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What changed in Usio, Inc.'s 10-K — 2024 vs 2025

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Paragraph-level year-over-year comparison of Usio, Inc.'s 2024 and 2025 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2025 report.

+318 added−261 removedSource: 10-K (2026-03-18) vs 10-K (2025-03-26)

Top changes in Usio, Inc.'s 2025 10-K

318 paragraphs added · 261 removed · 196 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

48 edited+67 added−22 removed71 unchanged
Biggest changeThe growth of electronic commerce has made the acceptance of card-based and other electronic forms of payment a necessity for businesses, both large and small, in order to remain competitive. • The value of core noncash payments in the United States grew 9.5% per year since 2018, faster than in any previous FRPS measurement period since 2000. • The number of core non-cash payments, comprising debit card, credit card, ACH, and check payments, reached 204.5 billion in 2021, an increase of 30.7 billion from 2018.
Biggest changeThe growth of electronic commerce has made the acceptance of card-based and other electronic forms of payment crucial for businesses, both large and small, in order to remain competitive. • In 2024, cash payment use as a percentage of total payments was 14%, having declined every year since 2021, and down from 31% in 2016. 1 • In 2024, credit and debit card payments accounted for 65% of U.S. consumers total payments per month, up from 51% of total payments in 2018. 1 • 23% of consumer purchases and peer-to-peer payments were made remotely in 2024, a share that has increased each year since 2021 when it was 18%. 1 • U.S. consumers made an average of 11 payments per month with a mobile phone in 2024, up from four payments per month in 2018. 1 • The value of core noncash payments in the United States grew 9.5% per year from 2018 through 2021, faster than in any previous FRPS measurement period since 2000. 2 • The number of core non-cash payments, comprising debit card, credit card, ACH, and check payments, reached 204.5 billion in 2021, an increase of 30.7 billion from 2018.
The value of these payments totaled $128.51 trillion in 2021, an increase of $31.47 trillion from 2018, more than twice the rate of increase in the previous three-year period (2015 to 2018). • ACH payments exhibited accelerating growth, increasing 8.3% per year by number and 12.7% per year by value from 2018 to 2021, and accounted for more than 90% of the rise in non-cash payments. • In 2021 ACH transfers grew to $91.85 trillion, representing 72% of core non-cash payments value. • For calendar year 2022, general-purpose (GP) card payments reached 153.3 billion transactions and $9.76 trillion in value. • From 2021 to 2022, GP card payments grew 6.0% by number and 10.5% by value, effectively continuing the growth trajectory from 2018 to 2021, where they grew 6.5% and 10.3% by year, respectively. • In 2022, remote payments represented 36.2% of the total number of card payments, down slightly versus the 37.7% of total card payments at the end of 2020.
The value of these payments totaled $128.51 trillion in 2021, an increase of $31.47 trillion from 2018, more than twice the rate of increase in the previous three-year period (2015 to 2018). 2 • ACH payments exhibited accelerating growth, increasing 8.3% per year by number and 12.7% per year by value from 2018 to 2021, and accounted for more than 90% of the rise in non-cash payments. 2 • In 2021 ACH transfers grew to $91.85 trillion, representing 72% of core non-cash payments value. 2 • For calendar year 2022, general-purpose (GP) card payments reached 153.3 billion transactions and $9.76 trillion in value. 2 • From 2021 to 2022, GP card payments grew 6.0% by number and 10.5% by value, effectively continuing the growth trajectory from 2018 to 2021, where they grew 6.5% and 10.3% by year, respectively. 2 • In 2022, remote payments represented 36.2% of the total number of card payments, down slightly versus the 37.7% of total card payments at the end of 2020.
Our sales personnel typically initiate contact with prospective customers that we identify as meeting our targeted customer profile. We also market and sell our prepaid card program directly to government entities, corporations and to consumers through the Internet. We have recently undertaken a major initiative to package and cross-sell of our platform of payment options across our portfolio of merchants.
Our sales personnel typically initiate contact with prospective customers that we identify as meeting our targeted customer profile. We also market and sell our prepaid card program directly to government entities, corporations and to consumers through the Internet. We have recently undertaken a major initiative to package and cross-sell our platform of payment options across our portfolio of merchants.
Leveraging the latest in cloud computing and cybersecurity, including Microsoft Azure's robust security features, we ensure the protection of data transmissions and transactions. Our adoption of Azure's hub-spoke architecture and other cutting-edge technologies supports enhanced performance and security, facilitating seamless integrations with third-party processors and offering tailored payment services to meet the specific requirements of our clients.
Leveraging the latest in cloud computing and cybersecurity, including Microsoft Azure's robust security features, we work to ensure the protection of data transmissions and transactions. Our adoption of Azure's hub-spoke architecture and other cutting-edge technologies supports enhanced performance and security, facilitating seamless integrations with third-party processors and offering tailored payment services to meet the specific requirements of our clients.
Further, our credit card payment offering was expanded in 2017 with the development of Payment Facilitation, or PayFac, that utilizes our unique technology that allows for instant enrollment of merchants and combined our suite of payment options into an integrated platform for merchants and customers to utilize.
Further, our credit card payment offering was expanded in 2017 with the development of Payment Facilitation, or PayFac, which utilizes our unique technology that allows for instant enrollment of merchants and combined our suite of payment options into an integrated platform for merchants and customers to utilize.
Any new, or changes made to, U.S. federal, state and local laws, regulations, card network rules or other industry standards affecting our business may require significant development efforts or have an unfavorable impact to our financial results.
Any new, or changes made to, U.S. federal, state and local laws, regulations, card network rules or other industry standards affecting our business may require significant development efforts or have an unfavorable impact on our financial results.
Finally, we believe we hold a significant competitive advantage over potential entrants into the prepaid industry as a result of the significant barrier in obtaining bank sponsorships for prepaid card program management and an even higher barrier for performing prepaid card processing. 7 Table of Contents Trademarks and Domain Names We own federally registered trademarks on the marks “Usio,” “Payment Data Systems, Inc.,” “Akimbo,” “FiCentive Innovations in Prepaid Card Solutions,” “Don’t change your bank, just your card” and “ZBILL” and their respective designs.
Finally, we believe we hold a significant competitive advantage over potential entrants into the prepaid industry as a result of the significant barrier in obtaining bank sponsorships for prepaid card program management and an even higher barrier for performing prepaid card processing. 8 Table of Contents Trademarks and Domain Names We own federally registered trademarks on the marks “Usio,” “Payment Data Systems, Inc.,” “Akimbo,” “FiCentive Innovations in Prepaid Card Solutions,” “Don’t change your bank, just your card” and “ZBILL” and their respective designs.
We closely monitor extensions of credit and if the financial condition of our customers were to deteriorate, resulting in an impairment of their ability to make contractual payments, additional allowances may be required. 6 Table of Contents Sales and Marketing We sell and market our ACH products and services primarily through non-exclusive resellers that act as an external sales force, with minimal direct investment in sales infrastructure and management, as well as direct contact by our sales personnel.
We closely monitor extensions of credit and if the financial condition of our customers were to deteriorate, resulting in an impairment of their ability to make contractual payments, additional allowances may be required. 7 Table of Contents Sales and Marketing We sell and market our ACH products and services primarily through non-exclusive resellers that act as an external sales force, with minimal direct investment in sales infrastructure and management, as well as direct contact by our sales personnel.
The success of this business line depends on our ability to realize the anticipated growth opportunities; we cannot provide any assurance that we will be able to realize these opportunities.
The success of this business line depends on our ability to realize the anticipated growth opportunities, although we cannot provide any assurance that we will be able to realize these opportunities.
Payment Acceptance. We provide 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.
We provide 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.
Some of our material websites are www.usio.com, www.payfacinabox.com, www.ficentive.com, www.akimbocard.com, and www.usiooutput.com. The inclusion of these website addresses in this Annual Report do not include or incorporate by reference the information on or accessible through these websites, and the information contained on or accessible through these websites should not be considered as part of this Annual Report on Form 10-K.
Some of our material websites are www.usio.com, www.payfacinabox.com, www.ficentive.com, www.akimbocard.com, and www.usiooutput.com. The inclusion of these website addresses in this Annual Report does not include or incorporate by reference the information on or accessible through these websites, and the information contained on or accessible through these websites should not be considered as part of this Annual Report on Form 10-K.
You may also read and copy any materials we file with or furnish to the SEC. The SEC maintains an Internet site that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC at https://www.sec.gov. 10 Table of Contents
You may also read and copy any materials we file with or furnish to the SEC. The SEC maintains an Internet site that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC at https://www.sec.gov. 12 Table of Contents
Beginning with our Electronic Bill Presentment and Payment, or EBPP, product that launched the Company, we entered into the electronic funds transfer space through the Automated Clearing House, or ACH, network, developing ancillary and complementary products such as PINless debit in 2016, and Remotely Created Checks, or RCC, account validation, and account inquiry in 2019.
Beginning with our Electronic Bill Presentment and Payment, or EBPP, product that launched the Company, we entered into the electronic funds transfer space through the ACH network, developing ancillary and complementary products such as PINless debit in 2016, and Remotely Created Checks, or RCC, account validation, and account inquiry in 2019.
We believe this allows us to satisfy the market demands for risk management, and service reliability. Furthermore, we believe we present a competitive distinction through our internal technology to provide a single integrated payment warehouse that consolidates, processes, tracks and reports all payments regardless of payment source or channel.
We believe this allows us to satisfy the market demands for risk management and service reliability. Furthermore, we believe we present a competitive distinction through our internal technology which provides a single integrated payment warehouse that consolidates, processes, tracks and reports all payments regardless of payment source or channel.
For the ODFI portion of our ACH business, we have entered into agreements with the North American Banking Company, or NABC, Metropolitan Commercial Bank and TransPecos Banks. We are financially liable for all fees, fines, chargebacks, and losses related to our ACH processing merchant customers.
For the ODFI portion of our ACH business, we have entered into agreements with the North American Banking Company, or NABC, and TransPecos Bank. We are financially liable for all fees, fines, chargebacks, and losses related to our ACH processing merchant customers.
This decline representing the recovery from the COVID-19 pandemic. • Chip authenticated payments accounted for 87.5% of in-person GP card payments in 2022, compared to 75.2% in 2020, while 29.1% used chip and PIN, and 19.7% were contactless. • From 2015 to 2018, total card payments - the sum of credit card, non-prepaid debit card and prepaid debit card payments - increased 25.9 billion to reach 157 billion payments by number and increased $2.35 trillion to reach $9.43 trillion by value in 2018. • In 2022, private-label (PL) card payments, including PL credit cards, PL prepaid cards, and electronic benefits transfer (EBT) cards, totaled 12.8 billion transactions and $0.64 trillion in value, down 2.1% and 18.1% respectively from 2021. • Within card payments, prepaid debit card payments had the highest growth rate in 2021 over 2018, by value, at 20.6%, compared with 13.7% per year for non-prepaid debit card payments and 7% for credit card payments. • Mobile wallet payments continued to exhibit strong growth, reaching 14.4 billion transactions in 2022, up from 2.9 billion in 2018. 2 Table of Contents Figure 1 (below) illustrates the overall growth in key non-cash metrics since the Federal Reserve Payments Study was first reported for the year 2000 and reflects the acceleration of growth in recent years.
This decline represented the recovery from the COVID-19 pandemic. 2 • Chip authenticated payments accounted for 87.5% of in-person GP card payments in 2022, compared to 75.2% in 2020, while 29.1% used chip and PIN, and 19.7% were contactless. 2 • From 2015 to 2018, total card payments - the sum of credit card, non-prepaid debit card and prepaid debit card payments - increased 25.9 billion to reach 157 billion payments by number and increased $2.35 trillion to reach $9.43 trillion by value in 2018. 2 • In 2022, private-label (PL) card payments, including PL credit cards, PL prepaid cards, and electronic benefits transfer (EBT) cards, totaled 12.8 billion transactions and $0.64 trillion in value, down 2.1% and 18.1% respectively from 2021. 2 • Within card payments, prepaid debit card payments had the highest growth rate in 2021 over 2018, by value, at 20.6%, compared with 13.7% per year for non-prepaid debit card payments and 7% for credit card payments. 2 • Mobile wallet payments continued to exhibit strong growth, reaching 14.4 billion transactions in 2022, up from 2.9 billion in 2018. 2 1 Source: 2024 Survey and Diary of Consumer Payment Choice. 2 Source: 2022 Federal Reserve Payments Study & 2023 annual Supplement. 2 Table of Contents Figure 1 (below) illustrates the overall growth in key non-cash metrics since the Federal Reserve Payments Study was first reported for the year 2000 and reflects the acceleration of growth in recent years.
Following the acquisition of substantially all of the assets of IMS, we've enhanced and expanded our services to include electronic bill presentment and comprehensive document management solutions, catering to a wide array of industries.
Following the acquisition of substantially all of the assets of IMS, we have enhanced and expanded our services to include electronic bill presentment and comprehensive document management solutions, catering to a wide array of industries.
These consumers have witnessed the wide adoption of card products, technology innovations such as mobile phone payment applications, widespread adoption of the internet and a significant increase in card not present transactions and on-line shopping during COVID-19, that subsequently remained at levels higher than pre 2020.
These consumers have witnessed the wide adoption of card products, technology innovations such as mobile phone payment applications, widespread adoption of the internet and a significant increase in card not present transactions and on-line shopping during COVID-19, which subsequently remained at levels higher than prior to 2020.
We make available on this website, free of charge, copies of our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to those reports, as applicable and as soon as reasonably practicable after we electronically file or furnish such materials to the U.S. Securities and Exchange Commission.
