Assets and Intangible Assets:

The Company reviews periodically, on at least an annual basis, the carrying value of its long-lived assets and intangible assets and whenever events or changes in circumstances indicate that the carrying value may not be recoverable.

To the extent the fair value of a long-lived asset, determined based upon the estimated future cash inflows attributable to the asset, less estimated future cash outflows, is less than the carrying amount, an impairment loss is recognized.

Reserve for Processing Losses:

5 unchanged sentences

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

At September 30, 2024 and December 31, 2023 , the Company’s reserve for processing losses was $ 925,528 and $ 826,528 , respectively, and carried on the Company's balance sheet as an accrued expense, and in the statement of cash flows as a change in accrued expenses.

At March 31, 2025 and December 31, 2024 , the Company’s reserve for processing losses was $ 541,521 and $ 897,116 , respectively, which is recorded on the Company's balance sheet as an accrued expense, and in the statement of cash flows as a change in accrued expenses.

Legal Proceedings:

7 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 each of the three months ended September 30, 2024 and 2023 , operating lease expenses totaled $ 135,123 and $ 132,574 , respectively.

For each of the nine months ended September 30, 2024 and 2023 , operating lease expenses totaled $ 401,228 and $ 407,358 , respectively.

For each of the three months ended March 31, 2025 and 2024 , operating lease expenses totaled $ 150,688 and $ 132,574 , respectively.

Accrued Expenses

Accrued expenses consisted of the following balances:

September 30, 2024

March 31, 2025

December 31, 2024

Accrued commissions

$ 771,156 $ 425,486

Reserve for processing losses

541,521 897,116

Other accrued expenses

815,954 881,925

Accrued taxes

537,806 474,561

Accrued salaries

38,685 687,837

Total accrued expenses

Equipment Loan

$ 2,705,122 $ 3,366,925

Equipment Loans

On March 20, 2021, the Company entered into a debt arrangement to finance $ 165,996 for the purchase of an Output Solutions sorter.

1 unchanged sentence

Monthly principal and interest payments were required in the amount of $ 4,902 .

Principal payments for the three months ended September 30, 2024 and 2023 were $ 0 and $ 14,312 , respectively, and are reflected on the Company's Condensed Consolidated Statement of Cash Flows.

Principal payments for the nine months ended September 30, 2024 and 2023 were $ 14,312 and $ 42,528 , respectively.

Principal payments for the three months ended March 31, 2025 and 2024 were $ 0 and $ 14,312 , respectively, and are reflected on the Company's Condensed Consolidated Statement of Cash Flows.

This loan was paid in full on its maturity date.

2 unchanged sentences

Monthly principal and interest payments are required in the amount of $ 16,017 , with interest only payments required for the first six months of the loan term.

Total interest and principal payments on this folder and inserter equipment loan were $ 47,953 for the three months ended September 30, 2024 .

Total interest and principal payments on this folder and inserter equipment loan were $ 98,121 for the nine months ended September 30, 2024 .

Total interest and principal payments on this folder and inserter equipment loan were $ 47,953 for the three months ended March 31, 2025 and $ 13,481 for the three months ended March 31, 2024 .

As of March 31, 2025 , 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.

Commitments and Contingencies" for further information.

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 March 31, 2025 , 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 principal payments on current debt arrangements are as follows at March 31, 2025 :

Year ended December 31,

2025 (excluding the three months ended March 31, 2025)

Total payments

Stockholders' Equity

Stock Warrants :

On December 15, 2020, the Company issued warrants to purchase 945,599 shares of the Company's common stock with an initial exercise price of $ 4.23 per share, subject to adjustment as provided in the warrant agreement governing the warrants, to Information Management Solutions, LLC d/b/a/ KDHM, LLC ("IMS" or "KDHM") which were issued in connection with our acquisition of IMS in December 2020.

IMS's warrants vest and become exercisable annually over three years in three equal tranches beginning on December 15, 2021 and became fully vested on December 15, 2023.

8 unchanged sentences

The fair value of the warrants amounted to $ 552,283 and was recorded as an increase in the customer list asset and a corresponding amount to additional paid in capital.

The amortization of these warrants, which is included in the total amortization expense of the customer list intangible asset, totaled $ 27,615 and $ 82,842 in each of the three and nine months ended September 30, 2024 and 2023 , respectively.

The amortization of these warrants, which is included in the total amortization expense of the customer list intangible asset, totaled $ 27,615 in the three months ended March 31, 2025 and 2024 , respectively.

Net Income (Loss) Per Share

3 unchanged sentences

therefore, unvested restricted stock is considered a participating security for the purpose of calculating EPS.

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 nine months ended September 30, 2024 and September 30, 2023 .

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

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

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 months ended March 31, 2025 and March 31, 2024 .

Three Months Ended March 31,

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

$ ( 234,970 ) $ ( 250,188 )

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

26,615,947 26,375,762

Effect of dilutive securities

Denominator for diluted earnings per share, adjusted for weighted average shares and assumed conversion

Basic income (loss) per common share

Diluted income (loss) per common share and common share equivalent

The warrants to purchase shares of common stock that were outstanding at September 30, 2024 and September 30, 2023 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,

26,615,947 26,375,762

Basic (loss) per common share

$ ( 0.01 ) $ ( 0.01 )

Diluted (loss) per common share and common share equivalent

$ ( 0.01 ) $ ( 0.01 )

The warrants to purchase shares of common stock that were outstanding at March 31, 2025 and March 31, 2024 that were not included in the computation of diluted earnings per share because the effect would have been anti-dilutive, are as follows:

Three Months Ended March 31,

Anti-dilutive warrants

945,599 945,599

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.

4 unchanged sentences

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 $ 3.2 million during 2024.

