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 accompanying notes to the condensed interim consolidated financial statements.

 

 

USIO, INC.

CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY

(UNAUDITED)

 

 

The accompanying notes are an integral part of these 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 "first quarter" mean the three month period ended  March 31, 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 USPS for postage.

 

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

 

		Three Months Ended March 31,
		2024				2023
ACH and complementary services		$	3,881,734			$	3,340,722
Credit card			7,560,734				7,339,898
Prepaid card services			3,341,224				4,807,404
Output Solutions			5,537,923				5,958,220
Total revenue		$	20,321,615			$	21,446,244

 

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.

 

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 continues to expand, 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.

 

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.

 

Merchant Reserves: The Company has merchant reserve requirements associated with Automated Clearing House, or 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 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 March 31,
		2024				2023
Beginning cash, cash equivalents, prepaid card load assets, customer deposits and merchant reserves:
Cash and cash equivalents		$	7,155,687			$	5,709,117
Prepaid card load assets			31,578,973				20,170,761
Customer deposits			1,865,731				1,554,122
Merchant reserves			5,310,095				4,909,501
Total		$	45,910,486			$	32,343,501
Ending cash, cash equivalents, prepaid card load assets, customer deposits and merchant reserves:
Cash and cash equivalents		$	7,053,812			$	6,763,813
Prepaid card load assets			28,698,878				18,812,954
Customer deposits			1,808,263				1,575,075
Merchant reserves			5,322,095				4,744,615
Total		$	42,883,048			$	31,896,457

 

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. During the three months ended March 31, 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 March 31, 2024 and December 31, 2023.

 

Inventory: Inventory is stated at the lower of cost or net realizable value. At March 31, 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 three months ended March 31, 2024 and March 31, 2023, the Company capitalized software costs of $115,473 and $207,732, 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 three months ended March 31, 2024. Management is not aware of any impairment changes 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 March 31, 2024 and December 31, 2023, the Company’s reserve for processing losses was $859,528 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: In  June 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2016-13, Financial Instruments - Credit Losses (Topic 326), to provide financial statement users with more decision-useful information about the expected credit losses on financial instruments and other commitments to extend credit held by a reporting entity at each reporting date.  To achieve this objective, the amendments in Topic 326 replace the incurred loss impairment methodology in current GAAP with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates.  Topic 326 is effective for fiscal years beginning after  December 25, 2022, including interim periods within those fiscal years for smaller reporting companies.  We adopted this guidance effective  January 1, 2023 on a prospective basis. Our financial statements were not materially impacted upon adoption.

 

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.

 

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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 March 31, 2024 and 2023, operating lease expenses totaled $132,574 and $179,901, respectively.

 

Note 3. Accrued Expenses

 

Accrued expenses consisted of the following balances:

 

		March 31, 2024				December 31, 2023
Accrued commissions		$	725,258			$	2,433,353
Reserve for processing losses			859,528				826,528
Other accrued expenses			593,255				246,444
Accrued taxes			377,740				294,953
Accrued salaries			222,286				—
Total accrued expenses		$	2,778,067			$	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  March 31, 2024 and 2023 were $14,312 and $13,488, respectively, and are reflected on the Company's Condensed Consolidated Statement of Cash Flows. This loan was paid in full on its maturity date.

 

On  October 1, 2023, the Company entered into a debt arrangement to finance $811,819 for the purchase of an Output Solutions folder and inserter. 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 6 months of the loan term. Total interest and principal payments on this folder and inserter equipment loan were $13,481 for the first quarter of 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 $27,614 in each of the three months ended  March 31, 2024 and 2023.

Note 6. Net (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 months ended March 31, 2024 and March 31, 2023.

 

		Three Months Ended March 31,
		2024				2023
Numerator:
Numerator for basic and diluted income (loss) per share, net (loss) available to common shareholders		$	(250,188	)		$	14,833
Denominator:
Common stock			19,990,862				20,122,972
Restricted stock awards			6,384,900				6,385,900
Denominator for basic income (loss) per share, weighted average shares outstanding			26,375,762				26,508,872
Effect of dilutive securities			—				945,599
Denominator for diluted earnings per share, adjusted for weighted average shares and assumed conversion			26,375,762				27,454,471
Basic income (loss) per common share		$	(0.01	)		$	0.00
Diluted income (loss) per common share and common share equivalent		$	(0.01	)		$	0.00

 

The awards and options to purchase shares of common stock that were outstanding at March 31, 2024 and March 31, 2023 that were not included in the computation of diluted earnings per share because the effect would have been anti-dilutive, are as follows:

 

		Three Months Ended March 31,
		2024				2023
Anti-dilutive awards and options			945,599				945,599

 

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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.

 

Note 8. Related Party Transactions

 

Louis Hoch

 

During the three months ended March 31, 2024 and  March 31, 2023, the Company purchased a total of $0 and $1,835, 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  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 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 restricted stock units ("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 Directors as a performance bonus at an issue price of $1.60 per share. Directors included in the RSU grant were Blaise Bender (21,000 RSUs), Brad Rollins (21,000 RSUs), Ernesto Beyer (21,000 RSUs) and Michelle Miller (6,000 RSUs).

 

On  November 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.