We make available on this website, free of charge, copies of our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to those reports, as applicable and as soon as reasonably practicable after we electronically file or furnish such materials to the SEC.
We believe that our business is strengthened by a diverse workforce that reflects the communities in which we operate. We believe all of our employees should be treated with respect and equality, regardless of gender, ethnicity, sexual orientation, gender identity, religious beliefs or other characteristics.
Inclusion and Diversity. Our inclusion and diversity program focuses on our employees, workplace and community. We believe that our business is strengthened by a diverse workforce that reflects the communities in which we operate. We believe all of our employees should be treated with respect and equality, regardless of gender, ethnicity, sexual orientation, gender identity, religious beliefs or other characteristics.
The Credit Card Accountability, Responsibility, and Disclosure Act of 2009 (“CARD Act”) imposes requirements relating to disclosures, fees and expiration dates that are generally applicable to gift certificates, store gift cards and general-use prepaid cards.
The Credit Card Accountability, Responsibility, and Disclosure Act (“CARD Act”) imposes requirements relating to disclosures, fees and expiration dates applicable to gift certificates, store gift cards and general‑use prepaid cards.
Our UsioCard platform supports Apple Pay®, Samsung Pay™ and Google Pay™. In our over 25+year history, we have created a loyal customer base that relies on us for our convenient, secure, innovative and adaptive services and technology, and we have built long-standing and valuable relationships with premier banking institutions such as Fifth Third Bank, Sunrise Bank, TransPecos and others.
In our over 25 year history, we have created a loyal customer base that relies on us for our convenient, secure, innovative and adaptive services and technology, and we have built long-standing and valuable relationships with premier banking institutions such as Fifth Third Bank, Sunrise Bank, TransPecos Bank and others. Payment Acceptance.
Prepaid debit card payments include general-purpose, private-label, and electronic benefits transfer, or EBT, versions. Estimates for prepaid debit card payments are not available for 2000 or 2003. The points mark years for which data were collected and estimates were produced. Lines connecting the points are linear interpolations.
Prepaid debit card payments include general-purpose, private-label, and electronic benefits transfer, or EBT, versions. Estimates for prepaid debit card payments are not available for 2000 or 2003. The points mark years for which data were collected and estimates were produced. Lines connecting the points are linear interpolations. Source: 2022 Federal Reserve Payments Study & 2023 annual Supplement.
Since the acquisition of substantially all of the assets of IMS, we have invested in new equipment to enhance the capacity and speed of the business unit, such as a new inserter and folder, on October 1, 2023, that was implemented over the course of 2024.
Since the acquisition of substantially all of the assets of IMS, we have invested in new equipment to enhance the capacity and speed of the business unit, such as a new inserter and folder, on October 1, 2023, that was implemented over the course of 2024, and a new printer in September 2025 that will be installed and operational in the first half of 2026.
CARD Act As an agent of, and third-party service provider to, our issuing banks, we are subject to indirect regulation and direct audit and examination by the Office of Thrift Supervision, the Office of the Comptroller of the Currency, the Board of Governors of the Federal Reserve System, or FRB, and the Federal Deposit Insurance Corporation.
CARD Act As an agent of, and third‑party service provider to, our issuing banks, we are subject to examination by federal banking regulators, including the Office of the Comptroller of the Currency, the Board of Governors of the Federal Reserve System, and the Federal Deposit Insurance Corporation.
Since December 2024, we have pursued the “One Usio” strategy in order to increase the integration of all of our various product offerings so that we approach the market as a unified force with a portfolio of capabilities that can meet our customer’s various electronic payment and associated needs.
Throughout 2025, we pursued the “Usio One” strategy in order to increase the integration of all of our various product offerings so that we approach the market as a unified force with a portfolio of capabilities that can meet our customers’ various electronic payment and associated needs.
(formerly known as Square), that serve a broad market spectrum from large to small merchants and provide banking, automatic teller machine, and other payment-related services and systems in addition to card-based payment processing. There are also a large number of smaller transaction processors that provide various services to small and medium- sized merchants.
There are a number of large transaction processors, including Fiserv, Inc., Elavon Inc., WorldPay, Global Payments, Inc., Stripe and Block, Inc. (formerly known as Square), that serve a broad market spectrum from large to small merchants and provide banking, automatic teller machine, and other payment-related services and systems in addition to card-based payment processing.
We promote our core values of ownership, innovation, camaraderie, service, authenticity and trust as an organization and offer awards to colleagues who exemplify these qualities. We require a mandatory online training curriculum for our employees that includes annual anti-harassment and anti-discrimination training. Inclusion and Diversity. Our inclusion and diversity program focuses on our employees, workplace and community.
Our strategy to develop and retain the best talent includes an emphasis on employee training and development. We promote our core values of ownership, innovation, camaraderie, service, authenticity and trust as an organization and offer awards to colleagues who exemplify these qualities. We require a mandatory online training curriculum for our employees that includes annual anti-harassment and anti-discrimination training.
Source: 2022 Federal Reserve Payments Study & 2023 annual Supplement. 3 Table of Contents We believe that the electronic payment processing industry will continue to benefit from the following trends: Favorable Demographics As consumers age, we expect that they will continue to use the payment technology to which they have grown accustomed.
Source: 2024 Survey and Diary of Consumer Payment Choice. 3 Table of Contents We believe that the electronic payment processing industry will continue to benefit from the following trends: Favorable Demographics As consumers age, we expect that they will continue to use the payment technology to which they have grown accustomed.
Elements of this strategy include: • unified onboarding process that allows every client boarded to have access to all of our various payment methods; • consolidated sales and customer support teams that can better cross-sell and integrate clients across all of our services; • improved reporting and customer management with the development of a new customer management platform that encompasses all of our business lines; • enhanced security and fraud protection through the development of new fraud detection tools, and a unified risk and compliance team; Customers Our customers are consumers, merchants, and businesses that use our Automated Clearing House and/or card-based processing services in order to provide their consumers with the ability to pay for goods and services without having to use cash or a paper check.
Elements of this strategy include: • unified onboarding process that allows every client boarded to have access to all of our various payment methods; • consolidated sales and customer support teams that can better cross-sell and integrate clients across all of our services; • improved reporting and customer management with the development of a new customer management platform that encompasses all of our business lines; and • enhanced security and fraud protection through the development of new fraud detection tools, and a unified risk and compliance team.
We may also require cash deposits and other types of collateral from certain merchants to mitigate any such risk. The banking sponsor and each of the regional debit networks have the ability to terminate our access or anyone of our merchant’s access to process payments without notice. If either case occurs, our revenue could be negatively affected.
The banking sponsor and each of the regional debit networks have the ability to terminate our access or anyone of our merchant’s access to process payments without notice. If either case occurs, our revenue could be negatively affected.
We are currently sponsored by Evolve Bank & Trust and TransPecos Bank in order to access certain regional debit networks. Through these sponsorships, we created a new service in late 2016 to provide both the issuance of real time credits and debits to a debit card holder via a regional network without using a PIN.
We are currently sponsored by TransPecos Bank in order to access certain regional debit networks. Through this sponsorship, we provide both the issuance of real time credits and debits to a debit card holder via a regional network without using a PIN. Regional networks are not affiliated with major credit card associations and operate independently.
Certain of our services are also subject to rules set by various payment networks, such as Visa and Mastercard. 8 Table of Contents The Dodd-Frank Act The Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (the "Dodd-Frank Act") effected and required significant changes to United States financial regulations, include regulations addressing fees charged or received by issuers for processing debit transactions and the transaction routing options available to merchants.
Certain of our services are also subject to rules set by various payment networks, such as Visa and Mastercard. 9 Table of Contents The Dodd-Frank Act The Dodd‑Frank Wall Street Reform and Consumer Protection Act of 2010 (the "Dodd-Frank Act") effected significant changes to U.S. financial regulations, including regulations addressing debit card interchange fees and merchant transaction‑routing rights.
A card-not-present transaction occurs whenever the customer does not physically present a payment card at the point-of-sale and may occur over the Internet, mail, or telephone. A tap-and-pay transaction occurs whenever a consumer taps their phone on a physical terminal utilizing third party wallet services like Apple Pay®, Samsung Pay™ and Google Pay™. Payment Facilitation.
A tap-and-pay transaction occurs whenever a consumer taps their phone on a physical terminal utilizing third party wallet services like Apple Pay®, Samsung Pay™ and Google Pay™. Payment Facilitation.
The Dodd-Frank Act also established the Consumer Financial Protection Bureau (“CFPB”) to regulate consumer financial services, including many services offered by our customers. The CFPB is responsible for enforcing and writing rules regarding consumer access to disclosures, fees and statements, error resolution, limited liability and overdrafts when using prepaid cards.
The Dodd-Frank Act also created the Consumer Financial Protection Bureau (“CFPB”), which regulates consumer financial services, including many services offered by our customers. The CFPB enforces rules regarding consumer disclosures, fees and statements, error‑resolution procedures, limited liability protections and overdraft restrictions applicable to prepaid programs.
Since 1998, Usio has entered a number of market verticals within the payments industry in order to satisfy the growing payment needs of consumers and merchants across the United States.
Since 1998, through our merchant services business lines, which now consist of Automated Clearing House, or ACH, and complementary services, credit card processing and prepaid cards, Usio has entered a number of market verticals within the payments industry in order to satisfy the growing payment needs of consumers and merchants across the United States.
Competition The payment processing industry is highly competitive. Many small and large companies compete with us in providing payment processing services and related services to a wide range of merchants. There are a number of large transaction processors, including Fiserv, Inc., Elavon Inc., WorldPay, Stripe and Block, Inc.
No customer accounted for more than 10% of revenues in 2025 or 2024. Competition The payment processing industry is highly competitive. Many small and large companies compete with us in providing payment processing services and related services to a wide range of merchants.
As well, we continue to enhance our existing product offerings, with improvements in reporting, data management, fraud and risk monitoring, ease of access, and accelerations in client onboarding and implementation times. With our transition to a cloud-based platform, our speed, security, and scalability in payment processing has been further expanded, allowing us to seamlessly grow as the market demands.
With our transition to a cloud-based platform, our speed, security, and scalability in payment processing have been further expanded, allowing us to seamlessly grow as the market demands.
Further, in December 2024, we partnered with an outsourced presorting company, that we believe will help lower costs of postage and labor, while increasing the speed of our mail delivery services. 5 Table of Contents Relationships with Sponsors and Processors We have agreements with several processors that provide us, on a non-exclusive basis, with transaction processing and transmittal, transaction authorization and data capture, and access to various reporting tools.
For the years ended December 31, 2025 and December 31, 2024, the Company capitalized $1,102,368 and $796,004, respectively. 6 Table of Contents Relationships with Sponsors and Processors We have agreements with several processors that provide us, on a non-exclusive basis, with transaction processing and transmittal, transaction authorization and data capture, and access to various reporting tools.
As a result, we and our handling of data are subject to a variety of laws, rules and regulations relating to privacy, data protection and information security, including regulation by various governmental authorities, such as the U.S. Federal Trade Commission, or FTC, and various state, local and foreign agencies.
Accordingly, we are subject to a range of U.S. federal, state and local laws and regulations relating to privacy, data protection and information security.
Further, in December 2024, we partnered with an outsourced presorting company, that we believe will help lower costs of postage and labor, while increasing the speed of our mail delivery services. 1 Table of Contents Industry Background and Trends In the United States, the use of non-paper-based forms of payment, such as credit and debit cards, has risen steadily over the past several years.
We believe we will be able to implement phased portions of this strategy, and other PostCredit related projects, by the end of 2026. 1 Table of Contents Industry Background and Trends In the United States, the use of non-paper-based forms of payment, such as credit and debit cards, has risen steadily over the past several years.
These merchant customers operate in a variety of predominately retail industries and are under contract with us to exclusively use the services that we provide to them. Recent areas of customer focus have included system integrators, law firms, churches, charitable organizations, medical and dental clinics, doctor's offices, property management and homeowner associations, hospitality firms and municipalities.
Recent areas of customer focus have included system integrators, law firms, churches, charitable organizations, medical and dental clinics, doctor's offices, property management and homeowner associations, hospitality firms and municipalities. Most of our merchant customers have signed long-term contracts, generally with three-year terms, that provide for volume-based transaction fees. Our customers are geographically dispersed throughout the United States.
Regional networks are not affiliated with major credit card associations and operate independently. Through our sponsorships with Evolve Bank & Trust, and TransPecos Bank, we are financially liable for all fees, fines, chargebacks and losses related to our PINless debit card processing for our merchant customers.
Through our sponsorship with TransPecos Bank, we are financially liable for all fees, fines, chargebacks and losses related to our PINless debit card processing for our merchant customers. We may also require cash deposits and other types of collateral from certain merchants to mitigate any such risk.
With the growing need for faster payment methods, we continue to invest in technology that can help us further expand our suite of payment technology. With the rise of Real Time Payments, or RTP, we began expansion into this market vertical in 2023, which serves as an alternative to ACH payments.
With the rise of Real Time Payments, or RTP, we began expansion into this market vertical in 2023, which serves as an alternative to ACH payments. We also continue to enhance our existing product offerings, with improvements in reporting, data management, fraud and risk monitoring, ease of access, and accelerations in client onboarding and implementation times.
Similarly, our PINless debit product allows merchants to debit and credit accounts in real-time. Card-Based Services. Our card-based processing services enable merchants to process both traditional card-present, tap-and-pay, or "swipe" transactions, as well as card-not-present transactions. A traditional card-present transaction occurs whenever a card holder physically presents a credit or debit card to a merchant at the point-of-sale.
