VASO 10-Q
VASO Corp (VASO)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM
For the quarterly period ended
For the transition period from _______________ to ______________
Commission File Number:
| (Exact name of registrant as specified in its charter) |
| (State or other jurisdiction of incorporation or organization) | (IRS Employer
Identification Number) |
| (Address of principal executive offices) |
Registrant’s
Telephone Number
Securities registered pursuant
to Section 12 (b) of the Act:
Indicate by check mark whether
the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Indicate by check mark whether
the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T
(§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit
such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large Accelerated Filer ☐ | Accelerated Filer ☐ | Smaller Reporting
Company | |
| Emerging Growth Company |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant
is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No
Number of Shares Outstanding of Common Stock,
$.001 Par Value, at November 10, 2025 –
Vaso Corporation and Subsidiaries
INDEX
Page i
PART I – FINANCIAL INFORMATION
ITEM 1 - FINANCIAL STATEMENTS
Vaso Corporation and Subsidiaries
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except share and per share data)
| September 30, 2025 | December 31, 2024 | |||||||
| (unaudited) | ||||||||
| ASSETS | ||||||||
| CURRENT ASSETS | ||||||||
| Cash and cash equivalents | $ | $ | ||||||
| Accounts and other receivables, net of an allowance for credit losses and commission adjustments of $ | ||||||||
| Receivables due from related parties | ||||||||
| Inventories, net | ||||||||
| Deferred commission expense | ||||||||
| Prepaid expenses and other current assets | ||||||||
| Total current assets | ||||||||
| Property and equipment, net of accumulated depreciation of $ | ||||||||
| Operating lease right of use assets | ||||||||
| Goodwill | ||||||||
| Intangibles, net | ||||||||
| Other assets, net | ||||||||
| Investment in EECP Global | ||||||||
| Deferred tax assets, net | ||||||||
| Total assets | $ | $ | ||||||
| LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||
| CURRENT LIABILITIES | ||||||||
| Accounts payable | $ | $ | ||||||
| Accrued commissions | ||||||||
| Accrued expenses and other liabilities | ||||||||
| Finance lease liabilities - current | ||||||||
| Operating lease liabilities - current | ||||||||
| Sales tax payable | ||||||||
| Income taxes payable | ||||||||
| Deferred revenue - current portion | ||||||||
| Notes payable - current portion | ||||||||
| Due to related party | ||||||||
| Total current liabilities | ||||||||
| LONG-TERM LIABILITIES | ||||||||
| Operating lease liabilities, net of current portion | ||||||||
| Deferred revenue, net of current portion | ||||||||
| Other long-term liabilities | ||||||||
| Total long-term liabilities | ||||||||
| COMMITMENTS AND CONTINGENCIES (NOTE O) | ||||||||
| STOCKHOLDERS' EQUITY | ||||||||
| Preferred stock, $ | ||||||||
| Common stock, $ | ||||||||
| Additional paid-in capital | ||||||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Accumulated other comprehensive loss | ( | ) | ( | ) | ||||
| Total stockholders’ equity | ||||||||
| Total liabilities and stockholders' equity | $ | $ | ||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
Page 1
Vaso Corporation and Subsidiaries
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)
(unaudited)
(in thousands, except per share data)
| Three Months ended September 30, | Nine Months ended September 30, | |||||||||||||||
| 2025 | 2024 | 2025 | 2024 | |||||||||||||
| Revenues | ||||||||||||||||
| Managed IT systems and services | $ | $ | $ | $ | ||||||||||||
| Professional sales services | ||||||||||||||||
| Equipment sales and services | ||||||||||||||||
| Total revenues | ||||||||||||||||
| Cost of revenues | ||||||||||||||||
| Cost of managed IT systems and services | ||||||||||||||||
| Cost of professional sales services | ||||||||||||||||
| Cost of equipment sales and services | ||||||||||||||||
| Total cost of revenues | ||||||||||||||||
| Gross profit | ||||||||||||||||
| Operating expenses | ||||||||||||||||
| Selling, general and administrative | ||||||||||||||||
| Research and development | ||||||||||||||||
| Business combination transaction costs | ||||||||||||||||
| Total operating expenses | ||||||||||||||||
| Operating income (loss) | ( | ) | ( | ) | ( | ) | ||||||||||
| Other (expense) income | ||||||||||||||||
| Interest and financing costs | ( | ) | ||||||||||||||
| Interest and other income, net | ||||||||||||||||
| Loss on disposal of fixed assets | ( | ) | ( | ) | ( | ) | ||||||||||
| Total other income, net | ||||||||||||||||
| Income (loss) before income taxes | ( | ) | ( | ) | ||||||||||||
| Income tax expense | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Net income (loss) | ( | ) | ( | ) | ||||||||||||
| Other comprehensive income | ||||||||||||||||
| Foreign currency translation gain (loss) | ( | ) | ||||||||||||||
| Comprehensive income (loss) | $ | $ | ( | ) | $ | $ | ( | ) | ||||||||
| Income (loss) per common share | ||||||||||||||||
| - basic and diluted | $ | $ | ( | ) | $ | $ | ( | ) | ||||||||