 

  

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

 

Usio, Inc. (collectively with its subsidiaries, "we," "our," "us," the "Company" or "Usio") was founded under the name Billserv Com, Inc. in July 1998 and incorporated in the State of Nevada. On June 26, 2019, we changed our corporate name from Payment Data Systems, Inc. to Usio, Inc. Our principal offices are located at 3611 Paesanos Parkway, Suite 300, San Antonio, TX 78231. Our telephone number is (210) 249-4100. 

 

We provide integrated payment processing services to merchants and businesses, including all types of Automated Clearing House, or ACH, processing, credit, prepaid card and debit card-based processing services and statement preparation, presentment and mailing services.

 

In addition, we offer customizable prepaid cards which businesses 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. 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™. Our PIN-less debit product allows merchants to debit and credit accounts in real-time. In our over 25-year history, we have created a loyal customer base that relies on us for our convenient, secure, innovative and adaptive services and technology, and we have built long-standing and valuable relationships with premier banking institutions such as Fifth-Third Bank, Sunrise Bank, and Wells Fargo Bank.

 

Our strategy is to drive growth through a leveraged, one to many, distribution model in the software development marketplace. Following the completion of the Singular Payments acquisition, we launched our payment facilitation, 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. We believe that the added value of offering our integration partners access to 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.

 

With the acquisition of the assets of Information Management Solutions, LLC, or IMS, in December 2020, we began to offer additional services relating to electronic bill presentment, document composition, document decomposition and printing and mailing services serving hundreds of customers representing a wide range of industry verticals, including utilities and financial institutions through our wholly-owned subsidiary, Usio Output Solutions, Inc., or Output Solutions.  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.

 

Summary of Results

 

We believe that our success will continue to depend in large part on our ability to (a) grow revenues, (b) manage our operating expenses, (c) add quality customers to our client base, (d) meet evolving customer requirements, (e) adapt to technological changes in an emerging market, and (f) assimilate current and future acquisitions of companies and customer portfolios. 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.

 

We believe that the number of credit card transactions processed, ACH transaction counts, prepaid card volumes and total dollar volumes are the most critical measures to gauge the state of our business. During the first quarter of 2024, the number of credit card transactions processed by us increased by 18% versus the first quarter of 2023. The volume of credit card dollars processed during the first quarter of 2024 increased by 8% 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 first quarter of 2024 increased by 4% compared to the first quarter of 2023. Returned check transactions processed during the first quarter of 2024 increased by 9% compared to the first quarter of 2023. Electronic check dollars processed during the first quarter of 2024 increased by 22% compared to the first 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 first quarter of 2024 increased by 108% compared to the first quarter of 2023. Prepaid card transaction counts processed during the first quarter of 2024 increased by 26% compared to the first quarter of 2023. Prepaid card purchase volume during the first quarter of 2024 increased by 42% compared to the first 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 first quarter of 2024 were $1.5 billion compared to $1.2 billion processed in the first quarter of 2023, up 19% 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 March 31, 2024 the Company had repurchased $44,823 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.

 

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.

 

As the Federal Reserve worked to fight economic inflation, the federal funds rate 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 receiving more favorable interest rates on its current cash balances, amounting to $764,125 in interest income in the three months ended March 31, 2024. 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. However, sustaining growth at existing rates may not occur. 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. 

 

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 $859,528 as of March 31, 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.

 

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.

 

 

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 an adjusted EBITDA of $0.1 million for the quarter ended March 31, 2024, as compared to an adjusted EBITDA of $1.0 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.

 

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 months ended March 31, 2024 and 2023.

 

		Three Months Ended March 31,
		2024				2023
Reconciliation from Operating income (Loss) to Adjusted EBITDA:
Operating income (Loss)		$	(930,728	)		$	5,993
Depreciation and amortization			576,154				518,029
EBITDA			(354,574	)			524,022
Non-cash stock-based compensation expense, net			499,273				504,574
Adjusted EBITDA		$	144,699			$	1,028,596
Calculation of Adjusted EBITDA margins:
Revenues		$	20,321,615			$	21,446,244
Adjusted EBITDA		$	144,699			$	1,028,596
Adjusted EBITDA margins			0.7	%			4.8	%

 

The following table is a reconciliation of net cash flow provided by (used in) operating activities to adjusted operating cash flows for the three months ended March 31, 2024 and 2023.

 

		March 31, 2024				March 31, 2023
Reconciliation from net cash (used in) operating activities to Non-GAAP Adjusted Operating Cash Flows:
Net cash provided by (used in) operating activities		$	(2,791,434	)		$	(207,292	)
Operating cash flow adjustments:
Prepaid card load obligations			2,880,095				1,357,807
Customer deposits			57,468				(20,953	)
Merchant reserves			(12,000	)			164,886
Operating lease right-of-use assets			(102,394	)			31,459
Operating lease liabilities			107,243				(4,548	)
Total adjustments to net cash provided by operating activities		$	2,930,412			$	1,528,651
Adjusted operating cash flows provided		$	138,978			$	1,321,359

 

We reported cash provided by adjusted operating cash flows of $0.1 million for the three months ended March 31, 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 three months ended March 31, 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 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 on the 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 in the 2024 quarter compared to the 2023 quarter 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 revenues are principally derived from providing integrated electronic payment services to merchants and businesses, including credit and debit card-based processing services and transaction processing via the Automated Clearing House, or ACH, network and program management and processing of prepaid debit cards. With the acquisition of the assets of IMS in December 2020, we began to offer additional Output Solutions services relating to electronic bill presentment, document composition, document decomposition and printing and mailing services serving hundreds of customers representing a wide range of industry verticals, including utilities and financial institutions.

