USIO Usio Inc

PART I – FINANCIAL INFORMATION

Item 1. Financial Statements.

 

USIO, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

 

 

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

 

 

USIO, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)

 

 

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

    

 

USIO, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

 

 

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

 

 

USIO, INC.

CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY

(UNAUDITED)

 

 

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

 

 

USIO, INC.

NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

 

Note 1. Basis of Presentation

 

The accompanying unaudited interim condensed consolidated financial statements of Usio, Inc. and its subsidiaries (collectively, the “Company”) have been prepared without audit, pursuant to the rules and regulations of the Securities and Exchange Commission (the "Commission" or the "SEC"). Certain information and footnote disclosures normally included in financial statements prepared in accordance with United States generally accepted accounting principles ("GAAP") have been omitted pursuant to such rules and regulations. In the opinion of management, the accompanying unaudited interim condensed consolidated financial statements reflect all adjustments of a normal recurring nature considered necessary to present fairly the Company's financial position, results of operations and cash flows for such periods. The accompanying unaudited interim condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and the notes thereto included in the Company's annual report on Form 10-K for the year ended  December 31, 2023, as filed with the Commission on  March 27, 2024 (the "2023 Annual Report"). Results of operations for interim periods are not necessarily indicative of results that  may be expected for any other interim periods or the full fiscal year. References in this quarterly report to "the quarter" or the "second quarter" mean the three month period ended  June 30, 2024 or 2023, as the case may be and unless otherwise noted.

 

Use of Estimates: The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

 

Revenue Recognition: Revenue consists primarily of fees generated through the electronic processing of payment transactions and related services. Revenue is recognized during the period in which the transactions are processed or when the related services are performed. The Company complies with ASC 606-10 and reports revenues at gross as a principal versus net as an agent. Although some of the Company's processing agreements vary with respect to specific credit risks, the Company has determined that for each agreement it is acting in the principal role. Merchants  may be charged for these processing services at a bundled rate based on a percentage of the dollar amount of each transaction and, in some instances, additional fees are charged for each transaction. Certain merchant customers are charged a flat fee per transaction, while others  may also be charged miscellaneous fees, including fees for chargebacks or returns, monthly minimums, and other miscellaneous services. Revenues derived from electronic processing of credit, debit, and prepaid card transactions that are authorized and captured through third-party networks are reported gross of amounts paid to sponsor banks as well as interchange and assessments paid to credit card associations. Certain card distributors remit payment of fees earned 45 days after the end of the processing period. 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. ("Output Solutions"), a wholly-owned subsidiary of Usio, Inc., provides bill preparation, presentment and mailing services. Revenue from Output Solutions is recognized when the related services are performed for printing and delivered to the United States Postal Services, or USPS, for postage. We also earn revenues from interest and fees earned on certain assets underlying customer balances. Interest earned on assets directly related to our core business line operations are recorded in the revenue source underlying the associated customer balances. Customer balances held on which the Company earns interest revenues include balances from our Automated Clearing House, or ACH, and complementary services, prepaid card services, and Output Solutions business lines.

 

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

 

		Three Months Ended June 30,								Six Months Ended June 30,
		2024				2023				2024				2023
ACH and complementary services		$	3,894,330			$	4,079,157			$	7,776,064			$	7,419,879
Credit card			7,261,268				7,115,884				14,822,002				14,455,782
Prepaid card services			3,673,418				5,217,468				7,014,642				10,024,872
Output Solutions			4,686,869				4,849,197				10,224,792				10,807,417
Interest - ACH and complementary services			190,233				40,361				401,873				43,306
Interest - Prepaid card services			334,624				125,058				737,365				186,018
Interest - Output Solutions			39,146				9,447				73,536				15,568
Total revenue		$	20,079,888			$	21,436,572			$	41,050,274			$	42,952,842

 

Cash and Cash Equivalents: Cash and cash equivalents includes cash and other money market instruments. The Company considers all highly liquid investments with an original maturity of 90 days or less to be cash equivalents.

 

Settlement Processing Assets and Obligations: Settlement processing assets and obligations represent intermediary balances arising in our settlement process for merchants. The Company earns interest on these underlying processing assets, which is recognized as revenue in the ACH and complementary services business line.

 

Prepaid Card Load Assets and Obligations: The Company maintains pre-funding accounts for its customers to facilitate prepaid card loads as initiated by the customer. These prepaid card load assets are carried on the Company's balance sheet with a corresponding liability. As the prepaid business line expands, card load assets will increase as funds are sent from customers to the Company. As customers begin to load cash onto cards, the balance of both the prepaid card asset and corresponding liability decrease. As these balances decrease, the Company recognizes processing revenue and cardholder fees. The Company earns interest on these prepaid card load assets and obligations, which is recognized as revenue in the prepaid card services business line.

 

Customer Deposits: The Company holds customer deposits primarily for postage expenses to ensure the Company is not out of pocket for amounts billed daily by the USPS. These customer deposits are carried on the Company's balance sheet with a corresponding liability. The Company earns interest on these customer deposits, which is recognized as revenue in the Output Solutions business line.

 

Merchant Reserves: The Company has merchant reserve requirements associated with ACH transactions. The merchant reserve assets are carried on the Company's balance sheet with a corresponding liability. Merchant reserves are set for each merchant and funds are collected and held as collateral to minimize contingent liabilities associated with any losses that  may occur. While this cash is not restricted in its use, the Company believes that designating this cash to collateralize merchant reserves strengthens the Company's standing with its member sponsors and is in accordance with the guidelines set by the card networks. The Company earns interest on these merchant reserves, which is recognized as revenue in our ACH and complementary services business line.

 

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

 

		Three Months Ended June 30,								Six Months Ended June 30,
		2024				2023				2024				2023
Beginning cash, cash equivalents, prepaid card load assets, customer deposits and merchant reserves:
Cash and cash equivalents		$	7,053,812			$	6,763,813			$	7,155,687			$	5,709,117
Prepaid card load assets			28,698,878				18,812,954				31,578,973				20,170,761
Customer deposits			1,808,263				1,575,075				1,865,731				1,554,122
Merchant reserves			5,322,095				4,744,615				5,310,095				4,909,501
Total		$	42,883,048			$	31,896,457			$	45,910,486			$	32,343,501
Ending cash, cash equivalents, prepaid card load assets, customer deposits and merchant reserves:
Cash and cash equivalents		$	7,498,256			$	6,575,124			$	7,498,256			$	6,575,124
Prepaid card load assets			28,056,918				46,398,476				28,056,918				46,398,476
Customer deposits			1,808,006				1,563,192				1,808,006				1,563,192
Merchant reserves			4,851,839				5,141,040				4,851,839				5,141,040
Total		$	42,215,019			$	59,677,832			$	42,215,019			$	59,677,832

 

Accounts Receivable/Allowance for Estimated Credit Losses: The Company maintains an allowance for estimated credit losses resulting from the inability or failure of the Company’s customers to make required payments. The Company determines the allowance based on an account-by-account review, taking into consideration such factors as the age of the outstanding balance, historical pattern of collections, and financial condition of the customer to conform with Accounting Standards Update (ASU) Topic 326. During the six months ended June 30, 2024 and the year ended  December 31, 2023, there were no credit losses incurred. In the past, losses incurred by the Company due to credit losses were within its expectations. If the financial conditions of the Company’s customers were to deteriorate, resulting in an impairment of their ability to make contractual payments, additional losses  may be incurred in future periods. Estimates for credit losses are variable based on the volume of transactions processed and could increase or decrease accordingly. The allowance for credit losses was $319,000 at June 30, 2024 and December 31, 2023.

 

Inventory: Inventory is stated at the lower of cost or net realizable value. At June 30, 2024 and December 31, 2023, inventory consisted primarily of printing and paper supplies used for Output Solutions.

 

Accounting for Internal Use Software: The Company capitalizes the costs associated with software being developed or obtained for internal use when both the preliminary project stage is completed and it is probable that computer software being developed will be completed and placed in service. Capitalized costs include only (i) external direct costs of materials and services consumed in developing or obtaining internal-use software, (ii) payroll and other related costs for employees who are directly associated with and who devote time to the internal-use software project, and (iii) interest costs incurred, when material, while developing internal-use software. The Company ceases capitalization of such costs no later than the point at which the project is substantially complete and ready for its intended purpose. During the six months ended June 30, 2024 and June 30, 2023, the Company capitalized software costs of $353,316 and $378,197, respectively.

 

Valuation of Long-Lived and Intangible Assets: The Company assesses the impairment of long-lived and intangible assets at least annually, and whenever events or changes in circumstances indicate that the carrying value may not be recoverable. Factors considered important, which could trigger an impairment review, include the following: significant underperformance relative to historical or projected future cash flows; significant changes in the manner of use of the assets or the strategy of the overall business; and significant negative industry trends. When management determines that the carrying value of long-lived and intangible assets may not be recoverable, impairment is measured as the excess of the assets’ carrying value over the estimated fair value. No impairment losses were recorded in 2023 or during the six months ended June 30, 2024. Management is not aware of any impairment charges that may currently be required; however, the Company cannot predict the occurrence of events that might adversely affect the reported values in the future.

 

Reserve for Processing Losses: If, due to insolvency or bankruptcy of one of the Company’s merchant customers, or for any other reason, the Company is not able to collect amounts from its credit card, ACH or prepaid customers that have been properly "charged back" by the customer, or if a prepaid cardholder incurs a negative balance, the Company must bear the credit risk for the full amount of the transaction. The Company may require cash deposits and other types of collateral from certain merchants to minimize any such risks. In addition, the Company utilizes multiple systems and procedures to manage merchant risk. ACH, prepaid and credit card merchant processing loss reserves are primarily determined by performing a historical analysis of the Company’s loss experience, considering other factors that could affect that experience in the future, such as the types of transactions processed and nature of the merchant relationship with its consumers and the Company’s relationship with the Company’s prepaid card holders. This reserve amount is subject to the risk that actual losses may be greater than the Company’s estimates. Estimates for processing losses are variable based on the volume of transactions processed and could increase or decrease accordingly. At June 30, 2024 and December 31, 2023, the Company’s reserve for processing losses was $892,528 and $826,528, respectively, carried on the Company's balance sheet as an accrued expense.

 

Legal Proceedings: In addition to the legal proceedings disclosed in this quarterly report, the Company may be involved in legal matters arising in the ordinary course of business from time to time. Litigation is subject to inherent uncertainties, and an adverse result in the legal proceedings disclosed in this quarterly report or other matters that may arise from time to time may harm our business.

 

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

 

Reclassifications: We have reclassified certain prior period amounts in the accompanying consolidated financial statements in order to be consistent with the current period presentation. These reclassifications had no effect on net income, total assets, total liabilities or equity.

 

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Note 2. Leases

 

The Company leases facilities and office equipment under various operating leases, which generally are expected to be renewed or replaced by other leases. For each of the three months ended  June 30, 2024 and 2023, operating lease expenses totaled $133,973 and $146,415, respectively. For each of the six months ended June 30, 2024 and 2023, operating lease expenses totaled $266,105 and $257,038, respectively.

 

Note 3. Accrued Expenses

 

Accrued expenses consisted of the following balances:

 

		June 30, 2024				December 31, 2023
Accrued commissions		$	1,092,870			$	2,433,353
Reserve for processing losses			892,528				826,528
Other accrued expenses			713,415				246,444
Accrued taxes			145,906				294,953
Accrued salaries			369,799				—
Total accrued expenses		$	3,214,518			$	3,801,278

 

Note 4. Equipment Loan

 

On March 20, 2021, the Company entered into a debt arrangement to finance $165,996 for the purchase of an Output Solutions sorter. The loan was for a period of 36 months with a maturity date of March 20, 2024 and annual interest of 3.95%. Monthly principal and interest payments were required in the amount of $4,902. Principal payments for the three months ended  June 30, 2024 and 2023 were $0 and $14,171, respectively, and are reflected on the Company's Condensed Consolidated Statement of Cash Flows. Principal payments for the six months ended  June 30, 2024 and 2023 were $14,312 and $27,659, respectively. This loan was paid in full on its maturity date.

 

On  October 1, 2023, the Company entered into a debt arrangement to finance $811,819 for the purchase of an Output Solutions folder and inserter. The loan is for a period of 66 months with a maturity date of  April 5, 2029 and annual interest of 6.75%. Monthly principal and interest payments are required in the amount of $16,017, with interest only payments required for the first six months of the loan term. Total interest and principal payments on this folder and inserter equipment loan were $36,687 for the three months ended  June 30, 2024. Total interest and principal payments on this folder and inserter equipment loan were $50,168 for the six months ended  June 30, 2024.

 

Note 5. Stockholders' Equity

 

Stock Warrants: On December 15, 2020, the Company issued warrants to purchase 945,599 shares of the Company's common stock with an initial exercise price of $4.23 per share, subject to adjustment as provided in the warrant agreement governing the warrants, to Information Management Solutions, LLC ("Management Solutions"). Management Solutions' warrants vest and become exercisable annually over three years in three equal tranches beginning on December 15, 2021 and become fully vested on December 15, 2023. Each warrant is exercisable for a period of five years beginning on the date it vests. At the time of issuance, these warrants were valued using the Black-Scholes option pricing model. Assumptions used were as follows: (i) the fair value of the underlying stock was $0.58 per share; (ii) the risk-free interest rate was 0.09%; (iii) the contractual life was 5 years; (iv) the dividend yield was 0%; and (v) the volatility was 59.9%. The fair value of the warrants amounted to $552,283 and was recorded as an increase in the customer list asset and a corresponding amount to additional paid in capital. The amortization of these warrants, which is included in the total amortization expense of the customer list intangible asset, totaled $27,615 and $55,228 in each of the three and six months ended  June 30, 2024 and 2023, respectively.

 

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Note 6. Net Income (Loss) Per Share

 

Basic income (loss) per share (EPS) was computed by dividing net income (loss) by the weighted average number of shares of common stock outstanding during the period. Diluted EPS differs from basic EPS due to the assumed conversion of potentially dilutive awards and options that were outstanding during the period. Unvested restricted stock awards have the right to receive nonforfeitable dividends on the same basis as common shares; therefore, unvested restricted stock is considered a participating security for the purpose of calculating EPS. The following is a reconciliation of the numerators and the denominators of the basic and diluted per share computations for net income (loss) for the three and six months ended June 30, 2024 and June 30, 2023.

 

		Three Months Ended June 30,								Six Months Ended June 30,
		2024				2023				2024				2023
Numerator:
Numerator for basic and diluted income (loss) per share, net income (loss) available to common shareholders		$	75,492			$	205,041			$	(174,696	)		$	219,874
Denominator:
Denominator for basic income (loss) per share, weighted average shares outstanding			26,534,407				26,413,329				26,454,848				26,410,340
Effect of dilutive securities			—				—				—				—
Denominator for diluted earnings per share, adjusted for weighted average shares and assumed conversion			26,534,407				26,413,329				26,454,848				26,410,340
Basic income (loss) per common share		$	0.00			$	0.01			$	(0.01	)		$	0.01
Diluted income (loss) per common share and common share equivalent		$	0.00			$	0.01			$	(0.01	)		$	0.01

 

The awards and options to purchase shares of common stock that were outstanding at June 30, 2024 and June 30, 2023 that were not included in the computation of diluted earnings per share because the effect would have been anti-dilutive, are as follows:

 

		Six Months Ended June 30,
		2024				2023
Anti-dilutive awards and options			945,599				945,599

 

Note 7. Income Taxes

 

Deferred tax assets and liabilities are recorded based on the difference between financial reporting and tax basis of assets and liabilities and are measured by the enacted tax rates and laws that are expected to be in effect when the differences are expected to reverse. Deferred tax assets are computed with the presumption that they will be realizable in future periods when taxable income is generated. Predicting the ability to realize these assets in future periods requires judgment by management. GAAP prescribes a recognition threshold and measurement attribute for a tax position taken or expected to be taken in a tax return. Income tax benefits that meet the “more likely than not” recognition threshold are recognized.

 

The Company has recognized a deferred tax asset of approximately $1.5 million recorded net of a valuation allowance of approximately $6.1 million. The Company reviews the assessment of the deferred tax asset and valuation allowance on an annual basis or more often when events indicate that a change to the valuation allowance may be warranted.

 

At  December 31, 2023, the Company had available net operating loss carryforwards of approximately $23.3 million. Net operating loss carryforwards generated during or prior to 2017 are available to offset taxable income of future periods and expire 20 years after the loss was generated. Net operating loss carryforwards generated after 2017 do not expire.

 

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

 

Tax Year End		NOL				Expiration
2005		$	1,768,851				2025
2006			1,350,961				2026
2007			1,740,724				2027
2008			918,960				2028
2009			835,322				2029
2010			429,827				2030
2013			504,862				2033
2016			474,465				2036
2017			1,267,336				2037
Total		$	9,291,308

 

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

 

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Note 8. Related Party Transactions

 

Louis Hoch

 

During the six months ended June 30, 2024 and  June 30, 2023, the Company purchased a total of $4,402 and $18,148, respectively, of corporate imprinted sportswear, promotional items, and caps from Angry Pug Sportswear. Louis Hoch, the Company’s Chairman of the Board, President, Chief Executive Officer and Chief Operating Officer, is a 50% owner of Angry Pug Sportswear.

 

Directors and Officers

 

 

On  June 21, 2024, the Company granted 966,000 shares of restricted common stock with a 10-year vesting period and 277,200 restricted stock units ("RSUs") with a 3-year vesting period to employees and Directors as a performance bonus at an issue price of $1.55 per share. RSUs vest in equal tranches over their 3-year vesting period, while 10-year grants are cliff vesting, and vest in full at the conclusion of their 10-year vesting period. Upon vesting, employees and Directors will receive issued shares. Executive officers and Directors included in the 10-year restricted stock grant were Louis Hoch (160,000 shares), Michael White (120,000 shares), Greg Carter (80,000 shares), and Houston Frost (40,000 shares). Executive officers included in the RSU grant were Louis Hoch (21,000 RSUs), Michael White (18,000 RSUs), Greg Carter (18,000 RSUs),and Houston Frost (12,000 RSUs).

 

On June 21, 2024, the Company granted 84,000 RSUs with a 3-year vesting period to Non-employee Directors as a performance bonus at an issue price of $1.55 per share. Directors included in the RSU grant were Blaise Bender (21,000 RSUs), Brad Rollins (21,000 RSUs), Ernesto Beyer (21,000 RSUs) and Michelle Miller (21,000 RSUs).

 

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

 

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

 

On  November 30, 2023, Tom Jewell, the Senior Vice President, Chief Financial Officer, and principal financial and accounting officer of the Company, notified the Company of his intention to retire. On  December 11, 2023, Mr. Jewell entered into a Separation and Mutual Release of Claims Agreement (“Separation Agreement”) with the Company. Pursuant to the Separation Agreement, Mr. Jewell will be paid installment payments equal to his current base salary until and including  April 18, 2024. Additionally, Mr. Jewell will be permitted to retain any unvested Company stock options or other equity awards, which shall vest in accordance with the applicable schedules. Mr. Jewell will also receive all employee benefits including, but not limited to, health, dental, vision and life insurances that he was receiving prior to his execution of the Agreement until  April 18, 2024.

 

On  November 18, 2023, we repurchased 2,619 shares of our common stock for $4,452 in a private transaction based on the $1.70 per share closing price on  November 18, 2023 from Tom Jewell, the Company's former Chief Financial Officer, to cover his share of taxes in connection with equity grants.

