What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2026-03-18 compared with 2025-03-26 · 362 added, 175 removed, 612 unchanged (47% of the section changed)

1 unchanged sentence

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

Report of Independent Registered Public Accounting Firm - WithumSmith+Brown, P.C.

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

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

Consolidated Balance Sheets as of December 31, 2025 and 2024

Consolidated Statements of Operations for the years ended December 31, 2025 and 2024

Consolidated Statement of Changes in Stockholders’ Equity for the years ended December 31, 2024 and 2023

Consolidated Statements of Changes in Stockholders’ Equity for the years ended December 31, 2025 and 2024

Consolidated Statements of Cash Flows for the years ended December 31, 2025 and 2024

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

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

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

(the “Company”) as of December 31, 2025, and the related consolidated statements of operations, changes in stockholders’ equity and cash flows, for the year ended December 31, 2025, and the related notes (collectively referred to as the “consolidated financial statements”).

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2025 and the results of its operations and its cash flows for the year ended December 31, 2025, in conformity accounting principles generally accepted in the United States of America.

The consolidated financial statements of the Company as of and for the year ended December 31, 2024 were audited by Pannell Kerr Forster of Texas, P.C., who joined WithumSmith+Brown, P.C., on June 1, 2025, and rendered their opinion on such statements on March 26, 2025.

Basis of Opinion

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

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

Our responsibility is to express an opinion on these financial statements based on our audits.

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

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

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

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

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

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

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

Accordingly, we express no such opinion.

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Critical Audit Matter

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

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

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

8 unchanged sentences

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

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

The consolidated financial statements of the Company, including the accompanying consolidated balance sheet, as of December 31, 2024, and the related consolidated statements of operations, changes in stockholders' equity, and cash flows for the year ended December 31, 2024 and the related notes were audited by Pannell Kerr Forster of Texas, P.C., who joined WithumSmith+Brown, P.C., on June 1, 2025, and rendered their opinion on such statements on March 26, 2025.

/s/ WithumSmith+Brown, P.C.

Houston, Texas United States

6 unchanged sentences

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

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

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

Basis of Opinion

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

Critical Audit Matters

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

Critical Audit Matter

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

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

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

Intangible Assets – Customer Lists

Description of the Matter

As of December 31, 2023, the Company had intangible assets relating to acquired customer lists which are recorded at their cost basis net of accumulated amortization.

On at least an annual basis, the Company performs an analysis of the carrying value of these customer lists to evaluate the assets for impairment.

The customer list is amortized over a five-year term and no impairment has been recognized on the customer list portfolios since their acquisition.

We identified the customer list valuation as a critical audit matter because of the significant estimates and forward-looking assumptions used which could be affected by future economic and market conditions.

How We Addressed the Matter in Our Audit

To test the fair value of the Company's customer list intangible assets, our audit procedures included, among others, evaluating the Company's valuation model, evaluating the method and significant assumptions used, and testing the completeness and accuracy of the underlying data supporting the significant assumptions and estimates.

We also evaluated whether the key factors considered in the evaluation were consistent with evidence obtained in other areas of the audit.

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

Deferred Tax Assets – Valuation Allowance

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

We compared the estimates to historical earnings and evaluated the inputs and assumptions used by management for developing future forecasts.

/s/ ADKF, P.C.

San Antonio, Texas United States

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

Houston, Texas United States

March 26, 2025

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

We served as the Company's auditor in 2024.

CONSOLIDATED BALANCE SHEETS

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$ 7,434,051 $ 8,056,891

Accounts receivable

5,053,639 5,564,138

Accounts receivable, tax credit

Settlement processing assets

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2,281,220 1,918,805

Accounts receivable, net

5,274,586 5,053,639

Prepaid expenses and other

Accounts receivable, tax credit

461,675 403,796

Current assets before merchant reserves

Prepaid expenses and other

1,359,382 585,500

8 unchanged sentences

9,759 881,346

Deferred tax asset

Deferred tax asset, net

4,526,228 4,580,440

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2,281,220 1,918,805

Current liabilities before merchant reserve obligations

80,055,504 83,917,612

Merchant reserve obligations

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

29,902,415 and 28,671,606 issued and 26,609,651 and 26,332,523 outstanding in 2024 and 2023 (see Note 12)