 

		Three Months Ended March 31,
		2024				2023				$ Change				% Change
ACH and complementary services		$	3,881,734			$	3,340,722			$	541,012				16	%
Credit card			7,560,734				7,339,898				220,836				3	%
Prepaid card services			3,341,224				4,807,404				(1,466,180	)			(30	)%
Output Solutions			5,537,923				5,958,220				(420,297	)			(7	)%
Total Revenue		$	20,321,615			$	21,446,244			$	(1,124,629	)			(5	)%

 

Consolidated revenue for the quarter ended March 31, 2024 decreased by 5% to $20.3 million, as compared to $21.4 million for the quarter ended March 31, 2023 due primarily to lower breakage revenues from our prepaid card line of business as the COVID incentive programs wind down. The Output Solutions lines of business were also down 7%, as a result of challenging comparables to the prior year period which contained higher levels of one time revenues related to government tax forms and voter card jobs. There was modest growth in our ACH and credit card lines of business, as our Payfac strategy continues to be implemented, 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 as our sales effort to board net new customers and processing volumes is reflected.

 

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 $0.4 million, or 3%, to $16.1 million for the quarter ended March 31, 2024, as compared to $16.5 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 14% to $4.2 million for the quarter ended March 31, 2024, as compared to $4.9 million for the same period in the prior year. Similarly, gross margin percentage of revenue was 20.7% for the quarter ended March 31, 2024 as compared to 22.9% in the prior year period. The decrease in gross profit and gross margin percentage in the quarter ended March 31, 2024, as compared to the same period during the prior year, was primarily attributable to lower revenues and gross profit metrics from our Prepaid card services and Output solutions lines of business.

 

Stock-based Compensation

 

Stock-based compensation expenses were $0.5 million for the quarter ended March 31, 2024 as compared to $0.5 million for the quarter ended March 31, 2023, flat versus the prior year period.

 

Other Selling, General and Administrative Expenses

 

Other selling, general and administrative expenses, or other SG&A, were $4.1 million for the quarter ended March 31, 2024 as compared to $3.9 million in the prior year quarter. The modest increase in other SG&A for the quarter ended March 31, 2024 reflects the occurrence of some one-time expenses related to marketing initiatives and increased travel to sales-related events during the quarter, 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 $0.6 million and $0.5 million for the quarters ended March 31, 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. 

 

Other Income (Expense)

 

Other income (expense), net was $0.8 million for the quarter ended March 31, 2024 compared to $0.1 million for the quarter ended March 31, 2023. Higher interest-bearing merchant reserves and interest rates drove the increased interest income.

 

Net Income (Loss)

 

We reported a net loss of $0.3 million for the quarter ended March 31, 2024, as compared to a net income of $0.01 million for the same period in the prior year. The decrease in net income was attributable to decreases in revenue combined with decreased profit margins.

 

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 offerings 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 March 31, 2024, we had cash and cash equivalents of $7.1 million. For the three months ended March 31, 2024, cash used in operations was $2.8 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 loss of $0.3 million for the quarter ended March 31, 2024. At March 31, 2024, we had an accumulated deficit of $71.6 million. Additionally, we had working capital of $8.7 million and $8.0 million at March 31, 2024 and December 31, 2023, respectively.

 

From time to time we have sold shares of our common stock in order to provide us liquidity. For example, on November 19, 2021, Voyager Digital purchased 142,857 unregistered shares of common stock at a price of $7.00 per share in a private offering. The gross proceeds to us 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 three months ended March 31, 2024 was $2.8 million, as compared to net cash used in operating activities of $0.2 million for the three months ended March 31, 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 $0.1 million for the three months ended March 31, 2024 as compared to cash used in operating activities of $1.3 million for the three months ended March 31, 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 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. 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. 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. This increase in cash used in operating activities 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 $0.2 million for the three months ended March 31, 2024 as compared to cash used in investing activities of $0.2 million for the three months ended March 31, 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 decrease in cash used in investing activities was primarily attributable to the reduced amount of fixed asset purchases relative to the same period a year ago.

 

Net cash used in financing activities for the three months ended March 31, 2024 was $0.1 million and net cash used in financing activities for the three months ended March 31, 2023 was $0.02 million.

 

 

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 March 31, 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 March 31, 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 Ben Kauder, Nina Pioletti and Triple Pay Play for breach of contract and misappropriation of trade secrets and unfair business competition.

 

On July 6, 2023, Ben Kauder, Nina 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, Nina, and Triple Pay Play reside.

 

Currently, this case is pending in the Chancery Court of Maury County, Tennessee and is in the early-stage discovery.

 

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 early March of 2024, Usio filed a Motion to Dismiss for improper venue and failure to state a claim. The motion is set to be heard in May of 2024 in the State of Rhode Island Kent, SC. Superior Court.

 

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.

 

We believe that plaintiff's claims in the lawsuit have no merit and contradict the express terms of the asset purchase agreement. As a result of this post-sale dispute, we discovered that KDHM, LLC and its principals made certain misrepresentations and breached the terms of the asset purchase agreement. 

