What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2025-11-12 compared with 2025-08-06 · 155 added, 195 removed, 513 unchanged (41% of the section changed)

1 unchanged sentence

CONDENSED CONSOLIDATED BALANCE SHEETS

June 30, 2025

September 30, 2025

December 31, 2024

65 unchanged sentences

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

- 0 - shares outstanding at June 30, 2025 (unaudited) and December 31, 2024, respectively

- 0 - shares outstanding at September 30, 2025 (unaudited) and December 31, 2024, respectively

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

30,235,512 and 29,902,415 issued, and 26,475,698 and 26,609,651 outstanding at June 30, 2025 (unaudited) and December 31, 2024, respectively

31,191,733 and 29,902,415 issued, and 27,395,639 and 26,609,651 outstanding at September 30, 2025 (unaudited) and December 31, 2024, respectively

31,192 198,317

2 unchanged sentences

Treasury stock, at cost;

3,759,814 and 3,292,764 shares at June 30, 2025 (unaudited) and December 31, 2024, respectively

3,796,094 and 3,292,764 shares at September 30, 2025 (unaudited) and December 31, 2024, respectively

( 6,536,479 ) ( 5,770,592 )

9 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

Three Months Ended June 30,

Six Months Ended June 30,

$ 19,960,990 $ 20,079,888 $ 41,970,040 $ 41,050,274

Three Months Ended September 30,

Nine Months Ended September 30,

Cost of services

14,820,921 15,280,074 32,020,828 31,396,765

5,140,069 4,799,814 9,949,212 9,653,509

Operating expenses:

Selling, general and administrative expenses:

Stock-based compensation

434,255 460,061 844,317 959,334

4,638,185 4,000,845 8,781,080 8,061,070

Depreciation and amortization

464,599 547,849 960,369 1,124,003

Total operating expenses

5,537,039 5,008,755 10,585,766 10,144,407

Total selling, general and administrative

Operating loss

( 396,970 ) ( 208,941 ) ( 636,554 ) ( 490,898 )

Other income and (expense):

Interest income

110,908 107,270 189,919 222,624

— 261,413 — 261,413

Interest expense

( 11,735 ) ( 14,250 ) ( 23,578 ) ( 27,835 )

Other income, net

99,173 354,433 166,341 456,202

Income (loss) before income taxes

( 297,797 ) 145,492 ( 470,213 ) ( 34,696 )

Loss before income taxes

Federal income tax benefit

State income tax expense

68,857 70,000 131,411 140,000

Income tax expense

68,857 70,000 131,411 140,000

Net income (loss)

$ ( 366,654 ) $ 75,492 $ ( 601,624 ) $ ( 174,696 )

Basic income (loss) per common share:

$ ( 0.01 ) $ 0.00 $ ( 0.02 ) $ ( 0.01 )

Diluted income (loss) per common share:

$ ( 0.01 ) $ 0.00 $ ( 0.02 ) $ ( 0.01 )

Weighted average common shares outstanding

26,456,411 26,534,407 26,577,052 26,454,848

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

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Six Months Ended June 30,

Nine Months Ended September 30,

Operating activities:

$ ( 601,624 ) $ ( 174,696 )

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

Depreciation & Amortization

960,369 1,124,003

Net income (loss)

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

Depreciation and Amortization

Deferred federal income tax

Employee stock-based compensation

844,317 959,334

Changes in current assets and current liabilities:

Accounts receivable

162,045 69,599

Accounts receivable, tax credit

Prepaid expenses and other

( 520,027 ) ( 375,092 )

Operating lease right-of-use assets

310,086 236,367

23,339 15,795

Accounts payable and accrued expenses

( 1,426,817 ) ( 649,684 )

Operating lease liabilities

( 310,483 ) ( 246,945 )

Merchant reserves

105,000 ( 458,256 )

Customer deposits

69,509 ( 57,725 )

Net cash provided by operating activities

1,110,326 457,772

Investing activities:

Purchases of property and equipment

( 73,925 ) ( 53,892 )

Capitalized labor for internal use software

( 673,242 ) ( 401,165 )

Net cash used in investing activities

( 747,167 ) ( 455,057 )

Financing activities:

Payments on equipment loan

( 72,328 ) ( 36,868 )

Proceeds from equipment loan

Proceeds from issuance of common stock

41,496 10,510

Purchases of treasury stock

( 708,298 ) ( 149,769 )

Assets held for customers

3,202,631 2,701,326

Net cash provided by financing activities

2,463,501 2,525,199

Net cash provided by (used in) financing activities

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

2,826,660 2,527,914

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

$ 90,445,151 $ 93,338,003

Supplemental disclosure of cash flow information:

Cash paid during the period for:

$ 23,578 $ 27,835

Non-cash financing activity:

Non-cash investing and financing activities:

Right of use assets obtained in exchange for operating lease liabilities

Issuance of deferred stock compensation

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:

Three Months Ended June 30,

Six Months Ended June 30,

Nine Months Ended September 30,

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

Cash and cash equivalents

$ 8,718,247 $ 7,053,812 $ 8,056,891 $ 7,155,687

Settlement processing assets

62,151,877 41,030,860 47,104,006 44,899,603

Prepaid card load assets

14,553,939 28,698,878 25,648,688 31,578,973

Customer deposits

1,907,169 1,808,263 1,918,805 1,865,731

Merchant reserves

4,925,101 5,322,095 4,890,101 5,310,095

$ 92,256,333 $ 83,913,908 $ 87,618,491 $ 90,810,089

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

Cash and cash equivalents

$ 7,506,411 $ 7,498,256 $ 7,506,411 $ 7,498,256

Settlement processing assets

62,891,265 51,122,984 62,891,265 51,122,984

Prepaid card load assets

13,064,060 28,056,918 13,064,060 28,056,918

Customer deposits

1,988,314 1,808,006 1,988,314 1,808,006

Merchant reserves

4,995,101 4,851,839 4,995,101 4,851,839

$ 90,445,151 $ 93,338,003 $ 90,445,151 $ 93,338,003

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

CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY

Additional Paid- In

1 unchanged sentence

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, at costs

— — — ( 351,640 ) — — ( 351,640 )

Net loss for the period

— — — — — ( 234,970 ) ( 234,970 )

Balance at March 31, 2025

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

Issuance of common stock under equity incentive plan

176,622 177 160,420 — — — 160,597

Issuance of common stock under employee stock purchase plan

20,535 20 29,958 — — — 29,978

Reversal of deferred compensation amortization that did not vest

— — — — — — —

Deferred compensation amortization

— — — — 273,658 — 273,658

Purchase of treasury stock, at costs

— — — ( 356,658 ) — — ( 356,658 )

Net loss for the period

— — — — — ( 366,654 ) ( 366,654 )

Balance at June 30, 2025

30,235,512 $ 30,235 $ 100,183,033 $ ( 6,478,890 ) $ ( 6,367,247 ) $ ( 68,634,280 ) $ 18,732,851

Issuance of common stock under equity incentive plan

Issuance of common stock under employee stock purchase plan

Deferred compensation amortization

Purchase of treasury stock, at costs

Net loss for the period

Balance at September 30, 2025

Balance at December 31, 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, at costs

— — — ( 44,823 ) — — ( 44,823 )

Net loss for the period

— — — — — ( 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

Issuance of common stock under equity incentive plan

994,049 994 1,610,320 — ( 1,497,300 ) — 114,014

Issuance of common stock under employee stock purchase plan

6,180 6 10,504 — — — 10,510

Reversal of deferred compensation amortization that did not vest

( 15,000 ) ( 15 ) ( 31,305 ) — 31,320 — —

Deferred compensation amortization

— — — — 346,048 — 346,048

Purchase of treasury stock, at costs

— — — ( 104,946 ) — — ( 104,946 )