31,562,178 and 29,902,415 issued and 27,729,704 and 26,609,651 outstanding in 2025 and 2024, respectively

31,562 198,317

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Treasury stock, at cost;

3,292,764 and 2,339,083 shares in 2024 and 2023 (see Note 12)

3,832,474 and 3,292,764 shares in 2025 and 2024, respectively

( 6,837,181 ) ( 5,770,592 )

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CONSOLIDATED STATEMENTS OF OPERATIONS

For the Year Ended

December 31, 2025

December 31, 2024

$ 85,393,626 $ 82,931,840

Cost of services

65,700,927 63,317,396

19,692,699 19,614,444

Selling, general and administrative:

Stock-based compensation

1,743,893 2,093,406

Other expenses

18,362,187 16,728,081

Depreciation and amortization

1,946,224 2,263,302

Total operating expenses

22,052,304 21,084,789

Operating loss

( 2,359,605 ) ( 1,470,345 )

Other income:

Interest income

407,160 464,746

5,000 1,737,685

Interest expense

( 52,083 ) ( 53,802 )

Other income, net

360,077 2,148,629

Income (loss) before income taxes

Federal income tax (benefit)

( 1,999,528 ) 678,284

Federal income tax expense (benefit)

54,212 ( 3,076,440 )

State income tax expense

458,599 449,227

512,811 ( 2,627,213 )

Net Income (loss)

$ ( 2,512,339 ) $ 3,305,497

Earnings (loss) Per Share

Basic income (loss) per common share:

$ ( 0.09 ) $ 0.12

Diluted income (loss) per common share:

$ ( 0.09 ) $ 0.12

Weighted average common shares outstanding (see Note 13)

26,926,838 26,852,129

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

CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY

Stockholders'

Balance at December 31, 2023

28,661,406 $ 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

1,189,050 1,178 2,130,336 — ( 1,497,300 ) — 634,214

Reversal of deferred compensation amortization that did not vest

66,959 67 97,596 — — — 97,663

Deferred compensation amortization

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

Non-cash return of treasury stock

Purchase of treasury stock

— — — — 1,459,192 — 1,459,192

Purchase of treasury stock, at cost

— — — ( 1,408,442 ) — — ( 1,408,442 )

— — — — — 3,305,497 3,305,497

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

1,243,575 1,243 1,928,490 — ( 1,324,800 ) — 604,933

Issuance of common stock under employee stock purchase plan

Reversal of deferred compensation amortization that did not vest

61,578 62 90,583 — — — 90,645

Issuance of common stock for software acquisition

354,610 355 499,645 — — — 500,000

Deferred compensation amortization

Purchase of treasury stock

— — — — 1,138,790 — 1,138,790

Purchase of treasury stock, at cost

— — — ( 1,066,589 ) — — ( 1,066,589 )

— — — — — ( 2,512,339 ) ( 2,512,339 )

Balance at December 31, 2025

31,562,178 $ 31,562 $ 102,363,590 $ ( 6,837,181 ) $ ( 7,100,573 ) $ ( 70,544,995 ) $ 17,912,403

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

CONSOLIDATED STATEMENTS OF CASH FLOWS

For the Year Ended

December 31, 2025

2 unchanged sentences

Net income (loss)

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

$ ( 2,512,339 ) $ 3,305,497

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

Depreciation and amortization

1,946,224 2,263,302

Loss on disposal of equipment

Deferred federal income tax

Deferred federal income tax expense (benefit)

54,212 ( 3,076,440 )

Employee stock-based compensation

Vendor stock-based compensation

Non-cash revenue from return of treasury stock

1,743,893 2,093,406

Allowance for expected credit losses 80,132 5,000

Reserve for processing losses

( 112,179 ) ( 70,588 )

Changes in operating assets and liabilities:

Accounts receivable

( 301,079 ) 505,499

Accounts receivable, tax credit

1,494,612 ( 1,494,612 )

Prepaid expenses and other

( 773,882 ) ( 141,429 )

Operating lease right-of-use assets

614,697 ( 617,146 )

( 5,072 ) ( 2,520 )

( 57,879 ) 19,012

Accounts payable and accrued expenses

( 304,530 ) ( 138,087 )