 

On September 28, 2021, we filed an answer generally denying the plaintiff’s allegations. On October 5, 2021, we filed a counterclaim and third-party petition. 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 profit and loss 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 assert 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. We are currently in the process of appealing the decision.

 

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 March 31, 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, $1,374,049 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 March 31, 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
January 1 - January 31, 2024			5,887			$	1.68				5,887			$	2,261,410
February 1 - February 29, 2024			20,745			$	1.58				20,745			$	2,228,724
March 1 - March 31, 2024			1,232			$	1.75				1,232			$	2,226,570
Total			27,864								27,864			$	2,226,570

 

Item 3. Defaults Upon Senior Securities.

 

None.

 

Item 4. MINE SAFETY DISCLOSURES.

 

Not applicable.

 

Item 5. OTHER INFORMATION.

 

None.

 

16

---

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: May 15, 2024	By:	/s/ Louis A. Hoch
		Louis A. Hoch
		Chief Executive Officer
		(Principal Executive Officer)
Date: May 15, 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 March 31, 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: May 15, 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 March 31, 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: May 15, 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 March 31, 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: May 15, 2024
	By:	/s/ Louis A. Hoch
		Louis A. Hoch
		Chief Executive Officer
		(Principal Executive Officer)
Date: May 15, 2024
	By:	/s/ Michael White
		Michael White
		Chief Accounting Officer
		(Principal Financial and Accounting Officer)

 

v3.24.1.1.u2

Document And Entity Information - shares	3 Months Ended
	Mar. 31, 2024	May 13, 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	Q1
Document Fiscal Year Focus	2024
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Mar. 31, 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		26,430,824

v3.24.1.1.u2

Condensed Consolidated Balance Sheets (Current Period Unaudited) - USD ($)	Mar. 31, 2024	Dec. 31, 2023
Assets
Cash and cash equivalents	$ 7,053,812	$ 7,155,687
Accounts receivable, net	4,862,227	5,564,138
Settlement processing assets	41,030,860	44,899,603
Prepaid card load assets	28,698,878	31,578,973
Customer deposits	1,808,263	1,865,731
Inventory	429,577	422,808
Prepaid expenses and other	687,415	444,071
Current assets before merchant reserves	84,571,032	91,931,011
Merchant reserves	5,322,095	5,310,095
Total current assets	89,893,127	97,241,106
Property and equipment, net	3,478,654	3,660,092
Other assets:
Intangibles, net	1,535,366	1,753,333
Deferred tax asset, net	1,504,000	1,504,000
Operating lease right-of-use assets	2,318,388	2,420,782
Other assets	335,357	355,357
Total other assets	5,693,111	6,033,472
Total assets	99,064,892	106,934,670
Current liabilities:
Accounts payable	896,293	1,031,141
Accrued expenses	2,778,067	3,801,278
Operating lease liabilities, current portion	490,184	633,616
Equipment loan, current portion	180,906	107,270
Settlement processing obligations	41,030,860	44,899,603
Prepaid card load obligations	28,698,878	31,578,973
Customer deposits	1,808,263	1,865,731
Current liabilities before merchant reserve obligations	75,883,451	83,917,612
Merchant reserve obligations	5,322,095	5,310,095
Total current liabilities	81,205,546	89,227,707
Non-current liabilities:
Equipment loan, net of current portion	630,913	718,980
Operating lease liabilities, net of current portion	1,955,333	1,919,144
Total liabilities	83,791,792	91,865,831
Commitments and contingencies
Stockholders’ equity:
Preferred stock, $0.01 par value, 10,000,000 shares authorized; -0- shares outstanding at March 31, 2024 (unaudited) and December 31, 2023, respectively	0	0
Common stock, $0.001 par value, 200,000,000 shares authorized; 28,779,206 and 28,661,406 issued, and 26,412,259 and 26,332,523 outstanding at March 31, 2024 (unaudited) and December 31, 2023, respectively	197,194	197,087
Additional paid-in capital	97,632,948	97,479,830
Treasury stock, at cost; 2,366,947 and 2,339,083 shares at March 31, 2024 (unaudited) and December 31, 2023, respectively	(4,406,973)	(4,362,150)
Deferred compensation	(6,561,728)	(6,907,775)
Accumulated deficit	(71,588,341)	(71,338,153)
Total stockholders’ equity	15,273,100	15,068,839
Total liabilities and stockholders’ equity	$ 99,064,892	$ 106,934,670

v3.24.1.1.u2

Condensed Consolidated Balance Sheets (Current Period Unaudited) (Parentheticals) - $ / shares	Mar. 31, 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)	28,779,206	28,661,406
Common stock, outstanding (in shares)	26,412,259	26,332,523
Treasury stock, shares (in shares)	2,366,947	2,339,083