Net income for the period

— — — — — 75,492 75,492

Balance at June 30, 2024

29,764,435 $ 198,179 $ 99,222,467 $ ( 4,511,919 ) $ ( 7,681,660 ) $ ( 71,512,849 ) $ 15,714,218

Issuance of common stock under equity incentive plan

Issuance of common stock under employee stock purchase plan

Deferred compensation amortization

Purchase of treasury stock, at costs

Net income for the period

Balance at September 30, 2024

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

2 unchanged sentences

The accompanying unaudited interim condensed consolidated financial statements of Usio, Inc.

and its subsidiaries (collectively, the “Company”) have been prepared without audit, pursuant to the rules and regulations of the Securities and Exchange Commission (the "Commission" or the "SEC").

and its subsidiaries (collectively, the “Company” or "Usio") have been prepared without audit, pursuant to the rules and regulations of the Securities and Exchange Commission (the "Commission" or the "SEC").

Certain information and footnote disclosures normally included in financial statements prepared in accordance with United States generally accepted accounting principles ("GAAP") have been omitted pursuant to such rules and regulations.

2 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 "second quarter" mean the three month period ended June 30, 2025 or 2024 , as the case may be and unless otherwise noted.

References in this quarterly report to "the quarter" or the "third quarter" mean the three month period ended September 30, 2025 or 2024 , as applicable unless otherwise noted.

Change in Accounting Policy:

3 unchanged sentences

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 retrospective change in presentation of prepaid card load obligations to be included as a component of assets held for customers, operating cash flows for the six months ended June 30, 2024 were increased by $ 3.5 million with a corresponding decrease in assets held for customers reflected as a financing activity.

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

As a result of the retrospective change in presentation of prepaid card load obligations to be included as a component of assets held for customers, operating cash flows for the nine months ended September 30, 2024 were increased by $ 9.5 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 increased assets held for customers by $ 14.6 million.

This policy change had no effect on working capital, total assets, total liabilities, total equity or net loss as of, and for the six months ended June 30, 2025 .

This policy change had no effect on working capital, total assets, total liabilities, total equity or net loss as of, and for the nine months ended September 30, 2025 .

Use of Estimates:

5 unchanged sentences

Settlement Processing Assets and Obligations:

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.

Settlement processing assets and obligations represent intermediary balances arising in the Company's settlement process for merchants.

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

Prepaid Card Load Assets:

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

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

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

1 unchanged sentence

Customer Deposits:

The Company holds customer deposits primarily for postage expenses to ensure the Company is not out of pocket for amounts billed daily by the USPS.

The Company holds customer deposits primarily for postage expenses to ensure the Company is not out of pocket for amounts billed daily by the United States Postal Service, or USPS.

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.

The Company earns interest on these customer deposits, which is recognized as revenue in the business line of the Company's wholly owned subsidiary, Usio Output Solutions, Inc., or Output Solutions.

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

The Company earns interest on these Merchant Reserves, which is recognized as revenue in its ACH and complementary services business line.

Accounts Receivable/Allowance for Estimated Credit Losses:

Accounts receivable are reported as outstanding principal net of an allowance for expected credit losses of $ 324,000 at June 30, 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.

Accounts receivable are reported as outstanding principal net of an allowance for estimated credit losses of $ 324,000 at September 30, 2025 and December 31, 2024 .

The Company maintains an allowance for estimated credit losses representing estimated losses expected to result from the inability or failure of its 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.

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

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

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

2 unchanged sentences

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

At June 30, 2025 and December 31, 2024 , inventory consisted primarily of printing and paper supplies used for our wholly-owned subsidiary, Usio Output Solutions, Inc., or Output Solutions.

At September 30, 2025 and December 31, 2024 , inventory consisted primarily of printing and paper supplies used for Output Solutions.