 

On  November 18, 2023, we repurchased 3,927 shares of our common stock for $6,675 in a private transaction based on the $1.70 per share closing price on  November 18, 2023 from Louis Hoch, the Company's Chairman, President, Chief Executive Officer and Chief Operating Officer, to cover his share of taxes in connection with equity grants.

 

Effective on February 17, 2023, the Company entered into an employment agreement with Greg Carter, the Company’s Executive Vice President, Payment Acceptance. Under the terms of this agreement, Mr. Carter will receive an annual salary of $250,000, Override/Commissions of 10% of the actual cash commissions paid to salespersons under direct management of Mr. Carter, to be paid quarterly, and the payment of a one-time signing bonus of $40,000. 

 

On  February 8, 2023, the Company granted 1,403,000 shares of restricted common stock with a 10-year vesting period and 273,000 RSUs with a 3-year vesting period to employees and Directors as a performance bonus at an issue price of $1.75 per share. RSUs vest in equal tranches over their 3-year vesting period, while 10-year grants are cliff vesting, and vest in full at the conclusion of their 10-year vesting period. Upon vesting, employees and Directors will receive issued shares. Executive officers and Directors included in the 10-year restricted stock grant were Louis Hoch (330,000 shares), Tom Jewell (200,000 shares), Greg Carter (100,000 shares) and Houston Frost (100,000 shares). Executive officers included in the RSU grant were Louis Hoch (33,000 RSUs), Tom Jewell (21,000 RSUs), Greg Carter (12,000 RSUs) and Houston Frost (12,000 RSUs).

 

On  March 16, 2023, the Company granted 69,000 RSUs with a 3-year vesting period to Non-employee Directors as a performance bonus at an issue price of $1.60 per share. Directors included in the RSU grant were Blaise Bender (21,000 RSUs), Brad Rollins (21,000 RSUs), Ernesto Beyer (21,000 RSUs) and Michelle Miller (6,000 RSUs).

 

Note 9. Commitments and Contingencies

 

Legal Proceedings.

 

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

 

In 2017, Usio acquired Singular Payments, Inc. (“Singular”), another payment processing company with offices in Nashville, Tennessee and St. Augustine, Florida.

 

Ben Kauder and Nina Pioletti were executives of Singular and, after the acquisition, Usio hired them as executive-level employees. Usio hired Kauder to serve as Senior Vice President of Integrated Payments, and Pioletti was hired to serve as Director of Sales. As a condition of employment, Kauder and Pioletti agreed to be bound by certain Usio policies, including as related to preserving the confidentiality of Usio’s proprietary information. As Usio executives, Kauder and Pioletti were afforded access to and contributed to the development of Usio’s trade secrets and other proprietary information not generally known by the public at large, including but not limited to financial information, marketing plans, cost and operational/strategic plans, and sales presentations.

 

In  May 2021, Kauder resigned from Usio followed by Pioletti in  July of 2022. Thereafter, Kauder and Pioletti formed Triple Pay Play, another payment processing company which competes with the same services as Usio. Upon information and belief, Kauder and Pioletti were working to form Triple Pay Play while employed by Usio, during Usio business hours, and while using Usio resources and Usio property.

 

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

 

On  July 6, 2023, Kauder, Pioletti and Triple Pay Play filed a Motion to Dismiss for Lack of Jurisdiction. The motion was granted. Subsequently, in  February of 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. The Judge did not make a ruling and is currently reviewing all materials filed in regards to this matter.

 

Greenwich Business Capital, LLC

 

On or about  September 25, 2019, Usio and Greenwich Business Capital LLC (“GBC”), entered into an Agreement for payment processing services (the “Agreement”). Pursuant to the terms of the Agreement, Usio effectively terminated the Agreement with GBC on  October 31, 2023, by providing Greenwich with a 30-days written notice as required by the Agreement.

 

On  November 13, 2023, GBC filed lawsuit against Usio, alleging violations of the National Automated Clearing House Association (NACHA) rules in the State of Rhode Island Kent Superior Court. In early  March of 2024, Usio filed a Motion to Dismiss for improper venue and failure to state a claim. 

 

On May 20, 2024, Usio’s Motion to Dismiss was heard in the State of Rhode Island Kent Superior Court. The Judge did not make a ruling and is currently reviewing all materials filed in regards to this matter.

 

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. The lawsuit alleges that due to a mistake, accident, or inadvertence, certain customer deposits in the amount of $317,000 were improperly transferred to us.

 

 

On  September 28, 2021, we filed an answer generally denying the plaintiff’s allegations. On  October 5, 2021, we filed a counterclaim and third-party petition. Therein, we allege that neither KDHM nor its principals disclosed that KDHM was not accounting for the customer deposits in accordance with GAAP. KDHM and third-party defendants, its principals Henry Minten and Thomas Dowe, affirmatively represented and warranted in section 3.1(e) of the asset purchase agreement that “[t]he Annual Financial Statements and the Interim Financial Statements have been prepared from the books and records of Seller in accordance with GAAP applied on a consistent basis.” 

 

We also discovered that KDHM by and through its principals failed to disclose that $305,000 in additional customer deposits existed and that these deposits were not conveyed to us as required by the asset purchase agreement. KDHM, Minten and Dowe provided us with fraudulent and misleading financial statements that did not disclose these additional customer deposits. KDHM and the defendants do not dispute that these additional customer deposits existed and that they were purchased by Usio. However, despite a written representation that these funds would be returned, KDHM and its principals have held these funds hostage. Section 2.1(b)(x) of the asset purchase agreement provides that the purchased assets include “All of Seller’s deposits from its customer, including without limitation, those customer deposits listed on Schedule 2.1(b)(xi) of the Disclosure Schedules.” Finally, we discovered that KDHM did not provide us with all customer lists, which are identified as purchased assets under the agreement.

 

In our counterclaims and third-party petition, we have asserted causes of action for fraud, breach of contract and conversion. 

 

On  August 18, 2023, the judge granted a summary motion entitling KDHM to deposits for customer accounts that were printed and mailed prior to the acquisition, and Usio Output Solutions, Inc. was entitled to deposits for accounts that were not yet printed and printed but not yet mailed prior to the acquisition. Usio has requested a reconsideration of the motion, as it does not consider that deposits are only owed to KDHM if they were earned and offset against accounts receivable.

 

On  March 4, 2024, the court held a hearing on KDHM’s Supplemental Rule 166(G) Motion and the court granted the motion in favor of KDHM. However, Usio believes the court erred in granting the motion and filed a motion for reconsideration on  March 19, 2024.

 

On March 28, 2024, the court heard Usio’s Motion for Reconsideration of Order Granting Plaintiff’s Supplemental Rule 166(g). On May 2, 2024, the court denied Usio’s motion. On July 12, 2024, we filed an appeal on the lower court's decision, which is pending review.

 

We believe that plaintiff's claims contradict the express terms of the asset purchase agreement, and we intend to vigorously defend this matter. As a result of this post-sale dispute, we subsequently discovered that KDHM, LLC and its principals made certain misrepresentations and breached the terms of the asset purchase agreement. 

 

Other proceedings

 

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

 

9

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Table of Contents

  

Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

 

FORWARD-LOOKING STATEMENTS DISCLAIMER

 

This Quarterly Report on Form 10-Q (this "quarterly report" or this "report") contains forward-looking statements that involve risks and uncertainties. If used in this report, the words "will," "anticipate," "believe," "estimate," "intend," and other words or phrases of similar import are intended to identify forward-looking statements. You should not place undue reliance on these forward-looking statements. Our actual results could differ materially from those anticipated in the forward-looking statements for many reasons, including the risks described in the 2023 Annual Report and other reports we file with the Commission. Although we believe the expectations reflected in the forward-looking statements are reasonable, they relate only to events as of the date on which the statements are made. We do not intend to update any of the forward-looking statements after the date of this report to conform these statements to actual results or to changes in our expectations, except as required by law.

 

This discussion and analysis should be read in conjunction with the unaudited interim condensed consolidated financial statements and the notes thereto included in this report, and the 2023 Annual Report, including the audited consolidated financial statements and the notes contained therein.

 

Overview

 

As a cloud-based, Fintech payment processor, we serve multiple industry verticals with technology that facilitates payment acceptance and funds disbursement in a single, full-stack ecosystem. We provide payment acceptance through multiple payment methods including: payment facilitation, prepaid card and electronic billing products and services to businesses, merchants and consumers. We seek to grow our business both organically through the continued development and enhancement of our products and services and through acquisitions of new products and services. We will continue to look for opportunities (both internally and externally) to enhance our offerings to meet customer demands as they arise.

 

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. 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. These supplementary product options offer customers access to faster and more convenient payment options and tools to improve operating efficiencies. 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.

 

Through our innovative Prepaid Debit Card platform, we offer a variety of prepaid card products such as reloadable, incentive, promotional and corporate card programs. Combined with our printing and mailing services, through the acquisition of IMS in December of 2020, we can satisfy the diverse requirements of customer needs with physical and virtual document creation and distribution, including traditional paper checks. Our Consumer Choice product developed and debuted in 2022 that provides flexible ways to initiate a variety of payment distributions through a multitude of payment methods including physical prepaid and virtual cards, ACH, paper checks, real-time PINless debit and others. This offering allows us a superior opportunity to increase our cross-selling efforts through all of our payment methods. 

 

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. 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 is further expanded, allowing us to seamlessly grow as the market demands.

 

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. The ACH network is a nationwide electronic funds transfer system that is regulated by the Federal Reserve and the National Automatic Clearing House Association, or NACHA, the electronic payments association, and provides for the clearing of electronic payments between participating financial institutions. Our ACH processing services enable merchants or businesses to both disburse and collect funds electronically using e-checks instead of traditional paper checks. An e-check is an electronic debit to a bank checking account that is initiated at the point-of-sale, on the Internet, over the telephone, or via a bill payment sent through the mail via a physical check. E-checks are processed using the ACH network. We are one of nine companies that hold the prestigious NACHA certification for Third-Party Senders and were the second company to receive the certification and are the most tenured to hold the certification.

 

Our payment acceptance services are delivered in a variety of forms and situations. For example, our capabilities allow merchants to convert a paper check to an e-check or receive card authorization at the point-of-sale, allow our merchants’ respective customer service representatives to take e-check or card payments from their consumers by telephone, and enable their consumers to make e-check or card payments directly through the use of a website or by calling an interactive voice response telephone system.

 

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 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. Following the completion of the Singular Payments acquisition in 2017, we launched our payment facilitation, or PayFac, platform called "PayFac-in-a-Box" in late 2018 targeting partnership opportunities with app and software developers in bill-centric verticals, such as legal, healthcare, property management, utilities and insurance. The PayFac-in-a-Box platform 'integration layer' offers a simple integration experience for technology companies who are looking to monetize payments within an existing base of downstream clients. The added value of offering our integration partners access to real-time merchant enrollment, credit card, debit card, ACH and prepaid card issuance capabilities through a single vendor partner relationship in face-to-face, mobile and virtual payment acceptance environments provides a true single channel commerce experience through an application programming interface, or API.

 

Prepaid and Incentive Card Services. Through our December 2014 acquisition of the assets of Akimbo Financial, Inc., we added a highly talented technical staff of industry subject matter experts and an innovative cardholder service platform including cardholder web and mobile applications and launched what is now our UsioCard business. As a result of this acquisition, through our subsidiary, FiCentive, Inc., we offer customizable prepaid cards which companies use for expense management, incentives, refunds, claims and disbursements, as well as unique forms of compensation such as per diem payments, government disbursements, and similar payments. This comprehensive money disbursement platform allows businesses to pay their contractors, employees, or other recipients by choosing among a prepaid debit Mastercard, real-time deposit to a checking account, traditional ACH, direct deposit or paper check. These cardholder web and mobile applications have been fully integrated into FiCentive’s prepaid card core processor, and now support all program types and brands offered by FiCentive and its clients.

 

As part of our Prepaid card-based processing services, we develop and manage a variety of Mastercard-branded prepaid card program types, including consumer reloadable, consumer gift, incentive, promotional, general and government disbursement and corporate expense cards. We also offer prepaid cards to consumers for use as a tool to stay on budget, manage allowances and share money with family and friends. Our UsioCard platform supports Apple Pay®, Samsung Pay™ and Google Pay™.

 

In our over 20+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.

 

Electronic Billing. On December 15, 2020, we entered into the 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 through the acquisition of IMS. 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 acquisition increased our ability to grow new revenue streams and allowed us to reenter the electronic bill presentment and payment revenue stream. The success of this new 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.

 

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 selling, general, and administrative 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. 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, growing our electronic bill presentment, document composition, document decomposition, printing and mailing services business while providing incremental services to existing merchants. In addition to our near-term growth opportunities, we are focused on leveraging and optimizing the infrastructure of our business allowing expansion of our payment processing and mail and printing capabilities without significantly increasing our operating costs. 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. This growth assists us in maintaining our diversified offerings, and remain relevant by developing payment platforms that address the current needs of our marketplace. In the second quarter of 2024, our revenues decreased 6% to $20.1 million, as compared to $21.4 million for the quarter ended June 30, 2023 due primarily to lower breakage revenues from our prepaid card line of business as the COVID incentive programs continue to wind down. These programs represented significant revenues in 2023, and were expected to decline in 2024 as they were wound down. Our processing volume and transactional metrics for prepaid, and the entire company, are growing, which we believe are strong indicators of future performance and revenue improvements. For more information, see "-Results of Operations - Revenues" below.

 

Managing Other Selling, General and Administrative Expenses. By appropriately managing our expenses (which are discussed under "Other Selling, General and Administrative Expenses" below), we believe we can achieve better economies of scale, and drive revenue growth. Carefully evaluating our existing SG&A expenses, and balancing them against the need for client implementation, support, and our technology staff to drive product innovation, will guide our operational strategies while maintaining a focus on efficiencies and profitability. Other SG&A expenses in the quarter increased nominally by $0.1 million, to $4.0 million as compared to $3.9 million in the prior year quarter. Similarly, for the six months ended June 30, 2024, SG&A expenses were up $0.3 million, reflecting the occurrence of some one-time expenses related to marketing initiatives and increased travel to sales-related events during the first quarter of 2024, alongside increases in salary and employee benefit expenses. We believe these operating expenses will be nominally higher versus the prior year to support the anticipated acceleration in revenue growth. For more information, see "-Results of Operations - Other Selling, General and Administrative Expenses" below.

 

Adding Quality Customers and Meeting Their Evolving Requirements. The addition of new, and quality customers, represents one of our largest opportunities to grow revenues, and stay relevant in the marketplace. We believe a large and quality client base allows us to stay in touch with the broader needs of the changing payment landscape, while providing a reliable book of business to help fund current and future operations. Our focus on addressing customer needs has allowed us to maintain a consistent presence and build a strong reputation in niche markets such as the lending, legal, government, and healthcare fields amongst others. 

 

Adapt to Technological Changes. We maintain a committed focus on the ever changing technological landscape within the payments ecosystem. We believe by regularly attending payments focused conferences, webinars, and training sessions, alongside our consistent communication with customers and clients, enables us to be informed of the most current, and future, applications and evolutions of financial technologies. This allows us to implement new feature functionality to existing products, and introduce new payment methods. This has led to our evolution from being an EBPP provider at the Company's founding, to the diverse payment provider we are today, with offerings such as ACH processing, PINless debit, prepaid card issuance, and credit card processing, especially in the digital marketplace, to match the need for diversified payment options in an increasingly ecommerce driven world.

 

Assimilating Current and Future Acquisitions. Acquisitions have been a key element in our growth focused strategy, both to add net new customers, and enhance our suite of payment technologies. This is evident through our acquisition of Akimbo Financial, Inc., Singular Payments, and IMS, which allowed us to introduce new offerings such as prepaid card issuance, PayFac, and electronic bill presentment, all of which represent significant portions of our current revenues. The assimilation of those acquisitions were critical in both the retention of purchased assets, and their growth, through cross-selling, and implementation into our broader infrastructure that allows for increased diversity of offerings and support. We cannot assure you that we will be able to complete any acquisitions in the future.

 

 

In addition to the factors discussed above, we believe that processing volume and transaction counts are a vital measure which indicate our addition and implementation of net new customers, and growth from existing customers, which we believe correlate to both current and future revenues. The change in credit card processing volume, ACH transaction counts, and prepaid card purchase volume are the most direct metrics that drive revenues in their respective business lines, while prepaid card load volumes specifically, are an indicator of future revenue change within the prepaid card business line. While there are many components to the revenues of our business units that could impact revenue growth or decline, these processing metrics offer an indication to the current health of our overall company and success in our strategies to grow the business. During the second quarter of 2024, the number of credit card transactions processed by us increased by 19% versus the second quarter of 2023. The volume of credit card dollars processed during the second quarter of 2024 increased by 10% compared to the same time period in 2023. The continued growth in credit card metrics was primarily attributable to our PayFac strategy to drive increased penetration across multiple industries including healthcare and legal. 

 

ACH (eCheck) transaction counts during the second quarter of 2024 increased by 10% compared to the second quarter of 2023. Returned check transactions processed during the second quarter of 2024 increased by 13% compared to the second quarter of 2023. Electronic check dollars processed during the second quarter of 2024 increased by 36% compared to the second quarter of 2023. The increases in eCheck transactions, returns, and electronic check dollar volumes processed were primarily attributable to traction in our ACH sales efforts driving new merchant onboarding and processing.

 

Prepaid card load volumes processed during the second quarter of 2024 increased by 55% compared to the second quarter of 2023. Prepaid card transaction counts processed during the second quarter of 2024 increased by 58% compared to the second quarter of 2023. Prepaid card purchase volume during the second quarter of 2024 increased by 39% compared to the second quarter of 2023. This increase occurred primarily due to the continued traction with, and implementation of, corporate expense and healthcare markets, alongside guaranteed income and government assistance programs.

 

Total dollar volumes processed across all business lines in the second quarter of 2024 were $1.7 billion compared to $1.3 billion processed in the second quarter of 2023, up 29% over the prior year quarter, attributable to processing volume growth across all of our business lines.

 

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. On May 13, 2022, our Board of Directors authorized a renewal of the Company's stock buyback program (the "buyback program"), with a repurchase limit equal to $4 million of the Company's common stock and a three year duration. As of December 31, 2023, the Company had repurchased $0.5 million of stock as part of the buyback program. Should the Company continue the repurchase of its securities on the open market, and the IRA remains in effect, we may be subject to this tax in 2024 and future years. As of June 30, 2024 the Company had repurchased $149,769 of stock as part of the buyback program, which may become subject to the IRA's 1% excise tax if the Company meets or exceeds the IRA's 1% excise tax repurchase minimum of $1 million in stock buy backs.

 

The broader implications of the macroeconomic environment, including uncertainty around recent international conflicts including the Russia - Ukraine and Israel - Hamas conflicts, 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. 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.

 

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 has remained flat since then. This has resulted in the Company's receiving more favorable interest rates on its current cash balances, amounting to $1,435,398 in interest earnings in the six months ended June 30, 2024. Of this interest, $1,212,774 was recognized as revenue in the respective business lines for which the cash balances are held, and $222,624 as interest income. Should the Federal Reserve begin lowering the federal funds rate in the future, this incremental source of income would decline. 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. 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. Those programs have begun winding down, 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. 

