Usio, Inc.

Previous wording

Electronic and Paper Billing. On December 15, 2020, we entered into the business of electronic bill presentment, document composition, document decomposition and printing and mailing services serving hundreds of customers representing a wide range of industry verticals, including utilities and financial institutions, through the acquisition of substantially all of the assets of Information Management Solutions, LLC, or IMS. This product offering provides an outsourced solution for document design, print, and electronic delivery to potential customers and entities looking to reduce postage costs and increase efficiencies. This acquisition increased our ability to grow new revenue streams and allowed us to reenter the electronic bill presentment and payment revenue stream. Usio Output Solutions, Inc., or Output Solutions, offers a unique, and complementary payment related solution to our merchant services products of ACH, credit card, and prepaid card processing, with an opportunity for enhanced cross-selling efforts. The success of this business line depends on our ability to realize the anticipated growth opportunities, although we cannot provide any assurance that we will be able to realize these opportunities. Since the acquisition of substantially all of the assets of IMS, we have invested in new equipment to enhance the capacity and speed of the business unit, such as a new inserter and folder, on October 1, 2023, that was implemented over the course of 2024, and a new printer in September 2025 that will be installed and operational in the first half of 2026. Further, in December 2024, we partnered with an outsourced presorting company to further automate our print and mail systems. Despite challenges in growing revenues from Output Solutions in 2025, we have significantly reduced labor costs related to print and mail processing. We believe this reduction has better positioned the business line to pursue and successfully generate much larger opportunities than we previously were able to through the increase in capacity and automation. Results have already been realized, as the quantity of mail we printed and delivered in the first quarter of 2026 was higher than in any other fiscal quarter in the history of the Company, while simultaneously requiring fewer working hours to achieve, compared to each fiscal quarter of 2025.

Current wording

Electronic and Paper Billing. On December 15, 2020, we entered into the business of electronic bill presentment, document composition, document decomposition and printing and mailing services serving hundreds of customers representing a wide range of industry verticals, including utilities and financial institutions, through the acquisition of substantially all of the assets of Information Management Solutions, LLC, or IMS. This product offering provides an outsourced solution for document design, print, and electronic delivery to potential customers and entities looking to reduce postage costs and increase efficiencies. This acquisition increased our ability to grow new revenue streams and allowed us to reenter the electronic bill presentment and payment revenue stream. Usio Output Solutions, Inc., or Output Solutions, offers a unique, and complementary payment related solution to our merchant services products of ACH, credit card, and prepaid card processing, with an opportunity for enhanced cross-selling efforts. The success of this business line depends on our ability to realize the anticipated growth opportunities, although we cannot provide any assurance that we will be able to realize these opportunities. Since the acquisition of substantially all of the assets of IMS, we have invested in new equipment to enhance the capacity and speed of the business unit, such as a new inserter and folder, on October 1, 2023, that was implemented over the course of 2024, and a new printer in September 2025 that was installed and operational in the second quarter of 2026. Further, in December 2024, we partnered with an outsourced presorting company to further automate our print and mail systems. Despite challenges in growing revenues from Output Solutions in 2025, we have significantly reduced labor costs related to print and mail processing. We believe this reduction has better positioned the business line to pursue and successfully generate much larger opportunities than we previously were able to through the increase in capacity and automation. Results have already been realized, as the quantity of mail we printed and delivered in the first quarter of 2026 was higher than in any other fiscal quarter in the history of the Company, while simultaneously requiring fewer working hours to achieve, compared to each fiscal quarter of 2025. This performance continued into the second quarter of 2026, in which each month set a record for the highest number of pieces printed and mailed in the same month of any prior year.

Previous wording

"Usio One". Throughout 2025, we adopted and began implementing our "Usio One" strategy, designed to unify our brand, sales approach, and payments offerings. Through this strategy, we are developing enhanced client onboarding features, superior customer management, improved reporting and fraud monitoring, alongside a consolidated sales and marketing team to better cross-sell our various payment methods and ancillary services. We believe this strategy will help better position our merchant services and Output Solutions business segments to customers and the broader payments related market as a more cohesive service offering. In turn, we anticipate being able to better leverage our resources, reduce friction in new customer acquisition, and drive more meaningful cross-selling opportunities, which we anticipate will help increase our products' stickiness and customer retention. Success from this strategy has already been realized by our sales and client management staff through the generation of new integrations between our existing customers and our ancillary business lines. The consolidation of our various technologies into a more seamless product offering continues to progress, and we anticipate that it will ultimately result in a client and customer onboarding process that enables all of our customers to automatically be enrolled in, and have access to, each of our payment acceptance and issuing products. In turn, through the continued development of our back end technology infrastructure, we anticipate the ability to eliminate the need for distinct contracts, dashboards, funding accounts, and support teams per product.