Operating lease liabilities

( 620,909 ) 593,937

Merchant reserves

( 94,564 ) ( 419,994 )

Customer deposits

362,415 53,074

Net cash provided by operating activities

1,513,752 2,896,251

Investing Activities

Purchases of property and equipment

( 435,014 ) ( 195,877 )

Capitalized labor for internal use software

( 1,102,368 ) ( 796,004 )

Sale of equipment

Net cash used by investing activities

( 1,537,382 ) ( 944,381 )

Financing Activities

Payments on equipment loan

( 147,157 ) ( 106,807 )

Proceeds from equipment loan

Proceeds from issuance of common stock

90,645 97,663

Purchases of treasury stock

( 1,066,589 ) ( 1,408,442 )

Assets held for customers

29,051,509 ( 3,725,882 )

Net cash provided (used) by financing activities

28,720,150 ( 5,143,468 )

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

28,696,520 ( 3,191,598 )

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

87,618,491 90,810,089

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

$ 116,315,011 $ 87,618,491

Supplemental disclosures of cash flow information

Cash paid during the period for:

$ 52,083 $ 53,802

Non-cash operating activities:

Right of use assets obtained in exchange for operating lease liabilities

$ — $ 1,156,543

Non-cash investing and financing activities:

Issuance of deferred stock compensation

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

$ 1,324,800 $ 1,497,300

Issuance of common stock for PostCredit acquisition

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

3 unchanged sentences

Cash and cash equivalents

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

Settlement processing assets

47,104,006 44,899,603

Prepaid card load assets

25,648,688 31,578,973

Customer deposits

1,918,805 1,865,731

Merchant reserves

4,890,101 5,310,095

$ 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

$ 7,434,051 $ 8,056,891

Settlement processing assets

74,180,475 47,104,006

Prepaid card load assets

27,623,728 25,648,688

Customer deposits

2,281,220 1,918,805

Merchant reserves

4,795,537 4,890,101

$ 116,315,011 $ 87,618,491

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

3 unchanged sentences

Organization:

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

Usio, Inc., together with its subsidiaries, FiCentive, Inc., a Nevada corporation, and Zbill, Inc., a Nevada corporation (collectively, "Usio" or the "Company" or "we," "us" or "our"), provides integrated electronic payment services, including credit and debit card-based processing services and transaction processing via the Automated Clearing House, or ACH, network to billers and retailers.

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

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Use of Estimates:

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.

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America ("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.

Actual results could differ from those estimates.

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Revenue is recognized during the period in which the transactions are processed or when the related services are performed.

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

The Company complies with Accounting Standards Codification ("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 for each agreement it is acting in the principal role.

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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.

Year Ended December 31,

13 unchanged sentences

170,950 150,928 20,022 13 %

Total Revenue

Total Revenues

$ 85,393,626 $ 82,931,840 $ 2,461,786 3 %

Deferred Revenues:

The Company records deferred revenues when it receives payments or issues invoices in advance of transferring control of promised goods or services to a customer.

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

The Company had no deferred revenues in 2024 or 2023 .

Cash and Cash Equivalents:

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Merchant Reserves:

The Company has merchant reserve requirements associated with Automated Clearing House, or ACH transactions.

The Company has merchant reserve requirements associated with ACH transactions.

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

4 unchanged sentences

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 December 31, 2024 and 2023 .

Accounts receivable are reported as outstanding principal net of an allowance for expected credit losses of $ 404,132 and $ 324,000 at December 31, 2025 and 2024 , respectively.

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

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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.

For the years ended December 31, 2024 and December 31, 2023 , the Company capitalized $ 796,004 and $ 634,571 , respectively.

For the years ended December 31, 2025 and 2024 , the Company capitalized $ 1,102,368 and $ 796,004 , 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 receivables potentially subject the Company to concentrations of credit risk.

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This reserve amount is subject to the risk that actual losses may be greater than our estimates.

The Company has not incurred any significant processing losses to date.

The Company did not incur any significant processing losses in 2025 , but has experienced substantial losses in the past.

For example, in the first quarter of 2023, we incurred $ 833,485 in merchant processing losses as a result of fraudulent activity and identify fraud from multiple merchants, of which $ 755,494 was deducted from our reserve for processing losses.