| Weighted average common shares outstanding | ||||||||||||||||
| - basic | ||||||||||||||||
| - diluted | ||||||||||||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
Page 2
Vaso Corporation and Subsidiaries
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (unaudited)
(in thousands)
| Accumulated | ||||||||||||||||||||||||||||||||
| Other | Total | |||||||||||||||||||||||||||||||
| Common Stock | Treasury Stock | Additional | Accumulated | Comprehensive | Stockholders’ | |||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Paid-in-Capital | Deficit | Loss | Equity | |||||||||||||||||||||||||
| Balance at January 1, 2024 | $ | ( | ) | ( | ) | $ | $ | ( | ) | $ | ( | ) | $ | |||||||||||||||||||
| Share-based compensation | - | - | - | |||||||||||||||||||||||||||||
| Foreign currency translation loss | - | - | - | ( | ) | ( | ) | |||||||||||||||||||||||||
| Net loss | - | - | - | ( | ) | ( | ) | |||||||||||||||||||||||||
| Balance at March 31, 2024 | $ | ( | ) | $ | ( | ) | $ | $ | ( | ) | $ | ( | ) | $ | ||||||||||||||||||
| Share-based compensation | - | - | ||||||||||||||||||||||||||||||
| Shares withheld for employee tax liability | - | - | - | |||||||||||||||||||||||||||||
| Foreign currency translation loss | - | - | - | ( | ) | ( | ) | |||||||||||||||||||||||||
| Net income | - | - | - | |||||||||||||||||||||||||||||
| Balance at June 30, 2024 | $ | ( | ) | $ | ( | ) | $ | $ | ( | ) | $ | ( | ) | $ | ||||||||||||||||||
| Retirement of treasury shares | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||
| Share-based compensation | - | - | ||||||||||||||||||||||||||||||
| Shares withheld for employee tax liability | - | - | - | ( | ) | ( | ) | |||||||||||||||||||||||||
| Foreign currency translation gain | - | - | - | |||||||||||||||||||||||||||||
| Net loss | - | - | - | ( | ) | ( | ) | |||||||||||||||||||||||||
| Balance at September 30, 2024 | $ | $ | $ | ( | ) | $ | ( | ) | $ | |||||||||||||||||||||||
| Balance at January 1, 2025 | $ | $ | $ | ( | ) | $ | ( | ) | $ | |||||||||||||||||||||||
| Share-based compensation | - | - | - | |||||||||||||||||||||||||||||
| Foreign currency translation gain | - | - | - | |||||||||||||||||||||||||||||
| Net loss | - | - | - | ( | ) | ( | ) | |||||||||||||||||||||||||
| Balance at March 31, 2025 | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ||||||||||||||||||||||
| Share-based compensation | - | - | ||||||||||||||||||||||||||||||
| Shares withheld for employee tax liability | - | - | - | ( | ) | ( | ) | |||||||||||||||||||||||||
| Foreign currency translation gain | - | - | - | |||||||||||||||||||||||||||||
| Net loss | - | - | - | ( | ) | ( | ) | |||||||||||||||||||||||||
| Balance at June 30, 2025 | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ||||||||||||||||||||||
| Share-based compensation | - | - | ||||||||||||||||||||||||||||||
| Foreign currency translation gain | - | - | - | |||||||||||||||||||||||||||||
| Net income | - | - | - | |||||||||||||||||||||||||||||
| Balance at September 30, 2025 | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ||||||||||||||||||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
Page 3
Vaso Corporation and Subsidiaries
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)
(in thousands)
| Nine months ended | ||||||||
| September 30, | ||||||||
| 2025 | 2024 | |||||||
| Cash flows from operating activities | ||||||||
| Net income (loss) | $ | $ | ( | ) | ||||
| Adjustments to reconcile net income (loss) to net cash provided by operating activities | ||||||||
| Depreciation and amortization | ||||||||
| Loss from investment in EECP Global | ||||||||
| Provision for credit losses and commission adjustments | ||||||||
| Write-off of Achari loan | ||||||||
| Share-based compensation | ||||||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts and other receivables | ||||||||
| Due from related parties | ( | ) | ( | ) | ||||
| Inventories | ||||||||
| Deferred commission expense | ( | ) | ||||||
| Prepaid expenses and other current assets | ( | ) | ||||||
| Other assets, net | ( | ) | ||||||
| Accounts payable | ( | ) | ||||||
| Accrued commissions | ( | ) | ( | ) | ||||
| Accrued expenses and other liabilities | ( | ) | ( | ) | ||||
| Sales tax payable | ( | ) | ||||||
| Deferred revenue | ||||||||
| Other long-term liabilities | ( | ) | ||||||
| Net cash provided by operating activities | ||||||||
| Cash flows from investing activities | ||||||||
| Purchases of equipment and software | ( | ) | ( | ) | ||||
| Loan to Achari | ( | ) | ||||||
| Redemption of short-term investments | ||||||||
| Net cash (used in) provided by investing activities | ( | ) | ||||||
| Cash flows from financing activities | ||||||||
| Payroll taxes paid by withholding shares | ( | ) | ( | ) | ||||
| Proceeds from note payable | ||||||||
| Repayment of notes payable and finance lease obligations | ( | ) | ( | ) | ||||
| Net cash provided by (used in) financing activities | ( | ) | ||||||
| Effect of exchange rate differences on cash and cash equivalents | ( | ) | ( | ) | ||||
| NET INCREASE IN CASH AND CASH EQUIVALENTS | ||||||||
| Cash and cash equivalents - beginning of period | ||||||||