Current wording

"Usio One". Throughout 2025 and continuing in 2026, we adopted and began implementing our "Usio One" strategy, designed to unify our brand, sales approach, and payments offerings. Through this strategy, we are developing enhanced client onboarding features, superior customer management, improved reporting and fraud monitoring, alongside a consolidated sales and marketing team to better cross-sell our various payment methods and ancillary services. We believe this strategy will help better position our merchant services and Output Solutions business segments to customers and the broader payments related market as a more cohesive service offering. In turn, we anticipate being able to better leverage our resources, reduce friction in new customer acquisition, and drive more meaningful cross-selling opportunities, which we anticipate will help increase our products' stickiness and customer retention. Success from this strategy has already been realized by our sales and client management staff through the generation of new integrations between our existing customers and our ancillary business lines. The consolidation of our various technologies into a more seamless product offering continues to progress, and we anticipate that it will ultimately result in a client and customer onboarding process that enables all of our customers to automatically be enrolled in, and have access to, each of our payment acceptance and issuing products. In turn, through the continued development of our back end technology infrastructure, we anticipate the ability to eliminate the need for distinct contracts, dashboards, funding accounts, and support teams per product.

Previous wording

PostCredit Acquisition. In November of 2025, we acquired substantially all of the assets of PostCredit, allowing an entry point into the expense management space. PostCredit had been developing technology that would cater to companies looking for fund management and expense tracking that integrated with various Enterprise Resource Planning, or ERP, systems. The Company anticipates continuing to develop this technology, while simultaneously integrating it into our existing products, opening a new sales channel to the broader market already utilizing ERPs such as Microsoft Business Dynamics and Business Central. We intend to combine this technology seamlessly with our EBPP product launched in 2025, allowing clients to send invoices, payments, manage funds, and reconcile with their various ERP platforms utilizing our payment channels. In combination with the other efforts of our Usio One strategy, we believe we will be able to develop a central Usio Hub that further encourages and incentivizes the utilization of our products, cross-sells our corporate expense solution, and assists in retaining the deposits we hold for our customers to help maintain or grow our interest revenues. We believe we will be able to implement phased portions of this strategy, and other PostCredit related projects, by the end of 2026. In the first quarter of 2026, we were able to demonstrate our early stage development to both existing clients and prospective customers as an upcoming feature, and believe we have been able to generate significant interest in PostCredit as both a standalone product and as a value-added service to our existing suite of technology.

Current wording

PostCredit Acquisition. In November of 2025, we acquired substantially all of the assets of PostCredit, allowing an entry point into the expense management space. PostCredit had been developing technology that would cater to companies looking for fund management and expense tracking that integrated with various Enterprise Resource Planning, or ERP, systems. The Company anticipates continuing to develop this technology, while simultaneously integrating it into our existing products, opening a new sales channel to the broader market already utilizing ERPs such as Microsoft Business Dynamics and Business Central. We intend to combine this technology seamlessly with our EBPP product launched in 2025, allowing clients to send invoices, payments, manage funds, and reconcile with their various ERP platforms utilizing our payment channels. In combination with the other efforts of our Usio One strategy, we believe we will be able to develop a central Usio Business Hub that further encourages and incentivizes the utilization of our products, cross-sells our corporate expense solution, and assists in retaining the deposits we hold for our customers to help maintain or grow our interest revenues. We believe we will be able to implement phased portions of this strategy, and other PostCredit related projects, by the end of 2026. In the first half of 2026, we were able to demonstrate our early stage development to both existing clients and prospective customers as an upcoming feature, and believe we have been able to generate significant interest in PostCredit as both a standalone product and as a value-added service to our existing suite of technology. We continue to work towards releasing a live version of this platform to customers in the second half of 2026.

Previous wording

Growing Revenues. Revenue growth remains a consistent focus for the Company, as we strive to achieve expanded scale, and establish a strong reputation within the financial technologies space. This growth assists us in maintaining our diversified offerings and remaining relevant in the payments ecosystem by developing payment platforms that address the current needs of our marketplace. In the first quarter of 2026, our revenues increased 16% to $25.5 million, as compared to $22.0 million in the same quarter of 2025, due primarily to strong growth in our ACH and complementary services, credit card, and Output Solutions lines of business, though offset slightly by declines in our prepaid card services line of business and interest revenues. The strong growth in each of our ACH and complementary services, and credit card lines of business was due to organic growth from existing customers and net new client implementations and onboarding. Growth in our Output Solutions line of business was driven by a combination of organic growth and net new customer acquisitions, but also from the presence of some cyclical business related to voter registration cards and tax statements, that are almost entirely printed and mailed in the first quarter each year in the case of tax statements, or every other year in the case of voter registration cards. The decrease in our prepaid card services revenues was due to declines from one of our key prepaid card programs, as its business was impacted by the loss of a key customer in the second quarter of 2025 that made meaningful contributions to Usio revenues in the first quarter of 2025. Lower interest revenues were driven by interest rates and interest bearing deposits declining versus the prior year.