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

The Company evaluates its risk for such transactions and estimates its potential processing losses based primarily on historical experience and other relevant factors.

At December 31, 2024 and 2023 , respectively, the Company’s reserve for processing losses was $ 897,116 and $ 826,528 , respectively.

At December 31, 2025 and 2024 , respectively, the Company’s reserve for processing losses was $ 784,937 and $ 897,116 , respectively, included as an accrued expense on the consolidated balance sheet.

Advertising Costs:

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

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

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

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 on 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 margin tax and Tennessee franchise tax.

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.

Stock-Based Compensation:

The Company recognizes as compensation expense all share-based payment awards made to employees and directors, including grants of stock options and warrants, based on estimated fair values.

Fair value is generally determined based on the closing price of the Company’s common stock on the date of grant.

The Company recognizes as compensation expense all share-based payment awards made to employees and directors, including grants of restricted stock, stock options and warrants, based on estimated fair values.

For restricted stock grants, fair value is generally determined based on the closing price of the Company’s common stock on the date of grant.

For options and warrants, fair value is determined using the Black Scholes Option pricing model, taking into consideration various assumptions such as stock price volatility, risk free interest rate, term of the instant annual dividend yield, market price of the stock, and exercise price.

401 (k) Plan:

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

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

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

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

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

See “Note 13 – Net Income (Loss) per Share” for further discussion.

Recently Adopted Accounting Pronouncements :

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

Recently Adopted and Recently Issued But Not Yet Adopted Accounting Pronouncements :

Accounting standards that have been issued or proposed by the Financial Accounting Standards Board ("FASB"), the U.S.

Securities and Exchange Commission ("SEC") or other standard setting bodies that do not require adoption until a future date are not expected to have a material impact on the consolidated financial statements upon adoption.

In December 2023, the FASB issued ASU No.

2023 - 09, Income Taxes (Topic 740 ):

Improvements to Income Tax Disclosures, which requires entities to provide additional information in the rate reconciliation and additional disaggregated disclosures about income taxes paid.

This guidance requires public entities to disclose in their rate reconciliation table additional categories of information about federal, state, and foreign income taxes and to provide more details about the reconciling items in some categories if the items meet a quantitative threshold.

The ASU is effective for annual periods beginning after December 15, 2024, with early adoption permitted.

The Company adopted ASU 2023 - 09 effective January 1, 2025 and included additional disclosures in Note 11.

The adoption of this standard did not have a material impact on the Company’s financial statements.

In October 2023, FASB issued ASU 2023 - 06, Disclosure Improvements:

Codification Amendments in Response to the SEC’s Disclosure Update and Simplification Initiative.

This ASU amends the ASC to incorporate certain disclosure requirements from SEC Release No.

33 - 10532, Disclosure Update and Simplification that was issued in 2018.

The effective date for each amendment will be the date on which the SEC’s removal of that related disclosure from Regulation S- X or Regulation S-K becomes effective, with early adoption prohibited.

For entities subject to the SEC’s existing disclosure requirements and for entities required to file or furnish financial statements with or to the SEC in preparation for the sale of or for purposes of issuing securities that are not subject to contractual restrictions on transfer, the effective date for each amendment will be the date on which the SEC’s removal of that related disclosure from Regulation S- X or Regulation S-K becomes effective, with early adoption prohibited.

For all other entities, the amendments will be effective two years later.

The Company is evaluating the effect that ASU 2023 - 06 will have on its financial statements and related disclosures.

In January 2025, the FASB issued ASU 2025 - 01, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220 - 40 ):

Clarifying the Effective Date.

ASU 2025 - 01 clarifies the effective date for ASU 2024 - 03 (Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures), ensuring public business entities adopt it initially in annual reporting periods ( not interim) for non-calendar year-end entities.

ASU 2024 - 03 requires disclosure on an annual and interim basis, in the notes to the financial statements, of disaggregated information about specific categories underlying certain income statement expense line items.

The effective dates of ASU 2025 - 01 align with ASU 2024 - 03:

annual periods beginning after December 15, 2026, and interim periods beginning after December 15, 2027.

The Company is currently evaluating the impact of adopting this new accounting guidance on its financial statements and related disclosures, but does not expect adoption of this new standard to be material.