| Cash and cash equivalents - end of period | $ | $ | ||||||
| SUPPLEMENTAL DISCLOSURE OF CASH INFORMATION | ||||||||
| Interest paid | $ | $ | ||||||
| Income taxes paid | $ | $ | ||||||
| SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING AND FINANCING ACTIVITIES | ||||||||
| Initial recognition of operating lease right of use asset and liability | $ | $ | ||||||
| Transfer of fixed assets to inventory | $ | $ | - | |||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
Page 4
Vaso Corporation and Subsidiaries
Notes to Condensed Consolidated Financial Statements (unaudited)
NOTE A – ORGANIZATION AND PLAN OF OPERATIONS
Vaso Corporation was incorporated in Delaware in July 1987. Unless the context requires otherwise, all references to “we”, “our”, “us”, “Company”, “registrant”, “Vaso” or “management” refer to Vaso Corporation and its subsidiaries.
Overview
Vaso Corporation (the “Company”) principally operates in three distinct business segments in the healthcare equipment and information technology industries. We manage and evaluate our operations, and report our financial results, through these three business segments:.
| ● | IT segment, operating through a wholly-owned subsidiary VasoTechnology, Inc. (“VasoTechnology”), primarily focuses on healthcare IT and managed network technology services; |
| ● | Professional sales service segment, operating through a wholly-owned subsidiary Vaso Diagnostics, Inc. d/b/a VasoHealthcare, primarily focuses on the sale of healthcare capital equipment for GE Healthcare Technologies, Inc. (“GEHC”) into the healthcare provider middle market; and |
| ● | Equipment segment, operating through a wholly-owned subsidiary VasoMedical, Inc., which in turn operates
through Vasomedical Solutions, Inc. (“VasoSolutions”) for domestic business and Vasomedical Global Corp. (“Vasomedical
Global”) for international business, respectively, primarily focuses on the design, manufacture, sale and service of proprietary
medical devices and software. VasoSolutions also manages the domestic operation of EECP Global Corporation (“EECP Global”),
in which the Company holds a |
The Company’s website is www.vasocorporation.com.
VasoTechnology (IT Segment)
VasoTechnology, Inc. was formed in May 2015, at the time the Company acquired all of the assets of NetWolves, LLC and its affiliates, including the membership interests in NetWolves Network Services, LLC (collectively, “NetWolves”). VasoTechnology currently consists of a managed network and security service division (NetWolves) and a healthcare IT application value added reseller (IT VAR) division (VasoHealthcare IT). Its current offerings include:
| ● | Managed healthcare software solutions including imaging applications (channel partner of select vendors of healthcare IT products); |
| ● | Managed network infrastructure (routers, switches and other core equipment); |
| ● | Managed network transport (FCC licensed carrier reselling 175+ facility partners); and |
| ● | Managed network security services. |
VasoTechnology uses a combination of proprietary technology, methodology and third-party applications to deliver its value proposition.
Page 5
Vaso Corporation and Subsidiaries
Notes to Condensed Consolidated Financial Statements (unaudited)
VasoHealthcare (Professional Sales Service Segment)
VasoHealthcare commenced operations in 2010, in conjunction with the Company’s execution of its exclusive sales representation agreement with GEHC (“GEHC Agreement”) to further the sale of certain healthcare capital equipment in the healthcare provider middle market. Its current offerings consist of:
| ● | GEHC diagnostic imaging capital equipment and ultrasound systems; |
| ● | GEHC service agreements for the above equipment; |
| ● | GEHC training services for use of the above equipment; and |
| ● | GEHC and third-party financial services for the above equipment. |
VasoMedical (Equipment Segment)
VasoMedical is the Company’s business division for its proprietary medical device operations, including the design, development, manufacturing, sales and service of various medical devices in the domestic and international markets and includes the Vasomedical Global and Vasomedical Solutions business units. These devices are primarily for cardiovascular monitoring and diagnostic systems. Its current offerings consist of:
| ● | Biox™ series Holter monitors and ambulatory blood pressure recorders; |
| ● | ARCS® series analysis, reporting and communication software for ECG and blood pressure signals, including cloud-based software suite and algorithm in the form of a SaaS (software as a service) subscription; |
| ● | MobiCare® multi-parameter wireless vital-sign monitoring system; and |
| ● | EECP® therapy systems for non-invasive, outpatient treatment of ischemic heart disease. |
This segment uses its extensive in-house knowledge and intellectual property for cardiovascular devices and software coupled with its engineering resources to cost-effectively create and market its proprietary technology. It sells and services its products to customers in the U.S. and China directly and sells and/or services its products in the international market mainly through independent distributors.