Current wording

Growing Revenues. Revenue growth remains a consistent focus for the Company, as we strive to achieve expanded scale and establish a strong reputation within the financial technologies space. This growth assists us in maintaining our diversified offerings and remaining relevant in the payments ecosystem by developing payment platforms that address the current needs of our marketplace. In the second quarter of 2026, our revenues increased 19% to $23.7 million, as compared to $20.0 million in the same quarter of 2025, due primarily to strong growth in our ACH and complementary services, credit card, and Output Solutions lines of business, though offset slightly by declines in our prepaid card services line of business and interest revenues. The strong growth in each of our ACH and complementary services, and credit card lines of business was due to organic growth from existing customers and net new client implementations and onboarding. Similarly, growth in our Output Solutions line of business was driven by a combination of organic growth and net new customer acquisitions. Additionally, revenues were further enhanced due to the scalability and printing speed realized from our new printer that became operational in the second quarter of 2026, improving work flows and allowing us to drive increased sales. The decrease in our prepaid card services revenues was due to declines from one of our key prepaid card programs, as its business was impacted by the loss of a key customer in the second quarter of 2025 that made meaningful contributions to Usio revenues in the first and second quarter of 2025. Lower interest revenues were driven by interest rates and interest bearing deposits declining versus the prior year.

Previous wording

Enhancing shareholder value via operational execution and capital allocation. By appropriately managing our expenses (which are discussed under "- Results of Operations - Selling, General and Administrative Expenses" below), we believe we can achieve better economies of scale, and drive revenue growth. We believe that carefully evaluating our existing selling, general and administrative, or SG&A, expenses, and balancing them against the need for client implementation and support, together with our technology staff driving product innovation, will guide our operational strategies while maintaining a focus on efficiencies and profitability. SG&A expenses were up in the quarter, at $4.4 million as compared to $4.1 million in the prior year quarter. The increase in SG&A expense was primarily due to increases in salary alongside increases in network infrastructure, travel expenditures, professional fees, and other various general expenses. For more information, see "Results of Operations - Selling, General and Administrative Expenses" below.

Current wording

Enhancing shareholder value via operational execution and capital allocation. By appropriately managing our expenses (which are discussed under "- Results of Operations - Selling, General and Administrative Expenses" below), we believe we can achieve better economies of scale, and drive revenue growth. We believe that carefully evaluating our existing selling, general and administrative, or SG&A, expenses, and balancing them against the need for client implementation and support, together with our technology staff driving product innovation, will guide our operational strategies while maintaining a focus on efficiencies and profitability. SG&A expenses were flat in the second quarter of 2026 compared to the second quarter of 2025, at $4.6 million. For more information, see "Results of Operations - Selling, General and Administrative Expenses" below.

Previous wording

During the first quarter of 2026, the number of credit card transactions processed by us increased by 22% versus the first quarter of 2025. The volume of credit card dollars processed during the first quarter of 2026 increased by 16% compared to the same period in 2025. 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.

Current wording

During the second quarter of 2026, the number of credit card transactions processed by us increased by 19% versus the second quarter of 2025. The volume of credit card dollars processed during the second quarter of 2026 increased by 13% compared to the same period in 2025. 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.

Previous wording

ACH (eCheck) transaction counts during the first quarter of 2026 increased by 34% compared to the first quarter of 2025. Returned check transactions processed during the first quarter of 2026 increased by 54% compared to the first quarter of 2025. Electronic check dollars processed during the first quarter of 2026 increased by 31% compared to the first quarter of 2025. 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, alongside organic growth from existing customers, and increased adoption of newer payment products, such as RTP.

Current wording

ACH (eCheck) transaction counts during the second quarter of 2026 increased by 34% compared to the second quarter of 2025. Returned check transactions processed during the second quarter of 2026 increased by 35% compared to the second quarter of 2025. Electronic check dollars processed during the second quarter of 2026 increased by 28% compared to the second quarter of 2025. 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, alongside organic growth from existing customers, and increased adoption of newer payment products, such as RTP.

Previous wording

Prepaid card load volumes during the first quarter of 2026 decreased by 19% compared to the first quarter of 2025. Prepaid card transaction counts processed during the first quarter of 2026 decreased by 16% compared to the first quarter of 2025. These declines were primarily due to processing reductions from one of our key clients, who lost its own downstream customers during the second quarter of 2025. This client contributed significant card load, purchase volume, and purchase transactions during the prior year period. Prepaid card purchase volume during the first quarter of 2026 increased by 7% compared to the first quarter of 2025. Despite the growth in prepaid card purchase volume driving increase revenues related to spend, it was not enough to overcome the more meaningful client and cardholder fee revenues derived from the aforementioned declines in one of our key clients. We continue to invest time and resources in the development of additional net new customers and clients that are at various stages of the implementation process, and we believe have the potential to drive meaningful revenue growth in the third and fourth quarters of 2026.