v3.24.1.1.u2

Condensed Consolidated Statements of Operations (Unaudited) - USD ($)	3 Months Ended
	Mar. 31, 2024	Mar. 31, 2023
Revenues	$ 20,321,615	$ 21,446,244
Cost of services	16,116,691	16,544,429
Gross profit	4,204,924	4,901,815
Selling, general and administrative expenses:
Stock-based compensation	499,273	504,574
Other SG&A	4,060,225	3,873,219
Depreciation and amortization	576,154	518,029
Total selling, general and administrative	5,135,652	4,895,822
Operating income (loss)	(930,728)	5,993
Other income and (expense):
Interest income	764,125	92,928
Interest expense	(13,585)	(662)
Other income, net	750,540	92,266
Income (Loss) before income tax expense	(180,188)	98,259
Income tax expense	70,000	83,426
Net income (Loss)	$ (250,188)	$ 14,833
Income (Loss) Per Share
Basic income (loss) per common share: (in dollars per share)	$ (0.01)	$ 0
Diluted income (loss) per common share: (in dollars per share)	$ (0.01)	$ 0
Weighted average common shares outstanding
Basic - common stock (in shares)	19,990,862	20,122,972
Basic - restricted stock awards (in shares)	6,384,900	6,385,900
Weighted average shares used to compute basic earnings per share (in shares)	26,375,762	26,508,872
Diluted (in shares)	26,375,762	27,454,471

v3.24.1.1.u2

Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($)	3 Months Ended
	Mar. 31, 2024	Mar. 31, 2023
Operating activities:
Net (loss)	$ (250,188)	$ 14,833
Adjustments to reconcile net income (loss) to net cash (used in) operating activities:
Depreciation	358,187	300,061
Amortization	217,967	217,968
Employee stock-based compensation	499,273	504,574
Changes in current assets and current liabilities:
Accounts receivable	701,911	(846,609)
Prepaid expenses and other	(243,344)	(10,616)
Operating lease right-of-use assets	102,394	(31,459)
Other assets	20,000	(1)
Inventory	(6,769)	12,898
Accounts payable and accrued expenses	(1,158,059)	1,128,251
Operating lease liabilities	(107,243)	4,548
Prepaid card load obligations	(2,880,095)	(1,357,807)
Merchant reserves	12,000	(164,886)
Customer deposits	(57,468)	20,953
Net cash (used in) operating activities	(2,791,434)	(207,292)
Investing activities:
Purchases of property and equipment	(176,750)	(217,735)
Net cash (used in) investing activities	(176,750)	(217,735)
Financing activities:
Payments on equipment loan	(14,431)	(13,488)
Purchases of treasury stock	(44,823)	(8,529)
Net cash (used in) financing activities	(59,254)	(22,017)
Change in cash, cash equivalents, prepaid card load assets, customer deposits and merchant reserves	(3,027,438)	(447,044)
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	42,883,048	31,896,457
Supplemental disclosure of cash flow information:
Interest	13,585	662
Income taxes	0	13,426
Non-cash financing activity:
Issuance of deferred stock compensation	0	2,444,054
Employee Awards [Member]
Adjustments to reconcile net income (loss) to net cash (used in) operating activities:
Employee stock-based compensation	$ 499,273	$ 504,574

v3.24.1.1.u2

Condensed 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 (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				308,676		308,676
Purchase of treasury stock costs	0	0	(8,529)	0	0	(8,529)
Net (loss)	$ 0	0	0	0	14,833	14,833
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
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	153,226
Deferred compensation amortization				346,047		346,047
Purchase of treasury stock costs	0	0	(44,823)	0	0	(44,823)
Net (loss)	$ 0	0	0	0	(250,188)	(250,188)
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

v3.24.1.1.u2

Note 1 - Basis of Presentation	3 Months Ended
	Mar. 31, 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 "first quarter" mean the three month period ended  March 31, 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 USPS for postage.   The following table presents the Company's consolidated revenues by source:       Three Months Ended March 31,       2024     2023                     ACH and complementary services   $ 3,881,734     $ 3,340,722   Credit card     7,560,734       7,339,898   Prepaid card services     3,341,224       4,807,404   Output Solutions     5,537,923       5,958,220   Total revenue   $ 20,321,615     $ 21,446,244     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.   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 continues to expand, 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.   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.   Merchant Reserves: The Company has merchant reserve requirements associated with Automated Clearing House, or 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 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 March 31,       2024     2023                     Beginning cash, cash equivalents, prepaid card load assets, customer deposits and merchant reserves:                 Cash and cash equivalents   $ 7,155,687     $ 5,709,117   Prepaid card load assets     31,578,973       20,170,761   Customer deposits     1,865,731       1,554,122   Merchant reserves     5,310,095       4,909,501   Total   $ 45,910,486     $ 32,343,501                     Ending cash, cash equivalents, prepaid card load assets, customer deposits and merchant reserves:                 Cash and cash equivalents   $ 7,053,812     $ 6,763,813   Prepaid card load assets     28,698,878       18,812,954   Customer deposits     1,808,263       1,575,075   Merchant reserves     5,322,095       4,744,615   Total   $ 42,883,048     $ 31,896,457     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. During the three months ended March 31, 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 March 31, 2024 and December 31, 2023.   Inventory: Inventory is stated at the lower of cost or net realizable value. At March 31, 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 three months ended March 31, 2024 and March 31, 2023, the Company capitalized software costs of $115,473 and $207,732, 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 three months ended March 31, 2024. Management is not aware of any impairment changes 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 March 31, 2024 and December 31, 2023, the Company’s reserve for processing losses was $859,528 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: In  June 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2016-13, Financial Instruments - Credit Losses (Topic 326), to provide financial statement users with more decision-useful information about the expected credit losses on financial instruments and other commitments to extend credit held by a reporting entity at each reporting date.  To achieve this objective, the amendments in Topic 326 replace the incurred loss impairment methodology in current GAAP with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates.  Topic 326 is effective for fiscal years beginning after  December 25, 2022, including interim periods within those fiscal years for smaller reporting companies.  We adopted this guidance effective  January 1, 2023 on a prospective basis. Our financial statements were not materially impacted upon adoption.   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.