Termination of Achari Business Combination Agreement
As previously disclosed, the Company entered into a business combination agreement (the “Business Combination Agreement”), dated as of December 6, 2023, with Achari Ventures Holdings Corp. I, a Delaware corporation (“Achari”), and Achari Merger Sub, Inc., a Delaware corporation and a wholly owned subsidiary of Achari. On September 17, 2024, Vaso provided to Achari a notice of termination of the Business Combination Agreement. Business combination transaction costs presented in the Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) include investment banking and other advisory and legal costs incurred associated with the Business Combination Agreement.
Page 6
Vaso Corporation and Subsidiaries
Notes to Condensed Consolidated Financial Statements (unaudited)
NOTE B – INTERIM STATEMENT PRESENTATION
Basis of Presentation and Use of Estimates
The accompanying condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and pursuant to the accounting and disclosure rules and regulations of the Securities and Exchange Commission (the “SEC”) for interim financial information. Certain information and disclosures normally included in the financial statements prepared in accordance with U.S. GAAP have been condensed or omitted pursuant to such rules and regulations. Accordingly, these condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and related notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024, as filed with the SEC on March 31, 2025.
These unaudited condensed consolidated financial statements include the accounts of the companies over which we exercise control. In the opinion of management, the accompanying condensed consolidated financial statements reflect all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation of interim results for the Company. The results of operations for any interim period are not necessarily indicative of results to be expected for any other interim period or the full year.
The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the condensed consolidated financial statements, the disclosure of contingent assets and liabilities in the unaudited condensed consolidated financial statements and the accompanying notes, and the reported amounts of revenues, expenses and cash flows during the periods presented. Actual amounts and results could differ from those estimates. The most significant of these estimates include the allowance for commission adjustments, the valuation of deferred tax assets, and the assessment of possible impairment of goodwill and intangible assets. The estimates and assumptions the Company makes are based on historical factors, current circumstances and the experience and judgment of the Company’s management. The Company evaluates its estimates and assumptions on an ongoing basis.
Recently Issued Accounting Standards To Be Adopted
In November 2024, the FASB issued ASU 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses, which requires disclosure of disaggregated information about certain income statement line items in the notes to the financial statements. The ASU is effective for fiscal years beginning after December 15, 2026, and interim periods within annual reporting periods beginning after December 15, 2027. Early adoption is permitted. The Company is currently evaluating the impact of adopting this standard on its Consolidated Financial Statements.
In July 2025, the FASB issued ASU No. 2025-05 (“ASU 2025-05”), Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets. ASU 2025-05 provides (1) all entities with a practical expedient and (2) entities other than public business entities, with an accounting policy election when estimating credit losses for current accounts receivable and current contract assets arising from transactions accounted for under Topic 606. This authoritative guidance is effective for annual periods beginning after December 15, 2025, and interim reporting periods within those annual reporting periods, with early adoption permitted. We are currently evaluating the impact of adopting ASU 2025-05.
In September 2025, the FASB issued ASU 2025-06, Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40): Accounting for and Disclosure of Software Costs, which amends certain aspects of the accounting for and disclosure of internal-use software costs. The ASU is effective for annual reporting periods beginning with the year ending December 31, 2028. Early adoption is permitted. The Company is currently evaluating the impact of adopting this standard on its Consolidated Financial Statements.