Current wording

Prepaid card load volumes during the second quarter of 2026 were flat at $65 million compared to the second quarter of 2025. Prepaid card transaction counts processed during the second quarter of 2026 decreased by 4% compared to the second quarter of 2025. These declines were primarily due to processing reductions from one of our key clients, who lost its own downstream customers during the second quarter of 2025. This client contributed significant card load, purchase volume, and purchase transactions during the prior year period. This loss, however, was partially offset by growth in our existing client base, alongside the implementation of several new customers. Prepaid card purchase volume during the second quarter of 2026 increased by 11% compared to the second quarter of 2025. Despite the growth in prepaid card purchase volume driving increase revenues related to spend, it was not enough to overcome the more meaningful client and cardholder fee revenues derived from the aforementioned declines in one of our key clients. We continue to invest time and resources in the development of additional net new customers and clients that are at various stages of the implementation process, and we believe have the potential to drive meaningful revenue growth in the third and fourth quarters of 2026.

Previous wording

Output Solutions total mail pieces processed and delivered were 8.9 million for the first quarter of 2026, an increase of 31% compared to 6.8 million in the first quarter of 2025, while electronic only documents delivered were 29 million, up 41% in the first quarter of 2026 compared to 20.5 million in the first quarter of 2025. This strong processing activity was driven by increased organic growth, new customer acquisitions, and the presence of increased traffic related to tax forms and voter registration cards being printed and mailed in the first quarter of 2026.

Current wording

Output Solutions total mail pieces processed and delivered were 7.8 million for the second quarter of 2026, an increase of 43% compared to 5.4 million in the second quarter of 2025, while electronic only documents delivered were 29.8 million, up 49% in the second quarter of 2026 compared to 20 million in the second quarter of 2025. This strong processing activity was driven by increased organic growth, new customer acquisitions, and the implementation of our new printer, driving increased scale and printing speeds allowing for quicker job completion time.

Previous wording

Total dollar volumes processed across all business lines in the first quarter of 2026 were $2.50 billion compared to $1.96 billion processed in the first quarter of 2025, up 28% over the prior year quarter, attributable to processing volume growth in our credit card, and ACH and complementary services business lines, countering the decline of prepaid card processing volume.

Current wording

Total dollar volumes processed across all business lines in the second quarter of 2026 were $2.47 billion compared to $1.94 billion processed in the second quarter of 2025, up 27% over the prior year quarter, attributable to processing volume growth in our credit card, ACH and complementary services, and prepaid card business lines.

Previous wording

On August 16, 2022, former President Biden signed the Inflation Reduction Act, or IRA, which implemented a 1% excise tax on certain corporate stock repurchases, when repurchases of stock on an established securities market exceed $1 million in a tax year. On May 13, 2022, and again on March 24, 2025, the Board authorized a renewal of the buy-back program, with a limit up to $4 million of the Company's common stock with a three year duration. As of December 31, 2025, the Company had repurchased approximately $1.1 million of stock as part of the buyback program for which the Company may be required to pay approximately $11,000 in excise tax. 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 2026 and future years. During the three months ended March 31, 2026, the Company repurchased $233,459 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 buybacks.

Current wording

On August 16, 2022, former President Biden signed the Inflation Reduction Act, or IRA, which implemented a 1% excise tax on certain corporate stock repurchases, when repurchases of stock on an established securities market exceed $1 million in a tax year. On May 13, 2022, and again on March 24, 2025, the Board authorized a renewal of the buy-back program, with a limit up to $4 million of the Company's common stock with a three year duration. As of December 31, 2025, the Company had repurchased approximately $1.1 million of stock as part of the buyback program for which the Company may be required to pay approximately $11,000 in excise tax. 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 2026 and future years. During the six months ended June 30, 2026, the Company repurchased $370,932 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 buybacks.

Previous wording

As the Federal Reserve has worked to fight economic inflation, the federal funds rate experienced rapid growth from the beginning of 2022 into the third quarter of 2023, and remained flat until September 2024 when the federal funds rate was lowered. This resulted in the Company's receiving more favorable interest rates on its current cash balances, amounting to $0.4 million in interest earnings in the three months ended March 31, 2026. Of this interest, $0.3 million was recognized as revenue in the respective business lines for which the cash balances are held, and $91,491 as interest income. In 2024, the Federal Reserve lowered the federal funds rate three times by a cumulative 1%, and by 0.25% three times in 2025 during September, October, and December 2025, which has resulted in lower interest earnings on our interest-bearing cash accounts. Should the Federal Reserve continue lowering the federal funds rate in the future, this incremental source of income would decline. 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.

