Quarterly Report for Quarter Ending September 30, 2026 (Form 10-Q)

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 2025 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 consolidated financial statements and the notes thereto included in this report, and the 2025 Annual Report, including the audited consolidated financial statements and the notes contained therein.

Overview

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

Since 1998, through our merchant services business lines, which now consist of Automated Clearing House, or ACH, and complementary services, credit card processing and prepaid cards, Usio has entered a number of market verticals within the payments industry in order to satisfy the growing payment needs of consumers and merchants across the United States. Beginning with our Electronic Bill Presentment and Payment, or EBPP, product that launched the Company, we entered into the electronic funds transfer space through the ACH network, developing ancillary and complementary products such as PINless debit in 2016, and Remotely Created Checks, or RCC, account validation, and account inquiry in 2019. These supplementary product options offer customers access to faster and more convenient payment options and tools to improve operating efficiencies. Further, our credit card payment offering was expanded in 2017 with the development of Payment Facilitation, or PayFac, which utilizes our unique technology that allows for instant enrollment of merchants and combined our suite of payment options into an integrated platform for merchants and customers to utilize.

Through our innovative Prepaid Debit Card platform, we offer a variety of prepaid card products such as reloadable, incentive, promotional and corporate card programs. Combined with our printing and mailing services, we can satisfy the diverse requirements of customer needs with physical and virtual document creation and distribution, including traditional paper checks. Our Consumer Choice product, developed and introduced in 2022, provides flexible ways to initiate a variety of payment distributions through a multitude of payment methods including physical prepaid and virtual cards, ACH, paper checks, real-time PINless debit and others. We believe that this offering provides us with a superior opportunity to increase our cross-selling efforts through all of our payment methods. Throughout 2025, we enhanced our Consumer Choice product to accommodate additional methods of disbursement, such as issuing funds through PayPal and Venmo, alongside integration with the PIN4 network to allow cardless ATM withdrawals.

With the growing need for faster payment methods, we continue to invest in technology that can help us further expand our suite of payment technology. With the rise of Real Time Payments, or RTP, we began expansion into this market vertical in 2023, which serves as an alternative to ACH and PINless debit payments. We also continue to enhance our existing product offerings, with improvements in reporting, data management, fraud and risk monitoring, ease of access, and accelerations in client onboarding and implementation times. With our transition to a cloud-based platform, our speed, security, and scalability in payment processing have been further expanded, better positioning us to seamlessly grow as the market demands.

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 North American Banking Company, First Premier Bank, Fifth Third Bank, Sunrise Bank, TransPecos Bank, Flagstar Bank, and others.

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

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

Similarly, our PINless debit product allows merchants to debit and credit accounts in real-time.

In the first half of 2025, we began, and completed, development of a new EBPP product. This offering allows merchants to create and distribute bills to their customers that can be viewed, and paid, online through our platform and payment processing services, increasing the opportunities for cross-selling between our various business lines.

Card-Based Services. Our card-based processing services enable merchants to process both traditional card-present, tap-and-pay, or "swipe" transactions, as well as card-not-present transactions. A traditional card-present transaction occurs whenever a card holder physically presents a credit or debit card to a merchant at the point-of-sale. A card-not-present transaction occurs whenever the customer does not physically present a payment card at the point-of-sale and may occur over the Internet, mail, or telephone. A tap-and-pay transaction occurs whenever a consumer taps their phone on a physical terminal utilizing third party wallet services like Apple Pay®, Samsung Pay™ and Google Pay™.

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

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

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

In 2025, we also launched a new distribution strategy for our Prepaid card services with a wearable device program. Our prepaid cards can now be successfully loaded onto items such as watches, wristbands, belt buckles, or nearly any wearable product through the use of embedded chips. We first demonstrated this new product in October 2025, and continue to refine the product, anticipating it will assist in enhancing our prepaid card program's marketability and diversity in the overall payment ecosystem.