A traditional card-present transaction occurs whenever a card holder physically presents a credit or debit card to a merchant at the point-of-sale. A card-not-present transaction occurs whenever the customer does not physically present a payment card at the point-of-sale and may occur over the Internet, mail, or telephone.
Census Bureau, estimated retail e-commerce sales for 2024 were estimated at $1,192.6 billion, an increase of approximately 8.1% from 2023, and e-commerce sales in 2024 accounted for 16.1% of total sales, compared to 15.3% in 2023. 4 Table of Contents Products and Services Our suite of payment solutions is driven by a sophisticated infrastructure that merges our own technology with strategic alliances, offering secure, scalable, and resilient payment processing services.
We cannot assure you that we will be able to successfully assimilate new and future acquisitions. 5 Table of Contents Products and Services Our suite of payment solutions is driven by a sophisticated infrastructure that merges our own technology with strategic alliances, offering secure, scalable, and resilient payment processing services.
We are not a party to any collective bargaining agreements. We believe that our relations with our employees are good. Growth and Development. Our strategy to develop and retain the best talent includes an emphasis on employee training and development.
We employ a diverse workforce and provide mandatory training, including anti‑harassment and anti‑discrimination programs. Human Capital Resources As of December 31, 2025, we had 107 full-time employees, and three part-time employees. We are not a party to any collective bargaining agreements. We believe that our relations with our employees are good. Growth and Development.
We believe that our general purpose re-loadable prepaid cards, and the maintenance fees charged on our general purpose re-loadable cards, are exempt from the requirements under this rule, as they fall within an express exclusion for cards which are re-loadable and not marketed or labeled as a gift card or gift certificate.
Our general‑purpose reloadable prepaid cards fall within an exclusion from certain CARD Act requirements if they are not marketed or labeled as gift cards; however, misplacement or improper display of our cards by retailers could cause these cards to lose this exemption and subject us to penalties or business disruption.
Removed
The FRPS reflects the effects of the COVID-19 pandemic which resulted in an increase of non-paper payments by 24% from 2019 through the end of 2020, and subsequent growth and recovery.
Added
Throughout 2025, we enhanced our Consumer Choice product to accommodate additional methods of disbursement, such as issuing funds through PayPal and Venmo, alongside integration with the PIN4 network to allow cardless ATM withdrawals. With the growing need for faster payment methods, we continue to invest in technology that can help us further expand our suite of payment technology.
Removed
Most of our merchant customers have signed long-term contracts, generally with three-year terms, that provide for volume-based transaction fees. Our merchant accounts increased 20% to 7,549 customers at December 31, 2024 from 6,281 customers at December 31, 2023. Our customers are geographically dispersed throughout the United States. No customer accounted for more than 10% of revenues in 2024 or 2023.
Added
Similarly, our PINless debit product allows merchants to debit and credit accounts in real-time. In the first half of 2025, we began, and completed, development of a new EBPP product.
Removed
However, this exclusion is not available if the issuer, the retailer selling the card to a consumer or the program manager, promotes, even if occasionally, the use of the card as a gift card or gift certificate. As a result, we provide retailers with instructions and policies regarding the display and promotion of our general purpose re-loadable cards.
Added
This offering allows merchants to create and distribute bills to their customers that can be viewed, and paid, online through our platform and payment processing services, increasing the opportunities for cross-selling between our various business lines. Card-Based Services. Our card-based processing services enable merchants to process both traditional card-present, tap-and-pay, or "swipe" transactions, as well as card-not-present transactions.
Removed
However, it is possible that despite our instructions and policies to the contrary, a retailer engaged in offering our general purpose re-loadable cards to consumers could take an action with respect to one or more of the cards that would cause each similar card to be viewed as being marketed or labeled as a gift card, such as by placing our general purpose re-loadable cards on a display which prominently features the availability of gift cards and does not separate or otherwise distinguish our general purpose re-loadable cards from the gift cards.
Added
Our UsioCard platform supports Apple Pay®, Samsung Pay™ and Google Pay™ with full mobile wallet provisioning. In 2025 we also launched, and rolled out a new distribution strategy for our Prepaid card services, with a wearable device program.
Removed
In such event, it is possible that such general purpose re-loadable cards would lose their eligibility for such exemption to the CARD Act and its requirements, and therefore we could be deemed to be in violation of the CARD Act and the rule, which could result in the imposition of fines, the suspension of our ability to offer our general purpose re-loadable cards, civil liability, criminal liability, and the inability of our issuing banks to apply certain fees to our general purpose re-loadable cards, each of which would likely have a material adverse impact on our revenues.
Added
Our prepaid cards can now be successfully loaded onto items such as watches, wristbands, belt buckles, or nearly any wearable product through the use of embedded chips. We first demonstrated this new product in October 2025, and continue to refine the product, anticipating it will assist in enhancing our prepaid card program's marketability and diversity in the overall payment ecosystem.
Removed
Any gift cards we issue will be governed by the CARD Act and other various regulations.
Added
Usio Output Solutions, Inc., or Output Solutions, offers a unique, and complementary payment related solution to our merchant services products of ACH, credit card, and prepaid card processing, with an opportunity for enhanced cross-selling efforts.
Removed
Any violations with our gift card issuance could result in the imposition of fines, the suspension of our ability to offer our gift cards, civil liability, criminal liability, and the inability of our issuing banks to apply certain fees to our gift cards, each of which would likely have a material adverse impact on our revenues.
Added
Further, in December 2024, we partnered with an outsourced presorting company to further automate our print and mail systems. Despite challenges in growing revenues from Output Solutions in 2025, we have significantly reduced labor costs related to print and mail processing.
Removed
Data Privacy Laws Our billers, financial institutions, partners and their consumers, store personal and business information, financial information and other sensitive information on our platform.
Added
We believe this reduction has better positioned the business line to pursue and successfully generate much larger opportunities than we previously were able to through the increase in capacity and automation.
Removed
In addition, we receive, store, handle, transmit, use and otherwise process personal and business information and other data from and about actual and prospective billers, financial institutions and partners, as well as our employees and service providers.
Added
Results have already been realized, as the quantity of mail we printed and delivered in the first two months of 2026 was higher than in any other two-month period in the history of the Company. "Usio One". Throughout 2025, we adopted and began implementing our "Usio One" strategy, designed to unify our brand, sales approach, and payments offerings.
Removed
Our data handling and processing activities are also subject to contractual obligations and industry standard requirements. The legislative and regulatory landscapes for privacy, data protection and information security continue to evolve in jurisdictions worldwide, with an increasing focus on privacy and data protection issues with the potential to affect our business.
Added
Through this strategy, we are developing enhanced client onboarding features, superior customer management, improved reporting and fraud monitoring, alongside a consolidated sales and marketing team to better cross-sell our various payment methods and ancillary services.
Removed
In the United States, various laws and regulations apply to the security, collection, processing, storage, use, disclosure and other processing of certain types of data, In addition, many states in which we operate have enacted laws that protect the privacy and security of sensitive and personal data, such as the California Consumer Privacy Act, or CCPA, as amended by the California Privacy Rights Act, or CPRA, in California.
Added
We believe this strategy will help better position our merchant services and Output Solutions business segments to customers and the broader payments related market as a more cohesive service offering.
Removed
Certain other state laws impose similar privacy obligations, such as in New York, Nevada, Virginia, Colorado, Connecticut and Utah to name a few. In addition, all 50 states have data breach laws including obligations to provide notification of security breaches of computer databases that contain personal information to affected individuals, state officers and others.
Added
In turn, we anticipate being able to better leverage our resources, reduce friction in new customer acquisition, and drive more meaningful cross-selling opportunities, which we anticipate will help increase our products' stickiness and customer retention.
Removed
In addition to the laws and regulations described above, various regulatory agencies in the United States and in foreign jurisdictions continue to examine a wide variety of issues which are or may be applicable to us and may impact our business. These issues include payments, identity theft, account management guidelines, privacy, disclosure rules, cybersecurity and marketing.
Added
Success from this strategy has already been realized by our sales and client management staff through the generation of new integrations between our existing customers and our ancillary business lines.
Removed
The banks we partner with are under growing pressure to increase scrutiny and oversight of their fintech customers, resulting in increasing pressure on us by our bank partners to enhance our AML/BSA compliance and sanctions screening controls. There is a risk a partner bank’s regulator will examine our compliance program under enhanced standards applicable to banks.
Added
The consolidation of our various technologies into a more seamless product continues to progress, and we anticipate that it will ultimately result in a client and customer onboarding process that enables all of our customers to automatically be enrolled in, and have access to, each of our payment acceptance and issuing products.
Removed
In addition, in the United States, almost all states regulate money transmission and while our services do not involve the movement of funds directly, there is a risk that a state regulator may misinterpret our services and find we are offering unlicensed money transmission.
Added
In turn, we expect this to eliminate the need for distinct contracts, dashboards, funding accounts, and support teams per product. PostCredit Acquisition. In November of 2025, we acquired substantially all of the assets of PostCredit, allowing an entry point into the expense management space.
Removed
The Consumer Financial Protection Bureau, or CFPB, and several states have provided guidance or prohibitions against the use of convenience or similar "pay-to-pay" fees in certain industries that may impact us and or our billers.
Added
PostCredit was a developing technology that would cater to companies looking for fund management and expense tracking that integrated with various Enterprise Resource Planning, or ERP, systems.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeAt this time, we believe we could find and enter into additional agreements with other bank sponsors on similar contractual terms, but no assurances can be made. Loss of key resellers could reduce our revenue growth. We rely on our reseller sales channel, which purchases and resells our end-to-end services to its own portfolio of merchant customers.
Biggest changeWe rely on our reseller sales channel, which purchases and resells our end-to-end services to its own portfolio of merchant customers. This channel is a strong contributor to our revenue growth.
The deferred compensation does not include amounts paid or accrued to executive for bonuses or bonus compensation, benefits or equity awards. Unpaid and unearned bonus compensation or bonus deferred compensation is forfeited.
The deferred compensation does not include amounts paid or accrued to the executive for bonuses or bonus compensation, benefits or equity awards. Unpaid and unearned bonus compensation or bonus deferred compensation is forfeited.
No deferred compensation will be due as long as we and/or an insurance company continues to pay executive’s base salary, minus any monthly base salary already paid to the executive prior to his death pursuant to the executive’s disability, to the executive’s estate for a period of up to 36 months.
No deferred compensation will be due as long as we and/or an insurance company continues to pay the executive’s base salary, minus any monthly base salary already paid to the executive prior to his death pursuant to the executive’s disability, to the executive’s estate for a period of up to 36 months.
These factors include, among other things: • changes in interest rates and credit spreads; • the availability of credit, including the price, terms, and conditions under which it can be obtained; • slower growth or recession or reduced consumer spending; • inflation; • competition; • the actual and perceived state of the economy and public capital markets generally; • amendments or repeals of legislation, or changes in regulations or regulatory interpretations thereof, and transitions of government, including uncertainty regarding any of the foregoing; and • the rise of international conflicts.
These factors include, among other things: • slower growth or recession or reduced consumer spending; • changes in interest rates and credit spreads; • the availability of credit, including the price, terms, and conditions under which it can be obtained; • inflation; • competition; • the actual and perceived state of the economy and public capital markets generally; • amendments or repeals of legislation, or changes in regulations or regulatory interpretations thereof, and transitions of government, including uncertainty regarding any of the foregoing; and • the rise of international conflicts.
Such classification of the Board of Directors expands the time required to change the composition of the majority of directors and may discourage a proxy contest or other takeover bid for our company. These provisions in our bylaws could make it more difficult for a third party to acquire us without the approval of our board.
Such classification of our Board expands the time required to change the composition of the majority of directors and may discourage a proxy contest or other takeover bid for our Company. These provisions in our bylaws could make it more difficult for a third party to acquire us without the approval of our Board.
As we have no plans to issue cash dividends in the future, our Common Stock could be less desirable to other investors and as a result, the value of our Common Stock may decline, or fail to reach the valuations of other similarly situated companies that pay cash dividends. Shares eligible for future sale may depress our stock price.
As we have no plans to pay cash dividends in the future, our common stock could be less desirable to other investors and as a result, the value of our common stock may decline, or fail to reach the valuations of other similarly situated companies that pay cash dividends. Shares eligible for future sale may depress our stock price.
For example, we acquired substantially all of the assets of IMS, a business of 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 on December 15, 2020.
For example, on December 15, 2020 we acquired substantially all of the assets of IMS, a business consisting of 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.
We may issue shares of preferred stock with greater rights than our Common Stock. Subject to the rules of The Nasdaq Stock Market, our articles of incorporation authorize our board of directors to issue one or more series of preferred stock and set the terms of the preferred stock without seeking any further approval from holders of our Common Stock.
We may issue shares of preferred stock with greater rights than our common stock. Subject to the rules of The Nasdaq Stock Market, our articles of incorporation authorize our Board to issue one or more series of preferred stock and set the terms of the preferred stock without seeking any further approval from holders of our common Stock.
We have adopted certain measures that may make it more difficult for a third party to acquire control of our Company. Our Board of Director members are classified into three classes of directors serving staggered three-year terms.
We have adopted certain measures that may make it more difficult for a third party to acquire control of our Company. Our Board members are classified into three classes of directors serving staggered three-year terms.
Accordingly, our business, results of operations and financial condition could be materially and adversely affected to the extent that we incur losses resulting from overdrawn cardholder accounts and fraudulent activity that exceed our designated reserves or if we determine that it is necessary to increase our reserves substantially in order to address any increased recovery risk. 17 Table of Contents Our business strategy includes identifying businesses and assets to acquire, and if we cannot integrate acquisitions into our company successfully, we may have limited growth.
