What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2026-05-13 compared with 2025-11-12 · 160 added, 262 removed, 406 unchanged (51% of the section changed)

Financial Statements.

CONDENSED CONSOLIDATED BALANCE SHEETS

September 30, 2025

CONSOLIDATED BALANCE SHEETS

March 31, 2026

December 31, 2025

2 unchanged sentences

$ 7,728,795 $ 7,434,051

Accounts receivable, net

5,211,771 5,053,639

Accounts receivable, tax credit

Settlement processing assets

4 unchanged sentences

2,239,829 2,281,220

Accounts receivable, net

5,418,653 5,274,586

Prepaid expenses and other

392,873 461,675

Current assets before merchant reserves

Prepaid expenses and other

1,903,690 1,359,382

7 unchanged sentences

Intangibles, net

227,356 881,346

Deferred tax asset, net

22 unchanged sentences

2,239,829 2,281,220

Current liabilities before merchant reserve obligations

73,198,063 80,055,504

Merchant reserve obligations

12 unchanged sentences

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

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

- 0 - shares outstanding at March 31, 2026 (unaudited) and December 31, 2025

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

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

31,667,305 and 31,562,178 issued, and 27,672,168 and 27,729,704 outstanding at March 31, 2026 (unaudited) and December 31, 2025, respectively

31,667 31,562

2 unchanged sentences

Treasury stock, at cost;

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

3,995,137 and 3,832,474 shares at March 31, 2026 (unaudited) and December 31, 2025, respectively

( 7,070,640 ) ( 6,837,181 )

7 unchanged sentences

$ 120,192,403 $ 134,890,214

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

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

Three Months Ended September 30,

Nine Months Ended September 30,

See the accompanying notes to the interim consolidated financial statements.

CONSOLIDATED STATEMENTS OF OPERATIONS

Three Months Ended March 31,

Cost of services

3 unchanged sentences

Total selling, general and administrative

Operating loss

Other income and (expense):

Operating income (loss)

Other income (expense):

Interest income

1 unchanged sentence

Other income, net

Loss before income taxes

Federal income tax benefit

Income (loss) before income taxes

Federal income tax expense

State income tax expense

4 unchanged sentences

Weighted average common shares outstanding

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

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Nine Months Ended September 30,

See the accompanying notes to the interim consolidated financial statements.

CONSOLIDATED STATEMENTS OF CASH FLOWS

Three Months Ended March 31,

Operating activities:

4 unchanged sentences

Employee stock-based compensation

Reserve for processing losses

Changes in current assets and current liabilities:

14 unchanged sentences

Payments on equipment loan

Proceeds from equipment loan

Proceeds from issuance of common stock

9 unchanged sentences

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:

Nine Months Ended September 30,

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

Three Months Ended March 31,

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

10 unchanged sentences

Merchant reserves

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

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY

See the accompanying notes to the interim consolidated financial statements.

CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY

Additional Paid- In

1 unchanged sentence

Balance at December 31, 2025

Adjustment to par value of common stock

Issuance of common stock under equity incentive plan

1 unchanged sentence

Deferred compensation amortization

Purchase of treasury stock, at costs

Net loss for the period

Purchase of treasury stock, at cost

Net income for the period

Balance at March 31, 2026

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 June 30, 2025

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, 2024

Adjustment to par value of common stock

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

Purchase of treasury stock, at cost

Net loss for the period

Balance at March 31, 2025

Issuance of common stock under equity incentive plan

Issuance of common stock under employee stock purchase plan

Reversal of deferred compensation amortization that did not vest

Deferred compensation amortization

Purchase of treasury stock, at costs

Net income for the period

Balance at June 30, 2024

Issuance of common stock under equity incentive plan

Issuance of common stock under employee stock purchase plan

Deferred compensation amortization

Purchase of treasury stock, at costs

Net income for the period

Balance at September 30, 2024

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

NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

See the accompanying notes to the interim consolidated financial statements.

NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS

Basis of Presentation

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

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

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.

In the opinion of management, the accompanying unaudited interim condensed consolidated financial statements reflect all adjustments of a normal recurring nature considered necessary to present fairly the Company's financial position, results of operations and cash flows for such periods.