Page 7
Vaso Corporation and Subsidiaries
Notes to Condensed Consolidated Financial Statements (unaudited)
NOTE C – REVENUE RECOGNITION
Disaggregation of Revenue
The following tables present revenues disaggregated by our business operations and timing of revenue recognition:
| (in thousands) | ||||||||||||||||||||||||||||||||
| Three Months Ended September 30, 2025 | Three Months Ended September 30, 2024 | |||||||||||||||||||||||||||||||
| Professional sales | Professional sales | |||||||||||||||||||||||||||||||
| IT segment | service segment | Equipment segment | Total | IT segment | service segment | Equipment segment | Total | |||||||||||||||||||||||||
| Network services | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
| Software sales and support | ||||||||||||||||||||||||||||||||
| Commissions | ||||||||||||||||||||||||||||||||
| Medical equipment sales | ||||||||||||||||||||||||||||||||
| Medical equipment service | ||||||||||||||||||||||||||||||||
| $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||
| Nine Months Ended September 30, 2025 | Nine Months Ended September 30, 2024 | |||||||||||||||||||||||||||||||
| Professional sales | Professional sales | |||||||||||||||||||||||||||||||
| IT segment | service segment | Equipment segment | Total | IT segment | service segment | Equipment segment | Total | |||||||||||||||||||||||||
| Network services | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
| Software sales and support | ||||||||||||||||||||||||||||||||
| Commissions | ||||||||||||||||||||||||||||||||
| Medical equipment sales | ||||||||||||||||||||||||||||||||
| Medical equipment service | ||||||||||||||||||||||||||||||||
| $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||
| Three Months Ended September 30, 2025 | Three Months Ended September 30, 2024 | |||||||||||||||||||||||||||||||
| Professional sales | Professional sales | |||||||||||||||||||||||||||||||
| IT segment | service segment | Equipment segment | Total | IT segment | service segment | Equipment segmtent | Total | |||||||||||||||||||||||||
| Revenue recognized over time | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
| Revenue recognized at a point in time | ||||||||||||||||||||||||||||||||
| $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||
| Nine Months Ended September 30, 2025 | Nine Months Ended September 30, 2024 | |||||||||||||||||||||||||||||||
| Professional sales | Professional sales | |||||||||||||||||||||||||||||||
| IT segment | service segment | Equipment segment | Total | IT segment | service segment | Equipment segment | Total | |||||||||||||||||||||||||
| Revenue recognized over time | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
| Revenue recognized at a point in time | ||||||||||||||||||||||||||||||||
| $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||
Page 8
Vaso Corporation and Subsidiaries
Notes to Condensed Consolidated Financial Statements (unaudited)
Transaction Price Allocated to Remaining Performance Obligations
As of September 30, 2025,
the aggregate amount of transaction price allocated to performance obligations that are unsatisfied (or partially unsatisfied) for executed
contracts approximates $
| (in thousands) | ||||||||||||||||
| Fiscal years of revenue recognition | ||||||||||||||||
| 2025 | 2026 | 2027 | Thereafter | |||||||||||||
| Unfulfilled performance obligations | $ | $ | $ | $ | ||||||||||||
Contract Assets and Liabilities
Contract liabilities arise
in our healthcare IT, VasoHealthcare, and VasoMedical businesses. In our healthcare IT business, payment arrangements with clients typically
include an initial payment due upon contract signing and milestone-based payments based upon product delivery and go-live, as well as
post go-live monthly payments for subscription and support fees. Customer payments received, or receivables recorded, in advance of go-live
and customer acceptance, where applicable, are deferred as contract liabilities. Such amounts aggregated approximately $
In our VasoHealthcare business,
we bill amounts for certain milestones in advance of customer acceptance of the underlying equipment. Such amounts aggregated approximately
$
In our VasoMedical business,
we bill amounts for post-delivery services and varying duration service contracts in advance of performance. Such amounts aggregated approximately
$
During the three and nine
months ended September 30, 2025, we recognized approximately $
The following table summarizes the Company’s contract receivable and contract liability balances:
| 2025 | 2024 | |||||||
| Contract receivables - January 1 | ||||||||
| Contract receivables - September 30 | ||||||||
| Increase (decrease) | ( | ) | ( | ) | ||||
| Contract liabilities - January 1 | ||||||||
| Contract liabilities - September 30 | ||||||||
| Increase (decrease) | ||||||||
The decrease in contract receivables in the first nine months of 2025 and 2024 was due primarily to collections exceeding billings. The increase in contract liabilities in the same periods is mainly attributable to orders exceeding deliveries.
NOTE D – SEGMENT REPORTING AND CONCENTRATIONS
Vaso Corporation principally
operates in three distinct business segments in the healthcare and information technology industries. We manage and evaluate our operations,
and report our financial results, through these
| ● | IT segment, operating through a wholly-owned subsidiary VasoTechnology, Inc., primarily focuses on healthcare IT and managed network technology services; |
| ● | Professional sales service segment, operating through a wholly-owned subsidiary Vaso Diagnostics, Inc. d/b/a VasoHealthcare, primarily focuses on the sale of healthcare capital equipment for GEHC into the healthcare provider middle market; and |
Page 9
Vaso Corporation and Subsidiaries
Notes to Condensed Consolidated Financial Statements (unaudited)
| ● | Equipment segment, operating through a wholly-owned subsidiary VasoMedical, Inc., primarily focuses on the design, manufacture, sale and service of proprietary medical devices. |
The chief operating
decision maker is the Company’s Chief Executive Officer, who, in conjunction with upper management, evaluates segment
performance based on operating income and adjusted EBITDA (which is a non-GAAP financial measure defined as net income (loss), plus
interest expense (income), net; tax expense; depreciation and amortization; and non-cash stock-based compensation). Administrative
functions such as finance, human resources, and information technology are centralized and related expenses allocated to each
segment. Other costs not directly attributable to operating segments, such as audit, legal, director fees, investor relations, and
others, as well as certain assets – primarily cash balances – are reported in the Corporate entity below. There are no
intersegment revenues.