Accordingly, our business, results of operations and financial condition could be materially and adversely affected to the extent that we incur losses resulting from overdrawn cardholder accounts and fraudulent activity that exceed our designated reserves or if we determine that it is necessary to increase our reserves substantially in order to address any increased recovery risk. 21 Table of Contents Our business strategy includes identifying businesses and assets to acquire, and if we cannot integrate acquisitions into our Company successfully, we may have limited growth.
This legislation, if passed or amended, as well as interpretation and implementation of such legislation by state attorneys general or by federal or state regulatory authorities, may add additional complexity, variation in requirements, restrictions and potential legal risk, require additional investment of resources in compliance programs, impact strategies and the availability of previously useful data and could result in increased compliance costs or changes in business practices and policies. 21 Table of Contents We are subject to the CARD Act which could subject us to civil and criminal liabilities.
This legislation, if passed or amended, as well as interpretation and implementation of such legislation by state attorneys general or by federal or state regulatory authorities, may add additional complexity, variation in requirements, restrictions and potential legal risk, require additional investment of resources in compliance programs, impact strategies and the availability of previously useful data and could result in increased compliance costs or changes in business practices and policies. 25 Table of Contents We are subject to the CARD Act which could subject us to civil and criminal liabilities.
We have not paid any cash dividends in the past and have no plans to issue cash dividends in the future, which could cause our Common Stock to have a lower value than that of similar companies which do pay cash dividends.
We have not paid any cash dividends in the past and have no plans to pay cash dividends in the future, which could cause our common stock to have a lower value than that of similar companies which do pay cash dividends.
In addition, any failure to successfully implement new information systems and technologies, or improvements or upgrades to existing information systems and technologies in a timely manner could have an adverse impact on our business, internal controls (including internal controls over financial reporting), results of operations, and financial condition. 13 Table of Contents We rely on our relationship with the Automated Clearing House network, and if the Federal Reserve rules were to change, our business could be adversely affected.
In addition, any failure to successfully implement new information systems and technologies, or improvements or upgrades to existing information systems and technologies in a timely manner could have an adverse impact on our business, internal controls (including internal controls over financial reporting), results of operations, and financial condition. 17 Table of Contents We rely on our relationship with the Automated Clearing House network, and if the Federal Reserve rules were to change, our business could be adversely affected.
Additionally, changing our bank sponsor could adversely affect our relationship with our merchants if the new sponsor provides inferior service or charges higher costs. 14 Table of Contents We may not be able to obtain and maintain sufficient insurance coverage. We insure against a majority of business risks, including liability for cyber incidents, and for director and officer liability ("D&O").
Additionally, changing our bank sponsor could adversely affect our relationship with our merchants if the new sponsor provides inferior service or charges higher costs. 18 Table of Contents We may not be able to obtain and maintain sufficient insurance coverage. We insure against a majority of business risks, including liability for cyber incidents, and for director and officer liability ("D&O").
If we are unable to find a replacement financial institution to provide sponsorship or become a member of the association, we may no longer be able to provide prepaid processing services to our Mastercard customers, which would negatively impact our revenues and earnings. 15 Table of Contents If our software fails, and we need to repair or replace it, or we become subject to warranty claims, our costs could increase.
If we are unable to find a replacement financial institution to provide sponsorship or become a member of the association, we may no longer be able to provide prepaid processing services to our Mastercard customers, which would negatively impact our revenues and earnings. 19 Table of Contents If our software fails, and we need to repair or replace it, or we become subject to warranty claims, our costs could increase.
We experienced a decline in fraudulent accounts in 2024 due to the increasing number of traditional magnetic stripe cards being replaced with cards featuring Europay, MasterCard and Visa chip technology that offer improved security. Although we actively devote efforts to effectively manage risk and prevent fraud, we could nevertheless experience future increases in fraud losses over our historical experience.
We experienced a decline in fraudulent accounts in 2025 due to the increasing number of traditional magnetic stripe cards being replaced with cards featuring Europay, MasterCard and Visa chip technology that offer improved security. Although we actively devote efforts to effectively manage risk and prevent fraud, we could nevertheless experience future increases in fraud losses over our historical experience.
If enacted, such laws, rules and regulations could be imposed on our business and industry and could increase our costs or limit our business opportunities. 20 Table of Contents We are subject to U.S. laws, regulations, rules, standards, policies, contractual obligations and other legal obligations, particularly those related to privacy, data protection and information security, and our actual or perceived failure to comply with such obligations could harm our business.
If enacted, such laws, rules and regulations could be imposed on our business and industry and could increase our costs or limit our business opportunities. 24 Table of Contents We are subject to U.S. laws, regulations, rules, standards, policies, contractual obligations and other legal obligations, particularly those related to privacy, data protection and information security, and our actual or perceived failure to comply with such obligations could harm our business.
As a result, our ability to adapt our existing products and services or develop future and new products and services using AI may be limited or restricted, which could adversely impact our business. 23 Table of Contents RISKS RELATED TO OUR COMMON STOCK Our stock price is volatile, and you may not be able to sell your shares at a price higher than what you paid.
As a result, our ability to adapt our existing products and services or develop future and new products and services using AI may be limited or restricted, which could adversely impact our business. 27 Table of Contents RISKS RELATED TO OUR COMMON STOCK Our stock price is volatile, and you may not be able to sell your shares at a price higher than what you paid.
If a reseller switches to another transaction processor, shuts down, becomes insolvent, or enters the processing business themselves, we may no longer receive new merchant referrals from the reseller, and we risk losing existing merchants that were originally enrolled by the reseller, all of which could negatively affect our revenues and earnings.
If a reseller switches to another transaction processor, shuts down, becomes insolvent, or enters the processing business itself, we may no longer receive new merchant referrals from the reseller, and we risk losing existing merchants that were originally enrolled by the reseller, all of which could negatively affect our revenues and earnings.
If our cash position is not sufficient, we may need to raise additional cash which could involve selling equity securities which would dilute our shareholders. In addition, the loss of our Chairman or Chief Executive Officer may adversely affect our business and results of operations. 16 Table of Contents We depend on Louis A.
If our cash position is not sufficient, we may need to raise additional cash which could involve selling equity securities which would dilute our shareholders. In addition, the loss of our Chairman or Chief Executive Officer may adversely affect our business and results of operations. 20 Table of Contents We depend on Louis A.
We have contractual relationships with North American Banking Company, or NABC, Metropolitan Commercial Bank, and TransPecos Bank, which are Originating Depository Financial Institutions, or ODFI, in the ACH network. The ACH network is a nationwide batch-oriented electronic funds transfer system that provides for the interbank clearing of electronic payments for participating financial institutions.
We have contractual relationships with North American Banking Company, or NABC, and TransPecos Bank, which are Originating Depository Financial Institutions, or ODFI, in the ACH network. The ACH network is a nationwide batch-oriented electronic funds transfer system that provides for the interbank clearing of electronic payments for participating financial institutions.
As an agent of, and third-party service provider to, our issuing banks, we are subject to indirect regulation and direct audit and examination by the Office of Thrift Supervision, the Office of the Comptroller of the Currency, the Board of Governors of the Federal Reserve System, or FRB, and the Federal Deposit Insurance Corporation.
As an agent of, and third-party service provider to, our issuing banks, we are subject to indirect regulation and direct audit and examination by the Office of the Comptroller of the Currency, the Board of Governors of the Federal Reserve System, or FRB, and the Federal Deposit Insurance Corporation.
If the Federal Reserve rules were to introduce restrictions or modify access to the Automated Clearing House, our business could be materially adversely affected. Further, if one or all of Metropolitan Commercial Bank, TransPecos Bank, or NABC were to cancel our respective contract with the bank, our business could be materially affected.
If the Federal Reserve rules were to introduce restrictions or modify access to the Automated Clearing House, our business could be materially adversely affected. Further, if one or all of TransPecos Bank, or NABC were to cancel our respective contract with the bank, our business could be materially affected.
In our capacity as an agent for Sunrise Banks, N.A., the issuing bank for our prepaid card programs and in our capacity as an agent for Metropolitan Commercial Bank, NABC and TransPecos Bank, the sponsoring banks for our ACH services, we are required to comply with these rules.
In our capacity as an agent for Sunrise Banks, N.A., the issuing bank for our prepaid card programs and in our capacity as an agent for NABC and TransPecos Bank, the sponsoring banks for our ACH services, we are required to comply with these rules.
Compliance with these obligations could result in increased compliance costs for us, our issuing banks and our resellers. 22 Table of Contents We are subject to regulations relating to prepaid card programs which could further increase our compliance costs.
Compliance with these obligations could result in increased compliance costs for us, our issuing banks and our resellers. 26 Table of Contents We are subject to regulations relating to prepaid card programs which could further increase our compliance costs.
We may not be able to compete against current or future competitors successfully. Additionally, competitive pressures may increase our costs, which could lower our earnings, if any. 19 Table of Contents RISKS RELATED TO REGULATION Payments and other financial services-related regulations and oversight are material to our business and any failure by us to comply could materially harm our business.
We may not be able to compete against current or future competitors successfully. Additionally, competitive pressures may increase our costs, which could lower our earnings, if any. 23 Table of Contents Payments and other financial services-related regulations and oversight are material to our business and any failure by us to comply could materially harm our business.
Unless our board of directors elects not to increase the number of shares available for future grant pursuant to our 2015 Plan and ESPP each year, our stockholders may experience additional dilution, which could cause our stock price to fall. 24 Table of Contents We may issue additional equity securities, or engage in other transactions that could dilute our book value or affect the priority of our Common Stock, which may adversely affect the market price of our Common Stock.
Unless our Board elects not to increase the number of shares available for future grant pursuant to our 2025 Plan and ESPP each year, our stockholders may experience additional dilution, which could cause our stock price to fall. 28 Table of Contents We may issue additional equity securities, or engage in other transactions that could dilute our book value or affect the priority of our common stock, which may adversely affect the market price of our common stock.
An ODFI is a participating financial institution that must abide by the provisions of the ACH Operating Rules and Guidelines. Through our relationships with Metropolitan Commercial Bank, TransPecos Bank, and NABC, we process payment transactions on behalf of our customers and their consumers by submitting payment instructions in a prescribed ACH format.
An ODFI is a participating financial institution that must abide by the provisions of the ACH Operating Rules and Guidelines. Through our relationship with TransPecos Bank, and NABC, we process payment transactions on behalf of our customers and their consumers by submitting payment instructions in a prescribed ACH format.
As of December 31, 2024, we have net deferred tax assets of $4.7 million. Realization of our deferred tax assets is dependent upon our generating sufficient taxable income in future years to realize the tax benefit from those assets. Deferred tax assets are reviewed at least annually for realizability.
As of December 31, 2025, we have net deferred tax assets of $4.5 million. Realization of our deferred tax assets is dependent upon our generating sufficient taxable income in future years to realize the tax benefit from those assets. Deferred tax assets are reviewed at least annually for realizability.
If the electronic commerce market fails to grow or grows slower than anticipated, or if we, despite an investment of significant resources, are unable to adapt to meet changing customer requirements or technological changes in this emerging market, or if our services and related products do not maintain a proportionate degree of acceptance in this growing market, our business may not grow and could even fail.
If the electronic commerce market fails to grow or grows slower than anticipated, or if we are unable to adapt to meet changing customer requirements or technological changes in this emerging market, or if our services and related products do not maintain a proportionate degree of acceptance in this growing market, our business may not grow and could even fail.
Additionally, the number of shares of our Common Stock reserved for issuance under our 2015 Plan automatically increases on January 1 of each year, beginning on January 1, 2016, and continuing through and including July 2, 2025, by 5% of the total number of shares of our capital stock outstanding on December 31 of the preceding calendar year (determined on an as-converted to voting common stock basis, without regard to any limitations on the conversion of the non-voting common stock), or a lesser number of shares determined by our board of directors.
Additionally, the number of shares of our common stock reserved for issuance under our 2025 Plan automatically increases on January 1 of each year, beginning on January 1, 2026, and continuing through and including January 1, 2035, by 5% of the total number of shares of our capital stock outstanding on December 31 of the preceding calendar year (determined on an as-converted to voting common stock basis, without regard to any limitations on the conversion of the non-voting common stock), or a lesser number of shares determined by our board of directors, or Board.
The amount of dilution due to future equity-based compensation issued to our employees and other additional issuances could be substantial. Pursuant to our 2015 Equity Incentive Plan (the “2015 Plan”), our management is authorized to grant stock options to our employees, directors and consultants. There are 5,000,000 shares of Common Stock reserved for issuance under the 2015 Plan.
The amount of dilution due to future equity-based compensation issued to our employees and other additional issuances could be substantial. Pursuant to our 2025 Equity Incentive Plan (the “2025 Plan”), our management is authorized to grant stock options to our employees, directors and consultants. There are 5,250,000 shares of common stock reserved for issuance under the 2025 Plan.
In addition, the Nevada corporate statute also contains certain provisions that could make an acquisition by a third party more difficult. 25 Table of Contents
In addition, the Nevada corporate statute contains certain provisions that could make an acquisition by a third party more difficult. 29 Table of Contents
We reported net income of $3.3 million and a net loss of $0.5 million for the years ended December 31, 2024 and December 31, 2023, respectively. Including these results, we have an accumulated deficit of $68.0 million at December 31, 2024. Our future operating results are not certain and we may incur future operating losses.
We reported a net loss of $2.5 million and net income of $3.3 million for the years ended December 31, 2025 and December 31, 2024, respectively. Including these results, we have an accumulated deficit of $70.5 million at December 31, 2025. Our future operating results are not certain and we may incur future operating losses.