The accompanying unaudited interim condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and the notes thereto included in the Company's annual report on Form 10 -K for the year ended December 31, 2024 , as filed with the Commission on March 26, 2025 ( the " 2024 Annual Report").

In the opinion of management, the accompanying unaudited interim consolidated financial statements reflect all adjustments of a normal recurring nature considered necessary to present fairly the Company's financial position, results of operations and cash flows for such periods.

The accompanying unaudited interim consolidated financial statements should be read in conjunction with the consolidated financial statements and the notes thereto included in the Company's annual report on Form 10 -K for the year ended December 31, 2025 , as filed with the Commission on March 18, 2026 ( the " 2025 Annual Report").

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

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

Change in Accounting Policy:

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

Additionally, we changed the presentation for prepaid card load obligations on the statement of cash flows from an operating activity to a financing activity, and the amount is now characterized within "assets held for customers".

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

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

Accordingly, this change in presentation is accounted for retrospectively, with each comparable period being revised to reflect 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 nine months ended September 30, 2025 .

References in this quarterly report to "the quarter" or the "first quarter" mean the three month period ended March 31, 2026 or 2025 , as applicable, unless otherwise noted.

Use of Estimates:

5 unchanged sentences

Settlement Processing Assets and Obligations:

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.

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 Automated Clearing House ("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 its customers.

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

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

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 United States Postal Service, or 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.

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 business line of the Company's wholly owned subsidiary, Usio Output Solutions, Inc., or Output Solutions.

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

Merchant Reserves:

4 unchanged sentences

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

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

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

Accounts Receivable/Allowance for Estimated Credit Losses:

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 .

Accounts receivable are reported as outstanding principal net of an allowance for estimated credit losses of $ 404,132 at March 31, 2026 and December 31, 2025 .

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.

5 unchanged sentences

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

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

At March 31, 2026 and December 31, 2025 , inventory consisted primarily of printing and paper supplies used for Usio Output Solutions, Inc., or 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 nine months ended September 30, 2025 and 2024 , the Company capitalized software costs of $ 846,375 and $ 575,882 , respectively.

During the three months ended March 31, 2026 and 2025 , the Company capitalized software costs of $ 215,532 and $ 290,650 , respectively.

Concentration of Credit Risk:

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

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

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

11 unchanged sentences

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 .

No impairment losses were recorded in 2025 or during the three months ended March 31, 2026 .

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

15 unchanged sentences

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

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.

At March 31, 2026 and December 31, 2025 , the Company’s reserve for processing losses was $ 802,937 and $ 784,937 , 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:

Revenue (other than for Output Solutions) consists primarily of fees generated through the electronic processing of payment transactions and related services.

Revenue consists primarily of fees generated through the electronic processing of payment transactions and related services.

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.

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

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.

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

10 unchanged sentences

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

Three Months Ended September 30,

Nine Months Ended September 30,

Three Months Ended March 31,

ACH and complementary services

14 unchanged sentences

Legal Proceedings:

In addition to the legal proceedings disclosed in this quarterly report, the Company may be involved in legal matters arising in the ordinary course of business from time to time.

The Company may be involved in legal matters arising in the ordinary course of business from time to time.

Litigation is subject to inherent uncertainties, and an adverse result in the legal proceedings disclosed in this quarterly report or other matters that may arise from time to time may harm our business.

12 unchanged sentences

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

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

The Company is subject to the Texas franchise tax.

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

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 Company's consolidated financial statements upon adoption.

Reclassifications:

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

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

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 Company's consolidated financial statements upon adoption.

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 2025 - 04 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 July 2025, the FASB issued ASU 2025 - 05, Financial Instruments — Credit Losses (Topic 326 ):

Measurement of Credit Losses for Accounts Receivable and Contract Assets (“ASU 2025 - 05” ), which provides a practical expedient for estimating expected credit losses for current accounts receivable and current contract assets.

ASU 2025 - 05 will be effective for annual periods beginning after December 15, 2025, and interim periods within those annual reporting periods and should be applied prospectively.

We adopted this guidance effective January 1, 2026 on a prospective basis.

Our financial statements were not materially impacted upon adoption.

In September 2025, the FASB issued ASU 2025 - 06, "Targeted Improvements to the Accounting for Internal-Use Software," which simplifies the capitalization guidance by removing all references to software development project stages, so that the guidance is neutral to different software development methods.