In May 2025, the FASB issued ASU No.

2025 - 03, Business Combinations (Topic 805 ) and Consolidation (Topic 810 ):

Determining the Accounting Acquirer in the Acquisition of a Variable Interest Entity (“ASU 2025 - 03” ).

ASU 2025 - 03 changes how companies determine the accounting acquirer in certain business combinations involving variable interest entities.

The new guidance requires considering the factors used for other acquisition transactions to assess which party is the accounting acquirer.

ASU 2025 - 03 is effective for the Company’s annual reporting periods beginning on January 1, 2027.

Early adoption is permitted.

In May 2025, the FASB issued ASU No.

2025 - 04, Compensation – Stock Compensation (Topic 718 ) and Revenue from Contracts With Customers (Topic 606 ):

Clarifications to Share-Based Consideration Payable to a Customer (“ASU 2025 - 04” ).

ASU 202504 revises the definition of a performance condition, eliminates the forfeiture policy election for service conditions, and clarifies that the variable consideration constraint in ASC Topic 606 does not apply to share-based consideration payable to customers.

The new guidance requires entities to consistently account for share-based awards granted to customers by clarifying the treatment of vesting conditions and ensuring alignment with ASC Topic 606 and ASC Topic 718:

Compensation—Stock Compensation.

ASU 2025 - 04 is effective for fiscal years beginning after December 15, 2026, including interim periods within those fiscal years.

Early adoption is permitted.

In December 2025, the FASB issued ASU No.

2025 - 10, Government Grants (Topic 832 ):

Accounting for Government Grants Received by Business Entities.

ASU 2025 - 10 establishes the accounting for a government grant received by a business entity, including guidance for ( 1 ) a grant related to an asset and ( 2 ) a grant related to income.

The ASU is effective for annual periods beginning after December 15, 2028, and interim reporting periods within those annual reporting periods, with early adoption permitted.

Reclassifications:

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Valuation Accounts

Valuation and allowance accounts included the following at December 31:

Valuation and allowance accounts included the following at the dates referenced below:

Net Write-Off

17 unchanged sentences

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.

The loan is for a period of 36 months with a maturity date of March 20, 2024.

The repayment amount is for 36 months at $ 4,902 per month.

Annual payments are $ 58,821 .

The financing is at an interest rate of 3.95 %.

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

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

The loan was for a period of 36 months with a maturity date of March 20, 2024.

The repayment schedule was for 36 months at $ 4,902 per month.

Annual payments were $ 58,821 .

The financing was at an annual interest rate of 3.95 %.

This equipment loan was paid off in its entirety in 2024 with total payments of $ 14,536 during 2024.

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

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

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

Monthly principal and interest payments are required in the amount of $ 16,017 .

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

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

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

Total interest and principal payments on this folder and inserter equipment loan were $ 191,812 for the twelve months ended December 31, 2025 and $ 146,074 for the twelve months ended December 31, 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 an annual interest rate 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 December 31, 2025, only $ 791,742 in proceeds have been drawn from the loan and presented on the Company's balance sheet with the remaining commitment of $ 226,212 still available.

Total payments on the printer loan in 2025 were $ 6,574 .

As of December 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.

Line of Credit

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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.

The Company 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.

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.

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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.

As a result of the KDHM lawsuit settlement, the Company will not renew the line of credit or letter of credit upon their maturity.

There are no ongoing costs associated with the maintenance of either of these credit facilities.

Future payments on current debt arrangements are as follows at December 31, 2025 :

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Accrued salaries

123,524 687,837

Total accrued expenses

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Operating Leases

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

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

The lease expires on December 31, 2025.

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

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

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

The lease expires on December 31, 2025.

The incremental space leased is 2,734 square feet.

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

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

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

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

On September 18, 2025 we renewed our lease, to run concurrently with our additional leased space in the same building.

The lease expires on December 31, 2030.

The incremental space lease is 6,628 square feet.

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

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

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

Rental expense under the operating lease was $ 0 and $ 36,995 for the years ended December 31, 2024 and 2023 , respectively.

The lease expired on April 30, 2023.