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, printing, 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, which 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. 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 prior 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 and third quarter of 2026, in which each quarter set a record for the highest revenue compared to the corresponding quarter of any prior year. Following the abrupt closure of our outsourced presorting partner in August of 2026, we entered into an agreement at the close of September 2026 to acquire a new piece of presorting mail equipment. This new equipment, which was installed and operational as of November 2026, will allow for presorting operations at significant scale, eliminating the initial bottleneck that required outsourcing our presorting operations in the first place. We believe this new equipment may allow us to see some additional cost savings through enhanced postage rates and the elimination of the fees arising from our previously outsourced presorting services.

"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 backend technology infrastructure, we anticipate the ability to eliminate the need for distinct contracts, dashboards, funding accounts, and support teams for each product.

PostCredit Acquisition. In November of 2025, we acquired substantially all of the assets of PostCredit, creating 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 technologies. In the third quarter of 2026, we released a live version of PostCredit, rebranded as "Ion", to consumers that leverages our central Usio Business Hub. This version of the product allows customers to create new accounts with Usio in the form of quasi-bank accounts that leverage our corporate and expense management solution through our prepaid card products and integrate into an ERP. In the future, we anticipate Usio Ion will integrate with all of our payment acceptance and print and mail services, enabling our existing customers and business to utilize all of our various service offerings through a single, easy to use account.

Summary of Results

We believe that our success will continue to depend in large part on our ability to (a) scale recurring revenues and deepen partner relationships, (b) expand our product offerings, (c) pursue disciplined, accretive opportunities, (d) enhance shareholder value via operational execution and capital allocation, and (e) assimilate current and future acquisitions of companies and customer portfolios. We will continue to invest in our sales force and technology platforms to drive revenue growth. In particular, we are focused on growing our ACH merchants, adding new software integrators, and growing our electronic bill presentment, document composition, document decomposition, printing and mailing services business while providing incremental services to existing merchants. In addition to our near-term growth opportunities, we are focused on leveraging and optimizing the infrastructure of our business to enable expansion of our payment processing and mail and printing capabilities without significantly increasing our operating costs. We continue to seek ways to grow revenue while also increasing new client implementations and onboards through addressing the needs of our market.

Scale recurring revenues and deepen partner relationships. 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. We seek to maintain and expand our diversified offerings and remain relevant in the payments ecosystem by developing payment platforms that address the current needs of our marketplace. In the third quarter of 2026, our revenues increased 12% to $23.8 million, as compared to $21.2 million in the same quarter of 2025, due to growth in all of our lines of business. 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 new client implementations and onboarding. Similarly, growth in our Output Solutions line of business was driven by a combination of organic growth and new customer acquisitions. Additionally, Output Solutions 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 workflows and allowing us to drive increased sales. The nominal increase in our prepaid card services revenues was due to organic growth from existing customers, alongside the onboarding and implementation of new clients during the quarter. Higher interest revenues were driven by increased interest bearing deposits versus the prior year.

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

Pursue disciplined, accretive opportunities. Acquisitions have been a key element in our growth-focused strategy, both by adding new customers and by enhancing our suite of payment technologies. This is evident through our acquisitions of Akimbo Financial, Inc., Singular Payments, and IMS, which allowed us to introduce new offerings such as prepaid card issuance, PayFac, and electronic bill presentment, all of which represent significant portions of our current revenues. The Company continually evaluates the markets for opportunities to acquire or partner with accretive opportunities that align with our core competencies. In 2025, we acquired the assets of PostCredit, rebranded as "Ion", which we believe once again represents an opportunity to enhance our existing products and to introduce us as a new competitor in the expense management market vertical. Although acquisitions are a key element of our strategy, we cannot assure you that we will be able to continue to complete acquisitions in the future.