The amendments in this update are effective for annual periods beginning after December 15, 2027.

Early adoption is permitted.

The amendments should be applied either retrospectively, prospectively to software costs incurred after the adoption date or on a modified prospective basis.

The Company is currently evaluating the potential effects of ASU 2025 - 06 on our consolidated financial statements and related disclosures but does not expect adoption of this new standard to be material.

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.

In December 2025, the FASB issued ASU 2025 - 11, “Interim Reporting ( Topic 270 ):

Narrow-Scope Improvements”.

The amendments are intended to improve the clarity and navigability of interim reporting requirements within Topic 270 by clarifying when interim reporting guidance applies, enhancing the organization of required interim disclosures, and specifying the form and content of interim financial statements.

The guidance responds to stakeholder feedback that existing interim reporting requirements were difficult to navigate because of the historical origins and accumulated amendments within Topic 270.

ASU 2025 - 11 adds a disclosure principle requiring entities to disclose events that occur after the end of the most recent annual reporting period that have a material impact on the entity.

The amendments also introduce a comprehensive list of required interim disclosures drawn from various Codification topics and clarify the presentation requirements for interim financial statements, including condensed financial statements and accompanying footnotes.

Importantly, the ASU does not change the fundamental nature of interim reporting nor expand or reduce existing disclosure requirements;

rather, it improves clarity and consistency across entities that issue interim financial statements in accordance with generally accepted accounting principles.

ASU 2025 - 11 is effective for the Company for interim reporting periods within annual reporting periods beginning after December 15, 2027.

Early adoption is permitted, and the amendments may be applied either prospectively or retrospectively.

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

For each of the three months ended September 30, 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.

For each of the three months ended March 31, 2026 and 2025 , operating lease expenses totaled $ 190,901 and $ 150,688 , respectively.

Accrued Expenses

Accrued expenses consisted of the following balances:

September 30, 2025

March 31, 2026

December 31, 2025

6 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 was for a period of 36 months with a maturity date of March 20, 2024 and annual interest of 3.95 %.

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

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.

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.

1 unchanged sentence

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 .

Total interest and principal payments on this folder and inserter equipment loan were $ 47,953 for each of the three months ended March 31, 2026 and 2025 .

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

1 unchanged sentence

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.

Commitments and Contingencies" for further information.

As of March 31, 2026 , $ 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 during the three months ended March 31, 2026 were $ 13,361 .

As of March 31, 2026 , 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 a prior lawsuit that has since been settled in the Company's favor.

Line of Credit

1 unchanged sentence

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

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.

As of March 31, 2026 , 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 a lawsuit appeal that has since been settled but remains fully available.

Letter of Credit

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

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.

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

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

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

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

As a result of the 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 principal payments on current debt arrangements are as follows at March 31, 2026 :

Year ending December 31,

14 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 $ 82,842 in each of the three and nine months ended September 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 $ 0 and $ 27,615 in the three months ended March 31, 2026 and 2025 , respectively.

Net Income (Loss) Per Share

3 unchanged sentences

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

The following is a reconciliation of the numerators and the denominators of the basic and diluted per share computations for net income (loss) for the three and nine months ended September 30, 2025 and 2024 .

Three Months Ended September 30,

Nine Months Ended September 30,

The following is a reconciliation of the numerators and the denominators of the basic and diluted per share computations for net income (loss) for the three months ended March 31, 2026 and 2025 .

Three Months Ended March 31,

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

4 unchanged sentences

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

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,

The warrants to purchase shares of common stock that were outstanding at March 31, 2026 and 2025 which were not included in the computation of diluted earnings per share because the effect would have been anti-dilutive, were as follows:

Anti-dilutive warrants

4 unchanged sentences

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

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.

At March 31, 2026 and December 31, 2025 , the Company had a deferred tax asset of approximately $ 4.5 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.

1 unchanged sentence

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.

As of March 31, 2026 , the Company had no accrued interest or penalties related to uncertain tax provisions.

At March 31, 2026 , the Company had available net operating loss carryforwards ("NOLs") of approximately $ 21.6 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.

7 unchanged sentences

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

$ 1,275,415 2025

1,350,961 2026

1,740,724 2027

1,267,336 2037

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.