v3.24.1.1.u2

Note 2 - Leases	3 Months Ended
	Mar. 31, 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 March 31, 2024 and 2023, operating lease expenses totaled $132,574 and $179,901, respectively.

v3.24.1.1.u2

Note 3 - Accrued Expenses	3 Months Ended
	Mar. 31, 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:       March 31, 2024     December 31, 2023                     Accrued commissions   $ 725,258     $ 2,433,353   Reserve for processing losses     859,528       826,528   Other accrued expenses     593,255       246,444   Accrued taxes     377,740       294,953   Accrued salaries     222,286       —   Total accrued expenses   $ 2,778,067     $ 3,801,278

v3.24.1.1.u2

Note 4 - Equipment Loan	3 Months Ended
	Mar. 31, 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  March 31, 2024 and 2023 were $14,312 and $13,488, respectively, and are reflected on the Company's Condensed Consolidated Statement of Cash Flows. This loan was paid in full on its maturity date.   On  October 1, 2023, the Company entered into a debt arrangement to finance $811,819 for the purchase of an Output Solutions folder and inserter. 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 6 months of the loan term. Total interest and principal payments on this folder and inserter equipment loan were $13,481 for the first quarter of 2024.

v3.24.1.1.u2

Note 5 - Stockholders' Equity	3 Months Ended
	Mar. 31, 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 $27,614 in each of the three months ended  March 31, 2024 and 2023.

v3.24.1.1.u2

Note 6 - Net (Loss) Per Share	3 Months Ended
	Mar. 31, 2024
Notes to Financial Statements
Earnings Per Share [Text Block]	Note 6. Net (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 months ended March 31, 2024 and March 31, 2023.       Three Months Ended March 31,       2024     2023   Numerator:                 Numerator for basic and diluted income (loss) per share, net (loss) available to common shareholders   $ (250,188 )   $ 14,833   Denominator:                 Common stock     19,990,862       20,122,972   Restricted stock awards     6,384,900       6,385,900   Denominator for basic income (loss) per share, weighted average shares outstanding     26,375,762       26,508,872   Effect of dilutive securities     —       945,599   Denominator for diluted earnings per share, adjusted for weighted average shares and assumed conversion     26,375,762       27,454,471   Basic income (loss) per common share   $ (0.01 )   $ 0.00   Diluted income (loss) per common share and common share equivalent   $ (0.01 )   $ 0.00     The awards and options to purchase shares of common stock that were outstanding at March 31, 2024 and March 31, 2023 that were not included in the computation of diluted earnings per share because the effect would have been anti-dilutive, are as follows:       Three Months Ended March 31,       2024     2023   Anti-dilutive awards and options     945,599       945,599

v3.24.1.1.u2

Note 7 - Income Taxes	3 Months Ended
	Mar. 31, 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.

v3.24.1.1.u2

Note 8 - Related Party Transactions	3 Months Ended
	Mar. 31, 2024
Notes to Financial Statements
Related Party Transactions Disclosure [Text Block]	Note 8. Related Party Transactions   Louis Hoch   During the three months ended March 31, 2024 and  March 31, 2023, the Company purchased a total of $0 and $1,835, 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  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 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 restricted stock units ("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 Directors as a performance bonus at an issue price of $1.60 per share. Directors included in the RSU grant were Blaise Bender (21,000 RSUs), Brad Rollins (21,000 RSUs), Ernesto Beyer (21,000 RSUs) and Michelle Miller (6,000 RSUs).   On  November 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.

v3.24.1.1.u2

Insider Trading Arrangements	3 Months Ended
	Mar. 31, 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