 

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.

 

Critical Accounting Policies and Estimates

 

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 GAAP. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenue and expenses, and related disclosure of contingent assets and liabilities. On an ongoing basis, we evaluate our estimates, including those related to the reported amounts of revenues and expenses, credit losses, investments, intangible assets, income taxes, contingencies and litigation. We base our estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results could differ from these estimates under different assumptions or conditions. We consider these accounting policies to be critical because the nature of the estimates or assumptions is material due to the levels of subjectivity and judgment necessary to account for such highly uncertain matters or due to the susceptibility of such matters to change or because the impact of the estimates and assumptions on financial condition or operating performance is material.

 

For a summary of Critical Accounting Policies, please refer to the Notes to Interim Condensed Consolidated Financial Statements, Note 1, Basis of Presentation.

 

 

Reserve for Processing Losses

 

We establish allowances for negative customer balances and estimated transaction losses arising from processing customer transactions, such as chargebacks for unauthorized credit card use and merchant-related chargebacks due to non-delivery or unsatisfactory delivery of purchased items, account takeovers, ACH returns, and insolvency. Additions to the allowance are reflected in our cost of services on our consolidated statements of income (loss). The allowances are based on known facts and circumstances, internal factors including experience with similar cases, historical trends involving collection and write-off patterns, and the mix of transaction and loss types, as well as current and projected factors such as the types of transactions processed and nature of the merchant relationship with its consumers and the Company with its prepaid card holders.

 

Determining appropriate current expected transactional losses is an inherently uncertain process, and final losses may vary from our current estimates. We regularly review and update our allowance estimates as new facts become known and events occur that may impact the settlement or recovery of losses. In the quarter ended March 31, 2023, we incurred $833,485 in merchant processing losses as a result of fraudulent activity and identity fraud from multiple merchants, of which $755,494 was taken from our reserve for processing losses. Subsequent to the first quarter of 2023, we have not had, and do not expect to have in the immediate future, similar processing losses, although there can be no assurance that such losses will not occur. Our reserve for processing losses was $892,528 as of June 30, 2024, to be used if future losses are incurred. The allowances are maintained at a level we deem appropriate to adequately provide for current expected losses at the balance sheet date, and are recorded on the Company's balance sheet as an accrued expense.

 

Reserve for Expected Credit Losses

 

We establish an allowance for accounts receivable, which represents our estimate of current expected allowances for credit losses. This evaluation process is subject to numerous estimates and judgements. This allowance is primarily based on expectations of unrecoverable receivables based on historical losses, as well as forecasted trends in customer instability, and general market conditions. The Company reviews this allowance quarterly on an account-by-account basis. Projected loss rates, inclusive of historical loss data and macroeconomic factors, are applied to the principal amount of our merchant and consumer receivables.

 

Determining appropriate current expected credit losses on our accounts receivable is an inherently uncertain process, and final losses may vary from our current estimates. We regularly review and update our allowance estimates as new facts become known, and events occur that may impact the settlement or recovery of losses. The allowances are maintained at a level we deem appropriate to adequately provide for current expected credit losses at the balance sheet date.

 

Accounting for Income Taxes

 

Our annual tax rate is based on our income, statutory tax rates, and tax planning opportunities available to us. Tax laws are complex and subject to different interpretations by the taxpayer and respective government taxing authority. Significant judgement is required in determining our tax expense and in evaluating our tax positions, including evaluating uncertainties. We review our tax positions yearly and adjust the balances as new information becomes available. 

 

Deferred tax assets represent amounts available to reduce income taxes payable on taxable income in future years. Such assets arise because of temporary differences between the financial reporting and tax bases of assets and liabilities, as well as from net operating loss and tax credit carryforwards. We evaluate the recoverability of these future tax deductions and credits by assessing the adequacy of future expected taxable income from all sources, including reversal of taxable temporary differences, forecasted operating earnings, and available tax planning strategies. These rely heavily on estimates that are based on a number of factors, including historical data, and business forecasts. 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 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 upon examination by the taxing authorities.

 

As with all businesses, the Company’s tax returns are subject to periodic examination. The Company’s federal returns for the past four years remain open to examination. The Company is subject to the Texas franchise tax and Tennessee franchise tax. Management is not aware of any tax positions that would have a significant impact on its financial position.

 

Revenue Recognition

 

Application of the accounting principles in GAAP related to the measurement and recognition of revenue requires us to make judgments and estimates. Complex arrangements with nonstandard terms and conditions may require significant contract interpretation to determine the appropriate accounting. Specifically, the determination of whether we are a principal to a transaction (gross revenue) or an agent (net revenue) can require considerable judgment. Further, we provide incentive payments to consumers and merchants. Evaluating whether these incentives are a payment to a customer, or consideration payable on behalf of a customer, requires judgment by management. Incentives determined to be made to a customer, or payable on behalf of a customer, are recorded as a reduction to gross revenue. Changes in judgments with respect to these assumptions and estimates could impact the amount of revenue recognized.

 

CARES Act

 

On March 11, 2021, President Biden signed the American Rescue Plan Act (“ARPA”). The ARPA includes several provisions, such as measures that expand the employee retention credit, previously enacted under the CARES Act, and extending the applicable period through December 31, 2024. Measures not related to income-based taxes within the CARES Act include allowing eligible employers subject to closure due to the COVID-19 pandemic to receive a 50% credit on qualified wages against their employment taxes each quarter, with any excess credits eligible for refunds.

 

As there is no authoritative guidance under GAAP for accounting for grants to for-profit business entities, the Company accounts for the grant by analogy to Accounting Standards Codification 450-30 – Gain Contingencies (“ASC 450-30”). During the three months ended June 30, 2024, the Company recorded an employee retention credit of $0.3 million upon confirmation of eligibility for the employee retention credit. The employee retention credit is recorded in other income in the consolidated statement of operations.

 

Reclassifications

 

We have reclassified certain prior period amounts in the accompanying consolidated financial statements in order to be consistent with the current period presentation. These reclassifications had no effect on net income, total assets, total liabilities or equity.

 

 

Key Business Metrics - Non-GAAP Financial Measures

 

This report includes the following non-GAAP financial measures as defined in Regulation G adopted by the Commission: EBITDA, adjusted EBITDA, adjusted EBITDA margins and adjusted operating cash flows. The Company reports its financial results in compliance with GAAP, but believes that also discussing non-GAAP financial measures provides investors with financial measures the Company uses in the management of its business.

 

•	The Company defines EBITDA as operating income (loss), before interest, taxes, depreciation and amortization of intangibles.
•	The Company defines adjusted EBITDA as EBITDA, as defined above, plus non-cash stock option costs and certain non-recurring items, such as costs related to acquisitions.
•	The Company defines adjusted EBITDA margins as adjusted EBITDA, as defined above, divided by total revenues.
•	The Company defines adjusted operating cash flow as net cash provided (used) by operating activities, less changes in prepaid card load obligations, customer deposits, merchant reserves and net operating lease assets and obligations. Operating lease right-of-use assets, operating lease liabilities, prepaid card load obligations, customer deposits and merchant reserves are deducted from operating cash flow, as management believes that these metrics do not serve in providing a clear picture of the true operational cash used or provided in a given time period. These measures may not be comparable to similarly titled measures reported by other companies. Management uses EBITDA, adjusted EBITDA, adjusted EBITDA margins and adjusted operating cash flows as key indicators of the Company's operating performance and ability to fund acquisitions, capital expenditures and other investments and, in the absence of refinancing options, to repay debt obligations.

 

Management also believes that EBITDA, adjusted EBITDA, adjusted EBITDA margins and adjusted operating cash flows are helpful to investors in evaluating the Company's operating performance because non-cash costs and other items that management believes are not indicative of its results of operations are excluded. 

 

We reported adjusted EBITDA of $0.8 million for the quarter ended June 30, 2024, as compared to adjusted EBITDA of $1.3 million for the same period in the prior year. The decrease in adjusted EBITDA in the 2024 quarter was attributable to lower revenues as breakage from the COVID related incentive programs within our Prepaid card business wind down, alongside decreased profit margins, as a result of those high margin breakage revenues declining, versus the prior year period.

 

We reported adjusted EBITDA of $1.6 million for the six months ended June 30, 2024, as compared to adjusted EBITDA of $2.4 million for the six months ended June 30, 2023. The decrease in adjusted EBITDA was attributable to lower revenues as breakage from the COVID related incentive programs within our Prepaid card business wind down, versus the prior year period.

 

The following tables set forth reconciliations of Operating Income (Loss) to EBITDA; EBITDA to Adjusted EBITDA; and Revenues to Adjusted EBITDA margins for the three and six months ended June 30, 2024 and 2023.

 

		Three Months Ended June 30,								Six Months Ended June 30,
		2024				2023				2024				2023
Reconciliation from Operating income (Loss) to Adjusted EBITDA:
Operating income (Loss)		$	(208,941	)		$	230,694			$	(490,898	)		$	306,713
Depreciation and amortization			547,849				522,999				1,124,003				1,041,028
EBITDA			338,908				753,693				633,105				1,347,741
Non-cash stock-based compensation expense, net			460,061				577,869				959,334				1,082,443
Adjusted EBITDA		$	798,969			$	1,331,562			$	1,592,439			$	2,430,184
Calculation of Adjusted EBITDA margins:
Revenues		$	20,079,888			$	21,436,572			$	41,050,274			$	42,952,842
Adjusted EBITDA		$	798,969			$	1,331,562			$	1,592,439			$	2,430,184
Adjusted EBITDA margins			4.0	%			6.2	%			3.9	%			5.7	%

 

The following table is a reconciliation of net cash flow provided by (used in) operating activities to adjusted operating cash flows for the six months ended June 30, 2024 and 2023.

 

		June 30, 2024				June 30, 2023
Reconciliation from net cash (used in) operating activities to Non-GAAP Adjusted Operating Cash Flow:
Net cash provided by (used in) operating activities		$	(3,064,283	)		$	27,770,210
Operating cash flow adjustments:
Prepaid card load obligations			3,522,055				(26,227,715	)
Customer deposits			57,725				(9,070	)
Merchant reserves			458,256				(231,539	)
Operating lease right-of-use assets			(236,367	)			(114,956	)
Operating lease liabilities			246,945				134,979
Total adjustments to net cash provided by operating activities		$	4,048,614			$	(26,448,301	)
Adjusted operating cash flows provided		$	984,331			$	1,321,909

 

We reported cash provided by adjusted operating cash flows of $1.0 million for the six months ended June 30, 2024 (after adjusting for the impact of operating lease right-of-use assets, operating lease liabilities, prepaid card load obligations, customer deposits, and merchant reserves), as compared to $1.3 million provided in the six months ended June 30, 2023. Operating lease right-of-use assets, operating lease liabilities, prepaid card load obligations, customer deposits and merchant reserves are deducted from operating cash flow, as we believe that these metrics do not serve in providing a clear picture of the true operational cash used or provided in a given time period. These adjustments to net cash provided by (used in) operating activities do not include any recurring expense items which are included in the calculation of operating income (loss), and only include changes in our assets and liabilities accounts as stated in our consolidated balance sheet. The Company believes non-GAAP adjusted operating cash flow to be a more accurate indicator of cash contributions that can be used to sustain current and future business operations. The decrease in adjusted operating cash flows for the six months ended June 30, 2024 compared to the six months ended June 30, 2023 was primarily attributable to an increase the Company's net loss, due to lower revenues and profit margins, alongside nominal increases in selling, general and administrative expense ("SG&A").

 

 

Use of Non-GAAP Financial Measures

 

EBITDA, adjusted EBITDA, adjusted EBITDA margins and adjusted operating cash flows should be considered in addition to, not as a substitute for, or superior to, financial measures calculated in accordance with GAAP. They are not measurements of our financial performance under GAAP and should not be considered as alternatives to revenue, net income (loss), or cash provided by (used in) operating activities, as applicable, or any other performance measures derived in accordance with GAAP and may not be comparable to other similarly titled measures of other businesses. EBITDA, adjusted EBITDA, adjusted EBITDA margins and adjusted operating cash flows 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.

 

Results of Operations

 

Revenues

 

Our revenue is 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 and program management and processing of prepaid debit cards. In addition, through Output Solutions services we provide 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 also earn revenue from interest and fees earned on certain assets underlying the associated customer balances. Customer balances on which the Company earns interest revenue include balances from our ACH and complementary services, prepaid card services, and Output Solutions business lines.

 

		Three Months Ended June 30,
		2024				2023				$ Change				% Change
ACH and complementary services		$	3,894,330			$	4,079,157			$	(184,827	)			(5	)%
Credit card			7,261,268				7,115,884				145,384				2	%
Prepaid card services			3,673,418				5,217,468				(1,544,050	)			(30	)%
Output Solutions			4,686,869				4,849,197				(162,328	)			(3	)%
Interest - ACH and complementary services			190,233				40,361				149,872				371	%
Interest - Prepaid card services			334,624				125,058				209,566				168	%
Interest - Output Solutions			39,146				9,447				29,699				314	%
Total Revenue		$	20,079,888			$	21,436,572			$	(1,356,684	)			(6	)%

 

		Six Months Ended June 30,
		2024				2023				$ Change				% Change
ACH and complementary services		$	7,776,064			$	7,419,879			$	356,185				5	%
Credit card			14,822,002				14,455,782				366,220				3	%
Prepaid card services			7,014,642				10,024,872				(3,010,230	)			(30	)%
Output Solutions			10,224,792				10,807,417				(582,625	)			(5	)%
Interest - ACH and complementary services			401,873				43,306				358,567				828	%
Interest - Prepaid card services			737,365				186,018				551,347				296	%
Interest - Output Solutions			73,536				15,568				57,968				372	%
Total Revenue		$	41,050,274			$	42,952,842			$	(1,902,568	)			(4	)%

 

Consolidated revenue for the quarter ended June 30, 2024 decreased by 6% to $20.1 million, as compared to $21.4 million for the quarter ended June 30, 2023 due primarily to lower breakage revenues from our prepaid card line of business as COVID incentive programs continue to wind down. The ACH and complementary services, and Output Solutions lines of business were also down 5% and 3%, respectively, as a result of slightly reduced recurring customer billing in the quarter. There was modest growth in our credit card line of business, as the growth related to our Payfac strategy continues to be implemented outpacing the attrition in our legacy credit card line of business. Interest revenues on underlying customer assets recognized in the quarter ended June 30, 2024 were $0.6 million compared to interest revenues of $0.2 million in the quarter ended June 30, 2023 primarily due to higher interest rates.

 

Consolidated revenue for the six months ended June 30, 2024 decreased by 4% to $41.1 million, as compared to $43.0 million for the six months ended June 30, 2023 due primarily to lower breakage revenues from our prepaid card line of business as COVID incentive programs continue to wind down. The Output Solutions line of business was also down 5%, as a result of challenging comparables to the prior year period which included higher levels of one time revenues related to printing government tax forms and voter cards. There was growth in our ACH and credit card lines of business, as the growth related to our Payfac strategy continues to be implemented, outpacing the attrition in our legacy credit card books of business, and ACH now compares more favorably to fiscal quarters following our exit from the crypto space in July of 2022, resulting in a return of positive quarterly growth metrics reflecting our efforts to add net new customers and processing volumes. Interest revenues recognized in the six months ended June 30, 2024 were $1.2 million compared to interest revenues of $0.2 million in the six months ended June 30, 2023 primarily due to higher interest rates.

 

Cost of Services

 

Cost of services includes the cost of personnel dedicated to the creation and maintenance of connections to third-party payment processors and the fees paid to such third-party providers for electronic payment processing services. Through our contractual relationships with our payment processors and sponsoring banks, we process ACH and debit, credit and prepaid card transactions on behalf of our customers and their consumers. 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 service fees also include fees paid to referral agents and partners.

 

Cost of services decreased by $1.0 million, or 6%, to $15.3 million for the quarter ended June 30, 2024, as compared to $16.3 million for the same period in the prior year, due to lower revenues driving similar declines in our processing, banking and transactional expenses. 

 

Cost of services decreased by $1.4 million, or 4%, to $31.4 million for the six months ended June 30, 2024, as compared to $32.8 million for the same period in the prior year, due to lower revenues driving similar declines in our processing, banking and transactional expenses. 

 

 

Gross Profit

 

Gross profit is the net profit existing after the cost of services.

 

Gross profit decreased by 7% to $4.8 million for the quarter ended June 30, 2024, as compared to $5.2 million for the same period in the prior year. Similarly, gross margin percentage of revenue was 23.9% for the quarter ended June 30, 2024 as compared to 24.2% in the prior year period. The decrease in gross profit, and gross margin percentage in the quarter ended June 30, 2024, as compared to the same period during the prior year was primarily attributable to lower revenues and profitability from our Output solutions line of business.

 

Gross profit decreased by 5% to $9.7 million for the six months ended June 30, 2024, as compared to $10.2 million for the same period in the prior year. Similarly, gross margin percentage of revenue was 23.5% for the six months ended June 30, 2024 as compared to 23.6% in the prior year period. The decrease in gross profit and gross margin percentage in the six months ended June 30, 2024, as compared to the same period during the prior year, was primarily attributable to lower revenues and gross profit from our Output solutions line of business, alongside reduced margins from our Prepaid card services business line in the first quarter of 2024 prior to improvement in the second quarter of 2024. 

 

Stock-based Compensation

 

Stock-based compensation expenses were $0.5 million for the quarter ended June 30, 2024 as compared to $0.6 million for the quarter ended June 30, 2023, nominally lower versus the prior year period due to the completed amortization of previously issued stock based compensation.

 

Stock-based compensation expenses were $1.0 million for the six months ended June 30, 2024 as compared to $1.1 million for the six months ended June 30, 2023, nominally lower versus the prior year period due to the completed amortization of previously issued stock based compensation.

 

Other Selling, General and Administrative Expenses

 

Other SG&A expenses were $4.0 million for the quarter ended June 30, 2024 as compared to $3.9 million in the prior year quarter. The modest increase in other SG&A for the quarter ended June 30, 2024 reflects moderate increases due to salary and employee benefit increases.

 

Other SG&A expenses were $8.1 million for the six months ended June 30, 2024 as compared to $7.7 million in the prior year quarter. The increase in other SG&A expenses for the six months ended June 30, 2024 reflects the occurrence of some one-time expenses related to marketing initiatives, and increased travel to sales-related events during the first quarter of 2024, alongside moderate increases in salary and employee benefit expenses.

 

Depreciation and Amortization 

 

Depreciation and amortization expense consists of the reduction in value of our tangible and intangible assets over their useful life. These assets include property, plant, and equipment, along with intangible assets acquired through acquisition, or developed as internal use software.

 

Depreciation and amortization expense totaled $0.5 million and $0.5 million for the quarters ended June 30, 2024 and 2023, respectively. Depreciation and amortization expense was effectively flat versus the same period a year ago as the amortization of net new intangible assets and completed amortization of prior intangible assets were essentially equal, resulting in effectively no change from the current to prior year period.

 

Depreciation and amortization expense totaled $1.1 million and $1.0 million for the six months ended June 30, 2024 and 2023, respectively. The increase in depreciation and amortization expense was due to the amortization of intangible assets, specifically related to capitalized labor for our internal use software, increasing overall depreciation and amortization expense versus the same period a year ago, countered in part by the completed amortization of intangible assets. 