As of March 31, 2026 , there were NOLs totaling approximately $ 14.0 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 NOLs for 2018 and later years were generated.

Total loss carryforwards

Management is not aware of any tax positions that would have a significant impact on the Company's financial position or results of operations.

The tax provision for federal and state income tax is as follows for the three months ended March 31, 2026 and 2025 .

Three Months Ended March 31, 2026

Three Months Ended March 31, 2025

Current provision:

Deferred provision:

Federal income tax

Income tax expense

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

federal statutory tax rates to total income tax expense (benefit) is as follows for the three months ended March 31, 2026 and 2025 .

Three Months Ended March 31, 2026

Three Months Ended March 31, 2025

Income tax (benefit) at 21%

Change in valuation allowance

Permanent and other differences

Income tax expense

Related Party Transactions

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.

During the three months ended March 31, 2026 and 2025 , the Company purchased a total of $ 2,831 and $ 2,003 , 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 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.

In the three months ended March 31, 2026 , we withheld 20,263 shares of our common stock for $ 27,111 in private transactions based on an average purchase price of $ 1.34 per share from officers, directors and employees to cover their share of taxes in connection with equity grants.

In the three months ended March 31, 2025 , we withheld 83,854 shares of our common stock for $ 152,997 in private transactions based on an average purchase price of $ 1.82 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.

5 unchanged sentences

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.

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).

Segment Reporting

10 unchanged sentences

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 September 30, 2025 and 2024 :

For the Three Months Ended September 30, 2025

The following tables set forth certain financial information with respect to Usio’s reportable segments for the three months ended March 31, 2026 and 2025 :

For the Three Months Ended March 31, 2026

Output Solutions

17 unchanged sentences

$ 4,805,488 $ 9,085,699 $ 13,891,187

For the Three Months Ended September 30, 2024

For the Three Months Ended March 31, 2025

Output Solutions

22 unchanged sentences

and intangibles, net.

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

Merchant Services

$ 15,347,330 $ 47,803,043 $ 63,150,373

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

$ 712,897 $ 680,318 $ 1,393,215

Capital expenditures

$ 84,698 $ 207,892 $ 292,590

Identifiable assets 1

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

For the Nine Months Ended September 30, 2024

Output Solutions

Merchant Services

$ 15,592,105 $ 46,779,647 $ 62,371,752

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

$ 1,031,134 $ 676,587 $ 1,707,721

Capital expenditures

$ 21,515 $ 100,874 $ 122,389

Identifiable assets 1

$ 5,114,484 $ 6,959,293 $ 12,073,777

Note to tables:

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

property and equipment, net;

net right-of-use lease assets;

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 nine months ended September 30, 2025 and 2024 :

Three Months Ended September 30,

Segment Profit

$ 4,870,019 $ 4,896,157

Stock-based compensation

( 399,582 ) ( 569,772 )

( 4,501,762 ) ( 4,119,317 )

Depreciation and amortization

( 432,846 ) ( 583,718 )

Operating (loss)

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

Nine Months Ended September 30,

The following table reconciles segment profit reported above to the loss from operations reported in the consolidated statements of operations for the three months ended March 31, 2026 and 2025 :

Three Months Ended March 31,

Segment Profit

5 unchanged sentences

( 225,745 ) ( 495,770 )

Operating (loss)

Operating income (loss)

$ 225,712 $ ( 239,584 )

1 unchanged sentence

Legal Proceedings.

Ben Kauder, Nina Pioletti, & Triple Pay Play, Inc.

In 2017, Usio acquired Singular Payments, Inc.

(“Singular”), another payment processing company with offices in Nashville, Tennessee and St.

Augustine, Florida.

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

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

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

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

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

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

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

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

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

The motion was granted.

Subsequently, in February 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.

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 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.

On October 5, 2021, we filed a counterclaim and third -party petition.

Therein, we allege that neither KDHM nor its principals disclosed that KDHM was not accounting for the customer deposits in accordance with GAAP.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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.

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 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.

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

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

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

Other proceedings

Aside from these proceedings, the Company may be involved in legal matters arising in the ordinary course of business from time to time.

The Company may be involved in legal matters arising in the ordinary course of business from time to time.

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.

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