usio20240930

usio20240930_10q.htm

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2024

☐ TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ________ to ________.

Commission File Number: 000-30152

USIO, INC.

(Exact name of registrant as specified in its charter)

Nevada		98-0190072
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)



3611 Paesanos Parkway, Suite 300, San Antonio, TX		78231
(Address of principal executive offices)		(Zip Code)

(210) 249-4100

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading symbol(s)	Name on each exchange on which registered
Common stock, par value $0.001 per share	USIO	The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ☒ Yes ☐ No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). ☒ Yes ☐ No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer ☐	Accelerated filer ☐
Non-accelerated filer ☒	Smaller reporting company ☒
	Emerging Growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). ☐ Yes ☒ No

As of November 4, 2024, the number of outstanding shares of the registrant's common stock was 27,130,334.

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USIO, INC.

INDEX

		Page
PART I – FINANCIAL INFORMATION		3

Item 1.	Financial Statements (Unaudited).	3

	Condensed Consolidated Balance Sheets as of September 30, 2024 and December 31, 2023	3

	Condensed Consolidated Statements of Operations for the Three and Nine Months ended September 30, 2024 and 2023	4

	Condensed Consolidated Statements of Cash Flows for the Nine Months ended September 30, 2024 and 2023	5

	Condensed Consolidated Statements of Stockholders' Equity for the Three and Nine Months ended September 30, 2024 and 2023	6

	Notes to Condensed Consolidated Financial Statements	7

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations.	12

Item 3.	Quantitative and Qualitative Disclosures About Market Risk.	18

Item 4.	Controls and Procedures.	18

PART II – OTHER INFORMATION		19

Item 1.	Legal Proceedings.	19

Item 1A.	Risk Factors.	20

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds.	20

Item 3.	Defaults Upon Senior Securities.	20

Item 4.	Mine Safety Disclosures (Not applicable).	20

Item 5.	Other Information.	20

Item 6.	Exhibits.	21

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PART I – FINANCIAL INFORMATION

Item 1. Financial Statements.

USIO, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

	*September 30, 2024*			*December 31, 2023*
	(Unaudited)
Assets
Current assets:
Cash and cash equivalents	$	8,392,317		$	7,155,687
Accounts receivable, net		4,257,022			5,564,138
Settlement processing assets		59,549,564			44,899,603
Prepaid card load assets		22,065,567			31,578,973
Customer deposits		1,824,820			1,865,731
Inventory		400,002			422,808
Prepaid expenses and other		775,310			444,071
Current assets before merchant reserves		97,264,602			91,931,011
Merchant reserves		4,892,601			5,310,095
Total current assets		102,157,203			97,241,106

Property and equipment, net		3,304,601			3,660,092

Other assets:
Intangibles, net		1,099,373			1,753,333
Deferred tax asset, net		4,690,053			1,504,000
Operating lease right-of-use assets		3,012,779			2,420,782
Other assets		340,285			355,357
Total other assets		9,142,490			6,033,472

Total assets	$	114,604,294		$	106,934,670

Liabilities and stockholders’ equity
Current liabilities:
Accounts payable	$	579,618		$	1,031,141
Accrued expenses		2,879,369			3,801,278
Operating lease liabilities, current portion		553,480			633,616
Equipment loan, current portion		192,206			107,270
Settlement processing obligations		59,549,564			44,899,603
Prepaid card load obligations		22,065,567			31,578,973
Customer deposits		1,824,820			1,865,731
Current liabilities before merchant reserve obligations		87,644,624			83,917,612
Merchant reserve obligations		4,892,601			5,310,095
Total current liabilities		92,537,225			89,227,707

Non-current liabilities:
Equipment loan, net of current portion		562,923			718,980
Operating lease liabilities, net of current portion		2,573,100			1,919,144
Total liabilities		95,673,248			91,865,831

Commitments and contingencies (Note 9)
Stockholders’ equity:
Preferred stock, $0.01 par value, 10,000,000 shares authorized; -0- shares outstanding at September 30, 2024 (unaudited) and December 31, 2023, respectively		—			—
Common stock, $0.001 par value, 200,000,000 shares authorized; 29,811,487 and 28,671,606 issued, and 27,216,864 and 26,332,523 outstanding at September 30, 2024 (unaudited) and December 31, 2023, respectively		198,226			197,087
Additional paid-in capital		99,447,552			97,479,830
Treasury stock, at cost; 2,594,623 and 2,339,083 shares at September 30, 2024 (unaudited) and December 31, 2023, respectively		(4,755,916	)		(4,362,150	)
Deferred compensation		(7,297,234	)		(6,907,775	)
Accumulated deficit		(68,661,582	)		(71,338,153	)
Total stockholders’ equity		18,931,046			15,068,839

Total liabilities and stockholders’ equity	$	114,604,294		$	106,934,670

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

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USIO, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)

	Three Months Ended September 30,						Nine Months Ended September 30,
	2024			2023			2024			2023

Revenues	$	21,321,478		$	20,982,761		$	62,371,752		$	63,935,603
Cost of services		16,425,321			16,325,793			47,822,086			49,121,210
Gross profit		4,896,157			4,656,968			14,549,666			14,814,393

Selling, general and administrative expenses:
Stock-based compensation		569,772			594,815			1,529,106			1,677,258
Other SG&A		4,119,317			4,293,869			12,180,387			12,021,110
Depreciation and amortization		583,718			518,573			1,707,721			1,559,601
Total selling, general and administrative		5,272,807			5,407,257			15,417,214			15,257,969

Operating (loss)		(376,650	)		(750,289	)		(867,548	)		(443,576	)

Other income and (expense):
Interest income		125,564			49,769			348,188			116,649
Other income		—			50,000			261,413			50,000
Interest expense		(13,700	)		(393	)		(41,535	)		(1,588	)
Other income, net		111,864			99,376			568,066			165,061

(Loss) before income taxes		(264,786	)		(650,913	)		(299,482	)		(278,515	)

Federal income tax (benefit)		(3,186,053	)		—			(3,186,053	)		—
State income tax expense		70,000			70,000			210,000			222,524
Income tax expense (benefit)		(3,116,053	)		70,000			(2,976,053	)		222,524

Net income (loss)	$	2,851,267		$	(720,913	)	$	2,676,571		$	(501,039	)

Basic income (loss) per common share:	$	0.10		$	(0.03	)	$	0.10		$	(0.02	)
Diluted income (loss) per common share:	$	0.10		$	(0.03	)	$	0.10		$	(0.02	)
Weighted average common shares outstanding
Basic		27,322,497			26,383,144			26,747,277			26,386,586
Diluted		27,322,497			26,383,144			26,747,277			26,386,586

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

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USIO, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

	*Nine Months Ended September 30,*
	*2024*		*2023*
Operating activities:
Net income (loss)	$	2,676,571	$	(501,039	)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Depreciation		1,053,761

SEC Form 10-Q filed by Usio Inc.