At December 31, 2024 we had $8.1 million of cash and cash equivalents, and for the year ended December 31, 2024, operating activities provided $2.9 million. If our capital resources are insufficient to meet future capital requirements, we will have to raise additional funds by selling assets, borrowing money from a third party, or by selling debt or equity securities.
At December 31, 2025, we had $7.4 million of cash and cash equivalents, and for the year ended December 31, 2025, operating activities provided $1.5 million. If our capital resources are insufficient to meet future capital requirements, we will have to raise additional funds by selling assets, borrowing money from a third party, or by selling debt or equity securities.
The broader implications of the macroeconomic environment, including uncertainty around recent international conflicts including the Russia and Ukraine conflict, supply chain shortages, a recession globally or in markets in which we operate, higher inflation rates, higher interest rates, and other related global economic conditions, remain unknown.
The broader implications of the macroeconomic environment, including uncertainty around recent international conflicts including the Russia and Ukraine conflict and the military actions in Iran by the U.S. and Israel, supply chain shortages, a recession globally or in markets in which we operate, higher inflation rates, higher interest rates, and other related global economic conditions, remain unknown.
No system or procedures established to detect and reduce the impact of fraud are entirely effective. We recorded fraud losses of $311,306 and $573,281, respectively, in 2024 and 2023.
No system or procedures established to detect and reduce the impact of fraud are entirely effective. We recorded fraud losses of $126,559 and $311,306, respectively, in 2025 and 2024.
A deterioration in macroeconomic conditions could continue to increase the risk of lower consumer spending, merchant and consumer bankruptcy, insolvency, business failure, higher credit losses, or other business interruption, which may adversely impact our business.
A deterioration in macroeconomic conditions as well as ongoing uncertainty regarding tariffs or trade disputes could continue to increase the risk of lower consumer spending, merchant and consumer bankruptcy, insolvency, business failure, higher credit losses, or other business interruption, which may adversely impact our business.
Our directors and executive officers, together with their affiliates and related persons, beneficially owned, in the aggregate, approximately 18% of our outstanding Common Stock as of March 21, 2025.
Our directors and executive officers, together with their affiliates and related persons, beneficially owned, in the aggregate, approximately 19% of our outstanding common stock as of March 16, 2026.
The market in which we operate is affected by a number of factors that are largely beyond our control but can nonetheless have a potentially significant, negative impact on us.
Market conditions could negatively impact our business, results of operations, cash flows and financial condition. The market in which we operate is affected by a number of factors that are largely beyond our control but can nonetheless have a potentially significant, negative impact on us.
Louis, Wells Fargo Bank, TransPecos Bank, CBW Bank or Evolve Bank & Trust fail to comply with the applicable requirements of the Visa, Mastercard, and Discover card associations, Visa, Mastercard or Discover could suspend or terminate the registration of our third-party processing provider.
If our third-party processing provider, TriSource Solutions, Card Connect or Global Payments, or our bank sponsors, Central Bank of St. Louis, Wells Fargo Bank, or TransPecos Bank, fail to comply with the applicable requirements of the Visa, Mastercard, and Discover card associations, Visa, Mastercard or Discover could suspend or terminate the registration of our third-party processing provider.
The market for our common stock is highly volatile. In 2024 our stock price fluctuated between $1.28 and $1.93.
The market for our common stock is highly volatile. In 2025 our stock price fluctuated between $1.24 and $2.92.
As of December 31, 2024, 66,959 of our Common Stock had been purchased pursuant to the ESPP.
As of December 31, 2025, 128,537 shares of our common stock had been purchased pursuant to the ESPP.
Our expansion into newer markets may not lead to growth and may require significant management time and attention, and we may not be able to recoup our investments in a timely manner or at all. If any of this were to occur, it could damage our reputation, limit our growth, and materially and adversely affect our business.
Our expansion into newer markets may not lead to growth and may require significant management time and attention, and we may not be able to recoup our investments in a timely manner or at all.
The Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, or Dodd-Frank Act, effected and required significant changes to United States financial regulations, include regulations addressing fees charged or received by issuers for processing debit transactions and the transaction routing options available to merchants.
The Dodd-Frank Act effected and required significant changes to United States financial regulations, including regulations addressing fees charged or received by issuers for processing debit transactions and the transaction routing options available to merchants. The Dodd-Frank Act also established the CFPB to regulate consumer financial services, including many services offered by our customers.
As of March 21, 2025, we had 26,514,356 shares of Common Stock outstanding of which 4,748,457 shares were held by affiliates. All of the shares of Common Stock held by affiliates are restricted or control securities under Rule 144 promulgated under the Securities Act of 1933, as amended (the “Securities Act”).
As of March 16, 2026, we had 27,746,208 shares of common stock outstanding of which approximately 5,240,200 shares were held by affiliates. All of the shares of common stock held by affiliates are restricted or control securities under Rule 144 promulgated under the Securities Act of 1933, as amended (the “Securities Act”).
We may need additional financing in the future. We may be unable to obtain additional financing or if we obtain financing it may not be on terms favorable to us. You may lose your entire investment.
We may be unable to obtain additional financing or if we obtain financing it may not be on terms favorable to us. Our inability to obtain additional financing when needed, or financing on terms favorable to us, could result in the loss of your entire investment.
We have potential liability for fraudulent bankcard, ACH and prepaid card transactions or credits initiated by merchants or others.
Fraud by merchants or others could have an adverse effect on our operating results and financial condition. We have potential liability for fraudulent bankcard, ACH and prepaid card transactions or credits initiated by merchants or others.
These measures could cause significant delays in our efforts to expand our product offerings and customer base in the United States, which are critical to the realization of our business plan and to future operations. We have recorded significant deferred tax assets, and we might never realize their full value, which would result in a charge against our earnings.
These measures could cause significant delays in our efforts to expand our product offerings and customer base in the United States, which are critical to the realization of our business plan and to future operations.
The Dodd-Frank Act also established the Consumer Financial Protection Bureau, or CFPB, to regulate consumer financial services, including many services offered by our customers. The CFPB is responsible for enforcing and writing rules regarding consumer access to disclosures, fees and statements, error resolution, limited liability and overdrafts when using prepaid cards.
The CFPB is responsible for enforcing and writing rules regarding consumer access to disclosures, fees and statements, error resolution, limited liability and overdrafts when using prepaid cards.
Unauthorized disclosure of cardholder data, whether through breach of our computer systems or otherwise, could expose us to liability and protracted and costly litigation.
If any of this were to occur, it could damage our reputation, limit our growth, and materially and adversely affect our business. 14 Table of Contents Unauthorized disclosure of cardholder data, whether through breach of our computer systems or otherwise, could expose us to liability and protracted and costly litigation.
A successful claim against us with respect to uninsured liabilities or in excess of insurance coverage could have a material adverse effect on our business, financial condition, and results of operations. We have incurred substantial losses in the past and may incur additional losses in the future.
A successful claim against us with respect to uninsured liabilities or in excess of insurance coverage could have a material adverse effect on our business, financial condition, and results of operations. We have recorded significant deferred tax assets, and we might never realize their full value, which would result in a charge against our earnings.
If we lose key personnel or we are unable to attract, recruit, retain and develop qualified employees, our business, financial condition and results of operations may be adversely affected.
At this time, we believe we could find and enter into additional agreements with other bank sponsors on similar contractual terms, but no assurances can be made. If we lose key personnel or we are unable to attract, recruit, retain and develop qualified employees, our business, financial condition and results of operations may be adversely affected.
A general reduction in consumer spending in the United States or in any other country where we do business could adversely affect our revenues and earnings.
A general reduction in consumer spending in the United States or in any other country where we do business could adversely affect our revenues and earnings. We are subject to risks and write-offs resulting from fraudulent activities and losses from overdrawn cardholder accounts that could adversely impact our financial performance and results of operations.
If any of the following risks actually occur, our business, financial condition or results of operations could be materially and adversely affected, and you may lose some or all of your investment. 11 Table of Contents RISKS RELATED TO OUR BUSINESS If our security applications are breached by cyberattacks or are not adequate to address changing market conditions and customer concerns, we may incur significant losses and be unable to sell our services.
If any of the following risks actually occur, our business, financial condition or results of operations could be materially and adversely affected, and you may lose some or all of your investment. 13 Table of Contents RISKS RELATED TO OUR BUSINESS Loss of key resellers could reduce our revenue growth.
The use of Artificial Intelligence could make us subject to evolving regulatory risks While our use of artificial intelligence, or AI, and machine learning is not material at this time, their use can present risks.
The use of AI could make us subject to evolving regulatory risks We use AI and machine learning technologies in various aspects of our business, including fraud prevention, risk management, and customer service. While our use of AI and machine learning is minimal at this time, its use can present risks.
If these conditions continue or worsen, they could adversely impact our future financial and operating results. 18 Table of Contents RISKS RELATED TO OUR INDUSTRY The electronic commerce market is evolving and if it does not grow, we may not be able to sell sufficient services to make our business viable.
We utilize a number of systems and procedures to manage and limit credit risks, but if these actions are not successful in managing such risks, we may incur significant losses. 22 Table of Contents RISKS RELATED TO OUR INDUSTRY The electronic commerce market is evolving and if it does not continue to grow, we may not be able to sell sufficient services to make our business viable.
If we cannot collect such amounts from the applicable merchant or one of our resellers, we could end up bearing such fines or penalties, resulting in lower earnings for us. Fraud by merchants or others could have an adverse effect on our operating results and financial condition.
If we cannot collect such amounts from the applicable merchant or one of our resellers, we could end up bearing such fines or penalties, resulting in lower earnings for us. 15 Table of Contents If we do not adapt to rapid technological change, including as a result of AI, our business may fail.
Increases in chargebacks or other liabilities could have an adverse effect on our operating results and financial condition. 12 Table of Contents If we do not adapt to rapid technological change, including as a result of artificial intelligence, our business may fail.
Increases in chargebacks or other liabilities could have an adverse effect on our operating results and financial condition. 16 Table of Contents We have incurred substantial losses in the past and may incur additional losses in the future, and we may need additional financing in the future.
Removed
We have not incorporated AI features into our products and technologies and our success will depend in part on our ability to do so. Incorporating generative AI into our products will require a significant investment by us which could have a material adverse effect on our results of operations and financial condition.
Added
In April 2025, developments relating to tariffs intensified concerns over the global macroeconomic environment. Volatility across financial markets rose and the prospect of a U.S. recession increased further. Uncertainty around the path forward and concerns over the potentially escalating effects of a trade war have created risks for the U.S. and global economies.
Removed
Growing use of artificial intelligence has challenges that, if not properly managed could result in harm to our brand, reputation, business or customers, and adversely affect our results of operations. The use of AI presents risks. AI algorithms may be flawed, and datasets may be insufficient.
Added
If these conditions continue or worsen, they could adversely impact our future financial and operating results. If our security applications are breached by cyberattacks or are not adequate to address changing market conditions and customer concerns, we may incur significant losses and be unable to sell our services.
Removed
Inappropriate or controversial data practices by us or others could impair the acceptance of AI solutions or subject us to lawsuits and regulatory investigations. These deficiencies could undermine the decisions, predictions or analysis AI applications produce, subjecting us to competitive harm, legal liability and brand or reputational harm.
Added
We cannot assure you that a future cyberattack would be resolved in the same manner, and a future attack could have a much more negative impact on our business, results of operations, financial condition and prospects.
Removed
In addition, the use of AI may increase cybersecurity risks, privacy risks, and operational and technological risks. The technologies underlying AI and their use cases are rapidly developing, and it is not possible to predict all of the legal, operational or technological risks related to the use of AI.
Added
We use AI and machine learning technologies as supplementary tools in various aspects of our business, including fraud prevention, risk management, and customer service. While our use of AI is minimal at this time, our success will depend in part on our ability to successfully incorporate AI into our products and technologies.
Removed
Moreover, how AI is used is the subject of evolving review by various U.S. regulatory agencies, including the SEC and the FTC. It is possible that governments may also seek to regulate, limit, or block the use of AI or otherwise impose other restrictions that may hinder the usability or effectiveness of our products and services.
Added
We expect that new technologies applicable to the industries in which we operate, including the development, adoption, and use of generative AI technologies and autonomous AI agents, will continue to emerge and may be superior to, or render obsolete, the technologies we currently use in our products and services.
Removed
This channel is a strong contributor to our revenue growth.
Added
We cannot predict the effects of technological changes on our business, which technological developments or innovations will become widely adopted, and how those technologies may be regulated. Developing and incorporating new technologies into new and existing products and services may require significant investment, take considerable time, and may not ultimately be successful.
Removed
If our third-party processing provider, TriSource Solutions, Card Connect or Global Payments, or our bank sponsors, Central Bank of St.
Removed
Please also refer to "General Risk Factors" in this Item 1A in this Annual Report on Form 10-K We are subject to risks and write-offs resulting from fraudulent activities and losses from overdrawn cardholder accounts that could adversely impact our financial performance and results of operations.
Removed
We utilize a number of systems and procedures to manage and limit credit risks, but if these actions are not successful in managing such risks, we may incur significant losses. Market conditions could negatively impact our business, results of operations, cash flows and financial condition.
Removed
In late 2023, the Consumer Financial Protection Bureau, or CFPB, proposed new federal oversight of large technology firms and providers of digital wallets and payment applications that would require large nonbank financial companies handling more than 5 million transactions per year to adhere to the same rules as large banks, credit unions, and other financial institutions already supervised by the CFPB.
Removed
The ultimate adoption or impact of this rule is uncertain, but it could materially increase regulatory risks and impact the way we conduct our business.