Enhance 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 while continuing to drive revenue growth. Our operational strategies are guided by carefully evaluating our existing selling, general and administrative, or SG&A, expenses and balancing them against the need for client implementation and support, while also utilizing our technology staff to drive product innovation. At the same time, we maintain a focus on efficiencies and profitability. SG&A expenses were $4.6 million, up 1% in the third quarter of 2026, compared to $4.5 million in the third quarter of 2025. This increase was due to nominal increases across salaries and network infrastructure expenses; however, SG&A expenses grew at a significantly lower rate than revenues and gross profit, as we remain committed to increasing profitability. For more information, see "Results of Operations - Selling, General and Administrative Expenses" below.

Assimilate current and future acquisitions of companies and customer portfolios. The assimilation of our previous acquisitions has been critical in both the retention of purchased assets and their growth through cross-selling and implementation into our broader infrastructure, which allows for increased diversity of offerings and support. Successfully assimilating acquisitions remains a crucial priority for the success of the Company. The recent acquisition of PostCredit, rebranded as "Ion", represents an especially critical component of this strategy, and may require significant time investment and capital expenditure to fully implement. We cannot assure you that we will be able to successfully assimilate new and future acquisitions.

In addition to the factors discussed above, we believe that processing volumes and transaction counts are vital measures that reflect our addition and implementation of new customers and growth from existing customers, which we believe correlate to both current and future revenues. The change in credit card processing volume, ACH transaction counts, and prepaid card purchase volume are the most direct metrics that drive revenues in their respective business lines, while prepaid card load volumes specifically are an indicator of future revenue change within the prepaid card business line. While there are many components to the revenues of our business units that could impact revenue growth or decline, these processing metrics offer an indication of the current health of our overall company and the success in our strategies to grow the business.

During the third quarter of 2026, the number of credit card transactions we processed increased by 17% versus the third quarter of 2025. The volume of credit card dollars processed during the third quarter of 2026 increased by 7% compared to the same quarter 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.

ACH (eCheck) transaction counts during the third quarter of 2026 increased by 39% compared to the third quarter of 2025. Returned check transactions (which result in fees we charge customers) processed during the third quarter of 2026 increased by 44% compared to the third quarter of 2025. Electronic check dollars processed during the third quarter of 2026 increased by 26% compared to the third 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.

Prepaid card load volumes during the third quarter of 2026 increased by 6% compared to the third quarter of 2025 through organic growth from our existing customers. Prepaid card purchase volume during the third quarter of 2026 increased by 17% compared to the third quarter of 2025 as a result of the increased quantity of load volumes. However, due to an increase in the average dollar value of each transaction processed, reflecting a change in consumer spending habits, prepaid card transaction counts processed during the third quarter of 2026 decreased by 2% compared to the third quarter of 2025. We continue to invest time and resources in the development of additional new customers and clients that are at various stages of the implementation process, which we believe have the potential to drive meaningful revenue growth in 2027 as we fully implement and onboard their business through the remainder of 2026.

Output Solutions total mail pieces processed and delivered were 5.8 million for the third quarter of 2026, an increase of 7% compared to 5.5 million in the third quarter of 2025, while electronic documents delivered were 25.5 million, up 28% in the third quarter of 2026 compared to 20 million in the third quarter of 2025. This strong processing activity was driven by increased organic growth, new customer acquisitions, and the implementation of our new printer, which drove increased scale and printing speeds and allowed for quicker job completion times.

Total dollar volumes processed across all business lines in the third quarter of 2026 were $2.73 billion compared to $2.18 billion processed in the third quarter of 2025, up 25% over the prior year quarter, attributable to processing volume growth in our credit card, ACH and complementary services, and prepaid card business lines.

For more information, see "Results of Operations - Revenues."

Material Trends and Uncertainties

On August 16, 2022, former President Biden signed the Inflation Reduction Act, or IRA, which implemented a 1% excise tax on certain corporate stock repurchases, when repurchases of stock on an established securities market exceed $1 million in a tax year. On May 13, 2022, and again on March 24, 2025, our Board of Directors authorized a renewal of the Company's stock buyback program, with a limit of $4 million of the Company's common stock and a three year duration. During 2025, the Company repurchased approximately $1.1 million of its common 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 nine months ended September 30, 2026, the Company repurchased $498,762 of its common stock as part of the buyback program, which may become subject to the IRA's 1% excise tax if, during 2026, the Company meets or exceeds the IRA's repurchase threshold of $1 million in stock buybacks.