| (in thousands) | ||||||||||||||||
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
| 2025 | 2024 | 2025 | 2024 | |||||||||||||
| Revenues from external customers | ||||||||||||||||
| IT | $ | $ | $ | $ | ||||||||||||
| Professional sales service | ||||||||||||||||
| Equipment | ||||||||||||||||
| Total revenues | $ | $ | $ | $ | ||||||||||||
| Gross Profit | ||||||||||||||||
| IT | $ | $ | $ | $ | ||||||||||||
| Professional sales service | ||||||||||||||||
| Equipment | ||||||||||||||||
| Total gross profit | $ | $ | $ | $ | ||||||||||||
| Significant segment expenses | ||||||||||||||||
| Selling, general & administrative | ||||||||||||||||
| IT | $ | $ | $ | $ | ||||||||||||
| Professional sales service | ||||||||||||||||
| Equipment | ||||||||||||||||
| Corporate | ||||||||||||||||
| Total selling, general and administrative | $ | $ | $ | $ | ||||||||||||
| Other segment items | ||||||||||||||||
| IT | $ | $ | $ | $ | ||||||||||||
| Equipment | ||||||||||||||||
| Corporate | ||||||||||||||||
| Total other segment items | $ | $ | $ | $ | ||||||||||||
| Operating income (loss) | ||||||||||||||||
| IT | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Professional sales service | ||||||||||||||||
| Equipment | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Corporate | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Total operating income (loss) | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||||
| Depreciation and amortization | ||||||||||||||||
| IT | $ | $ | $ | $ | ||||||||||||
| Professional sales service | ||||||||||||||||
| Equipment | ||||||||||||||||
| Corporate | ||||||||||||||||
| Total depreciation and amortization | $ | $ | $ | $ | ||||||||||||
| Capital expenditures | ||||||||||||||||
| IT | $ | ( | ) | $ | $ | $ | ||||||||||
| Professional sales service | ||||||||||||||||
| Equipment | ||||||||||||||||
| Corporate | ||||||||||||||||
| Total capital expenditures | $ | ( | ) | $ | $ | $ | ||||||||||
Page 10
Vaso Corporation and Subsidiaries
Notes to Condensed Consolidated Financial Statements (unaudited)
| (in thousands) | ||||||||
| September 30, 2025 | December 31, 2024 | |||||||
| Identifiable Assets | ||||||||
| IT | $ | $ | ||||||
| Professional sales service | ||||||||
| Equipment | ||||||||
| Corporate | ||||||||
| Total assets | $ | $ | ||||||
GE Healthcare accounted for
NOTE E – NET INCOME (LOSS) PER COMMON SHARE
Basic earnings per common share is based on the weighted average number of common shares outstanding, including vested restricted shares, without consideration of potential common stock. Diluted earnings per common share is based on the weighted average number of common and potential dilutive common shares outstanding.
Diluted earnings per share
were computed based on the weighted average number of shares outstanding plus all potentially dilutive common shares.
| (in thousands) | ||||||||||||||||
| Three months ended September 30, | Nine months ended September 30, | |||||||||||||||
| 2025 | 2024 | 2025 | 2024 | |||||||||||||
| Basic weighted average shares outstanding | ||||||||||||||||
| Dilutive effect of unvested restricted shares | ||||||||||||||||
| Diluted weighted average shares outstanding | ||||||||||||||||
The following table represents common stock equivalents that were excluded from the computation of diluted earnings (loss) per share for the three and nine months ended September 30, 2025 and 2024, because the effect of their inclusion would be anti-dilutive.
| (in thousands) | ||||||||||||||||
| Three months
ended September 30, | Nine months
ended September 30, | |||||||||||||||
| 2025 | 2024 | 2025 | 2024 | |||||||||||||
| Restricted common stock grants | ||||||||||||||||
Page 11
Vaso Corporation and Subsidiaries
Notes to Condensed Consolidated Financial Statements (unaudited)
NOTE F – SHORT-TERM INVESTMENTS AND FINANCIAL INSTRUMENTS
Cash and cash equivalents represent cash and short-term, highly liquid investments either in certificates of deposit, treasury bills, money market funds, or investment grade commercial paper issued by major corporations and financial institutions that generally have maturities of three months or less from the date of acquisition.
The Company complies with the provisions of ASC 820 “Fair Value Measurements and Disclosures” (“ASC 820”). Under ASC 820, fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (i.e., the “exit price”) in an orderly transaction between market participants at the measurement date.
In determining fair value, the Company uses various valuation approaches. ASC 820 establishes a fair value hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available. Observable inputs are those that market participants would use in pricing the asset or liability based on market data obtained from sources independent of the Company. Unobservable inputs reflect the Company’s assumptions about the inputs market participants would use in pricing the asset or liability developed based on the best information available in the circumstances. The fair value hierarchy is categorized into three levels based on the inputs as follows:
Level 1
Level 1 applies to assets or liabilities for which there are quoted prices in active markets for identical assets or liabilities.
Level 2
Level 2 applies to assets or liabilities for which there are inputs other than quoted prices that are observable for the asset or liability such as quoted prices for similar assets or liabilities in active markets; quoted prices for identical assets or liabilities in markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which significant inputs are observable or can be derived principally from, or corroborated by, observable market data.
Level 3
Level 3 applies to assets or liabilities for which there are unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of the assets or liabilities.