Property and Equipment:

7 unchanged sentences

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

During the six months ended June 30, 2025 and 2024 , the Company capitalized software costs of $ 608,233 and $ 353,316 , respectively.

During the nine months ended September 30, 2025 and 2024 , the Company capitalized software costs of $ 846,375 and $ 575,882 , respectively.

Concentration of Credit Risk:

6 unchanged sentences

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:

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

Valuation and Impairment of Long-Lived and Intangible Assets:

The Company assesses the impairment of long-lived and intangible assets at least annually, and whenever events or changes in circumstances indicate that the carrying value may not be recoverable.

3 unchanged sentences

and significant negative industry trends.

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 2024 or during the six months ended June 30, 2025 .

When management determines that the carrying value of long-lived and intangible assets may not be recoverable, an impairment loss is recognized, which is measured as the excess of the assets’ carrying value over the estimated fair value (with the estimated fair value determined based upon the estimated future cash inflows attributable to the asset, less estimated future cash outflows).

No impairment losses were recorded in 2024 or during the nine months ended September 30, 2025 .

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

8 unchanged sentences

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 June 30, 2025 and December 31, 2024 , the Company’s reserve for processing losses was $ 725,591 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.

At September 30, 2025 and December 31, 2024 , the Company’s reserve for processing losses was $ 751,937 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.

Revenue Recognition:

10 unchanged sentences

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.

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.

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

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

Three Months Ended June 30,

Six Months Ended June 30,

Three Months Ended September 30,

Nine Months Ended September 30,

ACH and complementary services

37 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 June 30, 2025 and 2024 , operating lease expenses totaled $ 151,568 and $ 133,973 , respectively.

For each of the six months ended June 30, 2024 and 2023, operating lease expenses totaled $ 302,256 and $ 266,105 , respectively.

For each of the three months ended September 30, 2025 and 2024 , operating lease expenses totaled $ 153,399 and $ 135,123 , respectively.

For each of the nine months ended September 30, 2025 and 2024 , operating lease expenses totaled $ 455,655 and $ 401,228 , respectively.

Accrued Expenses

Accrued expenses consisted of the following balances:

June 30, 2025

September 30, 2025

December 31, 2024

Accrued commissions

$ 599,189 $ 425,486

Reserve for processing losses

725,591 897,116

Other accrued expenses

749,031 881,925

Accrued taxes

159,377 474,561

Accrued salaries

331,003 687,837

Total accrued expenses

$ 2,564,191 $ 3,366,925

Equipment Loans

2 unchanged sentences

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

Principal payments for the three months ended June 30, 2025 and 2024 were $ 0 .

Principle payments for the six months ended June 30, 2025 and 2024 were $ 0 and $ 14,312 , respectively, and are reflected on the Company's Condensed Consolidated Statement of Cash Flows.

Principal payments for the three months ended September 30, 2025 and 2024 were $ 0 .

Principal payments for the nine months ended September 30, 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.

1 unchanged sentence

The loan is for a period of 66 months with a maturity date of April 5, 2029 and annual interest of 6.75 %.

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 June 30, 2025 and $ 36,687 for the three months ended June 30, 2024 .

Total interest and principal payments on this folder and inserter equipment loan were $ 95,906 for the six months ended June 30, 2025 and $ 50,168 for the six months ended June 30, 2024 .

As of June 30, 2025 , the Company maintained 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.

Monthly principal and interest payments are required in the amount of $ 16,017 , with monthly interest only payments in the amount of $ 4,744 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 each of the three months ended September 30, 2025 and September 30, 2024 .

Total interest and principal payments on this folder and inserter equipment loan were $ 143,859 for the nine months ended September 30, 2025 and $ 98,121 for the nine months ended September 30, 2024 .

On September 19, 2025 , the Company entered into a debt arrangement to finance $ 1,017,954 for the purchase of an Output Solutions printer.

The loan is for a period of 66 months with a maturity date of March 19, 2031 and annual interest of 6.75 %.