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

Rental expense, excluding rental expense for the additional space referenced below, under the operating lease was $ 174,380 and $ 165,817 for the years ended December 31, 2025 and 2024 , respectively.

Pursuant to a lease amendment that commenced on April 1, 2021, we began leasing an additional 2,734 square feet of space at our San Antonio, Texas office building.

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

Rental expense for this additional space for the years ended December 31, 2025 and 2024 was $ 51,249 and $ 49,653 , respectively.

Pursuant to a second lease amendment that commenced on April 1, 2022, we began leasing an additional 6,628 square feet of space at our San Antonio, Texas office building.

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

Rental expense for this additional space for the years ended December 31, 2025 and 2024 was $ 114,995 and $ 109,355 , respectively.

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

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Rental expense for the years ended December 31, 2025 and 2024 was $ 78,700 and $ 83,610 , respectively.

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

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

The weighted average remaining lease term is 3.49 years.

The Company has various copier equipment with a lease that has not expired.

Rental expense was $ 5,497 and $ 5,508 for the years ended December 31, 2025 and 2024 , respectively.

The weighted average remaining lease term for all of our leases is 3.95 years.

The weighted average discount rate is 4.61 %.

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Total minimum lease payments

Less imputed interest

imputed interest

Total lease liabilities

Less current portion

current portion

Long-term portion

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

Officers and Directors

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.

Stock-Based Compensation

In the year ended December 31, 2025 , we withheld 129,073 shares of our common stock for $ 218,750 in private transactions based on an average purchase price of $ 1.69 per share from officers, directors and employees to cover their share of taxes in connection with equity grants.

In the year ended December 31, 2024 , we withheld 408,305 shares of our common stock for $ 597,568 in private transactions based on an average purchase price of $ 1.46 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 performance bonuses 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, employees and Directors will receive issued shares.

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

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

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

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

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

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

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

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 will be paid installment payments equal to his current base salary until and including April 18, 2024.

Additionally, Mr.

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

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

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

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

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

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

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

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

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

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

Executive officers included in the 10 -year restricted stock grants 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 grants 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 performance bonuses at an issue price of $ 1.44 per share.

Directors included in the RSU grants 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 performance bonuses at an issue price of $ 1.55 per share.

Executive officers included in the 10 -year restricted stock grants 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 grants 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 performance bonuses at an issue price of $ 1.55 per share.

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

Segment Reporting

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, 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.

Merchant Services

This segment offers integrated electronic payment processing services to merchants and businesses, including credit and debit card-based processing services and electronic funds transfer via the ACH network.

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 twelve months ended December 31, 2025 and 2024 :

For the Year Ended December 31, 2025

Output Solutions

Merchant Services

$ 20,816,303 $ 64,577,323 $ 85,393,626

Cost of services

Processing expense

— 48,896,184 48,896,184

Services expense

2,480,472 — 2,480,472

Postage expense

14,324,271 — 14,324,271

Cost of services

16,804,743 48,896,184 65,700,927

$ 4,011,560 $ 15,681,139 $ 19,692,699

Depreciation and amortization

$ 944,225 $ 1,001,999 $ 1,946,224

Capital expenditures

$ 103,780 $ 331,234 $ 435,014

Identifiable assets 1

$ 4,376,501 $ 7,950,143 $ 12,326,644

For the Year Ended December 31, 2024

Output Solutions

Merchant Services

$ 20,769,924 $ 62,161,916 $ 82,931,840

Cost of services

Processing expense

— 46,897,136 46,897,136

Services expense

3,576,677 — 3,576,677

Postage expense

12,843,583 — 12,843,583

Cost of services

16,420,260 46,897,136 63,317,396

$ 4,349,664 $ 15,264,780 $ 19,614,444

Depreciation and amortization

$ 1,269,393 $ 993,909 $ 2,263,302

Capital expenditures

$ 21,515 $ 174,362 $ 195,877

Identifiable assets 1

$ 5,176,438 $ 7,395,089 $ 12,571,527

Note to tables:

Identifiable assets is calculated by summing the balances of accounts receivable, net;

property and equipment, net;

operating lease right-of-use lease assets;

and intangibles, net.