Management considered the realizability of this asset in light of historical operating results and forecasted results, and determined that it was 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 the third quarter of 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.

Significant components of the Company's deferred tax asset are as follows for the nine months ended September 30, 2024 and year ended December 31, 2023 .

September 30, 2024

December 31, 2023

Deferred tax assets:

Net operating loss carryforwards

$ 4,690,051 $ 4,686,000

Depreciation and amortization

1,137,000 1,137,000

Non-cash compensation

1,649,000 1,649,000

124,000 124,000

7,600,051 7,596,000

Valuation Allowance

( 2,909,998 ) ( 6,092,000 )

Deferred tax asset

$ 4,690,053 $ 1,504,000

The tax provision for federal and state income tax is as follows for the nine months ended September 30, 2024 and 2023 .

Nine Months Ended September 30, 2024

Nine Months Ended September 30, 2023

Current provision:

210,000 222,524

Deferred provision:

Federal income tax (benefit)

( 3,186,053 ) —

Income tax expense (benefit)

$ ( 2,976,053 ) $ 222,524

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 nine months ended September 30, 2024 and year ended December 31, 2023 .

Nine Months Ended September 30, 2024

Nine Months Ended September 30, 2023

Income tax (benefit) at 21%

$ ( 62,891 ) $ ( 58,488 )

Change in valuation allowance

( 3,182,002 ) —

Permanent and other differences

58,840 58,488

210,000 222,524

Income tax expense (benefit)

$ ( 2,976,053 ) $ 222,524

At December 31, 2023 , the Company had available net operating loss carryforwards of approximately $ 22.3 million.

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

As of March 31, 2025 , the Company had not accrued any interest or penalties related to uncertain tax provisions.

At March 31, 2025 , 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.

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1,267,336 2037

As of September 30, 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 year to offset taxable income.

As of March 31, 2025 , there were NOLs totaling approximately $ 13.0 million that have been generated since 2017 that do not expire, and can be carried forward to future year to offset taxable income.

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

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Related Party Transactions

During the nine months ended September 30, 2024 and September 30, 2023 , the Company purchased a total of $ 9,747 and $ 18,148 , respectively, of corporate imprinted sportswear, promotional items, and caps from Angry Pug Sportswear.

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

During the three months ended March 31, 2025 and March 31, 2024 , the Company purchased a total of $ 2,003 and $ 0 , respectively, of corporate imprinted sportswear, promotional items, and caps from Angry Pug Sportswear.

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

Directors and Officers

On March 14, 2025, we withheld 500 shares of our common stock for $ 735 in a private transaction based on the $ 1.47 per share closing price on March 14, 2025 from Michelle Miller, a member of the company’s Board of Directors to cover her share of taxes in connection with equity grants.

On February 21, 2025, we withheld 1,186 shares of our common stock for $ 2,028 in a private transaction based on the $ 1.71 per share closing price on February 21, 2025 from Houston Frost, the Company's Senior Vice President, Chief Product Officer, to cover his share of taxes in connection with equity grants.

On February 21, 2025, we withheld 1,186 shares of our common stock for $ 2,028 in a private transaction based on the $ 1.71 per share closing price on February 21, 2025 from Greg Carter, the Company's Senior Vice President, Chief Revenue Officer, to cover his share of taxes in connection with equity grants.

On February 21, 2025, we withheld 4,911 shares of our common stock for $ 8,399 in a private transaction based on the $ 1.71 per share closing price on February 21, 2025 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 January 31 2025, we withheld 54,460 shares of our common stock for $ 102,385 in a private transaction based on the $ 1.88 per share closing price on January 31, 2025 from Houston Frost, the Company's Senior Vice President, Chief Product Officer, to cover his share of taxes in connection with equity grants.

On January 8, 2025, we withheld 355 shares of our common stock for $ 850 in a private transaction based on the $ 2.39 per share closing price on January 8, 2025 from Michael White, the Company's Senior Vice President, Chief Accounting Officer, to cover his share of taxes in connection with equity grants.

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).

Upon vesting, officers and employees will receive issued shares.

Executive officers 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).

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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 repurchased 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 repurchased 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.

On December 11, 2023, Mr.

Jewell entered into a Separation and Mutual Release of Claims Agreement (“Separation Agreement”) with the Company.

Pursuant to the Separation Agreement, Mr.

Jewell was paid installment payments equal to his base salary at the time of his retirement until and including April 18, 2024.

Additionally, Mr.

Jewell was permitted to retain any unvested Company stock options or other equity awards, which shall vest in accordance with the applicable schedules.

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

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

On November 18, 2023, we repurchased 3,927 shares of our common stock for $ 6,675 in a private transaction based on the $ 1.70 per share closing price on November 18, 2023 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.

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 officers and employees as a performance bonus at an issue price of $ 1.75 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 ( 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 Non-employee 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 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.

Commitments and Contingencies

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this motion was heard August 5, 2024.

The Judge did not make a ruling and is currently reviewing all materials filed in regards to this matter.

Greenwich Business Capital, LLC

On or about September 25, 2019, 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 National Automated Clearing House Association (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.

The Judge did not make a ruling and is currently reviewing all materials filed in regards to this matter.

On March 14, 2025 the motion was denied, with 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.

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.

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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.

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

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

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

See Note 4 for more information.

On April 2, 2025, the Fourth Court of Appeals reversed the trial court’s judgment and rendered judgement that KDHM should take nothing against Usio on its “money had and received claim.” With respect to the remaining claims, the court remanded back to the lower court.

On April 11, 2025, KDHM filed a Motion for Reconsideration with the appellate court, which was denied on May 5, 2025.

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

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 March 31, 2025, 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.

The Company also 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.

Other proceedings

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

What changed 10-Q

Item 1. Financial Statements