Current wording

As the Federal Reserve has worked to fight economic inflation, the federal funds rate experienced rapid growth from the beginning of 2022 into the third quarter of 2023, and remained flat until September 2024 when the federal funds rate was lowered. This resulted in the Company's receiving more favorable interest rates on its current cash balances, amounting to $0.7 million in interest earnings in the six months ended June 30, 2026. Of this interest, $0.5 million was recognized as revenue in the respective business lines for which the cash balances are held, and $187,689 as interest income. In 2024, the Federal Reserve lowered the federal funds rate three times by a cumulative 1%, and by 0.25% three times in 2025 during September, October, and December 2025, which has resulted in lower interest earnings on our interest-bearing cash accounts. Should the Federal Reserve continue lowering the federal funds rate in the future, this incremental source of income would decline. 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.

Previous wording

If, due to insolvency or bankruptcy of any 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, 2026 and December 31, 2025, the Company’s reserve for processing losses was $802,937 and $784,937, respectively, and carried on the Company's balance sheet as an accrued expense, and in the statement of cash flows as a change in accrued expenses.

Current wording

If, due to insolvency or bankruptcy of any of the Company’s merchant customers, or for any other reason, the Company is not able to collect amounts from its credit card, ACH or prepaid customers that have been properly "charged back" by the customer, or if a prepaid cardholder incurs a negative balance, the Company must bear the credit risk for the full amount of the transaction. The Company may require cash deposits and other types of collateral from certain merchants to minimize any such risks. In addition, the Company utilizes multiple systems and procedures to manage merchant risk. ACH, prepaid and credit card merchant processing loss reserves are primarily determined by performing a historical analysis of the Company’s loss experience, considering other factors that could affect that experience in the future, such as the types of transactions processed and nature of the merchant relationship with its consumers and the Company’s relationship with the Company’s prepaid card holders. This reserve amount is subject to the risk that actual losses may be greater than the Company’s estimates. Estimates for processing losses are variable based on the volume of transactions processed and could increase or decrease accordingly. At June 30, 2026 and December 31, 2025, the Company’s reserve for processing losses was $629,837 and $784,937, respectively, and carried on the Company's balance sheet as an accrued expense, and in the statement of cash flows as a change in accrued expenses.

Previous wording

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

Current wording

Accounts receivable are reported as outstanding principal net of an allowance for estimated credit losses, which was $181,036 and $404,132 at June 30, 2026 and December 31, 2025, respectively.

Previous wording

We reported Adjusted EBITDA of $0.8 million for the quarter ended March 31, 2026, as compared to Adjusted EBITDA of $0.7 million for the same period in the prior year. The increase in Adjusted EBITDA in the 2026 quarter was attributable to increased gross profit in the period. Adjusted EBITDA margins were 3.1% in the quarter ended March 31, 2026, as compared to Adjusted EBITDA margins of 3.0% for the same period in the prior year. The increase in Adjusted EBITDA margins was due primarily to increased gross profit versus the prior year period, alongside SG&A expenses representing a smaller percentage portion of revenues driving improved bottom line results.

Current wording

We reported Adjusted EBITDA of $1.1 million for the quarter ended June 30, 2026, as compared to Adjusted EBITDA of $0.5 million for the same period in the prior year. The increase in Adjusted EBITDA in the 2026 quarter was attributable to increased gross profit in the period. Adjusted EBITDA margins were 4.8% in the quarter ended June 30, 2026, as compared to Adjusted EBITDA margins of 2.5% for the same period in the prior year. The increase in Adjusted EBITDA margins was due primarily to increased gross profit versus the prior year period, alongside SG&A expenses representing a smaller percentage of revenues, thereby driving improved bottom line results.

Previous wording

The following tables set forth reconciliations of Operating (Loss) to EBITDA; EBITDA to Adjusted EBITDA; and Revenues to Adjusted EBITDA margins for the three months ended March 31, 2026 and 2025.

Current wording

The following tables set forth reconciliations of Operating Income (Loss) to EBITDA; EBITDA to Adjusted EBITDA; and Revenues to Adjusted EBITDA margins for the three and six months ended June 30, 2026 and 2025.

Previous wording

Consolidated revenues for the quarter ended March 31, 2026 were up 16%, at $25.5 million, as compared to $22.0 million for the quarter ended March 31, 2025, due to the 25% growth in ACH and complementary services revenue, 23% growth in credit card revenue, and 19% growth in Output Solutions revenue. This growth completely offset an 18% revenue decline in our prepaid card services business line, alongside a net 36% decline in total interest revenues from all three interest revenue sources.

Current wording

Consolidated revenues for the quarter ended June 30, 2026 were up 19%, at $23.7 million, as compared to $20.0 million for the quarter ended June 30, 2025, due to the 21% growth in ACH and complementary services revenue, 28% growth in credit card revenue, and 22% growth in Output Solutions revenue. This growth completely offset a 10% revenue decline in our prepaid card services business line, alongside a net 29% decline in total interest revenues from all three interest revenue sources.