The broader implications of the macroeconomic environment, including uncertainty around international turmoil such as the Russia and Ukraine conflict and the military actions in Iran by the U.S. and Israel, supply chain shortages, a recession globally or in markets in which we operate, higher inflation rates, higher interest rates, and other related global economic conditions, remain unknown. In April 2025, developments relating to tariffs intensified concerns over the global macroeconomic environment. Volatility across financial markets rose and the prospect of a U.S. recession increased further. Uncertainty around the path forward and concerns over the potentially escalating effects of a trade war have created risks for the U.S. and global economies. A deterioration in macroeconomic conditions as well as ongoing uncertainty regarding tariffs or trade disputes could continue to increase the risk of lower consumer spending, merchant and consumer bankruptcy, insolvency, business failure, higher credit losses, or other business interruption, which may adversely impact our business. If these conditions continue or worsen, they could adversely impact our future financial and operating results.

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 remained flat until September 2024 when the federal funds rate was lowered. The Federal Reserve lowered the federal funds rate three times in 2024 by a cumulative 1%, and by 0.25% three times in 2025 during September, October, and December 2025, followed by a 0.25% increase in September 2026, which, despite a recent slight increase, has resulted in lower interest earnings on our interest-bearing cash accounts. The Company received $1.2 million in interest earnings in the nine months ended September 30, 2026. Of this interest, $0.9 million was recognized as revenue in the respective business lines for which the cash balances are held, and $282,599 as interest income. Should the Federal Reserve decide to lower 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.

Changes in these factors are difficult to predict, and a change in one factor could affect other factors, which could result in adverse effects to our business, results of operations, financial condition, and cash flows.

Critical Accounting Policies and Estimates

Our management's discussion and analysis of financial condition and results of operations is based upon our consolidated financial statements, which have been prepared in accordance with GAAP. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenue and expenses, and related disclosure of contingent assets and liabilities. On an ongoing basis, we evaluate our estimates, including those related to the reported amounts of revenues and expenses, credit losses, investments, intangible assets, income taxes, contingencies and litigation. We base our estimates on historical experience and on various other assumptions that we believe 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 and Estimates, please refer to the Notes to Interim Consolidated Financial Statements, Note 1, Basis of Presentation.

Reserve for Processing Losses

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 September 30, 2026 and December 31, 2025, the Company's reserve for processing losses was $684,835 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 the reserve for processing losses.

Accounts Receivable/Allowance for Estimated Credit Losses

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

The Company maintains an allowance for estimated credit losses representing estimated losses expected to result from the inability or failure of its 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. Past losses incurred by the Company due to credit losses have been within its estimates. If the financial condition of its customers deteriorates, resulting in an impairment of their ability to make contractual payments, additional allowances might be required. Estimates for credit losses are variable based on the volume of transactions processed and could increase or decrease accordingly. The Company normally does not charge interest on accounts receivable.

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. Management is not aware of any tax positions that would have a significant impact on its financial position.

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 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. Output Solutions 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. We also earn revenues from interest and fees earned on certain assets underlying customer balances. Interest earned on assets directly related to our core business line operations are recorded in the revenue source underlying the associated customer balances. Customer balances held on which the Company earns interest revenues include balances from our ACH and complementary services, prepaid card services, and Output Solutions business lines.

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, and Adjusted EBITDA margin. The Company reports its financial results in compliance with GAAP but believes that also discussing non-GAAP financial measures is useful to investors because it provides them with financial measures the Company uses in the management of its business.