Monthly principal and interest payments are required in the amount of $ 20,088 , with monthly interest only payments in the amount of $ 5,758 required for the first six months of the loan term beginning in October 2025.

As of September 30, 2025, only $ 226,212 in proceeds have been drawn from the loan and presented on the Company's balance sheet with the remaining commitment of $ 791,742 still available.

As of September 30, 2025 , the Company maintained 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.

See "Note 11.

3 unchanged sentences

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

As of June 30, 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.

As of September 30, 2025 , no amounts had been drawn under this line of credit since its origination.

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

Letter of Credit

1 unchanged sentence

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 lawsuit appeal and provide additional liquidity resources if needed.

These credit facilities were arranged to comply with legal requirements related to the Company’s KDHM lawsuit 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 June 30, 2025 :

Future principal payments on current debt arrangements are as follows at September 30, 2025 :

Year ending December 31,

3 unchanged sentences

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 substantially all of the assets of IMS in December 2020.

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 ("IMS"), which were issued in connection with our acquisition of substantially all of the assets of IMS in December 2020.

IMS's warrants became fully vested on December 15, 2023.

Each warrant is exercisable for a period of five years beginning on the date it vests.

Each warrant is exercisable for a period of five years beginning on the date it vested.

At the time of issuance, these warrants were valued using the Black-Scholes option pricing model.

6 unchanged sentences

The fair value of the warrants at the time of issuance 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 $ 55,228 in each of the three and six months ended June 30, 2025 and 2024 , respectively.

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, 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 six months ended June 30, 2025 and 2024 .

Three Months Ended June 30,

Six Months Ended June 30,

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

$ ( 366,654 ) $ 75,492 $ ( 601,624 ) $ ( 174,696 )

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, 2025 and 2024 .

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

26,456,411 26,534,407 26,577,052 26,454,848

Effect of dilutive securities

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

26,456,411 26,534,407 26,577,052 26,454,848

Basic income (loss) per common share

$ ( 0.01 ) $ 0.00 $ ( 0.02 ) $ ( 0.01 )

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

$ ( 0.01 ) $ 0.00 $ ( 0.02 ) $ ( 0.01 )

The warrants to purchase shares of common stock that were outstanding at June 30, 2025 and 2024 that were not included in the computation of diluted earnings per share because the effect would have been anti-dilutive, are as follows:

Six Months Ended June 30,

The warrants to purchase shares of common stock that were outstanding at September 30, 2025 and 2024 that were not included in the computation of diluted earnings per share because the effect would have been anti-dilutive, are as follows:

Nine Months Ended September 30,

Anti-dilutive 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.

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

At June 30, 2025 and December 31, 2024 , the Company had a deferred tax asset of approximately $ 4.6 million net of a valuation allowance of approximately $ 2.7 million.

At September 30, 2025 and December 31, 2024 , the Company had a deferred tax asset of approximately $ 4.6 million 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 it was more likely than not that the Company will have taxable income in the future sufficient to utilize the deferred tax asset.

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 June 30, 2025 , the Company had no accrued interest or penalties related to uncertain tax provisions.

At June 30, 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.

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.

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

As of September 30, 2025 , the Company had no accrued interest or penalties related to uncertain tax provisions.

At September 30, 2025 , the Company had available net operating loss carryforwards ("NOLs") of approximately $ 21.8 million.

NOLs generated during or prior to 2017 ("Pre- 2018 NOLs") are available to offset taxable income of future periods and expire 20 years after the loss was generated.

NOLs generated after 2017 do not expire.

Our ability to use our NOLs will be dependent on our ability to generate taxable income, and the Pre- 2018 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.

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 generated 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.

The schedule below outlines when the Company's Pre- 2018 NOLs were generated and the year they may expire.

$ 1,275,415 2025

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1,267,336 2037

As of June 30, 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.

As of September 30, 2025 , there were NOLs totaling approximately $ 13.0 million that have been generated since the beginning of 2018 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.