The following table reconciles segment profit reported above to the loss from operations reported in the consolidated statements of operations for the twelve months ended December 31, 2025 and 2024 :

Year Ended December 31,

Segment gross profit

$ 19,692,699 $ 19,614,444

Stock-based compensation

( 1,743,893 ) ( 2,093,406 )

Selling, general and administrative ("SG&A")

( 18,362,187 ) ( 16,728,081 )

Depreciation and amortization

( 1,946,224 ) ( 2,263,302 )

Operating (loss)

$ ( 2,359,605 ) $ ( 1,470,345 )

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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The Company has recognized a deferred tax asset of approximately $ 4.5 million recorded net of a valuation allowance of approximately $ 2.9 million.

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

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 increase the valuation allowance by approximately $ 247,000 in 2025, and decreased the valuation allowance by $ 3.6 million during 2024.

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

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

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

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

Deferred tax assets:

11 unchanged sentences

( 2,912,853 ) ( 2,665,954 )

Deferred tax asset

Deferred tax asset, net

$ 4,526,228 $ 4,580,440

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

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

Net operating loss carryforwards generated after 2017 do not expire.

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

At December 31, 2025 , the Company had available net operating loss carryforwards ("NOLs") of approximately $ 21.6 million.

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.

NOLs generated after 2017 do not expire.

Our ability to use our NOLs before they expire (to the extent they are subject to expiration) will be dependent on our ability to generate taxable income, and the NOLs could expire before we generate sufficient taxable income.

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

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

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

$ 1,275,415 2025

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

Tax Year End Generated

$ 1,350,961 2026

1 unchanged sentence

1,267,336 2037

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

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

Total loss carryforwards

As of December 31, 2025 , the Company had NOLs totaling approximately $ 14.0 million that were generated after 2017, which do not expire and can be carried forward to future years to offset taxable income.

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

Tax Year End Generated

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

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

For the Year Ended

Income tax (benefit) at 21%

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Stock Option Plans:

The Company’s 2015 Equity Incentive Plan provides for the grant of incentive stock options as defined in Section 422 of the Internal Revenue Code and the grant of Stock Options, Restricted Stock, Restricted Stock Units, Performance Awards, or other Awards to employees, non-employee directors, and consultants.

The Board of Directors has authorized 5,000,000 shares of common capital stock for issuance under the 2015 Equity Incentive Plan, including automatic increases provided for in the 2015 Equity Incentive Plan through fiscal year 2025.

The Company’s 2025 Equity Incentive Plan provides for the grant of incentive stock options as defined in Section 422 of the IRC and the grant of Stock Options, Restricted Stock, Restricted Stock Units, Performance Awards, or other Awards to employees, non-employee directors, and consultants.

The Board of Directors has authorized 5,250,000 shares of common stock for issuance under the 2025 Equity Incentive Plan, including automatic increases provided for in the 2025 Equity Incentive Plan through fiscal year 2035.

The number of shares of common stock reserved for issuance under the 2025 Equity Incentive Plan will automatically increase, with no further action by the stockholders, on the first business day of each fiscal year during the term of the 2025 Equity Incentive Plan, beginning January 1, 2026, in an amount equal to 5 % of the issued and outstanding shares of common stock on the last day of the immediately preceding year, or such lesser amount if so determined by the Board or the Plan Administrator.

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Treasury Stock :

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

The Company withheld 129,073 shares of common stock with a value of $ 218,750 to cover the employee's share of tax liabilities related to the vesting of common stock and restricted stock units in 2025 .

In addition, the Company repurchased 580,406 shares of common stock on the open market with a value of $ 847,839 as part of its stock buy-back program in 2025 .

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

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

In addition, the Company purchased 545,788 shares of common stock in the open market with a value of $ 810,874 as part of its stock buy-back program.

Stock Awards :

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6,539,900 $ 1.87 6.02

As of December 31, 2024 , there was $ 6,914,563 of unrecognized compensation costs related to the un-vested share-based compensation arrangements granted.

As of December 31, 2025 , there was $ 7,100,573 of unrecognized compensation costs related to the unvested share-based compensation arrangements granted.

The cost is expected to be recognized over the weighted average remaining contractual life of 6.27 years.

The aggregate intrinsic value represents the difference between the weighted average exercise price and the closing price of the Company’s stock on December 31, 2024 , or $ 1.95 .