Previous wording

ACH and complementary services revenue growth of 25% was primarily attributable to an increase in ACH check dollar volume of 31%, an increase in transactions of 34%, and an increase in returned check transactions of 54%, in each case, for the quarter ended March 31, 2026 compared to the same period in 2025. This growth was a result of organic growth within our existing customer base, alongside net new client implementations that began processing at the end of the second quarter of 2025. Our ACH business also benefited from an increase in revenue from ancillary product offerings, such as PINless debit, RCC, and RTP.

Current wording

ACH and complementary services revenue growth of 21% was primarily attributable to an increase in ACH check dollar volume of 28%, an increase in transactions of 34%, and an increase in returned check transactions of 35%, in each case, for the quarter ended June 30, 2026 compared to the same period in 2025. This growth was a result of organic growth within our existing customer base, alongside net new client implementations that began processing at the end of the second quarter of 2025. Our ACH business also benefited from an increase in revenue from ancillary product offerings, such as PINless debit, RCC, and RTP.

Previous wording

The 23% increase in our credit card business unit was partially the result of several key implementations of new independent software vendors and enterprise customers throughout 2025, who began processing at the end of the fourth quarter of 2025, and continued to increase their volumes in the first quarter of 2026. This new business was in addition to the organic growth from our existing customer base, who have continued to increase their processing volumes over time.

Current wording

The 28% increase in our credit card business unit for the quarter ended June 30, 2026 was the result of several key implementations of new independent software vendors and enterprise customers throughout 2025, who began processing at the end of the fourth quarter of 2025, and continued to increase their volumes in the first half of 2026. This new business was in addition to the organic growth from our existing customer base, who have continued to increase their processing volumes over time.

Previous wording

The 18% decrease in prepaid card services revenues was attributable to one of our key clients losing a portion of its downstream customer base during the second quarter of 2025, which contributed significant revenues in the prior year period. We have already signed several contracts throughout the second half of 2025, and into 2026, that we believe will have the ability drive meaningful revenue growth in the second half of 2026, as we fully implement and onboard their business.

Current wording

The 10% decrease in prepaid card services revenues for the quarter ended June 30, 2026 was attributable to one of our key clients losing a portion of its downstream customer base during the second quarter of 2025, which contributed significant revenues in the prior year period. We have already signed several contracts beginning in the second half of 2025 and into 2026, that we believe will have the ability to drive meaningful revenue growth in the second half of 2026, as we fully implement and onboard their business.

Previous wording

Output Solutions revenue was up 19% for the quarter ended March 31, 2026 compared to the same period of 2025, due to strong organic growth, and net new customers. Compounding this was the presence of increased business related to the printing and mailing of tax statements and voter registration cards that occurred, a recurring source of revenue, but one that occurs only once each year in the case of tax statements, and once every other year with respect to voter registration cards.

Current wording

Output Solutions revenue was up 20% for the six months ended June 30, 2026 compared to the same period of 2025, due to strong organic growth, and net new customers. Compounding this was the presence of increased business related to the printing and mailing of tax statements and voter registration cards that occurred in the first quarter of 2026, a recurring source of revenue, but one that occurs only once each year in the case of tax statements, and once every other year with respect to voter registration cards.

Previous wording

Further declines in revenues were attributable to lower interest revenue, associated with lower interest rates and interest bearing deposits versus the prior year period. For more information, see "- Summary of Results."

Current wording

Further declines in revenues were attributable to lower interest revenue, associated with lower interest rates and interest bearing deposits versus the prior year three and six month periods. For more information, see "- Summary of Results."

Previous wording

Cost of services increased by $3.1 million, or 18%, to $20.3 million for the quarter ended March 31, 2026, as compared to $17.2 million for the same period in the prior year, due to increased revenues of 16%. Revenue contribution from lower margin business lines such as PINless debit and RCC within ACH and complementary services, and credit card. Declines in our higher margin prepaid and interest revenues further compounded this, resulting in cost of services growth slightly outpacing revenue growth.

Current wording

Cost of services increased by $6.3 million, or 20%, to $38.3 million for the six months ended June 30, 2026, as compared to $32.0 million for the same period in the prior year, due to increased revenues of 17%. Increased revenue contribution from lower margin business lines such as PINless debit and RCC within ACH and complementary services, and credit card, alongside declines in our higher margin prepaid card services and interest revenues, specifically within the first quarter of 2026, all contributed to cost of services growth slightly outpacing revenue growth.

Previous wording

Gross profit increased by 7% to $5.1 million for the quarter ended March 31, 2026, as compared to $4.8 million for the same period in the prior year. Gross profit percentage of revenue was 20.2% for the quarter ended March 31, 2026, down versus 21.9% in the prior year period. The increase in gross profit in the quarter ended March 31, 2026, as compared to the same period during the prior year, was primarily attributable to the 16% increase in revenue. However, as a result of revenue mix favoring lower margin business lines such as PINless debit and RCC within ACH and complementary services, and credit card, alongside declines in our higher margin prepaid business and in interest revenues, gross profit percentages declined compared to the prior year period.