 

Other Income

 

Other income, net was $0.4 million for the quarter ended June 30, 2024 compared to $0.0 million for the quarter ended June 30, 2023. This increase was the result of an increase in interest-bearing assets and higher interest rates which drove the increased interest income alongside the receipt of an employee retention tax credit issued under the CARES Act, and extended by the ARPA, receivable in the quarter ended June 30, 2024.

 

Other income, net was $0.5 million for the six months ended June 30, 2024 compared to $0.1 million for the six months ended June 30, 2023. This increase was the result of an increase in interest-bearing assets and higher interest rates which drove the increased interest income alongside the receipt of an employee retention tax credit issued under the CARES Act, and extended by the ARPA, and receivable in the quarter ended June 30, 2024.

 

Net Income (Loss)

 

We reported a net income of $0.1 million for the quarter ended June 30, 2024, as compared to net income of $0.2 million for the same period in the prior year. The decrease in net income was attributable to a decrease in revenue combined with slightly increased SG&A.

 

We reported a net loss of $0.2 million for the six months ended June 30, 2024, as compared to net income of $0.2 million for the same period in the prior year. The decrease in net income was attributable to a decrease in revenue combined with decreased profit margins, and slightly increased SG&A.

 

We may incur future operating losses. To maintain, grow and achieve profitability, we must, among other things, continue to incrementally grow and maintain our customer base, sell our ACH, credit card, prepaid product and Output Solutions offerings to existing and new customers, implement successful marketing strategies, maintain and upgrade our technology and transaction-processing systems, provide superior customer service, respond to competitive developments, attract, retain and motivate personnel, and respond to unforeseen industry developments among other factors.

 

Liquidity and Capital Resources

 

Our primary sources of liquidity are available cash and cash equivalents and cash flows provided by operations. As of June 30, 2024, we had cash and cash equivalents of $7.5 million. For the six months ended June 30, 2024, cash used in operations was $3.1 million. We expect available cash and cash equivalents and internally generated funds to be sufficient to support working capital needs, capital expenditures (including acquisitions), and our debt service obligations. We believe we have sufficient liquidity to operate for at least the next 12 months from the date of filing this report. Cash from operating activities is dependent on our net income (loss), less depreciation, amortization, credit losses, deferred federal income tax, non-cash stock-based compensation, the amortization of warrant costs, and net of the changes in our operating assets and liabilities. These assets and liabilities include our accounts receivable, prepaid expenses, operating lease right-of-use assets, inventory, other assets, accounts payable and accrued expenses, operating lease liabilities, prepaid card load obligations, merchant reserves, customer deposits, and deferred revenues.

 

We reported a net income of $0.1 million for the quarter ended June 30, 2024. At June 30, 2024, we had an accumulated deficit of $71.5 million. Additionally, we had working capital of $9.4 million and $8.0 million at June 30, 2024 and December 31, 2023, respectively.

 

From time to time we have sold shares of our common stock in order to provide liquidity. For example, on November 19, 2021, Voyager Digital purchased 142,857 unregistered shares of common stock at a price of $7.00 per share in a private offering. The gross proceeds from the private offering were $1,000,000. On May 9, 2023, Voyager Digital returned 142,857 shares of common stock, valued at a price of $1.09 per share, in a non-cash transaction to satisfy payment obligations related to the wind down of their payment disbursement needs following their bankruptcy. This transaction was recognized as revenue for services rendered and as shares returned to treasury stock in the quarter ended June 30, 2023. 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 we will be able to sell shares of our equity securities on terms acceptable to us or at all in the future.

 

 

Cash Flows

 

Net cash used in operating activities, including merchant reserve funds, prepaid card load assets, customer deposits and net operating lease assets for the six months ended June 30, 2024 was $3.1 million, as compared to net cash provided by operating activities of $27.8 million for the six months ended June 30, 2023. The increase in cash used in operating activities was due to the larger decrease in prepaid card load obligations versus the same period last year, alongside lower accounts payable and accrued expenses. Excluding merchant reserves, prepaid card load assets, customer deposits and lease right of use assets and liabilities, our cash provided by operating activities was $1.0 million for the six months ended June 30, 2024 as compared to cash used in operating activities of $1.3 million for the six months ended June 30, 2023. The Company believes the non-GAAP measure adjusted operating cash flow is a more accurate indicator of cash contributions that can be used to sustain current and future business operations. Operating lease right-of-use assets, operating lease liabilities, prepaid card load obligations, customer deposits and merchant reserves are deducted from operating cash flow, as management believes that these metrics do not serve in providing a clear picture of the true operational cash used or provided in a given time period. For more information relating to this Non-GAAP financial measure, including a reconciliation from net cash provided by (used in) operating activities to Non-GAAP adjusted Operating Cash Flow (used), please see "Key Business Metrics - Non-GAAP Financial Measures" in this report. Operating cash flow for the six months ended June 30, 2024 was approximately $1.0 million, a decrease of approximately $0.3 million from the six months ended June 30, 2023. This decrease was primarily attributable to an increase in the Company's net loss, due to lower revenues and profit margins, alongside nominal increases in SG&A, and the decrease in our accrued expenses. We continue to invest resources in the infrastructure of our business such as the retention, and acquisition of employees, sales-related travel, and marketing efforts to achieve scale across all business lines.

 

Net cash used in investing activities was $0.5 million for the six months ended June 30, 2024 as compared to cash used in investing activities of $0.4 million for the six months ended June 30, 2023. The primary drivers of our investing activities were capital expenditures associated with capitalized software development costs and other capital investments associated with growing our business lines and associated employee counts. The increase in cash used in investing activities was primarily attributable to the increased amount of fixed asset purchases relative to the same period a year ago.

 

Net cash used in financing activities for the six months ended June 30, 2024 was $0.2 million and net cash used in financing activities for the six months ended June 30, 2023 was $0.05 million. The increase in cash used in financing activities was primarily attributable to the increased quantity of stock re-purchases relative to the same period a year ago.

 

Off-Balance Sheet Arrangements

 

We currently 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.

 

Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

 

As a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934, as amended (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.

 

Item 4. CONTROLS AND PROCEDURES.

 

Evaluation of Disclosure Controls and Procedures

 

Our management evaluated, with the participation of our Chief Executive and Chief Financial Officers, the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of the end of the period covered by this quarterly report on Form 10-Q. Based on that evaluation, our Chief Executive and Chief Financial Officers concluded that our disclosure controls and procedures as of June 30, 2024 were effective to ensure that information we are required to disclose in reports that we file or submit under the Exchange Act (i) is recorded, processed, summarized and reported within the time periods specified in Commission rules and forms and (ii) is accumulated and communicated to our management, including our Chief Executive and Chief Financial Officers, as appropriate, to allow timely decisions regarding required disclosure. Our disclosure controls and procedures are designed to provide reasonable assurance that such information is accumulated and communicated to our management. Our evaluation of disclosure controls and procedures included an evaluation of certain components of our internal control over financial reporting. Management’s assessment of the effectiveness of our internal control over financial reporting is expressed at the level of reasonable assurance, as a control system, no matter how well designed and operated, can provide only reasonable, but not absolute, assurance that the control system's objectives will be met.

 

Changes in Internal Control over Financial Reporting

 

There was no change in our internal control over financial reporting that occurred during the quarter ended June 30, 2024 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

 

 

PART II – OTHER INFORMATION

 

Item 1. Legal Proceedings.

 

 

BEN KAUDER, NINA PIOLETTI, & TRIPLE PAY PLAY, INC.

 

In 2017, Usio acquired Singular Payments, Inc. (“Singular”), another payment processing company with offices in Nashville, Tennessee and St. Augustine, Florida.

 

Ben Kauder and Nina Pioletti were executives of Singular and, after the acquisition, Usio hired them as executive-level employees. Usio hired Kauder to serve as Senior Vice President of Integrated Payments, and Pioletti was hired to serve as Director of Sales. As a condition of employment, Kauder and Pioletti agreed to be bound by certain Usio policies, including as related to preserving the confidentiality of Usio’s proprietary information. As Usio executives, Kauder and Pioletti were afforded access to and contributed to the development of Usio’s trade secrets and other proprietary information not generally known by the public at large, including but not limited to financial information, marketing plans, cost and operational/strategic plans, and sales presentations.

 

In May 2021, Kauder resigned from Usio followed by Pioletti in July of 2022. Thereafter, Kauder and Pioletti formed Triple Pay Play, another payment processing company which competes with the same services as Usio. Upon information and belief, Kauder and Pioletti were working to form Triple Pay Play while employed by Usio, during Usio business hours, and while using Usio resources and Usio property.

 

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

 

On July 6, 2023, Kauder, Pioletti and Triple Pay Play filed a Motion to Dismiss for Lack of Jurisdiction. The motion was granted. Subsequently, in February of 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. The Judge did not make a ruling and is currently reviewing all materials filed in regards to this matter.

 

GREENWICH BUSINESS CAPITAL, LLC

 

On or about September 25, 2019, Usio and Greenwich Business Capital LLC (“GBC”), entered into an Agreement for payment processing services (the “Agreement”). Pursuant to the terms of the Agreement, Usio effectively terminated the Agreement with GBC on October 31, 2023, by providing Greenwich with a 30-days written notice as required by the Agreement.

 

On November 13, 2023, GBC filed lawsuit against Usio, alleging violations of the National Automated Clearing House Association (NACHA) rules in the State of Rhode Island Kent Superior Court. In early March of 2024, Usio filed a Motion to Dismiss for improper venue and failure to state a claim. 

 

On May 20, 2024, Usio’s Motion to Dismiss was heard in the State of Rhode Island Kent Superior Court. The Judge did not make a ruling and is currently reviewing all materials filed in regards to this matter.

 

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. The lawsuit alleges that due to a mistake, accident, or inadvertence, certain customer deposits in the amount of $317,000 were improperly transferred to us.

 

On September 28, 2021, we filed an answer generally denying the plaintiff’s allegations. On October 5, 2021, we filed a counterclaim and third-party petition. Therein, we allege that neither KDHM nor its principals disclosed that KDHM was not accounting for the customer deposits in accordance with GAAP. KDHM and third-party defendants, its principals Henry Minten and Thomas Dowe, affirmatively represented and warranted in section 3.1(e) of the asset purchase agreement that “[t]he Annual Financial Statements and the Interim Financial Statements have been prepared from the books and records of Seller in accordance with GAAP applied on a consistent basis.” 

 

We also discovered that KDHM by and through its principals failed to disclose that $305,000 in additional customer deposits existed and that these deposits were not conveyed to us as required by the asset purchase agreement. KDHM, Minten and Dowe provided us with fraudulent and misleading financial statements that did not disclose these additional customer deposits. KDHM and the defendants do not dispute that these additional customer deposits existed and that they were purchased by Usio. However, despite a written representation that these funds would be returned, KDHM and its principals have held these funds hostage. Section 2.1(b)(x) of the asset purchase agreement provides that the purchased assets include “All of Seller’s deposits from its customer, including without limitation, those customer deposits listed on Schedule 2.1(b)(xi) of the Disclosure Schedules.” Finally, we discovered that KDHM did not provide us with all customer lists, which are identified as purchased assets under the agreement.

 

In our counterclaims and third-party petition, we have asserted causes of action for fraud, breach of contract and conversion. 

 

On August 18, 2023, the judge granted a summary motion entitling KDHM to deposits for customer accounts that were printed and mailed prior to the acquisition, and Usio Output Solutions, Inc. was entitled to deposits for accounts that were not yet printed and printed but not yet mailed prior to the acquisition. Usio has requested a reconsideration of the motion, as it does not consider that deposits are only owed to KDHM if they were earned and offset against accounts receivable.

 

On March 4, 2024, the court held a hearing on KDHM’s Supplemental Rule 166(G) Motion and the court granted the motion in favor of KDHM. However, Usio believes the court erred in granting the motion and filed a motion for reconsideration on March 19, 2024.

 

On March 28, 2024, the court heard Usio’s Motion for Reconsideration of Order Granting Plaintiff’s Supplemental Rule 166(g). On May 2, 2024, the court denied Usio’s motion. On July 12, 2024, we filed an appeal on the lower court's decision, which is pending review.

 

We believe that plaintiff's claims contradict the express terms of the asset purchase agreement, and we intend to vigorously defend this matter. As a result of this post-sale dispute, we subsequently discovered that KDHM, LLC and its principals made certain misrepresentations and breached the terms of the asset purchase agreement. 

 

 

OTHER PROCEEDINGS

 

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

 

Item 1A. RISK FACTORS.

 

There have been no material changes from risk factors previously disclosed in the 2023 Annual Report.

 

Item 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.

 

Recent Sales of Unregistered Securities

 

We did not issue unregistered securities during the quarter ended June 30, 2024.

 

Purchases of Equity Securities by the Issuer and Affiliated Purchasers

 

On November 2, 2016, we announced that our Board of Directors authorized the buyback program, pursuant to which the Company may repurchase up to $1 million in shares of our common stock from time to time in the open market, in block transactions, or in privately negotiated transactions. On January 9, 2018, our Board of Directors added an additional $2 million to the buyback program. The buyback 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 buyback program. On November 7, 2019, our Board of Directors approved the renewal of the buyback program. The Board approved a limit of $1,420,000, which was rolled over from the buyback program prior to renewal, with a three-year duration. On May 13, 2022, our Board of Directors authorized another renewal of the buyback program, with a limit equal to $4 million of the Company's common stock and a three year duration. The buyback program, as renewed most recently, terminates on the earliest of May 15, 2025, the date the funds are exhausted, or the date our Board of Directors, at its sole discretion, terminates or suspends the buyback program. The buyback program is used for the repurchase of stock from employees and directors, and for open-market purchases through a broker. During the three months ended June 30, 2024, we made the following stock repurchases:

 

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
April 1 - April 30, 2024			5,476			$	1.63				5,476			$	2,217,654
May 1 - May 31, 2024			6,415			$	1.61				6,415			$	2,207,353
June 1 - June 30, 2024			53,628			$	1.60				53,628			$	2,121,624
Total			65,519								65,519			$	2,121,624

 

Item 3. Defaults Upon Senior Securities.

 

None.

 

Item 4. MINE SAFETY DISCLOSURES.

 

Not applicable.

 

Item 5. OTHER INFORMATION.

 

None.

 

18

---

Table of Contents

 

Item 6. Exhibits.

 

Exhibit
Number		Description
3.1		Amended and Restated Articles of Incorporation (included as exhibit 3.1 to the Form 10-KSB filed March 31, 2006, and incorporated herein by reference).
3.2		Amendment to Restated Articles of Incorporation (included as exhibit A to the Schedule 14C filed April 18, 2007, and incorporated herein by reference).
3.3		Certificate of Change Filed Pursuant to NRS 78.209 (included as exhibit 3.1 to the Form 8-K filed July 23, 2015, and incorporated herein by reference).
3.4		Articles of Amendment of Restated Articles of Incorporation of Usio, Inc., as amended, effective June 26, 2019 (included as exhibit 3.1 to the Form 8-K filed July 1, 2019, and incorporated herein by reference).
3.5		Amended and Restated By-laws (included as exhibit 3.1 to the Form 8-K filed December 1, 2023, and incorporated herein by reference).
4.1		Description of Securities (included as exhibit 4.1 to the Form 10-K for the year ended December 31, 2023 filed on March 27, 2024)
10.1*		Employment Agreement between the Company and Louis A. Hoch, dated February 27, 2007 (included as exhibit 10.2 to the Form 8-K filed March 2, 2007, and incorporated herein by reference).
10.2*		First Amendment to Employment Agreement between the Company and Louis A. Hoch, dated November 12, 2009 (included as exhibit 10.16 to the Form 10-Q filed November 16, 2009, and incorporated herein by reference).
10.3*		Second Amendment to Employment Agreement between the Company and Louis A. Hoch, dated April 12, 2010 (included as exhibit 10.17 to the Form 10-K filed April 15, 2010, and incorporated herein by reference).
10.4		Bank Sponsorship Agreement between the Company and University National Bank, dated August 29, 2011 (included as exhibit 10.18 to the Form 10-K filed April 3, 2012, and incorporated herein by reference).
10.5*		Third Amendment to Employment Agreement between the Company and Louis A. Hoch, dated January 14, 2011 (included as exhibit 10.20 to the Form 10-K filed April 3, 2012, and incorporated herein by reference).
10.6*		Fourth Amendment to Employment Agreement between the Company and Louis A. Hoch, dated July 2, 2012 (included as exhibit 10.19 to the Form 10-Q filed August 20, 2012, and incorporated herein by reference).
10.7		Bank Sponsorship Agreement between the Company and Metropolitan Commercial Bank, dated December 11, 2014 (included as exhibit 10.26 to the Form 10-K filed March 30, 2015, and incorporated herein by reference).

 

 

10.8*		Fifth Amendment to Employment Agreement between the Company and Louis A. Hoch, dated August 3, 2016 (included as exhibit 10.2 to the Form 8-K filed August 9, 2016, and incorporated herein by reference).
10.9*		Sixth Amendment to Employment Agreement between the Company and Louis A. Hoch, dated September 8, 2016 (included as exhibit 10.2 to the Form 8-K filed September 14, 2016, and incorporated herein by reference).
10.10*		Independent Director Agreement, dated May 5, 2017, by and between Payment Data Systems, Inc. and Brad Rollins (included as exhibit 10.1 to the Form 8-K, filed May 11, 2017, and incorporated herein by reference).
10.11		Lease Agreement dated February 9, 2018 between Payment Data Systems, Inc. and Blauners Paesanos Parkway LP (included as exhibit 10.43 to the Form 10-K, filed March 30, 2018, and incorporated herein by reference).
10.12		Lease Agreement between Payment Data Systems, Inc. and RP Circle 1 Building, LLC dated December 11, 2017 (included as exhibit 10.44 to the Form 10-K, filed March 30, 2018, and incorporated herein by reference).
10.13*		Independent Director Agreement dated April 1, 2019, by and between Payment Data Systems, Inc. and Blaise Bender (included as exhibit 10.2 to the Form 8-K filed April 3, 2019, and incorporated herein by reference).
10.14		2015 Equity Incentive Plan (included as Appendix B to the Definitive Proxy Statement filed June 5, 2015, and incorporated herein by reference).
10.15		Warrant Agreement between the Company and University FanCards, LLC dated August 21, 2018 (included as exhibit 10.41 to the Form 10-Q filed on November 12, 2020, and incorporated herein by reference).
10.16*		Independent Director Agreement dated August 29, 2020, by and between the Company and Ernesto Beyer (included as exhibit 10.1 to the Form 8-K filed on August 31, 2020, and incorporated herein by reference).
10.17+		Asset Purchase Agreement between the Company and Information Management Solutions, LLC dated December 15, 2020 (included as exhibit 10.2 to the Form 8-K filed on December 18, 2020, and incorporated herein by reference).
10.18+		Warrant Agreement between the Company and Information Management Solutions, LLC dated December 15, 2020 (included as exhibit 10.2 to the Form 8-K filed on December 18, 2020, and incorporated herein by reference).