•	The Company defines EBITDA as net income (loss), before interest income, interest expense, taxes, depreciation and amortization of intangibles.
•	The Company defines Adjusted EBITDA as EBITDA, as defined above, less other income, plus non-cash stock-based compensation and certain non-recurring items, such as costs related to acquisitions.
•	The Company defines Adjusted EBITDA margin as Adjusted EBITDA, as defined above, divided by total revenues.

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

We reported Adjusted EBITDA of $1.2 million for the quarter ended September 30, 2026, as compared to Adjusted EBITDA of $0.4 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 margin were 5.0% in the quarter ended September 30, 2026, as compared to Adjusted EBITDA margin of 1.7% for the same period in the prior year. The increase in Adjusted EBITDA margin 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.

We reported Adjusted EBITDA of $3.1 million for the nine months ended September 30, 2026, as compared to Adjusted EBITDA of $1.5 million for the same period in the prior year. The increase in Adjusted EBITDA in the 2026 period was attributable to increased gross profit in the period, driven by a 15% increase in revenues versus the prior year period. Adjusted EBITDA margin were 4.3% in the nine months ended September 30, 2026, as compared to Adjusted EBITDA margin of 2.4% for the same period in the prior year. The increase in Adjusted EBITDA margin was due primarily to increased gross profit versus the prior year period, alongside SG&A expenses only increasing a nominal amount and representing a smaller percentage of revenues, thereby driving improved bottom line results.

The following tables set forth reconciliations of Net Income (Loss) to EBITDA; EBITDA to Adjusted EBITDA; and Revenues to Adjusted EBITDA margin for the three and nine months ended September 30, 2026 and 2025.

		Three Months Ended September 30,								Nine Months Ended September 30,
		2026				2025				2026				2025
Reconciliation from net income (loss) to Adjusted EBITDA:
Net income (loss)		$	217,380			$	(415,086	)		$	619,963			$	(1,016,710	)
Income tax expense			133,582				69,036				475,553				200,447
Interest income			(94,910	)			(124,449	)			(282,599	)			(314,368	)
Interest expense			22,680				11,328				68,440				34,906
Depreciation and amortization			335,865				432,846				847,628				1,393,215
EBITDA			614,597				(26,325	)			1,728,985				297,490
Other income			-				(5,000	)			-				(5,000	)
Non-cash stock-based compensation expense, net			570,431				399,582				1,382,223				1,243,899
Adjusted EBITDA		$	1,185,028			$	368,257			$	3,111,208			$	1,536,389
Calculation of Adjusted EBITDA margin:
Revenues		$	23,763,838			$	21,180,333			$	72,908,248			$	63,150,373
Adjusted EBITDA		$	1,185,028			$	368,257			$	3,111,208			$	1,536,389
Adjusted EBITDA margin			5.0	%			1.7	%			4.3	%			2.4	%

Use of Non-GAAP Financial Measures

EBITDA, Adjusted EBITDA, and Adjusted EBITDA margin 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, and Adjusted EBITDA margin have limitations as analytical tools and you should not consider these non-GAAP measures in isolation or as a substitute for analysis of our operating results as reported under GAAP.

Results of Operations

Revenues

Our revenue is principally derived from providing integrated electronic payment services to merchants and businesses, including credit and debit card-based processing services and transaction processing via the ACH network and program management and processing of prepaid debit cards. In addition, through Output Solutions, we provide electronic bill presentment, document composition, document decomposition and printing and mailing services serving hundreds of customers representing a wide range of industry verticals, including utilities and financial institutions. We also earn revenue from interest and fees earned on certain assets underlying the associated customer balances. Customer balances on which the Company earns interest revenue include balances from our ACH and complementary services, prepaid card services, and Output Solutions business lines.