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Related Party Transactions

During the six months ended June 30, 2025 and 2024 , the Company purchased a total of $ 4,756 and $ 4,402 , respectively, of corporate imprinted sportswear, promotional items, and caps from Angry Pug Sportswear.

During the nine months ended September 30, 2025 and 2024 , the Company purchased a total of $ 4,841 and $ 9,747 , respectively, of corporate imprinted sportswear, promotional items, and caps from Angry Pug Sportswear LLC.

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

Stock Based Compensation

In the six months ended June 30, 2025 , we withheld 76,397 shares of our common stock for $ 136,036 in private transactions based on an average purchase price of $ 1.78 per share from officers, directors and employees to cover their share of taxes in connection with equity grants.

In the six months ended June 30, 2024 we withheld 219,536 shares of our common stock for $ 319,244 in private transactions based on an average purchase price of $ 1.45 per share from officers, directors and employees to cover their 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.

In the nine months ended September 30, 2025 , we withheld 128,647 shares of our common stock for $ 218,141 in private transactions based on an average purchase price of $ 1.70 per share from officers, directors and employees to cover their share of taxes in connection with equity grants.

In the nine months ended September 30, 2024 , we withheld 40,974 shares of our common stock for $ 65,317 in private transactions based on an average purchase price of $ 1.59 per share from officers, directors and employees to cover their share of taxes in connection with equity grants.

On August 21, 2025, the Company granted 920,000 shares of restricted common stock with a 10 -year vesting period and 457,800 restricted stock units ("RSUs") with a 3 -year vesting period to officers and employees as a performance bonus at an issue price of $ 1.44 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, officers and employees will receive issued shares.

Upon vesting, officers and employees will receive issued shares of common stock.

Executive officers included in the 10 -year restricted stock grant were Louis Hoch ( 300,000 shares), Michael White ( 50,000 shares), Greg Carter ( 50,000 shares), and Houston Frost ( 50,000 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 ( 18,000 RSUs).

On August 21, 2025, 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 $ 1.44 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 June 21, 2024, the Company granted 966,000 shares of restricted common stock with a 10 -year vesting period and 277,200 RSUs with a 3 -year vesting period to officers and employees as a performance bonus at an issue price of $ 1.55 per share.

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).

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.

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Usio's reportable operating segments are "Output Solutions" and "Merchant Services" and these segments have been selected based on management’s resource allocation and performance assessment in making decisions regarding the Company.

Our chief operating decision maker ("CODM") is the Company’s chief executive officer.

The CODM has ultimate authority and responsibility over resource allocation decisions and performance assessment.

Segment gross profit is the measure of segment profit and loss reviewed by the CODM and is used by the CODM to evaluate segment performance and make decisions about funding our operations and allocating resources.

The following is a description of the segments.

Output Solutions

This segment offers electronic bill presentment, document composition, document decomposition and printing and mailing services serving hundreds of customers representing a wide range of industry verticals, including utilities and financial institutions through the acquisition of substantially all of the assets of IMS.

This segment, which was created in connection with the acquisition of substantially all of the assets of IMS, offers electronic bill presentment, document composition, document decomposition and printing and mailing services serving hundreds of customers representing a wide range of industry verticals, including utilities and financial institutions.

Output Solutions, provides an outsourced solution for document design, print, and electronic delivery to potential customers and entities looking to reduce postage costs and increase efficiencies.

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Additionally, as part of our Prepaid card-based processing services, we develop and manage a variety of Mastercard-branded prepaid card program types, including consumer reloadable, consumer gift, incentive, promotional, general and government disbursement and corporate expense cards.