Item 2. Properties

Properties — owned and leased real estate

10 edited+1 added−3 removed0 unchanged
Biggest changeRental 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.
Biggest changeRental 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.
We believe that our existing and new properties will be adequate to meet our needs through December 31, 2025. 27 Table of Contents
We believe that our existing and new properties will be adequate to meet our needs through December 31, 2025. 31 Table of Contents
On January 31, 2024, the Company entered into a lease amendment commencing on February 1, 2024, extending the term of the existing lease for a period of 24 months and expiring on January 31, 2027. The space leased is 1,890 square feet. Rental expense for the years ended December 31, 2024 and 2023 was $83,610 and $79,467, respectively.
On January 31, 2024, the Company entered into a lease amendment commencing on February 1, 2024, extending the term of the existing lease for a period of 24 months and expiring on January 31, 2027. The space leased is 1,890 square feet. Rental expense for the years ended December 31, 2025 and 2024 was $78,700 and $83,610, respectively.
ITEM 2. PROPERTIES. 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.
ITEM 2. PROPERTIES. 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.
On September 16, 2024 the Company entered into a lease amendment commencing on October 1, 2024, extending the term of the existing lease for a period of 60 months, expiring on September 30, 2029. The space leased is 22,400 square feet. Annual rents during the lease term range from $174,000 to $225,000.
The lease had a remaining life of 45 months and expired on September 30, 2024. On September 16, 2024 the Company entered into a lease amendment commencing on October 1, 2024, extending the term of the existing lease for a period of 60 months, expiring on September 30, 2029. The space leased is 22,400 square feet.
Rental expense for the years ended December 31, 2024 and 2023 was $135,489 and $117,836, respectively. On January 1, 2021, we entered into a lease in Austin, Texas commencing on January 1, 2021 for our Austin technology organization.
Annual rents during the lease term range from $174,000 to $225,000. Rental expense for the years ended December 31, 2025 and 2024 was $177,993 and $135,489, respectively. On January 1, 2021, we entered into a lease in Austin, Texas commencing on January 1, 2021 for our Austin technology organization.
The weighted average discount rate is 4.42% The Company recognized total operating lease expense of approximately $660,000 and $674,000 for the years ended December 31, 2024 and 2023, respectively. In 2024, the operating lease expense of $660,000 consisted of $544,000 of fixed operating expense and $116,000 of interest expense.
The Company recognized total operating lease expense of approximately $728,000 and $660,000 for the years ended December 31, 2025 and 2024, respectively. In 2025, the operating lease expense of $728,000 consisted of $597,000 of fixed operating expense and $131,000 of interest expense.
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%.
The Company assumed a lease in San Antonio, Texas as a part of the Information Management Solutions, LLC acquisition for its Output Solutions employees and warehouse operations. The lease had a remaining life of 45 months and expired on September 30, 2024.
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.
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.
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.
Removed
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.
Added
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.
Removed
Rental expense for the years ended December 31, 2024 and 2023 was $49,653 and $48,113, respectively. On October 19, 2021, the Company entered into a lease amendment to the existing lease in San Antonio, Texas commencing April 1, 2022. The lease expires on December 31, 2025. The incremental space lease is 6,628 square feet.
Removed
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.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

5 edited+9 added−5 removed15 unchanged
Biggest changeOn July 12, 2024, we filed an appeal on the lower court's decision, which is pending review. As part of the July 12, 2024 appeal, Usio was required to obtain a bond in the amount of $474,229.
Biggest changeAs part of the July 12, 2024 appeal, Usio was required to obtain a bond in the amount of $474,229. See Note 5 of the notes to our consolidated financial statements in this report for more information.
KDHM, LLC 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.
KDHM, LLC 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.
As a result of this post-sale dispute, we subsequently discovered that KDHM, LLC and its principals made certain misrepresentations and breached the terms of the asset purchase agreement. On September 28, 2021, we filed an answer generally denying the plaintiff’s allegations. On October 5, 2021, we filed a counterclaim and third-party petition.
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.
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.
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, and this motion was heard August 5, 2024. On March 14, 2025 the motion was denied.
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.
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.
Removed
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.
Added
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.
Removed
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.
Added
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.
Removed
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.
Added
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.
Removed
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.
Added
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.
Removed
Please refer to "Management's Discussion and Analysis of Financial Condition and Results of Operations - Liquidity and Capital Resources" for a description of certain financing arrangements we established in connection with this bond. We have not recorded a contingency in relation to this case, as we consider the risk of loss remote as related to this lawsuit.
Added
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.
Added
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.
Added
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.
Added
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.
Added
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.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

8 edited+0 added−0 removed2 unchanged
Biggest changeThe following table shows our fourth quarter of 2024 stock purchases under the buyback plan as of December 31, 2024: (d) (c) Maximum number (or Total number of shares approximate dollar (a) (or units) purchased as value) of shares (or Total number of (b) part of publicly units) that may yet be shares (or units) Average price paid announced plans or purchased under the Period purchased per share (or unit) programs plans or programs October 1, 2024 to October 31, 2024 80,236 $ 1.43 80,236 $ 1,762,938 November 1, 2024 to November 30, 2024 156,368 $ 1.51 156,368 1,527,492 December 1, 2024 to December 31, 2024 461,949 $ 1.44 461,949 862,951 Total 698,553 ITEM 6. [RESERVED]
Biggest changeThe following table shows our fourth quarter of 2025 stock purchases under the buyback plan as of December 31, 2025: Period (a) Total number of shares (or units) purchased (b) Average price paid per share (or unit) (c) Total number of shares (or units) purchased as part of publicly announced plans or programs (d) Maximum number (or approximate dollar value) of shares (or units) that may yet be purchased under the plans or programs October 1, 2025 to October 31, 2025 102,135 $ 1.47 102,135 $ 3,957,677 November 1, 2025 to November 30, 2025 46,132 $ 1.41 46,132 3,892,630 December 1, 2025 to December 31, 2025 57,882 $ 1.48 57,882 3,806,943 Total 206,149 ITEM 6. [RESERVED]
On May 13, 2022, and again on March 24, 2025, the Board of Directors authorized a renewal of the 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.
On May 13, 2022, and again on March 24, 2025, the Board authorized a renewal of the 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, at its sole discretion, terminates or suspends the program.
The program was used for purchases of stock from employees and directors; and for open-market purchases through a broker. On November 7, 2019, the Board of Directors approved the renewal of the share buyback program. The Board approved a limit of $1,420,000 which was rolled over from the prior buyback program with a three-year duration.
The program was used for purchases of shares of common stock from employees and directors, and for open-market purchases through a broker. On November 7, 2019, the Board approved the renewal of the share buyback program. The Board approved a limit of $1,420,000, which was rolled over from the prior buyback program with a three-year duration.
Refer to Item 12 of Part III of this annual report on Form 10-K for additional information. 29 Table of Contents Purchases of Equity Securities by the Issuer and Affiliated Purchasers On November 2, 2016, we announced that our Board of Directors authorized the repurchase of up to $1 million of our common stock from time to time on the open market, in block transactions, or in privately negotiated transactions.
Refer to Item 12 of Part III of this Annual Report on Form 10-K for additional information. 33 Table of Contents Purchases of Equity Securities by the Issuer and Affiliated Purchasers On November 2, 2016, we announced that our Board authorized the repurchase of up to $1 million of our common stock from time to time on the open market, in block transactions, or in privately negotiated transactions.
On January 9, 2018, the Board of Directors added an additional $2 million to the buyback plan. The program began on November 16, 2016 and ended on September 29, 2019. At September 29, 2019 when the program ended, $1,419,701 was available under the repurchase plan.
On January 9, 2018, the Board added an additional $2 million to the buyback plan. The program began on November 16, 2016 and ended on September 29, 2019. At September 29, 2019 when the program ended, $1,419,701 was available under the repurchase plan.
As of March 21, 2025, there were 3,518 stockholders of record of our common stock. Dividends We have never declared or paid cash or stock dividends, and we have no plans to pay any such dividends in the foreseeable future. Instead, we intend to reinvest our earnings, if any.
As of March 16, 2026, there were 3,055 stockholders of record of our common stock. Dividends We have never declared or paid cash or stock dividends, and we have no plans to pay any such dividends in the foreseeable future. Instead, we intend to reinvest our earnings, if any.
Prior to that change our common stock had been listed on the Nasdaq Capital Markets Exchange under the ticker symbol “PYDS” since August 11, 2015, and "USIO" since June 26, 2019. Holders On March 21, 2025, 26,514,356 shares of our common stock were issued and outstanding.
Prior to that change our common stock had been listed on the Nasdaq Capital Markets Exchange under the ticker symbol “PYDS” since August 11, 2015, and "USIO" since June 26, 2019. Holders On March 16, 2025, 27,746,208 shares of our common stock were issued and outstanding.
The program is used for the purchase of stock from employees and directors, and for open-market purchases through a broker.
The program continues to be used for the purchase of shares of common stock from employees and directors, and for open-market purchases through a broker.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

65 edited+39 added−24 removed41 unchanged
Biggest changeThree Months Ended (unaudited) Twelve Months Ended December 31, 2024 December 31, 2023 December 31, 2024 December 31, 2023 Reconciliation from Operating Income/(Loss) to Adjusted EBITDA: Operating income (loss) $ (602,797 ) $ (3,788 ) $ (1,470,345 ) $ (447,364 ) Depreciation and amortization 555,581 521,932 2,263,302 2,081,533 EBITDA (47,216 ) 518,144 792,957 1,634,169 Non-cash stock-based compensation expense, net 564,300 545,711 2,093,406 2,222,969 Adjusted EBITDA $ 517,084 $ 1,063,855 $ 2,886,363 $ 3,857,138 Calculation of Adjusted EBITDA margins: Revenues $ 20,560,088 $ 20,130,642 $ 82,931,840 $ 84,066,245 Adjusted EBITDA 517,084 1,063,855 2,886,363 3,857,138 Adjusted EBITDA margins 2.5 % 5.3 % 3.5 % 4.6 % In previous periods, the Company reported the non-GAAP financial measure of adjusted operating cash flows, which excluded certain items from operating cash flows to provide a measure of cash generated from its core operations.
Biggest changeTwelve Months Ended December 31, 2025 December 31, 2024 Reconciliation from Operating Income/(Loss) to Adjusted EBITDA: Operating income (loss) $ (2,359,605 ) $ (1,470,345 ) Depreciation and amortization 1,946,224 2,263,302 EBITDA (413,381 ) 792,957 Non-cash stock-based compensation expense, net 1,743,893 2,093,406 Adjusted EBITDA $ 1,330,512 $ 2,886,363 Calculation of Adjusted EBITDA margins: Revenues $ 85,393,626 $ 82,931,840 Adjusted EBITDA 1,330,512 2,886,363 Adjusted EBITDA margins 1.6 % 3.5 % Use of Non-GAAP Financial Measures EBITDA, adjusted EBITDA, and adjusted EBITDA margins should be considered in addition to, not as a substitute for, or superior to, financial measures calculated in accordance with GAAP.
Liquidity and Capital Resources Our primary sources of liquidity are available cash and cash equivalents and cash flows provided by operations and, if an appropriate opportunity presents itself, the sale of debt or equity securities, although we may not be able to complete any financing on terms acceptable to us, if at all.
Liquidity and Capital Resources Our primary sources of liquidity are available cash and cash equivalents, cash flows provided by operations and, if an appropriate opportunity presents itself, the sale of debt or equity securities, although we may not be able to complete any financing on terms acceptable to us, if at all.
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. Management is not aware of any tax positions that would have a significant impact on its financial position.
The Company’s federal returns for the past four years remain open to examination. The Company is subject to the Texas franchise tax and Tennessee franchise tax. Management is not aware of any tax positions that would have a significant impact on its financial position.
On May 13, 2022, and again on March 24, 2025, the Board of Directors authorized a renewal of the buy-back program, with a limit up to $4 million of the Company's common stock with a three year duration.
On May 13, 2022, and again on March 24, 2025, the Board authorized a renewal of the buy-back program, with a limit up to $4 million of the Company's common stock with a three year duration.
Prepaid card distributors have payment terms of 30 days following the end of the month. Sales taxes billed are reported directly as a liability to the taxing authority and are not included in revenue. Usio Output Solutions, Inc. provides bill preparation, presentment and mailing services.
Prepaid card distributors have payment terms of 30 days following the end of the month. Sales taxes billed are reported directly as a liability to the taxing authority and are not included in revenue. Output Solutions, provides bill preparation, presentment and mailing services.
This discussion and analysis should be read in conjunction with the audited consolidated financial statements and the notes thereto included in this report. 30 Table of Contents Overview Usio, Inc. was founded under the name Billserv Com, Inc. in July 1998 and incorporated in the State of Nevada.
This discussion and analysis should be read in conjunction with the audited consolidated financial statements and the notes thereto included in this report. 34 Table of Contents Overview Usio, Inc. was founded under the name Billserv.com, Inc. in July 1998 and incorporated in the State of Nevada.
EBITDA, adjusted EBITDA, and adjusted EBITDA margins have limitations as analytical tools and you should not consider these Non-GAAP measures in isolation or as a substitute for analysis of our operating results as reported under GAAP. 31 Table of Contents Results of Operations Revenues Our revenues are principally derived from providing integrated electronic payment services to merchants and businesses, including credit and debit card-based processing services and transaction processing via the Automated Clearing House, or ACH, network, the program management and processing of prepaid debit cards, and we also offer additional output solution services relating to 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.