		Three Months Ended September 30,
		2026				2025				$ Change				% Change
ACH and complementary services		$	6,353,526			$	5,844,267			$	509,259				9	%
Credit card			8,692,163				7,351,400				1,340,763				18	%
Prepaid card services			2,826,028				2,796,782				29,246				1	%
Output Solutions			5,534,198				4,844,496				689,702				14	%
Interest - ACH and complementary services			159,671				160,296				(625	)			(0	)%
Interest - Prepaid card services			149,146				137,841				11,305				8	%
Interest - Output Solutions			49,106				45,251				3,855				9	%
Total Revenue		$	23,763,838			$	21,180,333			$	2,583,505				12	%

		Nine Months Ended September 30,
		2026				2025				$ Change				% Change
ACH and complementary services		$	18,954,873			$	16,081,008			$	2,873,865				18	%
Credit card			27,399,661				22,275,124				5,124,537				23	%
Prepaid card services			7,653,003				8,430,643				(777,640	)			(9	)%
Output Solutions			18,008,861				15,220,264				2,788,597				18	%
Interest - ACH and complementary services			372,748				560,943				(188,195	)			(34	)%
Interest - Prepaid card services			379,677				455,325				(75,648	)			(17	)%
Interest - Output Solutions			139,425				127,066				12,359				10	%
Total Revenue		$	72,908,248			$	63,150,373			$	9,757,875				15	%

Consolidated revenues for the quarter ended September 30, 2026 were up 12%, at $23.8 million, as compared to $21.2 million for the quarter ended September 30, 2025, due to the 18% growth in credit card revenue, 14% growth in Output Solutions revenue, 9% growth in ACH and complementary services revenue, and 1% growth in our prepaid card services business line, alongside a net 4% increase in total interest revenues from all three interest revenue sources.

The 18% increase in our credit card business unit for the quarter ended September 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 three quarters 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, as represented in the 7% growth in credit card processing volume, and 17% growth in credit card transaction volume.

Output Solutions revenue was up 14% for the quarter ended September 30, 2026 compared to the same period of 2025, due to strong organic growth, and new customers. Further leverage in revenue driven by new customer acquisition was related to the implementation of our new printer in the second quarter of 2026, drastically increasing the quantity of mail we can print and deliver.

ACH and complementary services revenue growth of 9% was primarily attributable to an increase in ACH check dollar volume of 26%, an increase in transactions of 39%, and an increase in returned check transactions of 44%, in each case, for the quarter ended September 30, 2026 compared to the same period in 2025. This growth was a result of organic growth within our existing customer base, alongside new client implementations. Our ACH business also benefited from an increase in revenue from ancillary product offerings, such as PINless debit and RTP.

The 1% increase in prepaid card services revenues for the quarter ended September 30, 2026 was attributable to organic growth from existing customers, alongside the onboarding and implementation of new clients during the quarter. We 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 2027, as we continue to fully implement and onboard the business from these contracts throughout the remainder of 2026.

Further increases in revenues were attributable to higher interest revenue, associated with larger interest bearing deposits versus the prior year three-month period.

Consolidated revenues for the nine months ended September 30, 2026 were up 15%, at $72.9 million, as compared to $63.2 million for the nine months ended September 30, 2025, due to the 23% growth in credit card revenue, 18% growth in ACH and complementary services revenue, and 18% growth in Output Solutions revenue. This growth completely offset a 9% revenue decline in our prepaid card services business line, alongside a net 22% decline in total interest revenues from all three interest revenue sources.

The 23% increase in our credit card business unit for the nine months ended September 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 three quarters 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, as seen in the 12% growth in credit card processing volume and 19% growth in credit card transaction volume.

ACH and complementary services revenue growth of 18% was primarily attributable to an increase in ACH check dollar volume of 28%, an increase in transactions of 36%, and an increase in returned check transactions of 44%, in each case, for the nine months ended September 30, 2026 compared to the same period in 2025. This growth was a result of organic growth within our existing customer base, alongside 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.

Output Solutions revenue was up 18% for the nine months ended September 30, 2026 compared to the same period of 2025, due to strong organic growth and 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.

The 9% decline in prepaid card services revenue for the nine months ended September 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 throughout the second half of 2025 and into 2026 that we believe will have the ability drive meaningful revenue growth in 2027, as we continue to fully implement and onboard the business from these contracts throughout the remainder of 2026.