Current wording

Gross profit increased by 11% to $5.7 million for the quarter ended June 30, 2026, as compared to $5.1 million for the same period in the prior year. Gross profit percentage of revenue was 24.2% for the quarter ended June 30, 2026, down versus 25.8% in the prior year period. The increase in gross profit in the quarter ended June 30, 2026, as compared to the same period during the prior year, was primarily attributable to the 19% increase in revenue. However, as a result of revenue mix favoring lower margin business lines such as PINless debit and RCC within ACH and complementary services, and credit card, alongside declines in our higher margin prepaid business and in interest revenues, gross profit percentages declined compared to the prior year period.

Previous wording

Stock-based compensation expenses were $0.3 million for the quarter ended March 31, 2026 as compared to $0.4 million for the quarter ended March 31, 2025, with the decrease from the prior year quarter due to completed amortization of previously issued stock based awards.

Current wording

Stock-based compensation expenses were $0.5 million for the quarter ended June 30, 2026 as compared to $0.4 million for the quarter ended June 30, 2025, with the increase over the prior year quarter due to the amortization of newly issued stock-based awards offsetting the completed amortization of previously issued awards at the end of 2025.

Previous wording

SG&A expenses were $4.4 million for the quarter ended March 31, 2026 as compared to $4.1 million in the prior year quarter. The increase in SG&A for the quarter ended March 31, 2026 was driven primarily by increases in salary alongside increases in network infrastructure, travel expenditures, professional fees, and other various general expenses.

Current wording

SG&A expenses were $8.9 million for the six months ended June 30, 2026 as compared to $8.8 million in the prior year quarter. The increase in SG&A for the six months ended June 30, 2026 was driven primarily by increases in salary alongside increases in network infrastructure, travel expenditures, professional fees, and other various general expenses.

Previous wording

Depreciation and amortization expense totaled $0.2 million and $0.5 million in the quarter ended March 31, 2026 and 2025, respectively. The decrease in depreciation and amortization expense for the quarter ended March 31, 2026 compared to the prior year quarter was due to the completed amortization of intangible assets, specifically related to the completed amortization of our acquisition of Output Solutions, alongside capitalized labor for our internal use software, decreasing overall depreciation and amortization expense versus the same period a year ago.

Current wording

Depreciation and amortization expense totaled $0.3 million and $0.5 million in the quarter ended June 30, 2026 and 2025, respectively. The decrease in depreciation and amortization expense for the quarter ended June 30, 2026 compared to the prior year quarter was due to the completed amortization of intangible assets, specifically related to the completed amortization of our acquisition of Output Solutions, alongside capitalized labor for our internal use software, decreasing overall depreciation and amortization expense versus the same period a year ago.

Previous wording

State income tax expense in the three months ended March 31, 2026 and 2025 was $104,790 and $62,554, respectively, up slightly versus the prior year period as a result of increased taxable income.

Current wording

Income tax expense in the three months ended June 30, 2026 and 2025 was $0.2 million and $0.1 million, respectively, up versus the prior year period as a result of increased taxable income.

Previous wording

We reported net income of $0.1 million for the quarter ended March 31, 2026, as compared to a net loss of $0.2 million for the same period in the prior year. The increase from a net loss to net income was driven primarily by the increased revenues, and corresponding gross profits alongside lower stock-based compensation and depreciation and amortization expense in the quarter ended March 31, 2026 as compared to the same period in the prior year.

Current wording

We reported net income of $0.3 million for the quarter ended June 30, 2026, as compared to a net loss of $0.4 million for the same period in the prior year. The increase from a net loss to net income was driven primarily by the increased revenues, and corresponding gross profits in the quarter ended June 30, 2026 as compared to the same period in the prior year.

Previous wording

Our primary sources of liquidity are available cash and cash equivalents and cash flows provided by operations. As of March 31, 2026, we had cash and cash equivalents of $7.7 million. For the three months ended March 31, 2026, cash provided by operations was $0.9 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 intangible assets, 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, merchant reserves, customer deposits, and deferred revenues.

Current wording

Our primary sources of liquidity are available cash and cash equivalents and cash flows provided by operations. As of June 30, 2026, we had cash and cash equivalents of $6.4 million. For the six months ended June 30, 2026, cash provided by operations was $0.3 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 intangible assets, 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, merchant reserves, customer deposits, and deferred revenues.

Previous wording

We reported net income of $0.1 million for the three months ended March 31, 2026 compared to a net loss of $0.2 million for the three months ended March 31, 2025. We had an accumulated deficit of $70.4 million and $70.5 million at March 31, 2026 and December 31, 2025, respectively. Additionally, we had working capital of $9.0 million and $9.4 million at March 31, 2026 and December 31, 2025, respectively.