EBITDA, adjusted EBITDA, and adjusted EBITDA margins have limitations as analytical tools and you should not consider these Non-GAAP measures in isolation or as a substitute for analysis of our operating results as reported under GAAP. 43 Table of Contents Results of Operations Revenues Our revenues are principally derived from providing integrated electronic payment services to merchants and businesses, including credit and debit card-based processing services and transaction processing via the ACH network and the program management and processing of prepaid debit cards, and we also offer additional output solution services relating to 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.
Should the Company opt to continue the repurchase of its securities on the open market, and the IRA remain in effect, we may qualify for this tax in 2025, and future years.
Should the Company opt to continue the repurchase of its securities on the open market, and the IRA remain in effect, we may qualify for this tax in 2026, and future years.
Please refer to Note 9 to our Consolidated Financial Statements included elsewhere in this annual report for incremental information regarding this deferred tax asset.
Please refer to Note 11 to our Consolidated Financial Statements included elsewhere in this Annual Report for incremental information regarding this deferred tax asset.
The following table is a reconciliation of Net Loss to EBITDA for the three and twelve months ended December 31, 2024 and 2023.
The following table is a reconciliation of Net Loss to EBITDA for the three and twelve months ended December 31, 2025 and 2024.
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.
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.
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. The Company maintains an allowance for credit losses for estimated losses resulting from the inability or failure of its customers to make required payments.
Accounts Receivable/Allowance for Estimated Credit Losses 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.
In addition to our near-term growth opportunities, we are focused on leveraging and optimizing the infrastructure of the organization allowing expansion of our payment processing and mail and printing capabilities without significantly increasing our operating costs.
In addition to our near-term growth opportunities, we are focused on leveraging and optimizing the infrastructure of our business to enable expansion of our payment processing and mail and printing capabilities without significantly increasing our operating costs.
We have also sold securities in public offerings from time to time. For example, in September 2020, we sold 4,705,883 shares of our common stock and received net proceeds of approximately $8 million. We cannot assure you that in the future we will be able to sell shares of our equity securities on terms acceptable to us or at all.
For example, in September 2020, we sold 4,705,883 shares of our common stock and received net proceeds of approximately $8 million. We cannot assure you that in the future we will be able to sell shares of our equity securities on terms acceptable to us or at all.
We pay volume-based fees for debit, credit, ACH and prepaid transactions initiated through these processors or sponsoring banks, and pay fees for other transactions such as returns, notices of change to bank accounts and file transmission. Cost of services expense was $63.3 million and $64.0 million for 2024 and 2023, respectively.
We pay volume-based fees for debit, credit, ACH and prepaid transactions initiated through these processors or sponsoring banks, and pay fees for other transactions such as returns, notices of change to bank accounts and file transmission. Cost of services expense was $65.7 million and $63.3 million for 2025 and 2024, respectively.
These assets include property, plant, and equipment, along with intangible assets acquired through acquisition, or developed as internal use software. Depreciation and amortization expense increased to $2.3 million in 2024 as compared to $2.1 million in 2023.
These assets include property, plant, and equipment, along with intangible assets acquired through acquisition, or developed as internal use software. Depreciation and amortization expense decreased to $1.9 million in 2025 as compared to $2.3 million in 2024.
In the year ended December 31, 2024, the Company had repurchased approximately $1.4 million of stock as part of its buyback program for which the Company may be required to pay approximately $14,000 in excise tax.
In the year ended December 31, 2025, the Company had repurchased approximately $1.1 million of stock as part of its buyback program for which the Company may be required to pay approximately $11,000 in excise tax.
Customer balances held on which the Company earns interest revenues include balances from our Automated Clearing House, or ACH, and complementary services, prepaid card services, and Output Solutions business lines.
Customer balances held on which the Company earns interest revenues include balances from our ACH and complementary services, prepaid card services, and Output Solutions business lines.
The broader implications of the macroeconomic environment, including uncertainty around recent international conflicts including the Russia and Ukraine conflict, supply chain shortages, a recession globally or in markets in which we operate, higher inflation rates, higher interest rates, and other related global economic conditions, remain unknown.
The broader implications of the macroeconomic environment, including uncertainty around recent international conflicts including the Russia and Ukraine conflict and the military actions in Iran by the U.S. and Israel, supply chain shortages, a recession globally or in markets in which we operate, higher inflation rates, higher interest rates, and other related global economic conditions, remain unknown.
The increase of $0.5 million, or 3%, represented continued investments in staffing and employee retention through various hires and salary increases, alongside increased expenditures related to the Company's security and IT infrastructure to strengthen the Company's defense from cybersecurity risks.
The increase of $1.6 million, or 10%, represented continued investments in staffing and employee retention through various hires and salary increases, alongside increased expenditures related to the Company's security and IT infrastructure to strengthen the Company's defense from cybersecurity risks.
The state income tax expense represents amounts incurred under the Texas margin tax.
The state income tax expense represents amounts incurred under the Texas franchise tax.
From time to time, we have sold shares of our common stock in order to provide us liquidity. For example, on November 19, 2021, Voyager Digital purchased 142,857 unregistered shares of common stock at an offering price of $7.00 per share in a private offering. The gross proceeds to us from the private offering were $1,000,000.
For example, on November 19, 2021, Voyager Digital purchased 142,857 unregistered shares of common stock at an offering price of $7.00 per share in a private offering. The gross proceeds to us from the private offering were $1,000,000. We have also sold securities in public offerings from time to time.
We reported a net income of $3.3 million and a net loss of $0.5 million for the years ended December 31, 2024 and December 31, 2023, respectively.
We reported a net loss of $2.5 million and net income of $3.3 million for the years ended December 31, 2025 and December 31, 2024, respectively.
In addition, success in our PayFac platform drove growth, and exceeded the attrition in our legacy credit card processing portfolios by focusing on our distributed sales force and Independent Software Vendor, or ISV, market. We believe this strategy will continue to drive superior results over time. Total transactions processed were up 26% to 46.9 million.
In addition, success in our PayFac platform drove growth, and exceeded the attrition in our legacy credit card processing portfolios by focusing on our distributed sales force and Independent Software Vendor, or ISV, market. We believe this strategy will continue to drive superior results over time.
This resulted in the Company's receiving more favorable interest rates on its current cash balances, amounting to $2.8 million in interest earnings in 2024. Of this interest, $2.3 million was recognized as revenue in the respective business lines for which the cash balances are held, and $0.5 million as interest income.
This resulted in the Company's receiving more favorable interest rates on its current cash balances, amounting to $1.9 million in interest earnings in 2025. Of this interest, $1.5 million was recognized as revenue in the respective business lines for which the cash balances are held, and $0.4 million as interest income.
The increase in cash used by financing activities was primarily attributable to changes in the balance of our assets held for customers related to their payment processing, and in increase of treasury stock repurchases in 2024 by approximately $1.0 million over 2023. 33 Table of Contents Off-Balance Sheet Arrangements We have no off-balance sheet arrangements that have or are reasonably likely to have a current or future material effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.
The increase in cash provided by financing activities was primarily attributable to changes in the balance of our assets held for customers related to their payment processing, proceeds from the equipment loan related to our new printer, and a decrease of treasury stock repurchases in 2025 by approximately $0.3 million over 2024. 45 Table of Contents Off-Balance Sheet Arrangements We have no off-balance sheet arrangements that have or are reasonably likely to have a current or future material effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.
We reported adjusted EBITDA of $2.9 million for the twelve months ended December 31, 2024, as compared to an adjusted EBITDA of $3.9 million for the same period in the prior year. The decrease in adjusted EBITDA in 2024 was attributable to slightly lower revenues and profit margins, alongside increases in SG&A.
We reported adjusted EBITDA of $1.3 million for the twelve months ended December 31, 2025, as compared to an adjusted EBITDA of $2.9 million for the same period in the prior year. The decrease in adjusted EBITDA in 2025 was attributable to increases in SG&A.
Net income tax benefit reported was $2.6 million in 2024, and an expense of $0.3 million in 2023 due to the decrease in our valuation allowance of approximately $3.0 million, increased our deferred tax asset to approximately $4.7 million, resulting in a federal income tax benefit to the Company of $3.0 million.
Income tax reported was an expense of $0.5 million in 2025 and a benefit of $2.6 million in 2024, with the difference due to the decrease in our valuation allowance of approximately $3.6 million, and an increase in our deferred tax asset to approximately $4.5 million, resulting in a federal income tax benefit to the Company of $3.1 million in 2024.
As a result of the acquisition of substantially all of the assets of Information Management Solutions, LLC, or IMS, in December 2020, we also offer additional services relating to electronic bill presentment, document composition, document decomposition and printing and mailing services serving hundreds of customers representing a wide range of industry verticals, including utilities and financial institutions through our wholly-owned subsidiary, Usio Output Solutions, Inc., or Output Solutions.
We also offer additional services relating to electronic bill presentment, document composition, document decomposition and printing and mailing services serving hundreds of customers representing a wide range of industry verticals, including utilities and financial institutions through our wholly-owned subsidiary, Usio Output Solutions, Inc., or Output Solutions.
In particular, we are focused on growing our ACH merchants, adding new software integrators, growing our electronic bill presentment, document composition, document decomposition, printing and mailing services business while also providing incremental services to existing merchants.
We will continue to invest in our sales force and technology platforms to drive revenue growth. In particular, we are focused on growing our ACH merchants, adding new software integrators, and growing our electronic bill presentment, document composition, document decomposition, printing and mailing services business while providing incremental services to existing merchants.
To the extent we require other sources of capital, we may seek a commercial line of credit or sell debt or equity securities, although we may not be able to complete any financing on terms acceptable to us, if at all.
To the extent we require other sources of capital, we may seek a commercial line of credit or sell debt or equity securities, although we may not be able to complete any financing on terms acceptable to us, if at all. We reported working capital of $9.4 million and $10.2 million at December 31, 2025 and 2024, respectively.
In September 2024, the Federal Reserve lowered the federal funds rate 0.50%, followed by a further 0.25% decline in each of November and December 2024. which has resulted in lower interest earnings on our interest bearing cash accounts. Should the Federal Reserve continue lowering the federal funds rate in the future, this incremental source of income would decline.
In 2024, the Federal Reserve lowered the federal funds rate four times by a cumulative 1%, and by 0.25% twice in 2025 during September and October 2025, which has resulted in lower interest earnings on our interest-bearing cash accounts. Should the Federal Reserve continue lowering the federal funds rate in the future, this incremental source of income would decline.
Other income was $1.7 million for 2024, as compared to expense of $0.1 million for 2023 due to the employee retention tax credit recorded under the CARES Act, and extended by the ARPA, received in the year ended December 31, 2024, recorded as other income in our consolidated statement of operations. 32 Table of Contents Income Taxes State income tax expense was $449,227 in 2024 and $292,524 in 2023.
Other income, net was $0.4 million for 2025, as compared to income of $2.1 million for 2024 due to the employee retention tax credit recorded under the CARES Act, and extended by the ARPA, received in 2024, and recorded as other income in our consolidated statement of operations. 44 Table of Contents Income Taxes State income tax expense was $458,599 in 2025 and $449,227 in 2024.
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.
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, 2025 and 2024, the Company’s reserve for processing losses was $784,937 and $897,116, respectively, included as an accrued expense on the consolidated balance sheets.
We reported adjusted EBITDA of $0.5 million for the quarter ended December 31, 2024, as compared to an adjusted EBITDA of $1.1 million for the same period in the prior year. The decrease in adjusted EBITDA in the 2024 quarter was attributable to increases in SG&A combined with reduced profit margins.
We reported adjusted EBITDA loss of ($0.2) million for the quarter ended December 31, 2025, as compared to an adjusted EBITDA of $0.5 million for the same period in the prior year. The decrease in adjusted EBITDA in the 2025 quarter was attributable to increases in SG&A and reduced gross profit as a result of declines in interest revenue.
As of 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. The Company has an unsecured revolving line of credit with a maximum borrowing capacity of $475,000.
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, which was settled in February 2026.
As the Federal Reserve has worked to fight economic inflation, the federal funds rate has experienced rapid growth from the beginning of 2022 into the third quarter of 2023, and remained flat until September 2024 when the federal funds rate was lowered.
If these conditions continue or worsen, they could adversely impact our future financial and operating results. As the Federal Reserve has worked to fight economic inflation, the federal funds rate experienced rapid growth from the beginning of 2022 into the third quarter of 2023, and remained flat until September 2024 when the federal funds rate was lowered.
A deterioration in macroeconomic conditions could continue to increase the risk of lower consumer spending, merchant and consumer bankruptcy, insolvency, business failure, higher credit losses, or other business interruption, which may adversely impact our business. If these conditions continue or worsen, they could adversely impact our future financial and operating results.
A deterioration in macroeconomic conditions as well as ongoing uncertainty regarding tariffs or trade disputes could continue to increase the risk of lower consumer spending, merchant and consumer bankruptcy, insolvency, business failure, higher credit losses, or other business interruption, which may adversely impact our business.
At December 31, 2024, we had $8.1 million of cash and cash equivalents, as compared to $7.2 million of cash and cash equivalents at December 31, 2023. The increase was primarily a result of the increase in net income.
At December 31, 2025, we had $7.4 million of cash and cash equivalents, as compared to $8.1 million of cash and cash equivalents at December 31, 2024. The decrease was primarily a result of the increased SG&A and lower interest revenues/income.
Net cash used by investing activities was $0.9 million for 2024 and $0.8 million in 2023. The minor increase in investing activities was due to increased expenditures in property and equipment. Net cash used by financing activities for 2024 was $5.1 million compared to net cash provided by financing activities of $6.1 million for 2023.