 

 

10.19		Lease agreement between Information Management Systems, LLC and Industrial Properties Corp. dated June 16, 2011 (included as exhibit 10.40 to the Form 10-K filed on March 30, 2021, and incorporated herein by reference).
10.20		First amendment to lease between Information Management Systems, LLC and Industrial Properties Corp. dated April 4, 2013 (included as exhibit 10.41 to the Form 10-K filed on March 30, 2021, and incorporated herein by reference).
10.21		Second amendment to lease between Information Management Systems, LLC and Industrial Properties Corp. dated March 5, 2018 (included as exhibit 10.42 to the Form 10-K filed on March 30, 2021, and incorporated herein by reference).
10.22		Third amendment to lease between the Company as successor to Information Management Systems, LLC and ICON IPC TX Property Owner Pool 6 West/Southwest, LLC, dated December 22, 2020 (included as exhibit 10.43 to the Form 10-K filed on March 30, 2021, and incorporated herein by reference).
10.23		Lease agreement between the Company and Smartyfi, LLC for Austin offices dated January 1, 2021 (included as exhibit 10.44 to the Form 10-K filed on March 30, 2021, and incorporated herein by reference).
10.24		First amendment to lease between the Company and Paesanos Office Building, LLC for San Antonio offices dated March 15, 2021 (included as exhibit 10.45 to the Form 10-K filed on March 30, 2021, and incorporated herein by reference).
10.25*		Seventh Amendment to Employment Agreement between Usio, Inc. and Louis A. Hoch, dated April 18, 2021 (included as exhibit 10.1 to the Form 8-K filed on April 21, 2021, and incorporated herein by reference).
10.26		Second Amendment to lease between the Company and Paesanos Office Building, LLC for San Antonio offices, dated October 19,2021 (included as exhibit 10.43 to the Form 10-Q filed on November 10, 2021, and incorporated herein by reference.
10.27*		Independent Director Agreement dated June 16, 2022, by and between the Company and Michelle Miller (Included as exhibit 10.1 to the Form 8-K filed on June 22, 2022, and incorporated herein by reference).
10.28*		Eighth Amendment to Employment Agreement between Usio, Inc. and Louis A. Hoch, dated June 29, 2022 (included as exhibit 10.1 to the Form 8-K filed on July 6, 2022, and incorporated herein by reference).
10.29*		Employment Agreement Dated February 17, 2023 between Usio Inc and Greg Carter, the Company's Executive Vice President of Payment Acceptance
10.30*		Usio, Inc. Employee Stock Purchase Plan (included as Appendix A to the Definitive Proxy Statement on Schedule 14A filed on June 2, 2023 and incorporated herein by reference).
10.31*		Ninth Amendment to Employment Agreement between Usio, Inc. and Louis A. Hoch, dated February 1, 2024 (included as exhibit 10.1 to the Form 8-K filed on February 1, 2024, and incorporated herein by reference).
31.1		Certification of the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith).
31.2		Certification of the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith).
32.1		Certification of the Chief Executive Officer and the Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (filed herewith).
97.1*		Clawback Policy (Included as exhibit 97.1 to the Form 10-K filed on March 27, 2024, and incorporated herein by reference).
101.INS		Inline XBRL Instance Document (filed herewith).
101.SCH		Inline XBRL Taxonomy Extension Schema Document (filed herewith).
101.CAL		Inline XBRL Taxonomy Extension Calculation Linkbase Document (filed herewith).
101.DEF		Inline XBRL Taxonomy Extension Definition Linkbase Document (filed herewith).
101.LAB		Inline XBRL Taxonomy Extension Label Linkbase Document (filed herewith).
101.PRE		Inline XBRL Taxonomy Presentation Linkbase Document (filed herewith).
104		Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)
†		Confidential treatment has been granted for portions of this agreement.
+		The schedules to the exhibit have been omitted from this filing pursuant to Item 601(a)(5) of Regulation S-K. The Company will furnish copies of any such schedules to the Commission upon request.
*		Management Compensatory Plan or Arrangement

 

Copies of above exhibits not contained herein are available to any stockholder, upon written request to: Chief Financial Officer, Usio, Inc., 3611 Paesanos Parkway, Suite 300, San Antonio, TX 78231.

 

 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

	USIO, INC
Date: August 14, 2024	By:	/s/ Louis A. Hoch
		Louis A. Hoch
		Chief Executive Officer
		(Principal Executive Officer)
Date: August 14, 2024	By:	/s/ Michael White
		Michael White
		Chief Accounting Officer
		(Principal Accounting and Financial Officer)

 

Exhibit 31.1

 

CERTIFICATION OF CHIEF EXECUTIVE OFFICER

PURSUANT TO

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

(18 U.S.C. SECTION 1350)

 

I, Louis A. Hoch, certify that:

 

1.	I have reviewed this Quarterly Report on Form 10-Q of Usio, Inc. for the quarter ended June 30, 2024;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	As the registrant’s certifying officer, I am responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

 

	(a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
	(b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
	(c)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
	(d)	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

 

5.	As the registrant’s certifying officer, I have disclosed, based on my most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

 

	(a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
	(b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

 

Date: August 14, 2024

 

	By:	/s/ Louis A. Hoch
		Louis A. Hoch
		Chief Executive Officer
		(Principal Executive Officer)

 

Exhibit 31.2

 

CERTIFICATION OF CHIEF FINANCIAL OFFICER

PURSUANT TO

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

(18 U.S.C. SECTION 1350)

 

I, Michael White, certify that:

 

1.	I have reviewed this Quarterly Report on Form 10-Q of Usio, Inc. for the quarter ended June 30, 2024;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	As the registrant’s certifying officer, I am responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

 

	(a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
	(b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
	(c)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
	(d)	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

 

5.	As the registrant’s certifying officer, I have disclosed, based on my most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

 

	(a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
	(b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

 

Date: August 14, 2024

 

	By:	/s/ Michael White
		Michael White
		Chief Accounting Officer
		(Principal Financial and Accounting Officer)

 

Exhibit 32.1

 

CERTIFICATION PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

(18 U.S.C. SECTION 1350)

 

Pursuant to section 906 of the Sarbanes-Oxley Act of 2002 (subsections (a) and (b) of section 1350, chapter 63 of title 18, United States Code), the undersigned officer of Usio, Inc., a Nevada corporation (the “Company”), does hereby certify, to such officer’s knowledge, that:

 

The Quarterly Report on Form 10-Q for the quarter ended June 30, 2024 (the “Form 10-Q”) of the Company fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, and the information contained in the Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of the Company.

 

 

Date: August 14, 2024
	By:	/s/ Louis A. Hoch
		Louis A. Hoch
		Chief Executive Officer
		(Principal Executive Officer)
Date: August 14, 2024
	By:	/s/ Michael White
		Michael White
		Chief Accounting Officer
		(Principal Financial and Accounting Officer)

 

v3.24.2.u1

Document And Entity Information - shares	6 Months Ended
	Jun. 30, 2024	Aug. 12, 2024
Document Information [Line Items]
Entity Central Index Key	0001088034
Entity Registrant Name	Usio, Inc.
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Document Fiscal Period Focus	Q2
Document Fiscal Year Focus	2024
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Jun. 30, 2024
Document Transition Report	false
Entity File Number	000-30152
Entity Incorporation, State or Country Code	NV
Entity Tax Identification Number	98-0190072
Entity Address, Address Line One	3611 Paesanos Parkway, Suite 300
Entity Address, City or Town	San Antonio
Entity Address, State or Province	TX
Entity Address, Postal Zip Code	78231
City Area Code	210
Local Phone Number	249-4100
Title of 12(b) Security	Common stock, par value $0.001 per share
Trading Symbol	USIO
Security Exchange Name	NASDAQ
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Non-accelerated Filer
Entity Small Business	true
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		27,361,329

v3.24.2.u1

Condensed Consolidated Balance Sheets (Current Period Unaudited) - USD ($)	Jun. 30, 2024	Dec. 31, 2023
Assets
Cash and cash equivalents	$ 7,498,256	$ 7,155,687
Accounts receivable, net	5,494,539	5,564,138
Settlement processing assets	51,122,984	44,899,603
Prepaid card load assets	28,056,918	31,578,973
Customer deposits	1,808,006	1,865,731
Inventory	407,013	422,808
Prepaid expenses and other	819,163	444,071
Current assets before merchant reserves	95,206,879	91,931,011
Merchant reserves	4,851,839	5,310,095
Total current assets	100,058,718	97,241,106
Property and equipment, net	3,427,109	3,660,092
Other assets:
Intangibles, net	1,317,370	1,753,333
Deferred tax asset, net	1,504,000	1,504,000
Operating lease right-of-use assets	2,184,415	2,420,782
Other assets	340,285	355,357
Total other assets	5,346,070	6,033,472
Total assets	108,831,897	106,934,670
Current liabilities:
Accounts payable	968,217	1,031,141
Accrued expenses	3,214,518	3,801,278
Operating lease liabilities, current portion	442,668	633,616
Equipment loan, current portion	192,206	107,270
Settlement processing obligations	51,122,984	44,899,603
Prepaid card load obligations	28,056,918	31,578,973
Customer deposits	1,808,006	1,865,731
Current liabilities before merchant reserve obligations	85,805,517	83,917,612
Merchant reserve obligations	4,851,839	5,310,095
Total current liabilities	90,657,356	89,227,707
Non-current liabilities:
Equipment loan, net of current portion	597,176	718,980
Operating lease liabilities, net of current portion	1,863,147	1,919,144
Total liabilities	93,117,679	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 June 30, 2024 (unaudited) and December 31, 2023, respectively	0	0
Common stock, $0.001 par value, 200,000,000 shares authorized; 29,764,435 and 28,671,606 issued, and 27,331,969 and 26,332,523 outstanding at June 30, 2024 (unaudited) and December 31, 2023, respectively	198,179	197,087
Additional paid-in capital	99,222,467	97,479,830
Treasury stock, at cost; 2,432,466 and 2,339,083 shares at June 30, 2024 (unaudited) and December 31, 2023, respectively	(4,511,919)	(4,362,150)
Deferred compensation	(7,681,660)	(6,907,775)
Accumulated deficit	(71,512,849)	(71,338,153)
Total stockholders’ equity	15,714,218	15,068,839
Total liabilities and stockholders’ equity	$ 108,831,897	$ 106,934,670

v3.24.2.u1

Condensed Consolidated Balance Sheets (Current Period Unaudited) (Parentheticals) - $ / shares	Jun. 30, 2024	Dec. 31, 2023
Preferred stock, par value (in dollars per share)	$ 0.01	$ 0.01
Preferred stock, authorized (in shares)	10,000,000	10,000,000
Preferred stock, issued (in shares)	0	0
Preferred stock, outstanding (in shares)	0	0
Common stock, par value (in dollars per share)	$ 0.001	$ 0.001
Common stock, authorized (in shares)	200,000,000	200,000,000
Common stock, issued (in shares)	29,764,435	28,671,606
Common stock, outstanding (in shares)	27,331,969	26,332,523
Treasury stock, shares (in shares)	2,432,466	2,339,083

v3.24.2.u1

Condensed Consolidated Statements of Operations (Unaudited) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2024	Jun. 30, 2023	Jun. 30, 2024	Jun. 30, 2023
Revenues	$ 20,079,888	$ 21,436,572	$ 41,050,274	$ 42,952,842
Cost of services	15,280,074	16,250,988	31,396,765	32,795,417
Gross profit	4,799,814	5,185,584	9,653,509	10,157,425
Selling, general and administrative expenses:
Employee stock-based compensation	460,061	577,869	959,334	1,082,443
Other SG&A	4,000,845	3,854,022	8,061,070	7,727,241
Depreciation and amortization	547,849	522,999	1,124,003	1,041,028
Total selling, general and administrative	5,008,755	4,954,890	10,144,407	9,850,712
Operating income (loss)	(208,941)	230,694	(490,898)	306,713
Other income and (expense):
Interest income	107,270	43,978	222,624	66,880
Other income	261,413	0	261,413	0
Interest expense	(14,250)	(533)	(27,835)	(1,195)
Other income, net	354,433	43,445	456,202	65,685
Income (loss) before income tax expense	145,492	274,139	(34,696)	372,398
Income tax expense	70,000	69,098	140,000	152,524
Net income (loss)	$ 75,492	$ 205,041	$ (174,696)	$ 219,874
Basic income (loss) per common share: (in dollars per share)	$ 0	$ 0.01	$ (0.01)	$ 0.01
Diluted income (loss) per common share: (in dollars per share)	$ 0	$ 0.01	$ (0.01)	$ 0.01
Weighted average common shares outstanding
Basic (in shares)	26,534,407	26,413,329	26,454,848	26,410,340
Diluted (in shares)	26,534,407	26,413,329	26,454,848	26,410,340

v3.24.2.u1

Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($)	6 Months Ended
	Jun. 30, 2024	Jun. 30, 2023
Operating activities:
Net income (loss)	$ (174,696)	$ 219,874
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Depreciation	688,039	605,095
Amortization	435,964	435,933
Employee stock-based compensation	959,334	1,082,443
Non-cash revenue from returned common stock	0	(156,162)
Changes in current assets and current liabilities:
Accounts receivable	69,599	(850,132)
Prepaid expenses and other	(375,092)	(176,728)
Operating lease right-of-use assets	236,367	114,956
Other assets	15,072	0
Inventory	15,795	25,185
Accounts payable and accrued expenses	(649,684)	136,401
Operating lease liabilities	(246,945)	(134,979)
Prepaid card load obligations	(3,522,055)	26,227,715
Merchant reserves	(458,256)	231,539
Customer deposits	(57,725)	9,070
Net cash provided by (used in) operating activities	(3,064,283)	27,770,210
Investing activities:
Purchases of property and equipment	(455,057)	(388,628)
Net cash (used in) investing activities	(455,057)	(388,628)
Financing activities:
Payments on equipment loan	(36,868)	(28,215)
Proceeds from issuance of common stock	10,510	0
Purchases of treasury stock	(149,769)	(19,036)
Net cash (used in) financing activities	(176,127)	(47,251)
Change in cash, cash equivalents, prepaid card load assets, customer deposits and merchant reserves	(3,695,467)	27,334,331
Cash, cash equivalents, prepaid card load assets, customer deposits and merchant reserves, beginning of period	45,910,486	32,343,501
Cash, Cash Equivalents, Prepaid Card Load Assets, Customer Deposits and Merchant Reserves, End of Period	42,215,019	59,677,832
Supplemental disclosure of cash flow information:
Interest	27,835	1,195
Income taxes	0	312,158
Non-cash financing activity:
Issuance of deferred stock compensation	1,497,300	2,478,506
Employee Awards [Member]
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Employee stock-based compensation	$ 959,334	$ 1,082,443

v3.24.2.u1

Consolidated Statement of Changes in Stockholders' Equity (Unaudited) - USD ($)	Common Stock Outstanding [Member]	Additional Paid-in Capital [Member]	Treasury Stock, Common [Member]	Deferred Compensation, Share-Based Payments [Member]	Retained Earnings [Member]	Total
Balance	$ 195,471	$ 94,048,603	$ (3,749,027)	$ (5,697,900)	$ (70,863,049)	$ 13,934,098
Balance (in shares) at Dec. 31, 2022	27,044,900
Balance at Dec. 31, 2022	$ 195,471	94,048,603	(3,749,027)	(5,697,900)	(70,863,049)	13,934,098
Issuance of common stock under equity incentive plan (in shares)	1,421,250
Issuance of common stock under equity incentive plan	$ 1,421	2,638,529	0	(2,444,054)	0	195,896
Deferred compensation amortization	0	0	0	308,676	0	308,676
Purchase of treasury stock costs	0	0	(8,529)	0	0	(8,529)
Net income (loss)	$ 0	0	0	0	14,833	14,833
Balance (in shares) at Mar. 31, 2023	28,466,150
Balance (in shares) at Dec. 31, 2022	27,044,900
Balance at Dec. 31, 2022	$ 195,471	94,048,603	(3,749,027)	(5,697,900)	(70,863,049)	13,934,098
Net income (loss)						219,874
Balance (in shares) at Jun. 30, 2023	28,462,606
Balance	$ 196,892	96,687,132	(3,757,556)	(7,833,278)	(70,848,216)	14,444,974
Balance (in shares) at Mar. 31, 2023	28,466,150
Balance at Mar. 31, 2023	$ 196,892	96,687,132	(3,757,556)	(7,833,278)	(70,848,216)	14,444,974
Issuance of common stock under equity incentive plan (in shares)	111,456
Issuance of common stock under equity incentive plan	$ 111	354,199	0	(34,452)	0	319,858
Deferred compensation amortization	0	0	0	343,123	0	343,123
Purchase of treasury stock costs	0	0	(10,507)	0	0	(10,507)
Net income (loss)	$ 0	0	0	0	205,041	205,041
Reversal of deferred compensation amortization that did not vest (in shares)	(115,000)
Reversal of deferred compensation amortization that did not vest	$ (115)	(188,088)	0	103,091	0	(85,112)
Non-cash return of common stock	$ 0	0	(156,162)	0	0	(156,162)
Balance (in shares) at Jun. 30, 2023	28,462,606
Balance	$ 196,888	96,853,243	(3,924,225)	(7,421,516)	(70,643,175)	15,061,215
Balance	$ 197,087	97,479,830	(4,362,150)	(6,907,775)	(71,338,153)	15,068,839
Balance (in shares) at Dec. 31, 2023	28,671,606
Balance at Dec. 31, 2023	$ 197,087	97,479,830	(4,362,150)	(6,907,775)	(71,338,153)	15,068,839
Issuance of common stock under equity incentive plan (in shares)	107,600
Issuance of common stock under equity incentive plan	$ 107	153,118	0	0	0	153,225
Deferred compensation amortization				346,047		346,047
Purchase of treasury stock costs	0	0	(44,823)	0	0	(44,823)
Net income (loss)	$ 0	0	0	0	(250,188)	(250,188)
Balance (in shares) at Mar. 31, 2024	28,779,206
Balance (in shares) at Dec. 31, 2023	28,671,606
Balance at Dec. 31, 2023	$ 197,087	97,479,830	(4,362,150)	(6,907,775)	(71,338,153)	15,068,839
Net income (loss)						(174,696)
Balance (in shares) at Jun. 30, 2024	29,764,435
Balance	$ 197,194	97,632,948	(4,406,973)	(6,561,728)	(71,588,341)	15,273,100
Balance (in shares) at Mar. 31, 2024	28,779,206
Balance at Mar. 31, 2024	$ 197,194	97,632,948	(4,406,973)	(6,561,728)	(71,588,341)	15,273,100
Issuance of common stock under equity incentive plan (in shares)	994,049
Issuance of common stock under equity incentive plan	$ 994	1,610,320	0	(1,497,300)	0	114,014
Deferred compensation amortization				346,048		346,048
Purchase of treasury stock costs	0	0	(104,946)	0	0	(104,946)
Net income (loss)	$ 0	0	0	0	75,492	75,492
Issuance of common stock under employee stock purchase plan (in shares)	6,180
Issuance of common stock under employee stock purchase plan	$ 6	10,504	0	0	0	10,510
Reversal of deferred compensation amortization that did not vest (in shares)	(15,000)
Reversal of deferred compensation amortization that did not vest	$ (15)	(31,305)	0	31,320	0	0
Balance (in shares) at Jun. 30, 2024	29,764,435
Balance	$ 198,179	$ 99,222,467	$ (4,511,919)	$ (7,681,660)	$ (71,512,849)	$ 15,714,218