The following tables set forth certain financial information with respect to Usio’s reportable segments for the three months ended June 30, 2025 and 2024 :

For the Three Months Ended June 30, 2025

The following tables set forth certain financial information with respect to Usio’s reportable segments for the three months ended September 30, 2025 and 2024 :

For the Three Months Ended September 30, 2025

Output Solutions

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Cost of services

Processing expense

— 12,303,940 12,303,940

Services expense

612,439 — 612,439

Postage expense

3,393,935 — 3,393,935

Cost of services

4,006,374 12,303,940 16,310,314

$ 883,373 $ 3,986,646 $ 4,870,019

Depreciation and amortization

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$ 3,833,520 $ 8,107,829 $ 11,941,349

For the Three Months Ended June 30, 2024

For the Three Months Ended September 30, 2024

Output Solutions

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Cost of services

Processing expense

— 12,374,709 12,374,709

Services expense

807,561 — 807,561

Postage expense

3,243,051 — 3,243,051

Cost of services

4,050,612 12,374,709 16,425,321

$ 1,243,165 $ 3,652,992 $ 4,896,157

Depreciation and amortization

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and intangibles, net.

The following tables set forth certain financial information with respect to Usio’s reportable segments for the six months ended June 30, 2025 and 2024 :

For the Six Months Ended June 30, 2025

The following tables set forth certain financial information with respect to Usio’s reportable segments for the nine months ended September 30, 2025 and 2024 :

For the Nine Months Ended September 30, 2025

Output Solutions

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Cost of services

Processing expense

— 35,934,993 35,934,993

Services expense

1,868,827 — 1,868,827

Postage expense

10,527,322 — 10,527,322

Cost of services

12,396,149 35,934,993 48,331,142

$ 2,951,181 $ 11,868,050 $ 14,819,231

Depreciation and amortization

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$ 3,833,520 $ 8,107,829 $ 11,941,349

For the Six Months Ended June 30, 2024

For the Nine Months Ended September 30, 2024

Output Solutions

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Cost of services

Processing expense

— 35,413,986 35,413,986

Services expense

2,895,179 — 2,895,179

Postage expense

9,512,921 — 9,512,921

Cost of services

12,408,100 35,413,986 47,822,086

$ 3,184,005 $ 11,365,661 $ 14,549,666

Depreciation and amortization

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and intangibles.

The following table reconciles segment profit reported above to the loss from operations reported in the condensed consolidated statements of operations for the three and six months ended June 30, 2025 and 2024 :

Three Months Ended June 30,

The following table reconciles segment profit reported above to the loss from operations reported in the condensed consolidated statements of operations for the three and nine months ended September 30, 2025 and 2024 :

Three Months Ended September 30,

Segment Profit

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$ ( 464,171 ) $ ( 376,650 )

Six Months Ended June 30,

Nine Months Ended September 30,

Segment Profit

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On March 14, 2025 the motion was denied.

On July 11, 2025, Usio attended a deposition with Kauder and Triple Pay Play in Nashville, Tennessee, with proceedings to continue at a date yet to be determined.

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.

On July 11, 2025, Usio attended a deposition with Kauder and Triple Pay Play in Nashville, Tennessee.

On September 29, 2025, Kauder, Pioletti and Triple Pay Play agreed to Usio’s settlement and filed a Joint Notice of Voluntary Nonsuit with Prejudice in The Chancery Court of Maury County Tennessee on October 10, 2025.

The settlement was in the amount of $ 115,000 , which was recorded on our balance sheet as a reduction of SG&A expense for the three and nine months ended September 30, 2025 .

On September 1, 2021, KDHM, LLC ("KDHM"), 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 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.

As a result of this post-sale dispute, we subsequently discovered that KDHM 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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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.

See Note 4 of the notes to our condensed consolidated financial statements in this report 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.

On August 8, 2025, KDHM filed in the Supreme Court of Texas a Petition for Review from the Fourth Court of Appeals at San Antonio, Texas.

We are currently preparing a response to the petition.

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

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

As of June 30, 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.

As of September 30, 2025, no amounts had been drawn under this line of credit since its origination.

This line of credit was obtained 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 June 3, 2026.

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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