Net cash used by investing activities was $1.5 million for 2025 and $0.9 million in 2024. The increase in investing activities was due to increased expenditures related to capitalized labor for internal use software. Net cash provided by financing activities for 2025 was $28.7 million compared to net cash used by financing activities of $5.1 million for 2024.
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.
To the extent deferred tax assets are not expected to be realized, we record a valuation allowance.
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%. Monthly principal and interest payments are required in the amount of $16,017.
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.
Net Income (Loss) Income (loss) before income taxes was $0.7 million in 2024 and a loss of $0.2 million in 2023, due primarily to $1.7 million recorded as part of the employee retention tax credit issued under the CARES act.
Net Income (Loss) Income (loss) before income taxes was a loss of $2.0 million in 2025 and income of $0.7 million in 2024, with the decline from 2024 to 2025 due primarily to increased SG&A expenses in 2025 versus 2024 alongside the presence of $1.7 million recorded in 2024 as part of the one time employee retention tax credit issued under the CARES which was not present in 2025, to offset the higher operating loss.
In 2024, we processed $7.1 billion for all payment types, which was up 33% from the prior year volume of $5.3 billion total dollars processed due to strong growth in our ACH and complimentary services business unit via organic growth and net new customer acquisitions.
We cannot assure you that we will be able to successfully assimilate new and future acquisitions. 36 Table of Contents Summary of Results In 2025, we processed $8.4 billion for all payment types, which was up 19% from the prior year volume of $7.1 billion total dollars processed due to strong growth in our ACH and complimentary services business unit and PINless debit product line, via organic growth and net new customer acquisitions.
This product offering provides an outsourced solution for document design, print and electronic delivery to potential customers and entities looking to reduce postage costs and increase efficiencies.
This product offering provides an outsourced solution for document design, print and electronic delivery to potential customers and entities looking to reduce postage costs and increase efficiencies. We continue to actively work on expanding and supplementing our product offerings in order to retain key customers, as well as extend our market reach.
Critical Accounting Policies and Estimates General Our management’s discussion and analysis of financial condition and results of operations is based upon our consolidated financial statements, which have been prepared in accordance with U.S. generally accepted accounting principles.
Changes in these factors are difficult to predict, and a change in one factor could affect other factors, which could result in adverse effects to our business, results of operations, financial condition, and cash flows. 41 Table of Contents Critical Accounting Policies and Estimates General Our management’s discussion and analysis of financial condition and results of operations is based upon our consolidated financial statements, which have been prepared in accordance with U.S. generally accepted accounting principles, or GAAP.
Material Trends and Uncertainties On August 16, 2022, President Biden signed the Inflation Reduction Act, or IRA, which implemented a 1% excise tax on certain corporate stock repurchases, when repurchases of stock on an established securities market exceed $1 million in a tax year.
While there has been success in new client onboarding, replacement of this customer has been delayed as many of our more meaningful new programs have anticipated start dates in mid to late 2026. 40 Table of Contents Material Trends and Uncertainties On August 16, 2022, former President Biden signed the Inflation Reduction Act, or IRA, which implemented a 1% excise tax on certain corporate stock repurchases, when repurchases of stock on an established securities market exceed $1 million in a tax year.
The Company has an irrevocable letter of credit in the amount of $474,229, issued on June 3, 2024, with a maturity date of July 3, 2025. This letter of credit was obtained as part of the bonding requirement for the KDHM lawsuit appeal and has not been drawn upon since its issuance.
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.
For the year ended December 31, 2024 net cash provided by operating activities was $2.9 million and for the year ended December 31, 2023, cash provided by operations was $3.5 million due primarily to the increase of prepaid expenses and decrease in merchant reserves.
For the year ended December 31, 2025, net cash provided by operating activities was $1.5 million, and for the year ended December 31, 2024, cash provided by operations was $2.9 million with the decrease due primarily to the absence of the employee retention tax credit that was received in 2024, combined with increased SG&A expense.
The facility was established on May 29, 2024, and matures on June 5, 2026. As of December 31, 2024, no amounts had been drawn under this line of credit since its origination. This line of credit was secured to support the bond requirement in the KDHM lawsuit appeal, but remains fully available.
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.
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.
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. From time to time, we have sold shares of our common stock in order to provide us liquidity.
Our stock-based compensation expenses for 2024 and 2023 represented the amortization of deferred compensation expenses related to incentive stock grants to employees, officers and directors. The decrease in stock-based compensation is primarily attributable to various three year RSUs and 10 year grants fully vesting during 2024.
The decrease in stock-based compensation was primarily attributable to various three year RSUs and 10 year grants fully vesting during 2025. This vesting offset the increase in stock-based compensation expense related to our June 21, 2024 and August 21, 2025 stock grants.
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. Estimates for processing losses vary based on the volume of transactions processed and could increase or decrease accordingly.
This reserve amount is subject to the risk that actual losses may be greater than our estimates. The Company did not incur any significant processing losses in 2025, but has experienced substantial losses in the past.
We continue to work closely with our bank partners, to ensure we effectively manage our cash balances, and monitor the Federal Reserve's monetary policy decisions. The Company continues to invest in growth initiatives to drive increased revenues, and profitability metrics. Such initiatives include our "One Usio" strategy, designed to unify our brand, sales approach, and payments offerings.
We continue to work closely with our bank partners, to ensure we effectively manage our cash balances, and monitor the Federal Reserve's monetary policy decisions.
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 Automated Clearing House, or ACH, and complementary services, prepaid card services, and Output Solutions business lines. 42 Table of Contents Key Business Metrics - Non-GAAP Financial Measures This Annual Report on Form 10-K includes the following non-GAAP financial measures as defined in Regulation G adopted by the SEC: EBITDA, adjusted EBITDA, and adjusted EBITDA margins.
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%. Payments in 2024 on this equipment loan were $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.
Cash Flows Net cash provided by operating activities totaled $2.9 million for 2024 as compared to net cash provided by operating activities of $3.5 million in 2023. The decrease in cash provided by operating activities was driven primarily by increases in prepaid expenses, and decreases in merchant reserves.
Cash Flows Net cash provided by operating activities totaled $1.5 million for 2025 as compared to net cash provided by operating activities of $2.9 million in 2024. The decrease in cash provided by operating activities was due primarily to the absence of the employee retention tax credit that was received in 2024, combined with increased SG&A expense.
These vesting offset the increase in stock-based compensation expense related to our June 21, 2024 stock grants. Please refer to Notes 8 and 10 to our Consolidated Financial Statements included elsewhere in this annual report for incremental information regarding these stock grants.
Please refer to Notes 9 and 11 to our Consolidated Financial Statements included elsewhere in this Annual Report for incremental information regarding these stock grants. Selling, General and Administrative Expenses Selling, general and administrative expenses, or SG&A, increased to $18.4 million in 2025 from $16.7 million in 2024.
Please refer to Note 9 to our Consolidated Financial Statements included elsewhere in this annual report for additional information regarding this deferred tax asset.
The decrease in net income (loss) was due to the 2024 federal income tax benefit of $3.0 million, combined with the receipt of the employee retention tax credit in 2024, which did not occur in 2025. Please refer to Note 11 to our Consolidated Financial Statements included elsewhere in this annual report for additional information regarding this deferred tax asset.
Cost of services expenses decreased by $0.7 million, or 1%, in 2024 as compared to 2023 primarily due to decreased transaction costs associated with our lower revenues. Gross Profit Gross profit is the net profit after deducting the cost of services. Gross profit was $19.6 million and $20.1 million for 2024 and 2023, respectively.
Gross profit was $19.7 million and $19.6 million for 2025 and 2024, respectively. Gross profit increased nominally by $0.1 million, or 0.4%, in 2025 as compared to 2024.
We have in the past, and may in the future, utilize equipment loans in order to finance the cost of particular pieces of equipment. On March 20, 2021, we entered into a debt arrangement to finance $165,996 for the purchase of an Output Solutions sorter.
This decrease was a result of declines in cash and cash equivalents, alongside lower accounts receivable. We have in the past, and may in the future, utilize equipment loans in order to finance the cost of particular pieces of equipment.
ACH or electronic check transactions processed for 2024 increased by 18.5% compared to 2023. Returned check transactions increased by 17.1% in 2024 compared to 2023. Credit card dollars processed in 2024 increased by 9.9% compared to 2023 and credit card transactions processed for 2024 increased by 23.8% compared to 2023.
Returned check transactions increased by 31.2% in 2025 compared to 2024. 38 Table of Contents Credit card dollars processed in 2025 increased by 12.7% compared to 2024 and credit card transactions processed for 2025 increased by 66.3% compared to 2024.
The increase of $0.2 million, or 9%, was primarily attributable to our continued investment in our internal use software, which is continually being developed to offer new or improved consumer offerings. Other Income Interest income increased to $0.5 million in 2024 from $0.2 million in 2023 due to higher interest-bearing cash balances.
The decrease of $0.3 million, or 14%, was primarily attributable to the completed depreciation of fixed and intangible assets related to internal use software. Other Income, net Interest income decreased to $0.4 million in 2025 from $0.5 million in 2024 due to both lower interest rates, and interest-bearing cash balances.
Both the credit card dollars and transactions processed represent all-time records for the Company. Prepaid card load volume increased by 34.8% and transaction volume increased by 45.1%. These improved transactional metrics helped offset the significantly reduced revenues as part of the anticipated wind down of our COVID incentive card programs at the start of 2024.
All of these metrics for dollars and transactions processed represent all-time records for the Company. 39 Table of Contents Prepaid card load volume decreased by 40.6% and transaction volume decreased by 26.5%.
The decline in the prepaid business line was further offset by gains in our ACH and complementary services business line of 12%, through continued sales efforts to grow our organic customer base, alongside net new client acquisitions. Output solutions and credit card revenues were up slightly, 1% and 3% respectively.
This increase came primarily from our ACH and complementary services business line, which increased by 33%, due to successful sales efforts to grow our organic customer base, alongside net new client implementations.
Removed
Summary of Results We believe that our success will continue to depend in large part on our ability to (a) grow revenues, (b) manage our operating expenses, (c) add quality customers to our client base, (d) meet evolving customer requirements, (e) adapt to technological changes in an emerging market, and (f) assimilate current and future acquisitions of companies and customer portfolios.
Added
Through our diverse payment channels, we believe we offer a comprehensive payment ecosystem that can satisfy the variety of needs any client may have.
Removed
We will continue to invest in our sales force and technology platforms to drive revenue growth, and assess the needs of the market to both enhance and maintain our existing product set, alongside the incorporation of new features and payment processing products.
Added
As a result, not only do we have a portfolio of products that we believe is attractive to the broader payment market and can drive new customer growth, but our embedded technology also improves relationships with existing clients by increasing engagement and customer loyalty. 35 Table of Contents Strategy We believe that our success in 2026 and beyond will continue to depend in large part on our ability to (a) scale recurring revenues and deepen partner relationships, (b) expand our product offerings, (c) pursue disciplined, accretive opportunities, (d) enhance shareholder value via operational execution and capital allocation, and (e) assimilate current and future acquisitions of companies and customer portfolios.
Removed
We reported net income of $3.3 million and a net loss of $0.5 million for the years ended December 31, 2024 and December 31, 2023, respectively. We had an accumulated deficit of $68.0 million at December 31, 2024.
Added
We continue to seek ways to grow revenue, and net new client implementations and onboards occur regularly due to our ability to address the needs of our market. Growing Revenues. Revenue growth remains a consistent focus for the Company, as we strive to achieve expanded scale, and establish a strong reputation within the financial technologies space.
Removed
These incentive programs contributed approximately $12.1 million in prepaid card services revenue during 2023 that needed to be replaced in 2024.
Added
This growth assists us in maintaining our diversified offerings and remaining relevant in the payments ecosystem by developing payment platforms that address the current needs of our marketplace.
Removed
Our processing metrics help reflect the improved organic growth and sales activity that took place in the year as part of our initiative to minimize the impact of these expired programs, while also indicating a positive sign for continued growth in the future.
Added
In 2025, our revenues increased 3% to $85.4 million, as compared to $82.9 million in 2024, due primarily to strong growth in our ACH and complementary services line of business, though offset in large part by declines in our prepaid card services line of business and interest revenues.
Removed
Through this strategy, we are developing enhanced client onboarding features, superior customer management, improved reporting and fraud monitoring, alongside a consolidated sales and marketing team to better cross-sell our various payment methods and ancillary services.
Added
The strong growth in our ACH and complementary services line of business was due to organic growth from existing customers and net new client implementations and onboarding.
Removed
While we recognized high levels of growth in 2023, a significant portion of this growth was due to the Prepaid card business benefitting from outsized growth in 2022 and 2023 as a result of large incentive programs brought on by the Covid-19 pandemic.
Added
The decrease in our prepaid card services revenues was due to declines from one of our key prepaid card programs, as its business was impacted by the loss of a key customer that made significant contributions to Usio revenues in 2024. Lower interest revenues were driven by interest rates and interest bearing deposits declining versus the prior year.
Removed
Those programs were wound down and completed during 2024, requiring new card programs and clients being brought on to replace prior revenues. While we expect growth to continue, it is possible that we may not see similar rates of expansion moving forward.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK. As a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and in Item 10(f)(1) of Regulation S-K, we are electing scaled disclosure reporting obligations and therefore are not required to provide the information requested by this Item. 34 Table of Contents
Biggest changeITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK. As a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and in Item 10(f)(1) of Regulation S-K, we are electing scaled disclosure reporting obligations and therefore are not required to provide the information requested by this Item. 46 Table of Contents

Other USIO 10-K year-over-year comparisons