Note 2 - Acquisition of Information Management Solutions, LLC.

12 Months Ended

Dec. 31, 2021

Notes to Financial Statements

Business Combination Disclosure [Text Block]

Note 2. Acquisition of Information Management Solutions, LLC.

On December 15, 2020, the Company entered into an asset purchase agreement to purchase substantially all the assets of Information Management Solutions, LLC ("IMS"), a Texas limited liability company in 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. The total purchase price consideration consisted of a cash payment of $5,907,408 at closing and warrant considerations valued at $552,283.  The warrants were comprised of 945,599 unregistered warrants to purchase shares of common stock of Usio, Inc., or 945,599 shares of common stock, $0.001 par value per share, with an exercise price of $4.23 per share.

The final number of warrants was determined by dividing $2,000,000 by the 5-day weighted average closing price for the four trading days preceding the closing date and the closing day, or $2.115 per share.  The exercise price of the warrants was determined by multiplying the 5-day weighted average closing price by the number 2.   The warrants vest in three equal installments on the first, second and third anniversary of the closing date and have a term of five years from vest.

The purchase price was allocated to the net assets acquired based upon their estimated fair values as follows:

	Estimated Fair		Estimated Useful
	Value		Life (in years)
Accounts receivable	$	683,736
Inventory		168,138
Fixed assets		1,211,225		5
Prepaid expenses		29,849
Other assets		7,408
Customer list		3,807,052		5
Total Cash Consideration	$	5,907,408
Customer list	$	552,283
Total Warrant Consideration	$	552,283
Total Purchase Price	$	6,459,691

The 2020 consolidated statement of operations includes 1 month of IMS operations, which was approximately $1.2 million of revenue. The first full year of operations from the Output Solutions unit exceeded our expectations, achieving $14.8 million in top line revenue for The Company in 2021, exceeding expectations.

Unaudited Pro Forma Information

The Company estimates that the revenues and net income for the periods below that would have been reported if the IMS acquisition would have taken place on the first day of the Company's 2019 calendar year would be as follows and includes pro-forma adjustments to normalize results in line with future operating performance:

	2020			2019
Revenues	$	45,184,678		$	41,809,997
Gross Profit		9,251,517			8,099,868
Net (Loss)		(3,127,387	)		(4,909,074	)
Income per share:
Basic	$	(0.17	)	$	(0.28	)
Diluted	$	(0.17	)	$	(0.28	)

Amounts set forth above are not necessarily indicative of the results that would have been obtained had the IMS acquisition had taken place on the first day of the Company's 2019 calendar year or of the results that may be achieved by the combined enterprise in the future.