The carrying amount of assets and liabilities including cash and cash equivalents, short-term investments, accounts receivable, prepaids, accounts payable, accrued expenses and other current liabilities approximated their fair value as of September 30, 2025 and December 31, 2024, due to the relative short maturity of these instruments. Property and equipment, intangible assets, capital lease obligations, and goodwill are not required to be re-measured to fair value on a recurring basis. These assets are evaluated for impairment if certain triggering events occur. If such evaluation indicates that impairment exists, the respective asset is written down to its fair value.
Page 12
Vaso Corporation and Subsidiaries
Notes to Condensed Consolidated Financial Statements (unaudited)
The following table presents information about the Company’s assets measured at fair value as of September 30, 2025 and December 31, 2024:
| Quoted Prices | ||||||||||||||||
| in Active | Significant | |||||||||||||||
| Markets for | Other | Significant | Balance | |||||||||||||
| Identical Assets | Observable Inputs | Unobservable Inputs | as of September 30, | |||||||||||||
| (Level 1) | (Level 2) | (Level 3) | 2025 | |||||||||||||
| Assets | ||||||||||||||||
| Cash equivalents invested in money market funds and treasury bills | $ | $ | $ | $ | ||||||||||||
| Quoted Prices | ||||||||||||||||
| in Active | Significant | |||||||||||||||
| Markets for | Other | Significant | Balance | |||||||||||||
| Identical Assets | Observable Inputs | Unobservable Inputs | as of December 31, | |||||||||||||
| (Level 1) | (Level 2) | (Level 3) | 2024 | |||||||||||||
| Assets | ||||||||||||||||
| Cash equivalents invested in money market funds and treasury bills | $ | $ | $ | $ | ||||||||||||
NOTE G – ACCOUNTS AND OTHER RECEIVABLES, NET
The following table presents information regarding the Company’s accounts and other receivables as of September 30, 2025 and December 31, 2024:
| (in thousands) | ||||||||
| September 30, 2025 | December 31, 2024 | |||||||
| Trade receivables | $ | $ | ||||||
| Unbilled receivables | ||||||||
| Allowance for credit losses and commission adjustments | ( | ) | ( | ) | ||||
| Accounts and other receivables, net | $ | $ | ||||||
Contract receivables under “Revenue from Contracts with Customers (“ASC Topic 606”)” consist of trade receivables and unbilled receivables. Trade receivables include amounts due for shipped products and services rendered. Unbilled receivables represent variable consideration recognized in accordance with ASC Topic 606 but not yet billable. Amounts recorded – billed and unbilled - under the GEHC Agreement are subject to adjustment in subsequent periods should the underlying sales order amount, upon which the receivable is based, change.
Allowance for credit losses and commission adjustments include estimated losses resulting from the inability of our customers to make required payments, and adjustments arising from subsequent changes in sales order amounts that may reduce the amount the Company will ultimately receive under the GEHC Agreement.
Page 13
Vaso Corporation and Subsidiaries
Notes to Condensed Consolidated Financial Statements (unaudited)
NOTE H – INVENTORIES, NET
Inventories, net of reserves, consist of the following:
| (in thousands) | ||||||||
| September 30, 2025 | December 31, 2024 | |||||||
| Raw materials | $ | $ | ||||||
| Work in process | ||||||||
| Finished goods | ||||||||
| $ | $ | |||||||
The Company maintained reserves
for slow moving inventories of $
NOTE I – GOODWILL AND OTHER INTANGIBLES
Goodwill of $
| (in thousands) | ||||||||
| Nine Months Ended | Year Ended | |||||||
| September 30, 2025 | December 31, 2024 | |||||||
| Beginning of period | $ | $ | ||||||
| Foreign currency translation adjustment | ( | ) | ||||||
| End of period | $ | $ | ||||||
The Company’s other intangible assets consist of capitalized customer-related intangibles, patent and technology costs, and software costs, as set forth in the following:
| (in thousands) | ||||||||
| September 30, 2025 | December 31, 2024 | |||||||
| Customer-related | ||||||||
| Costs | $ | $ | ||||||
| Accumulated amortization | ( | ) | ( | ) | ||||
| Patents and Technology | ||||||||
| Costs | ||||||||
| Accumulated amortization | ( | ) | ( | ) | ||||
| Software | ||||||||
| Costs | ||||||||
| Accumulated amortization | ( | ) | ( | ) | ||||
| $ | $ | |||||||
Patents and technology are
amortized on a straight-line basis over their estimated useful lives of
Page 14
Vaso Corporation and Subsidiaries
Notes to Condensed Consolidated Financial Statements (unaudited)
Amortization expense amounted
to $
Amortization of intangibles for the next five years is:
| (in thousands) | ||||
| Years ending December 31, | ||||
| Remainder of 2025 | ||||
| 2026 | ||||
| 2027 | ||||
| 2028 | ||||
| 2029 | ||||
| 2030 | ||||
| $ | ||||
NOTE J – OTHER ASSETS, NET
Other assets, net consist of the following at September 30, 2025 and December 31, 2024:
| (in thousands) | ||||||||
| September 30, 2025 | December 31, 2024 | |||||||
| Deferred commission expense - noncurrent | $ | $ | ||||||
| Trade receivables - noncurrent | ||||||||
| Other, net of allowance for loss on loan receivable of $ | ||||||||