v3.24.1.1.u2

Significant Accounting Policies (Policies)	3 Months Ended
	Mar. 31, 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 USPS for postage.   The following table presents the Company's consolidated revenues by source:       Three Months Ended March 31,       2024     2023                     ACH and complementary services   $ 3,881,734     $ 3,340,722   Credit card     7,560,734       7,339,898   Prepaid card services     3,341,224       4,807,404   Output Solutions     5,537,923       5,958,220   Total revenue   $ 20,321,615     $ 21,446,244
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.
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 continues to expand, 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.
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.
Cash and Cash Equivalents, Restricted Cash and Cash Equivalents, Policy [Policy Text Block]	Merchant Reserves: The Company has merchant reserve requirements associated with Automated Clearing House, or 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 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 March 31,       2024     2023                     Beginning cash, cash equivalents, prepaid card load assets, customer deposits and merchant reserves:                 Cash and cash equivalents   $ 7,155,687     $ 5,709,117   Prepaid card load assets     31,578,973       20,170,761   Customer deposits     1,865,731       1,554,122   Merchant reserves     5,310,095       4,909,501   Total   $ 45,910,486     $ 32,343,501                     Ending cash, cash equivalents, prepaid card load assets, customer deposits and merchant reserves:                 Cash and cash equivalents   $ 7,053,812     $ 6,763,813   Prepaid card load assets     28,698,878       18,812,954   Customer deposits     1,808,263       1,575,075   Merchant reserves     5,322,095       4,744,615   Total   $ 42,883,048     $ 31,896,457
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. During the three months ended March 31, 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 March 31, 2024 and December 31, 2023.
Inventory, Policy [Policy Text Block]	Inventory: Inventory is stated at the lower of cost or net realizable value. At March 31, 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 three months ended March 31, 2024 and March 31, 2023, the Company capitalized software costs of $115,473 and $207,732, 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 three months ended March 31, 2024. Management is not aware of any impairment changes 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 March 31, 2024 and December 31, 2023, the Company’s reserve for processing losses was $859,528 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: In  June 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2016-13, Financial Instruments - Credit Losses (Topic 326), to provide financial statement users with more decision-useful information about the expected credit losses on financial instruments and other commitments to extend credit held by a reporting entity at each reporting date.  To achieve this objective, the amendments in Topic 326 replace the incurred loss impairment methodology in current GAAP with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates.  Topic 326 is effective for fiscal years beginning after  December 25, 2022, including interim periods within those fiscal years for smaller reporting companies.  We adopted this guidance effective  January 1, 2023 on a prospective basis. Our financial statements were not materially impacted upon adoption.   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.

v3.24.1.1.u2

Note 1 - Basis of Presentation (Tables)	3 Months Ended
	Mar. 31, 2024
Notes Tables
Disaggregation of Revenue [Table Text Block]	Three Months Ended March 31,       2024     2023                     ACH and complementary services   $ 3,881,734     $ 3,340,722   Credit card     7,560,734       7,339,898   Prepaid card services     3,341,224       4,807,404   Output Solutions     5,537,923       5,958,220   Total revenue   $ 20,321,615     $ 21,446,244
Contract with Customer, Contract Asset, Contract Liability, and Receivable [Table Text Block]	Three Months Ended March 31,       2024     2023                     Beginning cash, cash equivalents, prepaid card load assets, customer deposits and merchant reserves:                 Cash and cash equivalents   $ 7,155,687     $ 5,709,117   Prepaid card load assets     31,578,973       20,170,761   Customer deposits     1,865,731       1,554,122   Merchant reserves     5,310,095       4,909,501   Total   $ 45,910,486     $ 32,343,501                     Ending cash, cash equivalents, prepaid card load assets, customer deposits and merchant reserves:                 Cash and cash equivalents   $ 7,053,812     $ 6,763,813   Prepaid card load assets     28,698,878       18,812,954   Customer deposits     1,808,263       1,575,075   Merchant reserves     5,322,095       4,744,615   Total   $ 42,883,048     $ 31,896,457

v3.24.1.1.u2

Note 3 - Accrued Expenses (Tables)	3 Months Ended
	Mar. 31, 2024
Notes Tables
Schedule of Accounts Payable and Accrued Liabilities [Table Text Block]	March 31, 2024     December 31, 2023                     Accrued commissions   $ 725,258     $ 2,433,353   Reserve for processing losses     859,528       826,528   Other accrued expenses     593,255       246,444   Accrued taxes     377,740       294,953   Accrued salaries     222,286       —   Total accrued expenses   $ 2,778,067     $ 3,801,278

v3.24.1.1.u2

Note 6 - Net (Loss) Per Share (Tables)	3 Months Ended
	Mar. 31, 2024
Notes Tables
Schedule of Earnings Per Share, Basic and Diluted [Table Text Block]	Three Months Ended March 31,       2024     2023   Numerator:                 Numerator for basic and diluted income (loss) per share, net (loss) available to common shareholders   $ (250,188 )   $ 14,833   Denominator:                 Common stock     19,990,862       20,122,972   Restricted stock awards     6,384,900       6,385,900   Denominator for basic income (loss) per share, weighted average shares outstanding     26,375,762       26,508,872   Effect of dilutive securities     —       945,599   Denominator for diluted earnings per share, adjusted for weighted average shares and assumed conversion     26,375,762       27,454,471   Basic income (loss) per common share   $ (0.01 )   $ 0.00   Diluted income (loss) per common share and common share equivalent   $ (0.01 )   $ 0.00
Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share [Table Text Block]	Three Months Ended March 31,       2024     2023   Anti-dilutive awards and options     945,599       945,599

v3.24.1.1.u2

Note 7 - Income Taxes (Tables)	3 Months Ended
	Mar. 31, 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

v3.24.1.1.u2

Note 1 - Basis of Presentation (Details Textual) - USD ($)	3 Months Ended		12 Months Ended
	Mar. 31, 2024	Mar. 31, 2023	Dec. 31, 2023
Accounts Receivable, Allowance for Credit Loss, Current	$ 319,000		$ 319,000
Capitalized Computer Software, Additions	115,473	$ 207,732
Asset Impairment Charges	0	$ 0
SEC Schedule, 12-09, Valuation Allowances and Reserves, Deduction	$ 859,528		$ 826,528