Interest revenues were also down 22%, associated with lower interest rates and interest bearing deposits versus the prior nine-month period. For more information, see "- Summary of Results."

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. Additional costs include commissions paid to referral agents and partners. Cost of service fees also include fees related to our Output Solutions business line related to items such as paper, ink, and postage for the printing and mailing of paper statements.

Cost of services increased by $1.7 million, or 11%, to $18.0 million for the quarter ended September 30, 2026, as compared to $16.3 million for the same period in the prior year, due to increased revenues of 12%.

Cost of services increased by $8.0 million, or 17%, to $56.3 million for the nine months ended September 30, 2026, as compared to $48.3 million for the same period in the prior year, due to increased revenues of 15%. 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.

Gross Profit

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

Gross profit increased by 18% to $5.7 million for the quarter ended September 30, 2026, as compared to $4.9 million for the same period in the prior year. Gross profit percentage of revenue was 24.1% for the quarter ended September 30, 2026, up versus 23.0% in the prior year period. The increase in gross profit in the quarter ended September 30, 2026, as compared to the same period during the prior year, was primarily attributable to the 12% increase in revenue. As a result of revenue mix favoring higher margin business lines such as ACH and RTP within ACH and complementary services, and interest revenues, gross profit percentages increased compared to the prior year period.

Gross profit increased by 12% to $16.6 million for the nine months ended September 30, 2026, as compared to $14.8 million for the same period in the prior year. Gross profit percentage of revenue was 22.8% for the nine months ended September 30, 2026, down versus 23.5% in the prior year period. The increase in gross profit in the nine months ended September 30, 2026, as compared to the same period during the prior year, was primarily attributable to the 15% 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.

Stock-based Compensation

Stock-based compensation expenses were $0.6 million for the quarter ended September 30, 2026 as compared to $0.4 million for the quarter ended September 30, 2025, with the increase over the prior year quarter due to increases in amortization expense related to newly issued stock-based awards offsetting the completed amortization of previously issued awards at the end of 2025.

Stock-based compensation expenses were $1.4 million for the nine months ended September 30, 2026, versus $1.2 million in the same period in the prior year, with the increase over the prior year period due to increases in amortization expense related to newly issued stock-based awards in 2026.

Selling, General and Administrative Expenses

SG&A expenses were $4.6 million for the quarter ended September 30, 2026, as compared to $4.5 million in the prior year quarter, with the increase a result of nominal increases across salaries and network infrastructure expenses. When comparing the quarter ended September 30, 2026 to the prior year quarter, SG&A expenses grew at a significantly lower rate than revenues and gross profit, as we remain committed to increasing profitability.

SG&A expenses were $13.5 million for the nine months ended September 30, 2026 as compared to $13.3 million in the prior year period. The increase in SG&A for the nine months ended September 30, 2026 was driven primarily by increases in salary alongside increases in network infrastructure, travel expenditures, professional fees, and other various general 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 acquisitions, or developed as internal use software.

Depreciation and amortization expense totaled $0.3 million and $0.4 million in the quarter ended September 30, 2026 and 2025, respectively. The decrease in depreciation and amortization expense for the quarter ended September 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.

Depreciation and amortization expense totaled $0.8 million and $1.4 million in the nine months ended September 30, 2026 and 2025, respectively. The decrease in depreciation and amortization expense for the nine months ended September 30, 2026 compared to the prior year period 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.

Other Income, Net

Other income, net was $0.1 million for the quarter ended September 30, 2026, flat compared to $0.1 million for the quarter ended September 30, 2025.

Other income, net was $0.2 million for the nine months ended September 30, 2026, down compared to $0.3 million for the nine months ended September 30, 2025 due to lower interest income as a result of lower interest rates versus the prior year period.

Income Taxes

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

Income tax expense for the nine months ended September 30, 2026 and 2025 was $0.5 million and $0.2 million, respectively, up versus the prior year period as a result of increased taxable income.