The aggregate intrinsic value represents the difference between the weighted average exercise price and the closing price of a share of the Company’s common stock on December 31, 2025 , or $ 1.95 .

Employee Stock Purchase Plan :

The Company's board of directors adopted the 2023 Employee Stock Purchase Plan (the “ESPP”) and the Company's stockholders approved the ESPP in July 2023.

The ESPP was adopted under the requirements of Section 423 of the Internal Revenue Code to allow eligible employees to purchase the Company’s common stock at regular intervals.

The ESPP was adopted under the requirements of Section 423 of the IRC to allow eligible employees to purchase the Company’s common stock at regular intervals.

Participating employees may purchase common stock through voluntary payroll deductions at the end of each participation period at a purchase price equal to 85 % of the lower of the fair market value of the common stock at the beginning or the end of the participation period.

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(iii) the contractual life is five years;

(iv) the dividend yield of 0%;

(iv) the dividend yield is 0%;

and (v) the volatility is 59.9%.

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

The fair value of the warrants amounted to $ 552,283 and was recorded as an increase in the customer list asset and was fully amortized December 15, 2025.

Net Income (Loss) per Share

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The Company currently maintains the majority of its cash and cash equivalent balance with one financial institution.

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

No customer accounts for more than 10% of the revenues of the Company.

Commitments and Contingencies

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

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

this motion was heard August 5, 2024.

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

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

GREENWICH BUSINESS CAPITAL, LLC

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

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

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

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

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

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

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

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

On May 3, 2024, Kauder, Pioletti and Triple Pay Play filed a Motion to Dismiss Usio’s Complaint, and this motion was heard August 5, 2024.

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.

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 statement of operations as a reduction of SG&A expense for the year ended December 31, 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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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.

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 5 for more information.

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

See Note 5 of the notes to our 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, which was denied on January 30, 2026.

On February 6, 2026, KDHM agreed to Usio’s settlement.

The settlement was in the amount of $ 120,000 , which will be recorded on our statement of operations as a reduction of SG&A expense in 2026.

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

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

As of December 31, 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.

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.

As a result of the KDHM lawsuit settlement, the Company will not renew the line of credit or letter of credit upon their maturity.

There are no ongoing costs associated with the maintenance of either of these credit facilities.

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

Subsequent Events

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

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

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

On June 1, 2025, WithumSmith+Brown, P.C., an independent registered public accounting firm (“ Withum ”), acquired certain assets of Pannell Kerr Forster of Texas, P.C.

(“ PKF ”), the independent registered public accounting firm for Usio, Inc.

(the “ Company ”) (the “ Transaction ”).

As a result of this Transaction, on June 1, 2025, PKF resigned as the Company’s independent registered public accounting firm.

Concurrent with such resignation, the Company, with the approval of its Audit Committee, consented to the engagement of Withum as the Company’s new independent registered public accounting firm, effective June 1, 2025.

Prior to the Transaction, the Company did not consult with Withum regarding the application of accounting principles to any specific completed or contemplated transaction or regarding the type of audit opinion that might be rendered by Withum on the Company’s consolidated financial statements, and Withum did not provide any written or oral advice that was an important factor considered by the Company in reaching a decision as to any accounting, auditing or financial reporting issue.

PKF’s Report of Independent Registered Public Accounting Firm (the “ Audit Report ”) on the Company’s consolidated financial statements for the year ended December 31, 2024 did not contain any adverse opinion or disclaimer of opinion and was not qualified or modified as to uncertainty, audit scope or accounting principles.

During the year ended December 31, 2024, and during the interim period from the end of the most recently completed fiscal year through June 1, 2025, the date of resignation, there were no “disagreements” (as such term is defined in Item 304(a)(1)(iv) of Regulation S-K and the related instructions to Item 304) with PKF on any matter of accounting principles or practices, financial statement disclosure or auditing scope or procedures, which disagreements, if not resolved to the satisfaction of PKF would have caused it to make reference to such disagreement in its reports.

During the year ended December 31, 2024, and the subsequent interim period through June 1, 2025, there have been no “reportable events” (as such term is defined in Item 304 (a)(1)(v) of Regulation S-K).

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

What changed 10-K

Item 8. Financial Statements and Supplementary Data