v3.24.2.u1

Note 1 - Basis of Presentation	6 Months Ended
	Jun. 30, 2024
Notes to Financial Statements
Business Description and Accounting Policies [Text Block]	Note 1. Basis of Presentation   The accompanying unaudited interim condensed consolidated financial statements of Usio, Inc. and its subsidiaries (collectively, the “Company”) have been prepared without audit, pursuant to the rules and regulations of the Securities and Exchange Commission (the "Commission" or the "SEC"). Certain information and footnote disclosures normally included in financial statements prepared in accordance with United States generally accepted accounting principles ("GAAP") have been omitted pursuant to such rules and regulations. In the opinion of management, the accompanying unaudited interim condensed consolidated financial statements reflect all adjustments of a normal recurring nature considered necessary to present fairly the Company's financial position, results of operations and cash flows for such periods. The accompanying unaudited interim condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and the notes thereto included in the Company's annual report on Form 10-K for the year ended  December 31, 2023, as filed with the Commission on  March 27, 2024 (the "2023 Annual Report"). Results of operations for interim periods are not necessarily indicative of results that  may be expected for any other interim periods or the full fiscal year. References in this quarterly report to "the quarter" or the "second quarter" mean the three month period ended  June 30, 2024 or 2023, as the case may be and unless otherwise noted.   Use of Estimates: The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.   Revenue Recognition: Revenue consists primarily of fees generated through the electronic processing of payment transactions and related services. Revenue is recognized during the period in which the transactions are processed or when the related services are performed. The Company complies with ASC 606-10 and reports revenues at gross as a principal versus net as an agent. Although some of the Company's processing agreements vary with respect to specific credit risks, the Company has determined that for each agreement it is acting in the principal role. Merchants  may be charged for these processing services at a bundled rate based on a percentage of the dollar amount of each transaction and, in some instances, additional fees are charged for each transaction. Certain merchant customers are charged a flat fee per transaction, while others  may also be charged miscellaneous fees, including fees for chargebacks or returns, monthly minimums, and other miscellaneous services. Revenues derived from electronic processing of credit, debit, and prepaid card transactions that are authorized and captured through third-party networks are reported gross of amounts paid to sponsor banks as well as interchange and assessments paid to credit card associations. Certain card distributors remit payment of fees earned 45 days after the end of the processing period. 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. ("Output Solutions"), a wholly-owned subsidiary of Usio, Inc., provides bill preparation, presentment and mailing services. Revenue from Output Solutions is recognized when the related services are performed for printing and delivered to the United States Postal Services, or USPS, for postage. We also earn revenues from interest and fees earned on certain assets underlying customer balances. Interest earned on assets directly related to our core business line operations are recorded in the revenue source underlying the associated customer balances. Customer balances held on which the Company earns interest revenues include balances from our Automated Clearing House, or ACH, and complementary services, prepaid card services, and Output Solutions business lines.   The following table presents the Company's consolidated revenues by source:       Three Months Ended June 30,     Six Months Ended June 30,       2024     2023     2024     2023                                     ACH and complementary services   $ 3,894,330     $ 4,079,157     $ 7,776,064     $ 7,419,879   Credit card     7,261,268       7,115,884       14,822,002       14,455,782   Prepaid card services     3,673,418       5,217,468       7,014,642       10,024,872   Output Solutions     4,686,869       4,849,197       10,224,792       10,807,417   Interest - ACH and complementary services     190,233       40,361       401,873       43,306   Interest - Prepaid card services     334,624       125,058       737,365       186,018   Interest - Output Solutions     39,146       9,447       73,536       15,568   Total revenue   $ 20,079,888     $ 21,436,572     $ 41,050,274     $ 42,952,842     Cash and Cash Equivalents: Cash and cash equivalents includes cash and other money market instruments. The Company considers all highly liquid investments with an original maturity of 90 days or less to be cash equivalents.   Settlement Processing Assets and Obligations: Settlement processing assets and obligations represent intermediary balances arising in our settlement process for merchants. The Company earns interest on these underlying processing assets, which is recognized as revenue in the ACH and complementary services business line.   Prepaid Card Load Assets and Obligations: The Company maintains pre-funding accounts for its customers to facilitate prepaid card loads as initiated by the customer. These prepaid card load assets are carried on the Company's balance sheet with a corresponding liability. As the prepaid business line expands, card load assets will increase as funds are sent from customers to the Company. As customers begin to load cash onto cards, the balance of both the prepaid card asset and corresponding liability decrease. As these balances decrease, the Company recognizes processing revenue and cardholder fees. The Company earns interest on these prepaid card load assets and obligations, which is recognized as revenue in the prepaid card services business line.   Customer Deposits: The Company holds customer deposits primarily for postage expenses to ensure the Company is not out of pocket for amounts billed daily by the USPS. These customer deposits are carried on the Company's balance sheet with a corresponding liability. The Company earns interest on these customer deposits, which is recognized as revenue in the Output Solutions business line.   Merchant Reserves: The Company has merchant reserve requirements associated with ACH transactions. The merchant reserve assets are carried on the Company's balance sheet with a corresponding liability. Merchant reserves are set for each merchant and funds are collected and held as collateral to minimize contingent liabilities associated with any losses that  may occur. While this cash is not restricted in its use, the Company believes that designating this cash to collateralize merchant reserves strengthens the Company's standing with its member sponsors and is in accordance with the guidelines set by the card networks. The Company earns interest on these merchant reserves, which is recognized as revenue in our ACH and complementary services business line.   The reconciliation of cash and cash equivalents to cash, cash equivalents, prepaid card load assets, customer deposits and merchant reserves is as follows for each period presented:       Three Months Ended June 30,     Six Months Ended June 30,       2024     2023     2024     2023                                     Beginning cash, cash equivalents, prepaid card load assets, customer deposits and merchant reserves:                                 Cash and cash equivalents   $ 7,053,812     $ 6,763,813     $ 7,155,687     $ 5,709,117   Prepaid card load assets     28,698,878       18,812,954       31,578,973       20,170,761   Customer deposits     1,808,263       1,575,075       1,865,731       1,554,122   Merchant reserves     5,322,095       4,744,615       5,310,095       4,909,501   Total   $ 42,883,048     $ 31,896,457     $ 45,910,486     $ 32,343,501                                     Ending cash, cash equivalents, prepaid card load assets, customer deposits and merchant reserves:                                 Cash and cash equivalents   $ 7,498,256     $ 6,575,124     $ 7,498,256     $ 6,575,124   Prepaid card load assets     28,056,918       46,398,476       28,056,918       46,398,476   Customer deposits     1,808,006       1,563,192       1,808,006       1,563,192   Merchant reserves     4,851,839       5,141,040       4,851,839       5,141,040   Total   $ 42,215,019     $ 59,677,832     $ 42,215,019     $ 59,677,832     Accounts Receivable/Allowance for Estimated Credit Losses: The Company maintains an allowance for estimated credit losses resulting from the inability or failure of the Company’s customers to make required payments. The Company determines the allowance based on an account-by-account review, taking into consideration such factors as the age of the outstanding balance, historical pattern of collections, and financial condition of the customer to conform with Accounting Standards Update (ASU) Topic 326. During the six months ended June 30, 2024 and the year ended  December 31, 2023, there were no credit losses incurred. In the past, losses incurred by the Company due to credit losses were within its expectations. If the financial conditions of the Company’s customers were to deteriorate, resulting in an impairment of their ability to make contractual payments, additional losses  may be incurred in future periods. Estimates for credit losses are variable based on the volume of transactions processed and could increase or decrease accordingly. The allowance for credit losses was $319,000 at June 30, 2024 and December 31, 2023.   Inventory: Inventory is stated at the lower of cost or net realizable value. At June 30, 2024 and December 31, 2023, inventory consisted primarily of printing and paper supplies used for Output Solutions.   Accounting for Internal Use Software: The Company capitalizes the costs associated with software being developed or obtained for internal use when both the preliminary project stage is completed and it is probable that computer software being developed will be completed and placed in service. Capitalized costs include only (i) external direct costs of materials and services consumed in developing or obtaining internal-use software, (ii) payroll and other related costs for employees who are directly associated with and who devote time to the internal-use software project, and (iii) interest costs incurred, when material, while developing internal-use software. The Company ceases capitalization of such costs no later than the point at which the project is substantially complete and ready for its intended purpose. During the six months ended June 30, 2024 and June 30, 2023, the Company capitalized software costs of $353,316 and $378,197, respectively.   Valuation of Long-Lived and Intangible Assets: The Company assesses the impairment of long-lived and intangible assets at least annually, and whenever events or changes in circumstances indicate that the carrying value may not be recoverable. Factors considered important, which could trigger an impairment review, include the following: significant underperformance relative to historical or projected future cash flows; significant changes in the manner of use of the assets or the strategy of the overall business; and significant negative industry trends. When management determines that the carrying value of long-lived and intangible assets may not be recoverable, impairment is measured as the excess of the assets’ carrying value over the estimated fair value. No impairment losses were recorded in 2023 or during the six months ended June 30, 2024. Management is not aware of any impairment charges that may currently be required; however, the Company cannot predict the occurrence of events that might adversely affect the reported values in the future.   Reserve for Processing Losses: If, due to insolvency or bankruptcy of one of the Company’s merchant customers, or for any other reason, the Company is not able to collect amounts from its credit card, ACH or prepaid customers that have been properly "charged back" by the customer, or if a prepaid cardholder incurs a negative balance, the Company must bear the credit risk for the full amount of the transaction. The Company may require cash deposits and other types of collateral from certain merchants to minimize any such risks. In addition, the Company utilizes multiple systems and procedures to manage merchant risk. ACH, prepaid and credit card merchant processing loss reserves are primarily determined by performing a historical analysis of the Company’s loss experience, considering other factors that could affect that experience in the future, such as the types of transactions processed and nature of the merchant relationship with its consumers and the Company’s relationship with the Company’s prepaid card holders. This reserve amount is subject to the risk that actual losses may be greater than the Company’s estimates. Estimates for processing losses are variable based on the volume of transactions processed and could increase or decrease accordingly. At June 30, 2024 and December 31, 2023, the Company’s reserve for processing losses was $892,528 and $826,528, respectively, carried on the Company's balance sheet as an accrued expense.   Legal Proceedings: In addition to the legal proceedings disclosed in this quarterly report, the Company may be involved in legal matters arising in the ordinary course of business from time to time. Litigation is subject to inherent uncertainties, and an adverse result in the legal proceedings disclosed in this quarterly report or other matters that may arise from time to time may harm our business.   Recently Adopted Accounting Pronouncements: Accounting standards that have been issued or proposed by the FASB, the SEC or other standard setting bodies that do not require adoption until a future date are not expected to have a material impact on the Company's consolidated financial statements upon adoption.   Reclassifications: We have reclassified certain prior period amounts in the accompanying consolidated financial statements in order to be consistent with the current period presentation. These reclassifications had no effect on net income, total assets, total liabilities or equity.

v3.24.2.u1

Note 2 - Leases	6 Months Ended
	Jun. 30, 2024
Notes to Financial Statements
Lessee, Operating Leases [Text Block]	Note 2. Leases   The Company leases facilities and office equipment under various operating leases, which generally are expected to be renewed or replaced by other leases. For each of the three months ended  June 30, 2024 and 2023, operating lease expenses totaled $133,973 and $146,415, respectively. For each of the six months ended June 30, 2024 and 2023, operating lease expenses totaled $266,105 and $257,038, respectively.

v3.24.2.u1

Note 3 - Accrued Expenses	6 Months Ended
	Jun. 30, 2024
Notes to Financial Statements
Accounts Payable, Accrued Liabilities, and Other Liabilities Disclosure, Current [Text Block]	Note 3. Accrued Expenses   Accrued expenses consisted of the following balances:       June 30, 2024     December 31, 2023                     Accrued commissions   $ 1,092,870     $ 2,433,353   Reserve for processing losses     892,528       826,528   Other accrued expenses     713,415       246,444   Accrued taxes     145,906       294,953   Accrued salaries     369,799       —   Total accrued expenses   $ 3,214,518     $ 3,801,278

v3.24.2.u1

Note 4 - Equipment Loan	6 Months Ended
	Jun. 30, 2024
Notes to Financial Statements
Debt Disclosure [Text Block]	Note 4. Equipment Loan   On March 20, 2021, the Company entered into a debt arrangement to finance $165,996 for the purchase of an Output Solutions sorter. The loan was for a period of 36 months with a maturity date of March 20, 2024 and annual interest of 3.95%. Monthly principal and interest payments were required in the amount of $4,902. Principal payments for the three months ended  June 30, 2024 and 2023 were $0 and $14,171, respectively, and are reflected on the Company's Condensed Consolidated Statement of Cash Flows. Principal payments for the six months ended  June 30, 2024 and 2023 were $14,312 and $27,659, respectively. This loan was paid in full on its maturity date.   On  October 1, 2023, the Company entered into a debt arrangement to finance $811,819 for the purchase of an Output Solutions folder and inserter. The loan is for a period of 66 months with a maturity date of  April 5, 2029 and annual interest of 6.75%. Monthly principal and interest payments are required in the amount of $16,017, with interest only payments required for the first six months of the loan term. Total interest and principal payments on this folder and inserter equipment loan were $36,687 for the three months ended  June 30, 2024. Total interest and principal payments on this folder and inserter equipment loan were $50,168 for the six months ended  June 30, 2024.

v3.24.2.u1

Note 5 - Stockholders' Equity	6 Months Ended
	Jun. 30, 2024
Notes to Financial Statements
Shareholders' Equity and Share-Based Payments [Text Block]	Note 5. Stockholders' Equity   Stock Warrants: On December 15, 2020, the Company issued warrants to purchase 945,599 shares of the Company's common stock with an initial exercise price of $4.23 per share, subject to adjustment as provided in the warrant agreement governing the warrants, to Information Management Solutions, LLC ("Management Solutions"). Management Solutions' warrants vest and become exercisable annually over three years in three equal tranches beginning on December 15, 2021 and become fully vested on December 15, 2023. Each warrant is exercisable for a period of five years beginning on the date it vests. At the time of issuance, these warrants were valued using the Black-Scholes option pricing model. Assumptions used were as follows: (i) the fair value of the underlying stock was $0.58 per share; (ii) the risk-free interest rate was 0.09%; (iii) the contractual life was 5 years; (iv) the dividend yield was 0%; and (v) the volatility was 59.9%. The fair value of the warrants amounted to $552,283 and was recorded as an increase in the customer list asset and a corresponding amount to additional paid in capital. The amortization of these warrants, which is included in the total amortization expense of the customer list intangible asset, totaled $27,615 and $55,228 in each of the three and six months ended  June 30, 2024 and 2023, respectively.

v3.24.2.u1

Note 6 - Net Income (Loss) Per Share	6 Months Ended
	Jun. 30, 2024
Notes to Financial Statements
Earnings Per Share [Text Block]	Note 6. Net Income (Loss) Per Share   Basic income (loss) per share (EPS) was computed by dividing net income (loss) by the weighted average number of shares of common stock outstanding during the period. Diluted EPS differs from basic EPS due to the assumed conversion of potentially dilutive awards and options that were outstanding during the period. Unvested restricted stock awards have the right to receive nonforfeitable dividends on the same basis as common shares; therefore, unvested restricted stock is considered a participating security for the purpose of calculating EPS. The following is a reconciliation of the numerators and the denominators of the basic and diluted per share computations for net income (loss) for the three and six months ended June 30, 2024 and June 30, 2023.       Three Months Ended June 30,     Six Months Ended June 30,       2024     2023     2024     2023   Numerator:                                 Numerator for basic and diluted income (loss) per share, net income (loss) available to common shareholders   $ 75,492     $ 205,041     $ (174,696 )   $ 219,874   Denominator:                                 Denominator for basic income (loss) per share, weighted average shares outstanding     26,534,407       26,413,329       26,454,848       26,410,340   Effect of dilutive securities     —       —       —       —   Denominator for diluted earnings per share, adjusted for weighted average shares and assumed conversion     26,534,407       26,413,329       26,454,848       26,410,340   Basic income (loss) per common share   $ 0.00     $ 0.01     $ (0.01 )   $ 0.01   Diluted income (loss) per common share and common share equivalent   $ 0.00     $ 0.01     $ (0.01 )   $ 0.01     The awards and options to purchase shares of common stock that were outstanding at June 30, 2024 and June 30, 2023 that were not included in the computation of diluted earnings per share because the effect would have been anti-dilutive, are as follows:       Six Months Ended June 30,       2024     2023   Anti-dilutive awards and options     945,599       945,599

v3.24.2.u1

Note 7 - Income Taxes	6 Months Ended
	Jun. 30, 2024
Notes to Financial Statements
Income Tax Disclosure [Text Block]	Note 7. Income Taxes   Deferred tax assets and liabilities are recorded based on the difference between financial reporting and tax basis of assets and liabilities and are measured by the enacted tax rates and laws that are expected to be in effect when the differences are expected to reverse. Deferred tax assets are computed with the presumption that they will be realizable in future periods when taxable income is generated. Predicting the ability to realize these assets in future periods requires judgment by management. GAAP prescribes a recognition threshold and measurement attribute for a tax position taken or expected to be taken in a tax return. Income tax benefits that meet the “more likely than not” recognition threshold are recognized.   The Company has recognized a deferred tax asset of approximately $1.5 million recorded net of a valuation allowance of approximately $6.1 million. The Company reviews the assessment of the deferred tax asset and valuation allowance on an annual basis or more often when events indicate that a change to the valuation allowance may be warranted.   At  December 31, 2023, the Company had available net operating loss carryforwards of approximately $23.3 million. Net operating loss carryforwards generated during or prior to 2017 are available to offset taxable income of future periods and expire 20 years after the loss was generated. Net operating loss carryforwards generated after 2017 do not expire.   The schedule below outlines when the Company's net operating losses for 2017 and prior years were generated and the year they  may expire.   Tax Year End   NOL     Expiration   2005   $ 1,768,851       2025   2006     1,350,961       2026   2007     1,740,724       2027   2008     918,960       2028   2009     835,322       2029   2010     429,827       2030   2013     504,862       2033   2016     474,465       2036   2017     1,267,336       2037   Total   $ 9,291,308             Management is not aware of any tax positions that would have a significant impact on the Company’s financial position.