Net Income (Loss)

We reported net income of $0.2 million for the quarter ended September 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 the corresponding increase in gross profits exceeding the rate of growth in total SG&A expenses and income tax expense in the quarter ended September 30, 2026 as compared to the same period in the prior year.

We reported net income of $0.6 million for the nine months ended September 30, 2026, as compared to a net loss of $1.0 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 the corresponding increase in gross profits exceeding the rate of growth in total SG&A expenses and income tax expense in the nine months ended September 30, 2026 as compared to the same period in the prior year.

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

Liquidity and Capital Resources

Our primary sources of liquidity are available cash and cash equivalents and cash flows provided by operations. As of September 30, 2026, we had cash and cash equivalents of $7.3 million. For the nine months ended September 30, 2026, cash provided by operations was $3.3 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), after adding back non-cash items, including depreciation, amortization, deferred federal income tax, non-cash stock-based compensation, changes in our allowance for expected credit losses, changes in our reserve for processing losses, 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, accounts payable and accrued expenses, operating lease liabilities, merchant reserves, and customer deposits.

We reported net income of $0.6 million for the nine months ended September 30, 2026 compared to a net loss of $1.0 million for the nine months ended September 30, 2025. We had an accumulated deficit of $69.9 million and $70.5 million at September 30, 2026 and December 31, 2025, respectively. Additionally, we had working capital of $9.1 million and $9.4 million at September 30, 2026 and December 31, 2025, respectively.

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 approximate amount of $16,017. Total interest and principal payments on this folder and inserter equipment loan were $47,953 for the three months ended September 30, 2026 and 2025. Total interest and principal payments on this folder and inserter equipment loan were $146,094 and $143,859 for the nine months ended September 30, 2026 and 2025, respectively.

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 approximate amount of $20,088. Total interest and principal payments on the printer loan during the three months ended September 30, 2026 were $53,273. As of September 30, 2026, all proceeds had been drawn from the loan. Total payments on the printer loan during the nine months ended September 30, 2026 were $111,270.

On September 28, 2026, the Company entered into a debt arrangement to finance $625,500 for the purchase of an Output Solutions presorter. The loan is for a period of 66 months with a maturity date of March 28, 2032 and annual interest of 6.75%. Monthly principal and interest payments are required in the approximate amount of $12,344, with interest only payments in the amount of $3,518 required for the first six months of the loan term beginning in October 2026. Through September 30, 2026, no proceeds had been drawn from the loan, and therefore the loan was not reflected on the Company's consolidated balance sheet at September 30, 2026. As of October 27, 2026, $331,952 of proceeds had been drawn from the loan, with the remaining commitment of $293,548 still available.

From time to time, we have sold shares of our common stock in order to provide us liquidity. For example, on November 19, 2021, Voyager Digital purchased 142,857 unregistered shares of common stock at an offering price of $7.00 per share in a private offering. The gross proceeds to us from the private offering were $1,000,000. We have also sold securities in public offerings from time to time. For example, in September 2020, we sold 4,705,883 shares of our common stock and received net proceeds of approximately $8 million. We cannot assure you that in the future we will be able to sell shares of our equity securities on terms acceptable to us or at all.

Cash Flows

Net cash provided by operating activities for the nine months ended September 30, 2026 was $3.3 million, as compared to net cash provided by operating activities of $1.4 million for the nine months ended September 30, 2025. The increase in net cash provided by operating activities was due primarily to increases in net income, accounts payable, and accrued expenses in the nine months ended September 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.

Net cash used in investing activities was $2.9 million for the nine months ended September 30, 2026, as compared to net cash used in investing activities of $1.1 million for the nine months ended September 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.

Net cash used in financing activities for the nine months ended September 30, 2026 was $20.9 million and net cash used in financing activities for the nine months ended September 30, 2025 was $6.5 million. The increase in cash used in 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.

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.