v3.24.1.1.u2

Note 1 - Basis of Presentation - Schedule of Disaggregation of Revenue (Details) - USD ($)	3 Months Ended
	Mar. 31, 2024	Mar. 31, 2023
Revenues	$ 20,321,615	$ 21,446,244
ACH and Complementary Service Revenue [Member]
Revenues	3,881,734	3,340,722
Credit Card Revenue [Member]
Revenues	7,560,734	7,339,898
Prepaid Card Services Revenue [Member]
Revenues	3,341,224	4,807,404
Output Solutions [Member]
Revenues	$ 5,537,923	$ 5,958,220

v3.24.1.1.u2

Note 1 - Basis of Presentation - Summary of Deferred Revenue (Details) - USD ($)	Mar. 31, 2024	Dec. 31, 2023	Mar. 31, 2023
Cash and cash equivalents	$ 7,155,687	$ 6,763,813	$ 5,709,117
Prepaid card load assets	31,578,973	18,812,954	20,170,761
Customer deposits	1,865,731	1,575,075	1,554,122
Merchant reserves	5,310,095	4,744,615	4,909,501
Cash, cash equivalents, prepaid card load assets, customer deposits and merchant reserves, beginning of period	45,910,486	31,896,457	32,343,501
Cash and cash equivalents	7,053,812	7,155,687	6,763,813
Prepaid card load assets	28,698,878	31,578,973	18,812,954
Customer deposits	1,808,263	1,865,731	1,575,075
Merchant reserves	5,322,095	5,310,095	4,744,615
Cash, Cash Equivalents, Prepaid Card Load Assets, Customer Deposits and Merchant Reserves, End of Period	$ 42,883,048	$ 45,910,486	$ 31,896,457

v3.24.1.1.u2

Note 2 - Leases (Details Textual) - USD ($)	3 Months Ended
	Mar. 31, 2024	Mar. 31, 2023
Operating Lease, Expense	$ 132,574	$ 179,901

v3.24.1.1.u2

Note 3 - Accrued Expenses - Summary of Accrued Expenses (Details) - USD ($)	Mar. 31, 2024	Dec. 31, 2023
Accrued commissions	$ 725,258	$ 2,433,353
Reserve for processing losses	859,528	826,528
Other accrued expenses	593,255	246,444
Accrued taxes	377,740	294,953
Accrued salaries	222,286	0
Total accrued expenses	$ 2,778,067	$ 3,801,278

v3.24.1.1.u2

Note 4 - Equipment Loan (Details Textual) - USD ($)			3 Months Ended
	Oct. 01, 2023	Mar. 20, 2021	Mar. 31, 2024	Mar. 31, 2023
Repayments of Long-Term Debt			$ 14,431	$ 13,488
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			14,312	$ 13,488
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			$ 13,481

v3.24.1.1.u2

Note 5 - Stockholders' Equity (Details Textual) - Warrants Issued to Acquire Information Management Solutions, LLC [Member]		3 Months Ended
	Dec. 15, 2020 USD ($) $ / shares shares	Mar. 31, 2024 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		$ 27,614
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

v3.24.1.1.u2

Note 6 - Net (Loss) Per Share - Earnings Per Share Reconciliation (Details) - USD ($)	3 Months Ended
	Mar. 31, 2024	Mar. 31, 2023
Numerator for basic and diluted income (loss) per share, net (loss) available to common shareholders	$ (250,188)	$ 14,833
Denominator:
Common stock (in shares)	19,990,862	20,122,972
Restricted stock awards (in shares)	6,384,900	6,385,900
Weighted average shares used to compute basic earnings per share (in shares)	26,375,762	26,508,872
Effect of dilutive securities (in shares)	0	945,599
Diluted (in shares)	26,375,762	27,454,471
Basic income (loss) per common share: (in dollars per share)	$ (0.01)	$ 0
Diluted income (loss) per common share: (in dollars per share)	$ (0.01)	$ 0

v3.24.1.1.u2

Note 6 - Net (Loss) Per Share - Anti-dilutive Securities (Details) - shares	3 Months Ended
	Mar. 31, 2024	Mar. 31, 2023
Anti-dilutive awards and options (in shares)	945,599	945,599

v3.24.1.1.u2

Note 7 - Income Taxes (Details Textual) - USD ($) $ in Millions	Mar. 31, 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

v3.24.1.1.u2

Note 7 - Income Taxes - Schedule of Net Operating Losses (Details) - USD ($)		3 Months Ended	12 Months Ended
	Jan. 01, 2005	Mar. 31, 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

v3.24.1.1.u2

Note 8 - Related Party Transactions (Details Textual) - USD ($)						3 Months Ended
	Feb. 24, 2024	Nov. 18, 2023	Mar. 16, 2023	Feb. 17, 2023	Feb. 08, 2023	Mar. 31, 2024	Mar. 31, 2023
Treasury Stock, Value, Acquired, Cost Method						$ 44,823	$ 8,529
Shares Issued, Price Per Share (in dollars per share)			$ 1.6		$ 1.75
Restricted Stock [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award, Equity Instruments Other than Options, Grants in Period (in shares)					1,403,000
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Period (Year)					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)			69,000		273,000
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Period (Year)			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
Angry Pug Sportswear [Member]
Related Party Transaction, Purchases from Related Party						$ 0	$ 1,835
Louis Hoch [Member] | Angry Pug Sportswear [Member]
Ownership Percentage						50.00%
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
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)					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)					33,000
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)					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)					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)					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
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
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
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
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)			6,000

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