v3.24.2.u1

Note 8 - Related Party Transactions	6 Months Ended
	Jun. 30, 2024
Notes to Financial Statements
Related Party Transactions Disclosure [Text Block]	Note 8. Related Party Transactions   Louis Hoch   During the six months ended June 30, 2024 and  June 30, 2023, the Company purchased a total of $4,402 and $18,148, respectively, of corporate imprinted sportswear, promotional items, and caps from Angry Pug Sportswear. Louis Hoch, the Company’s Chairman of the Board, President, Chief Executive Officer and Chief Operating Officer, is a 50% owner of Angry Pug Sportswear.   Directors and Officers     On  June 21, 2024, the Company granted 966,000 shares of restricted common stock with a 10-year vesting period and 277,200 restricted stock units ("RSUs") with a 3-year vesting period to employees and Directors as a performance bonus at an issue price of $1.55 per share. RSUs vest in equal tranches over their 3-year vesting period, while 10-year grants are cliff vesting, and vest in full at the conclusion of their 10-year vesting period. Upon vesting, employees and Directors will receive issued shares. Executive officers and Directors included in the 10-year restricted stock grant were Louis Hoch (160,000 shares), Michael White (120,000 shares), Greg Carter (80,000 shares), and Houston Frost (40,000 shares). Executive officers included in the RSU grant were Louis Hoch (21,000 RSUs), Michael White (18,000 RSUs), Greg Carter (18,000 RSUs),and Houston Frost (12,000 RSUs).   On June 21, 2024, the Company granted 84,000 RSUs with a 3-year vesting period to Non-employee Directors as a performance bonus at an issue price of $1.55 per share. Directors included in the RSU grant were Blaise Bender (21,000 RSUs), Brad Rollins (21,000 RSUs), Ernesto Beyer (21,000 RSUs) and Michelle Miller (21,000 RSUs).   On  February 24, 2024, we repurchased 2,075 shares of our common stock for $3,258 in a private transaction based on the $1.57 per share closing price on  February 24, 2024 from Tom Jewell, the Company's former Chief Financial Officer, to cover his share of taxes in connection with equity grants.   On  February 24, 2024, we repurchased 4,911 shares of our common stock for $7,710 in a private transaction based on the $1.57 per share closing price on  February 24, 2024 from Louis Hoch, the Company's Chairman, President, Chief Executive Officer and Chief Operating Officer, to cover his share of taxes in connection with equity grants.   On  November 30, 2023, Tom Jewell, the Senior Vice President, Chief Financial Officer, and principal financial and accounting officer of the Company, notified the Company of his intention to retire. On  December 11, 2023, Mr. Jewell entered into a Separation and Mutual Release of Claims Agreement (“Separation Agreement”) with the Company. Pursuant to the Separation Agreement, Mr. Jewell will be paid installment payments equal to his current base salary until and including  April 18, 2024. Additionally, Mr. Jewell will be permitted to retain any unvested Company stock options or other equity awards, which shall vest in accordance with the applicable schedules. Mr. Jewell will also receive all employee benefits including, but not limited to, health, dental, vision and life insurances that he was receiving prior to his execution of the Agreement until  April 18, 2024.   On  November 18, 2023, we repurchased 2,619 shares of our common stock for $4,452 in a private transaction based on the $1.70 per share closing price on  November 18, 2023 from Tom Jewell, the Company's former Chief Financial Officer, to cover his share of taxes in connection with equity grants.   On  November 18, 2023, we repurchased 3,927 shares of our common stock for $6,675 in a private transaction based on the $1.70 per share closing price on  November 18, 2023 from Louis Hoch, the Company's Chairman, President, Chief Executive Officer and Chief Operating Officer, to cover his share of taxes in connection with equity grants.   Effective on February 17, 2023, the Company entered into an employment agreement with Greg Carter, the Company’s Executive Vice President, Payment Acceptance. Under the terms of this agreement, Mr. Carter will receive an annual salary of $250,000, Override/Commissions of 10% of the actual cash commissions paid to salespersons under direct management of Mr. Carter, to be paid quarterly, and the payment of a one-time signing bonus of $40,000.    On  February 8, 2023, the Company granted 1,403,000 shares of restricted common stock with a 10-year vesting period and 273,000 RSUs with a 3-year vesting period to employees and Directors as a performance bonus at an issue price of $1.75 per share. RSUs vest in equal tranches over their 3-year vesting period, while 10-year grants are cliff vesting, and vest in full at the conclusion of their 10-year vesting period. Upon vesting, employees and Directors will receive issued shares. Executive officers and Directors included in the 10-year restricted stock grant were Louis Hoch (330,000 shares), Tom Jewell (200,000 shares), Greg Carter (100,000 shares) and Houston Frost (100,000 shares). Executive officers included in the RSU grant were Louis Hoch (33,000 RSUs), Tom Jewell (21,000 RSUs), Greg Carter (12,000 RSUs) and Houston Frost (12,000 RSUs).   On  March 16, 2023, the Company granted 69,000 RSUs with a 3-year vesting period to Non-employee Directors as a performance bonus at an issue price of $1.60 per share. Directors included in the RSU grant were Blaise Bender (21,000 RSUs), Brad Rollins (21,000 RSUs), Ernesto Beyer (21,000 RSUs) and Michelle Miller (6,000 RSUs).

v3.24.2.u1

Note 9 - Commitments and Contingencies	6 Months Ended
	Jun. 30, 2024
Notes to Financial Statements
Commitments and Contingencies Disclosure [Text Block]	Note 9. Commitments and Contingencies   Legal Proceedings.   Ben Kauder, Nina Pioletti, & Triple Pay Play, Inc.   In 2017, Usio acquired Singular Payments, Inc. (“Singular”), another payment processing company with offices in Nashville, Tennessee and St. Augustine, Florida.   Ben Kauder and Nina Pioletti were executives of Singular and, after the acquisition, Usio hired them as executive-level employees. Usio hired Kauder to serve as Senior Vice President of Integrated Payments, and Pioletti was hired to serve as Director of Sales. As a condition of employment, Kauder and Pioletti agreed to be bound by certain Usio policies, including as related to preserving the confidentiality of Usio’s proprietary information. As Usio executives, Kauder and Pioletti were afforded access to and contributed to the development of Usio’s trade secrets and other proprietary information not generally known by the public at large, including but not limited to financial information, marketing plans, cost and operational/strategic plans, and sales presentations.   In  May 2021, Kauder resigned from Usio followed by Pioletti in  July of 2022. Thereafter, Kauder and Pioletti formed Triple Pay Play, another payment processing company which competes with the same services as Usio. Upon information and belief, Kauder and Pioletti were working to form Triple Pay Play while employed by Usio, during Usio business hours, and while using Usio resources and Usio property.   On or about  June 21, 2023, Usio filed suit against Kauder, Pioletti and Triple Pay Play for breach of contract and misappropriation of trade secrets and unfair business competition.   On  July 6, 2023, Kauder, Pioletti and Triple Pay Play filed a Motion to Dismiss for Lack of Jurisdiction. The motion was granted. Subsequently, in  February of 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. The Judge did not make a ruling and is currently reviewing all materials filed in regards to this matter.   Greenwich Business Capital, LLC   On or about  September 25, 2019, Usio and Greenwich Business Capital LLC (“GBC”), entered into an Agreement for payment processing services (the “Agreement”). Pursuant to the terms of the Agreement, Usio effectively terminated the Agreement with GBC on  October 31, 2023, by providing Greenwich with a 30-days written notice as required by the Agreement.   On  November 13, 2023, GBC filed lawsuit against Usio, alleging violations of the National Automated Clearing House Association (NACHA) rules in the State of Rhode Island Kent Superior Court. In early  March of 2024, Usio filed a Motion to Dismiss for improper venue and failure to state a claim.    On May 20, 2024, Usio’s Motion to Dismiss was heard in the State of Rhode Island Kent Superior Court. The Judge did not make a ruling and is currently reviewing all materials filed in regards to this matter.   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. The lawsuit alleges that due to a mistake, accident, or inadvertence, certain customer deposits in the amount of $317,000 were improperly transferred to us.     On  September 28, 2021, we filed an answer generally denying the plaintiff’s allegations. On  October 5, 2021, we filed a counterclaim and third-party petition. Therein, we allege that neither KDHM nor its principals disclosed that KDHM was not accounting for the customer deposits in accordance with GAAP. KDHM and third-party defendants, its principals Henry Minten and Thomas Dowe, affirmatively represented and warranted in section 3.1(e) of the asset purchase agreement that “[t]he Annual Financial Statements and the Interim Financial Statements have been prepared from the books and records of Seller in accordance with GAAP applied on a consistent basis.”    We also discovered that KDHM by and through its principals failed to disclose that $305,000 in additional customer deposits existed and that these deposits were not conveyed to us as required by the asset purchase agreement. KDHM, Minten and Dowe provided us with fraudulent and misleading financial statements that did not disclose these additional customer deposits. KDHM and the defendants do not dispute that these additional customer deposits existed and that they were purchased by Usio. However, despite a written representation that these funds would be returned, KDHM and its principals have held these funds hostage. Section 2.1(b)(x) of the asset purchase agreement provides that the purchased assets include “All of Seller’s deposits from its customer, including without limitation, those customer deposits listed on Schedule 2.1(b)(xi) of the Disclosure Schedules.” Finally, we discovered that KDHM did not provide us with all customer lists, which are identified as purchased assets under the agreement.   In our counterclaims and third-party petition, we have asserted causes of action for fraud, breach of contract and conversion.    On  August 18, 2023, the judge granted a summary motion entitling KDHM to deposits for customer accounts that were printed and mailed prior to the acquisition, and Usio Output Solutions, Inc. was entitled to deposits for accounts that were not yet printed and printed but not yet mailed prior to the acquisition. Usio has requested a reconsideration of the motion, as it does not consider that deposits are only owed to KDHM if they were earned and offset against accounts receivable.   On  March 4, 2024, the court held a hearing on KDHM’s Supplemental Rule 166(G) Motion and the court granted the motion in favor of KDHM. However, Usio believes the court erred in granting the motion and filed a motion for reconsideration on  March 19, 2024.   On March 28, 2024, the court heard Usio’s Motion for Reconsideration of Order Granting Plaintiff’s Supplemental Rule 166(g). On May 2, 2024, the court denied Usio’s motion. On July 12, 2024, we filed an appeal on the lower court's decision, which is pending review.   We believe that plaintiff's claims contradict the express terms of the asset purchase agreement, and we intend to vigorously defend this matter. As a result of this post-sale dispute, we subsequently discovered that KDHM, LLC and its principals made certain misrepresentations and breached the terms of the asset purchase agreement.    Other proceedings   Aside from these proceedings, the Company  may be involved in legal matters arising in the ordinary course of business from time to time. While we believe that such matters are currently not material, there can be no assurance that matters arising in the ordinary course of business for which we are or could become involved in litigation will not have a material adverse effect on our business, financial condition, or results of operations.

v3.24.2.u1

Insider Trading Arrangements	3 Months Ended	6 Months Ended
	Jun. 30, 2024	Jun. 30, 2024
Insider Trading Arr Line Items
Material Terms of Trading Arrangement [Text Block]		Item 5. OTHER INFORMATION.   None.
Rule 10b5-1 Arrangement Adopted [Flag]	false
Non-Rule 10b5-1 Arrangement Adopted [Flag]	false
Rule 10b5-1 Arrangement Terminated [Flag]	false
Non-Rule 10b5-1 Arrangement Terminated [Flag]	false

v3.24.2.u1

Significant Accounting Policies (Policies)	6 Months Ended
	Jun. 30, 2024
Accounting Policies [Abstract]
Use of Estimates, Policy [Policy Text Block]	Use of Estimates: The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Revenue [Policy Text Block]	Revenue Recognition: Revenue consists primarily of fees generated through the electronic processing of payment transactions and related services. Revenue is recognized during the period in which the transactions are processed or when the related services are performed. The Company complies with ASC 606-10 and reports revenues at gross as a principal versus net as an agent. Although some of the Company's processing agreements vary with respect to specific credit risks, the Company has determined that for each agreement it is acting in the principal role. Merchants  may be charged for these processing services at a bundled rate based on a percentage of the dollar amount of each transaction and, in some instances, additional fees are charged for each transaction. Certain merchant customers are charged a flat fee per transaction, while others  may also be charged miscellaneous fees, including fees for chargebacks or returns, monthly minimums, and other miscellaneous services. Revenues derived from electronic processing of credit, debit, and prepaid card transactions that are authorized and captured through third-party networks are reported gross of amounts paid to sponsor banks as well as interchange and assessments paid to credit card associations. Certain card distributors remit payment of fees earned 45 days after the end of the processing period. 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. ("Output Solutions"), a wholly-owned subsidiary of Usio, Inc., provides bill preparation, presentment and mailing services. Revenue from Output Solutions is recognized when the related services are performed for printing and delivered to the United States Postal Services, or USPS, for postage. We also earn revenues from interest and fees earned on certain assets underlying customer balances. Interest earned on assets directly related to our core business line operations are recorded in the revenue source underlying the associated customer balances. Customer balances held on which the Company earns interest revenues include balances from our Automated Clearing House, or ACH, and complementary services, prepaid card services, and Output Solutions business lines.   The following table presents the Company's consolidated revenues by source:       Three Months Ended June 30,     Six Months Ended June 30,       2024     2023     2024     2023                                     ACH and complementary services   $ 3,894,330     $ 4,079,157     $ 7,776,064     $ 7,419,879   Credit card     7,261,268       7,115,884       14,822,002       14,455,782   Prepaid card services     3,673,418       5,217,468       7,014,642       10,024,872   Output Solutions     4,686,869       4,849,197       10,224,792       10,807,417   Interest - ACH and complementary services     190,233       40,361       401,873       43,306   Interest - Prepaid card services     334,624       125,058       737,365       186,018   Interest - Output Solutions     39,146       9,447       73,536       15,568   Total revenue   $ 20,079,888     $ 21,436,572     $ 41,050,274     $ 42,952,842
Cash and Cash Equivalents, Policy [Policy Text Block]	Cash and Cash Equivalents: Cash and cash equivalents includes cash and other money market instruments. The Company considers all highly liquid investments with an original maturity of 90 days or less to be cash equivalents.
Credit Card Origination Costs, Policy [Policy Text Block]	Settlement Processing Assets and Obligations: Settlement processing assets and obligations represent intermediary balances arising in our settlement process for merchants. The Company earns interest on these underlying processing assets, which is recognized as revenue in the ACH and complementary services business line.
Prepaid Card Load Assets, Policy [Policy Text Block]	Prepaid Card Load Assets and Obligations: The Company maintains pre-funding accounts for its customers to facilitate prepaid card loads as initiated by the customer. These prepaid card load assets are carried on the Company's balance sheet with a corresponding liability. As the prepaid business line expands, card load assets will increase as funds are sent from customers to the Company. As customers begin to load cash onto cards, the balance of both the prepaid card asset and corresponding liability decrease. As these balances decrease, the Company recognizes processing revenue and cardholder fees. The Company earns interest on these prepaid card load assets and obligations, which is recognized as revenue in the prepaid card services business line.
Customer Deposits [Policy Text Block]	Customer Deposits: The Company holds customer deposits primarily for postage expenses to ensure the Company is not out of pocket for amounts billed daily by the USPS. These customer deposits are carried on the Company's balance sheet with a corresponding liability. The Company earns interest on these customer deposits, which is recognized as revenue in the Output Solutions business line.
Cash and Cash Equivalents, Restricted Cash and Cash Equivalents, Policy [Policy Text Block]	Merchant Reserves: The Company has merchant reserve requirements associated with ACH transactions. The merchant reserve assets are carried on the Company's balance sheet with a corresponding liability. Merchant reserves are set for each merchant and funds are collected and held as collateral to minimize contingent liabilities associated with any losses that  may occur. While this cash is not restricted in its use, the Company believes that designating this cash to collateralize merchant reserves strengthens the Company's standing with its member sponsors and is in accordance with the guidelines set by the card networks. The Company earns interest on these merchant reserves, which is recognized as revenue in our ACH and complementary services business line.   The reconciliation of cash and cash equivalents to cash, cash equivalents, prepaid card load assets, customer deposits and merchant reserves is as follows for each period presented:       Three Months Ended June 30,     Six Months Ended June 30,       2024     2023     2024     2023                                     Beginning cash, cash equivalents, prepaid card load assets, customer deposits and merchant reserves:                                 Cash and cash equivalents   $ 7,053,812     $ 6,763,813     $ 7,155,687     $ 5,709,117   Prepaid card load assets     28,698,878       18,812,954       31,578,973       20,170,761   Customer deposits     1,808,263       1,575,075       1,865,731       1,554,122   Merchant reserves     5,322,095       4,744,615       5,310,095       4,909,501   Total   $ 42,883,048     $ 31,896,457     $ 45,910,486     $ 32,343,501                                     Ending cash, cash equivalents, prepaid card load assets, customer deposits and merchant reserves:                                 Cash and cash equivalents   $ 7,498,256     $ 6,575,124     $ 7,498,256     $ 6,575,124   Prepaid card load assets     28,056,918       46,398,476       28,056,918       46,398,476   Customer deposits     1,808,006       1,563,192       1,808,006       1,563,192   Merchant reserves     4,851,839       5,141,040       4,851,839       5,141,040   Total   $ 42,215,019     $ 59,677,832     $ 42,215,019     $ 59,677,832
Receivable [Policy Text Block]	Accounts Receivable/Allowance for Estimated Credit Losses: The Company maintains an allowance for estimated credit losses resulting from the inability or failure of the Company’s customers to make required payments. The Company determines the allowance based on an account-by-account review, taking into consideration such factors as the age of the outstanding balance, historical pattern of collections, and financial condition of the customer to conform with Accounting Standards Update (ASU) Topic 326. During the six months ended June 30, 2024 and the year ended  December 31, 2023, there were no credit losses incurred. In the past, losses incurred by the Company due to credit losses were within its expectations. If the financial conditions of the Company’s customers were to deteriorate, resulting in an impairment of their ability to make contractual payments, additional losses  may be incurred in future periods. Estimates for credit losses are variable based on the volume of transactions processed and could increase or decrease accordingly. The allowance for credit losses was $319,000 at June 30, 2024 and December 31, 2023.
Inventory, Policy [Policy Text Block]	Inventory: Inventory is stated at the lower of cost or net realizable value. At June 30, 2024 and December 31, 2023, inventory consisted primarily of printing and paper supplies used for Output Solutions.
Internal Use Software, Policy [Policy Text Block]	Accounting for Internal Use Software: The Company capitalizes the costs associated with software being developed or obtained for internal use when both the preliminary project stage is completed and it is probable that computer software being developed will be completed and placed in service. Capitalized costs include only (i) external direct costs of materials and services consumed in developing or obtaining internal-use software, (ii) payroll and other related costs for employees who are directly associated with and who devote time to the internal-use software project, and (iii) interest costs incurred, when material, while developing internal-use software. The Company ceases capitalization of such costs no later than the point at which the project is substantially complete and ready for its intended purpose. During the six months ended June 30, 2024 and June 30, 2023, the Company capitalized software costs of $353,316 and $378,197, respectively.
Impairment or Disposal of Long-Lived Assets, Policy [Policy Text Block]	Valuation of Long-Lived and Intangible Assets: The Company assesses the impairment of long-lived and intangible assets at least annually, and whenever events or changes in circumstances indicate that the carrying value may not be recoverable. Factors considered important, which could trigger an impairment review, include the following: significant underperformance relative to historical or projected future cash flows; significant changes in the manner of use of the assets or the strategy of the overall business; and significant negative industry trends. When management determines that the carrying value of long-lived and intangible assets may not be recoverable, impairment is measured as the excess of the assets’ carrying value over the estimated fair value. No impairment losses were recorded in 2023 or during the six months ended June 30, 2024. Management is not aware of any impairment charges that may currently be required; however, the Company cannot predict the occurrence of events that might adversely affect the reported values in the future.
Contingent Liability Reserve Estimate, Policy [Policy Text Block]	Reserve for Processing Losses: If, due to insolvency or bankruptcy of one of the Company’s merchant customers, or for any other reason, the Company is not able to collect amounts from its credit card, ACH or prepaid customers that have been properly "charged back" by the customer, or if a prepaid cardholder incurs a negative balance, the Company must bear the credit risk for the full amount of the transaction. The Company may require cash deposits and other types of collateral from certain merchants to minimize any such risks. In addition, the Company utilizes multiple systems and procedures to manage merchant risk. ACH, prepaid and credit card merchant processing loss reserves are primarily determined by performing a historical analysis of the Company’s loss experience, considering other factors that could affect that experience in the future, such as the types of transactions processed and nature of the merchant relationship with its consumers and the Company’s relationship with the Company’s prepaid card holders. This reserve amount is subject to the risk that actual losses may be greater than the Company’s estimates. Estimates for processing losses are variable based on the volume of transactions processed and could increase or decrease accordingly. At June 30, 2024 and December 31, 2023, the Company’s reserve for processing losses was $892,528 and $826,528, respectively, carried on the Company's balance sheet as an accrued expense.
Legal Costs, Policy [Policy Text Block]	Legal Proceedings: In addition to the legal proceedings disclosed in this quarterly report, the Company may be involved in legal matters arising in the ordinary course of business from time to time. Litigation is subject to inherent uncertainties, and an adverse result in the legal proceedings disclosed in this quarterly report or other matters that may arise from time to time may harm our business.
New Accounting Pronouncements, Policy [Policy Text Block]	Recently Adopted Accounting Pronouncements: Accounting standards that have been issued or proposed by the FASB, the SEC or other standard setting bodies that do not require adoption until a future date are not expected to have a material impact on the Company's consolidated financial statements upon adoption.
Reclassification, Comparability Adjustment [Policy Text Block]	Reclassifications: We have reclassified certain prior period amounts in the accompanying consolidated financial statements in order to be consistent with the current period presentation. These reclassifications had no effect on net income, total assets, total liabilities or equity.