Current wording

We reported net income of $0.4 million for the six months ended June 30, 2026 compared to a net loss of $0.6 million for the six months ended June 30, 2025. We had an accumulated deficit of $70.1 million and $70.5 million at June 30, 2026 and December 31, 2025, respectively. Additionally, we had working capital of $9.7 million and $9.4 million at June 30, 2026 and December 31, 2025, respectively.

Previous wording

We have in the past, and may in the future, utilize equipment loans in order to finance the cost of particular pieces of equipment. On 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 monthly interest only payments in the amount of $4,744 required for the first six months of the loan term. Total interest and principal payments on this folder and inserter equipment loan were $47,953 for each of the three months ended March 31, 2026 and March 31, 2025.

Current wording

We have in the past, and may in the future, utilize equipment loans in order to finance the cost of particular pieces of equipment. On 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. Total interest and principal payments on this folder and inserter equipment loan were $50,188 and $47,953 for the three months ended June 30, 2026 and 2025, respectively. Total interest and principal payments on this folder and inserter equipment loan were $98,141 and $95,906 for the six months ended June 30, 2026 and 2025, respectively.

Previous wording

On September 19, 2025*,* the Company entered into a debt arrangement to finance $1,017,954 for the purchase of an Output Solutions printer. The loan is for a period of 66 months with a maturity date of March 19, 2031 and annual interest of 6.75%. Monthly principal and interest payments are required in the amount of $20,088, with monthly interest only payments in the amount of $5,758 required for the first six months of the loan term beginning in October 2025. As of March 31, 2026, $791,742 in proceeds have been drawn from the loan and presented on the Company's balance sheet with the remaining commitment of $226,212 still available. Total payments on the printer loan in the three months ended March 31, 2026 were $13,361.

Current wording

On September 19, 2025*,* the Company entered into a debt arrangement to finance $1,017,954 for the purchase of an Output Solutions printer. The loan is for a period of 66 months with a maturity date of March 19, 2031 and annual interest of 6.75%. Monthly principal and interest payments are required in the amount of $20,088. Through the end of 2025, only $791,742 in proceeds were drawn from the loan and reflected on the Company's consolidated balance sheets at December 31, 2025, with the remaining commitment of $226,212 still available as of June 30, 2026. Total payments on the printer loan during the three months ended June 30, 2026 were $44,636. Total payments on the printer loan during the six months ended June 30, 2026 were $57,997.

Previous wording

Net cash provided by operating activities for the three months ended March 31, 2026 was $0.9 million, as compared to net cash provided by operating activities of $1.4 million for the three months ended March 31, 2025. The decrease in net cash provided by operating activities was due primarily to increases in accounts receivable, alongside higher levels of prepaid expenses in the three months ended March 31, 2026. 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.

Current wording

Net cash provided by operating activities for the six months ended June 30, 2026 was $0.3 million, as compared to net cash provided by operating activities of $1.1 million for the six months ended June 30, 2025. The decrease in net cash provided by operating activities was due primarily to increases in accounts receivable, alongside lower merchant reserves and depreciation and amortization expenses in the six months ended June 30, 2026. 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.

Previous wording

Net cash used in investing activities was $0.6 million for the three months ended March 31, 2026 as compared to net cash used in investing activities of $0.3 million for the three months ended March 31, 2025. The primary driver of our investing activities was capital expenditures associated with capitalized software development costs and other capital investments associated with growing our business lines and associated employee counts. The increase in net cash used in investing activities was primarily attributable to the increased amount of fixed asset purchases and capitalization of internal use software relative to the same period a year ago.

Current wording

Net cash used in investing activities was $1.0 million for the six months ended June 30, 2026 as compared to net cash used in investing activities of $0.7 million for the six months ended June 30, 2025. The primary driver of our investing activities was capital expenditures associated with capitalized software development costs and other capital investments associated with growing our business lines and associated employee counts. The increase in net cash used in investing activities was primarily attributable to the increased amount of fixed asset purchases and leasehold improvements relative to the same period a year ago.

Previous wording

Net cash used in financing activities for the three months ended March 31, 2026 was $17.1 million and net cash provided by financing activities for the three months ended March 31, 2025 was $3.6 million. The decrease in cash provided by financing activities was primarily attributable to the decrease in assets held for customers, which include settlement processing and prepaid card load assets, relative to the same period a year ago.

Current wording

Net cash used in financing activities for the six months ended June 30, 2026 was $13.1 million and net cash provided by financing activities for the six months ended June 30, 2025 was $2.5 million. The decrease in cash provided by financing activities was primarily attributable to the decrease in assets held for customers, which include settlement processing and prepaid card load assets, relative to the same period a year ago.