v3.24.2.u1

Note 1 - Basis of Presentation (Tables)	6 Months Ended
	Jun. 30, 2024
Notes Tables
Disaggregation of Revenue [Table Text Block]	Three Months Ended June 30,     Six Months Ended June 30,       2024     2023     2024     2023                                     ACH and complementary services   $ 3,894,330     $ 4,079,157     $ 7,776,064     $ 7,419,879   Credit card     7,261,268       7,115,884       14,822,002       14,455,782   Prepaid card services     3,673,418       5,217,468       7,014,642       10,024,872   Output Solutions     4,686,869       4,849,197       10,224,792       10,807,417   Interest - ACH and complementary services     190,233       40,361       401,873       43,306   Interest - Prepaid card services     334,624       125,058       737,365       186,018   Interest - Output Solutions     39,146       9,447       73,536       15,568   Total revenue   $ 20,079,888     $ 21,436,572     $ 41,050,274     $ 42,952,842
Contract with Customer, Contract Asset, Contract Liability, and Receivable [Table Text Block]	Three Months Ended June 30,     Six Months Ended June 30,       2024     2023     2024     2023                                     Beginning cash, cash equivalents, prepaid card load assets, customer deposits and merchant reserves:                                 Cash and cash equivalents   $ 7,053,812     $ 6,763,813     $ 7,155,687     $ 5,709,117   Prepaid card load assets     28,698,878       18,812,954       31,578,973       20,170,761   Customer deposits     1,808,263       1,575,075       1,865,731       1,554,122   Merchant reserves     5,322,095       4,744,615       5,310,095       4,909,501   Total   $ 42,883,048     $ 31,896,457     $ 45,910,486     $ 32,343,501                                     Ending cash, cash equivalents, prepaid card load assets, customer deposits and merchant reserves:                                 Cash and cash equivalents   $ 7,498,256     $ 6,575,124     $ 7,498,256     $ 6,575,124   Prepaid card load assets     28,056,918       46,398,476       28,056,918       46,398,476   Customer deposits     1,808,006       1,563,192       1,808,006       1,563,192   Merchant reserves     4,851,839       5,141,040       4,851,839       5,141,040   Total   $ 42,215,019     $ 59,677,832     $ 42,215,019     $ 59,677,832

v3.24.2.u1

Note 3 - Accrued Expenses (Tables)	6 Months Ended
	Jun. 30, 2024
Notes Tables
Schedule of Accounts Payable and Accrued Liabilities [Table Text Block]	June 30, 2024     December 31, 2023                     Accrued commissions   $ 1,092,870     $ 2,433,353   Reserve for processing losses     892,528       826,528   Other accrued expenses     713,415       246,444   Accrued taxes     145,906       294,953   Accrued salaries     369,799       —   Total accrued expenses   $ 3,214,518     $ 3,801,278

v3.24.2.u1

Note 6 - Net Income (Loss) Per Share (Tables)	6 Months Ended
	Jun. 30, 2024
Notes Tables
Schedule of Earnings Per Share, Basic and Diluted [Table Text Block]	Three Months Ended June 30,     Six Months Ended June 30,       2024     2023     2024     2023   Numerator:                                 Numerator for basic and diluted income (loss) per share, net income (loss) available to common shareholders   $ 75,492     $ 205,041     $ (174,696 )   $ 219,874   Denominator:                                 Denominator for basic income (loss) per share, weighted average shares outstanding     26,534,407       26,413,329       26,454,848       26,410,340   Effect of dilutive securities     —       —       —       —   Denominator for diluted earnings per share, adjusted for weighted average shares and assumed conversion     26,534,407       26,413,329       26,454,848       26,410,340   Basic income (loss) per common share   $ 0.00     $ 0.01     $ (0.01 )   $ 0.01   Diluted income (loss) per common share and common share equivalent   $ 0.00     $ 0.01     $ (0.01 )   $ 0.01
Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share [Table Text Block]	Six Months Ended June 30,       2024     2023   Anti-dilutive awards and options     945,599       945,599

v3.24.2.u1

Note 7 - Income Taxes (Tables)	6 Months Ended
	Jun. 30, 2024
Notes Tables
Summary of Operating Loss Carryforwards [Table Text Block]	Tax Year End   NOL     Expiration   2005   $ 1,768,851       2025   2006     1,350,961       2026   2007     1,740,724       2027   2008     918,960       2028   2009     835,322       2029   2010     429,827       2030   2013     504,862       2033   2016     474,465       2036   2017     1,267,336       2037   Total   $ 9,291,308

v3.24.2.u1

Note 1 - Basis of Presentation (Details Textual) - USD ($)	6 Months Ended		12 Months Ended
	Jun. 30, 2024	Jun. 30, 2023	Dec. 31, 2023
Accounts Receivable, Allowance for Credit Loss, Current	$ 319,000		$ 319,000
Capitalized Computer Software, Additions	353,316	$ 378,197
Asset Impairment Charges	0		0
SEC Schedule, 12-09, Valuation Allowances and Reserves, Deduction	$ 892,528		$ 826,528

v3.24.2.u1

Note 1 - Basis of Presentation - Schedule of Disaggregation of Revenue (Details) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2024	Jun. 30, 2023	Jun. 30, 2024	Jun. 30, 2023
Revenues	$ 20,079,888	$ 21,436,572	$ 41,050,274	$ 42,952,842
ACH and Complementary Service Revenue [Member]
Revenues	3,894,330	4,079,157	7,776,064	7,419,879
Credit Card Revenue [Member]
Revenues	7,261,268	7,115,884	14,822,002	14,455,782
Prepaid Card Services Revenue [Member]
Revenues	3,673,418	5,217,468	7,014,642	10,024,872
Output Solutions [Member]
Revenues	4,686,869	4,849,197	10,224,792	10,807,417
ACH and Complementary Service Interest Revenue [Member]
Revenues	190,233	40,361	401,873	43,306
Prepaid Card Services Interest Revenue [Member]
Revenues	334,624	125,058	737,365	186,018
Output Solutions Interest [Member]
Revenues	$ 39,146	$ 9,447	$ 73,536	$ 15,568

v3.24.2.u1

Note 1 - Basis of Presentation - Summary of Deferred Revenue (Details) - USD ($)	Jun. 30, 2024	Apr. 01, 2024	Mar. 31, 2024	Dec. 31, 2023	Jun. 30, 2023	Mar. 31, 2023
Cash and cash equivalents	$ 7,498,256	$ 7,053,812	$ 7,155,687	$ 6,575,124	$ 6,763,813	$ 5,709,117
Prepaid card load assets	28,056,918	28,698,878	31,578,973	46,398,476	18,812,954	20,170,761
Customer deposits	1,808,006	1,808,263	1,865,731	1,563,192	1,575,075	1,554,122
Merchant reserves	4,851,839	5,322,095	5,310,095	5,141,040	4,744,615	4,909,501
Cash, cash equivalents, prepaid card load assets, customer deposits and merchant reserves, beginning of period	42,215,019	42,883,048	45,910,486	59,677,832	31,896,457	32,343,501
Cash and cash equivalents	7,498,256	7,498,256	7,053,812	7,155,687	6,575,124	6,763,813
Prepaid card load assets	28,056,918	28,056,918	28,698,878	31,578,973	46,398,476	18,812,954
Customer deposits	1,808,006	1,808,006	1,808,263	1,865,731	1,563,192	1,575,075
Merchant reserves	4,851,839	4,851,839	5,322,095	5,310,095	5,141,040	4,744,615
Cash, Cash Equivalents, Prepaid Card Load Assets, Customer Deposits and Merchant Reserves, End of Period	$ 42,215,019	$ 42,215,019	$ 42,883,048	$ 45,910,486	$ 59,677,832	$ 31,896,457

v3.24.2.u1

Note 2 - Leases (Details Textual) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2024	Jun. 30, 2023	Jun. 30, 2024	Jun. 30, 2023
Operating Lease, Expense	$ 133,973	$ 146,415	$ 266,105	$ 257,038

v3.24.2.u1

Note 3 - Accrued Expenses - Summary of Accrued Expenses (Details) - USD ($)	Jun. 30, 2024	Dec. 31, 2023
Accrued commissions	$ 1,092,870	$ 2,433,353
Reserve for processing losses	892,528	826,528
Other accrued expenses	713,415	246,444
Accrued taxes	145,906	294,953
Accrued salaries	369,799	0
Total accrued expenses	$ 3,214,518	$ 3,801,278

v3.24.2.u1

Note 4 - Equipment Loan (Details Textual) - USD ($)			3 Months Ended		6 Months Ended
	Oct. 01, 2023	Mar. 20, 2021	Jun. 30, 2024	Jun. 30, 2023	Jun. 30, 2024	Jun. 30, 2023
Repayments of Long-Term Debt					$ 36,868	$ 28,215
Debit Arrangement to Finance Purchase of Output Solutions Sorter [Member]
Debt Instrument, Face Amount		$ 165,996
Debt Instrument, Term (Month)		36 months
Debt Instrument, Interest Rate, Stated Percentage		3.95%
Debt Instrument, Periodic Payment		$ 4,902
Repayments of Long-Term Debt			$ 0	$ 14,171	14,312	$ 27,659
Debit Arrangement to Finance Purchase of Output Solutions Folder and Inserter [Member]
Debt Instrument, Face Amount	$ 811,819
Debt Instrument, Term (Month)	66 months
Debt Instrument, Interest Rate, Stated Percentage	6.75%
Debt Instrument, Periodic Payment	$ 16,017
Repayments of Long-Term Debt			$ 36,687		$ 50,168

v3.24.2.u1

Note 5 - Stockholders' Equity (Details Textual) - Warrants Issued to Acquire Information Management Solutions, LLC [Member]		3 Months Ended	6 Months Ended
	Dec. 15, 2020 USD ($) $ / shares shares	Jun. 30, 2024 USD ($)	Jun. 30, 2023 USD ($)
Class of Warrant or Right, Issued During Period (in shares) | shares	945,599
Class of Warrant or Right, Exercise Price of Warrants or Rights (in dollars per share) | $ / shares	$ 4.23
Class of Warrant or Right, Vesting Period (Year)	3 years
Class of Warrant or Right, Term Following Vesting (Year)	5 years
Warrants and Rights Outstanding	$ 552,283
Fair Value Adjustment of Warrants		$ 27,615	$ 55,228
Measurement Input, Share Price [Member]
Warrants and Rights Outstanding, Measurement Input	0.58
Measurement Input, Risk Free Interest Rate [Member]
Warrants and Rights Outstanding, Measurement Input	0.0009
Measurement Input, Expected Term [Member]
Warrants and Rights Outstanding, Measurement Input	5
Measurement Input, Expected Dividend Rate [Member]
Warrants and Rights Outstanding, Measurement Input	0
Measurement Input, Price Volatility [Member]
Warrants and Rights Outstanding, Measurement Input	0.599

v3.24.2.u1

Note 6 - Net Income (Loss) Per Share - Earnings Per Share Reconciliation (Details) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2024	Jun. 30, 2023	Jun. 30, 2024	Jun. 30, 2023
Numerator for basic and diluted income (loss) per share, net income (loss) available to common shareholders	$ 75,492	$ 205,041	$ (174,696)	$ 219,874
Denominator:
Basic (in shares)	26,534,407	26,413,329	26,454,848	26,410,340
Effect of dilutive securities (in shares)	0	0	0	0
Diluted (in shares)	26,534,407	26,413,329	26,454,848	26,410,340
Basic income (loss) per common share: (in dollars per share)	$ 0	$ 0.01	$ (0.01)	$ 0.01
Diluted income (loss) per common share: (in dollars per share)	$ 0	$ 0.01	$ (0.01)	$ 0.01

v3.24.2.u1

Note 6 - Net Income (Loss) Per Share - Anti-dilutive Securities (Details) - shares	6 Months Ended
	Jun. 30, 2024	Jun. 30, 2023
Anti-dilutive awards and options (in shares)	945,599	945,599

v3.24.2.u1

Note 7 - Income Taxes (Details Textual) - USD ($) $ in Millions	Jun. 30, 2024	Dec. 31, 2023
Deferred Tax Assets, Net of Valuation Allowance	$ 1.5
Deferred Tax Assets, Valuation Allowance	$ 6.1
Tax Year 2023 [Member]
Operating Loss Carryforwards		$ 23.3

v3.24.2.u1

Note 7 - Income Taxes - Schedule of Net Operating Losses (Details) - USD ($)		6 Months Ended	12 Months Ended
	Jan. 01, 2005	Jun. 30, 2024	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2013	Dec. 31, 2010	Dec. 31, 2009	Dec. 31, 2008	Dec. 31, 2007	Dec. 31, 2006
NOL	$ 1,768,851	$ 9,291,308	$ 1,267,336	$ 474,465	$ 504,862	$ 429,827	$ 835,322	$ 918,960	$ 1,740,724	$ 1,350,961

v3.24.2.u1

Note 8 - Related Party Transactions (Details Textual) - USD ($)							3 Months Ended				6 Months Ended
	Jun. 21, 2024	Feb. 24, 2024	Nov. 18, 2023	Mar. 16, 2023	Feb. 17, 2023	Feb. 08, 2023	Jun. 30, 2024	Mar. 31, 2024	Jun. 30, 2023	Mar. 31, 2023	Jun. 30, 2024	Jun. 30, 2023
Shares Issued, Price Per Share (in dollars per share)	$ 1.55			$ 1.6		$ 1.75
Treasury Stock, Value, Acquired, Cost Method							$ 104,946	$ 44,823	$ 10,507	$ 8,529
Restricted Stock [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award, Equity Instruments Other than Options, Grants in Period (in shares)	966,000					1,403,000
Share-Based Compensation Arrangement by Share-Based Payment Award, Award Vesting Period (Year)	10 years					10 years
Restricted Stock Units (RSUs) [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award, Equity Instruments Other than Options, Grants in Period (in shares)	277,200			69,000		273,000
Share-Based Compensation Arrangement by Share-Based Payment Award, Award Vesting Period (Year)	10 years			3 years		10 years
Restricted Stock Units (RSUs) [Member] | Employees and Directors [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award, Award Vesting Period (Year)	3 years					3 years
Shares Issued, Price Per Share (in dollars per share)	$ 1.55
Angry Pug Sportswear [Member]
Related Party Transaction, Purchases from Related Party											$ 4,402	$ 18,148
Louis Hoch [Member] | Angry Pug Sportswear [Member]
Ownership Percentage								50.00%
Chief Executive Officer [Member] | Restricted Stock [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award, Equity Instruments Other than Options, Grants in Period (in shares)	160,000					330,000
Chief Executive Officer [Member] | Restricted Stock Units (RSUs) [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award, Equity Instruments Other than Options, Grants in Period (in shares)	21,000					33,000
Chief Accounting Officer [Member] | Restricted Stock [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award, Equity Instruments Other than Options, Grants in Period (in shares)	120,000
Chief Accounting Officer [Member] | Restricted Stock Units (RSUs) [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award, Equity Instruments Other than Options, Grants in Period (in shares)	18,000
Director One [Member] | Restricted Stock [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award, Equity Instruments Other than Options, Grants in Period (in shares)	80,000					100,000
Director One [Member] | Restricted Stock Units (RSUs) [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award, Equity Instruments Other than Options, Grants in Period (in shares)	18,000					12,000
Director Two [Member] | Restricted Stock [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award, Equity Instruments Other than Options, Grants in Period (in shares)	40,000					100,000
Director Two [Member] | Restricted Stock Units (RSUs) [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award, Equity Instruments Other than Options, Grants in Period (in shares)	12,000					12,000
Non Employee Directors [Member] | Restricted Stock Units (RSUs) [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award, Equity Instruments Other than Options, Grants in Period (in shares)	84,000
Share-Based Compensation Arrangement by Share-Based Payment Award, Award Vesting Period (Year)	3 years
Director Three [Member] | Restricted Stock Units (RSUs) [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award, Equity Instruments Other than Options, Grants in Period (in shares)	21,000			21,000
Director Four [Member] | Restricted Stock Units (RSUs) [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award, Equity Instruments Other than Options, Grants in Period (in shares)	21,000			21,000
Director Five [Member] | Restricted Stock Units (RSUs) [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award, Equity Instruments Other than Options, Grants in Period (in shares)	21,000			21,000
Director Six [Member] | Restricted Stock Units (RSUs) [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award, Equity Instruments Other than Options, Grants in Period (in shares)	21,000			6,000
Chief Financial Officer [Member]
Treasury Stock, Shares, Acquired (in shares)		2,075	2,619
Treasury Stock, Value, Acquired, Cost Method		$ 3,258	$ 4,452
Shares Acquired, Average Cost Per Share (in dollars per share)		$ 1.57	$ 1.7
Chief Financial Officer [Member] | Restricted Stock [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award, Equity Instruments Other than Options, Grants in Period (in shares)						200,000
Chief Financial Officer [Member] | Restricted Stock Units (RSUs) [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award, Equity Instruments Other than Options, Grants in Period (in shares)						21,000
Chairman, President, Chief Executive Officer and Chief Operating Officer [Member]
Treasury Stock, Shares, Acquired (in shares)		4,911	3,927
Treasury Stock, Value, Acquired, Cost Method		$ 7,710	$ 6,675
Shares Acquired, Average Cost Per Share (in dollars per share)		$ 1.57	$ 1.7
Executive Vice President [Member]
Annual Base Salary					$ 250,000
Employment Agreement, Commissions Percentage					10.00%
Payment of One-time Signing Bonus					$ 40,000

v3.24.2.u1

Note 9 - Commitments and Contingencies (Details Textual)	Sep. 28, 2021 USD ($)
Claim By KDHM, LLC Against Usio Output Solutions, Inc. [Member]
Loss Contingency, Damages Sought, Value	$ 317,000
Counterclaim By Usio Output Solutions, Inc. Against KDHM, LLC [Member]
Amount Failed to Disclose As Required	$ 305,000

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