| $ | $ | |||||||
NOTE K – NOTES PAYABLE
Notes payable consist of the following:
| September 30, 2025 | December 31, 2024 | |||||||
| Notes payable | ||||||||
| Less: current portion | ( | ) | ( | ) | ||||
| $ | $ | |||||||
In June 2025, the Company’s
Biox subsidiary drew RMB
On December 30, 2022, the
Company executed a $
Page 15
Vaso Corporation and Subsidiaries
Notes to Condensed Consolidated Financial Statements (unaudited)
NOTE L – ACCRUED EXPENSES AND OTHER LIABILITIES
Accrued expenses and other liabilities consist of the following at September 30, 2025 and December 31, 2024:
| (in thousands) | ||||||||
| September 30, 2025 | December 31, 2024 | |||||||
| Accrued compensation | $ | $ | ||||||
| Accrued expenses - other | ||||||||
| Order reduction liability | ||||||||
| Other liabilities | ||||||||
| $ | $ | |||||||
NOTE M – DEFERRED REVENUE
The changes in the Company’s deferred revenues are as follows:
| (in thousands) | ||||||||||||||||
| Three months ended September 30, | Nine months ended September 30, | |||||||||||||||
| 2025 | 2024 | 2025 | 2024 | |||||||||||||
| Deferred revenue at beginning of period | $ | $ | $ | $ | ||||||||||||
| Net additions: | ||||||||||||||||
| Deferred extended service contracts | ( | ) | ||||||||||||||
| Deferred commission revenues | ||||||||||||||||
| Recognized as revenue: | ||||||||||||||||
| Deferred extended service contracts | ( | ) | ||||||||||||||
| Deferred commission revenues | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Deferred revenue at end of period | ||||||||||||||||
| Less: current portion | ||||||||||||||||
| Long-term deferred revenue at end of period | $ | $ | $ | $ | ||||||||||||
NOTE N – RELATED-PARTY TRANSACTIONS
The
Company uses the equity method to account for its interest in EECP Global as it has the ability to exercise significant influence over
the entity and reports its share of EECP Global operations in Other Income (Expense) on its condensed consolidated statements of operations.
For the three months ended September 30, 2025 and 2024, the Company’s share of EECP Global’s loss was approximately $
Page 16
Vaso Corporation and Subsidiaries
Notes to Condensed Consolidated Financial Statements (unaudited)
NOTE O – COMMITMENTS AND CONTINGENCIES
Litigation
The Company is currently, and has been in the past, a party to various legal proceedings, primarily employee related matters, incident to its business. The Company believes that the outcome of all pending legal proceedings in the aggregate is unlikely to have a material adverse effect on the business or consolidated financial condition of the Company.
Sales representation agreement
In October 2021, the Company concluded an amendment of the GEHC Agreement with GEHC, originally signed on May 19, 2010 and previously extended in 2012, 2015 and 2017. The amendment extended the term of the original agreement, which began on July 1, 2010, through December 31, 2026, subject to early termination by GEHC without cause with certain conditions. Under the agreement, VasoHealthcare is the exclusive representative for the sale of select GEHC diagnostic imaging products to specific market accounts in the 48 contiguous states of the United States and the District of Columbia. The circumstances under which early termination of the agreement may occur with cause include: not materially achieving certain sales goals, not maintaining a minimum number of sales representatives, and not meeting various legal and GEHC policy requirements.
Employment Agreements
On May 10, 2019, the Company
modified its Employment Agreement with its President and Chief Executive Officer, Dr. Jun Ma, to provide for a five-year term with extensions,
unless earlier terminated by the Company, but in no event can it extend beyond May 31, 2026. The Employment Agreement provides for annual
compensation of $
On December 31, 2022, the
Company executed an Employment Agreement with the President of its VasoHealthcare subsidiary, Ms. Jane Moen, which provides for a twenty-seven
month initial term with extensions, unless earlier terminated by the Company, but in no event can it extend beyond the earlier of December
31, 2026 or the termination of the GEHC Agreement. The Employment Agreement provides for annual base compensation of $
Page 17
Vaso Corporation and Subsidiaries
ITEM 2 - MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The information contained in this report contains forward-looking statements (as such term is defined in the Securities Exchange Act of 1934 and the regulations thereunder). These forward-looking statements may include projections of, or guidance on, the Company’s future financial performance, expected levels of future revenue and expenses, anticipated growth strategies, and anticipated trends in the Company’s business or financial results. When used in this report, words such as “anticipates”, “continue”, “believes”, “could”, “estimates”, “expects”, “may”, “plans”, “potential”, “future”, “intends”, the negative of these terms and similar expressions identify forward-looking statements. Any forward-looking statement made by the Company in this document is based only on the Company’s current expectations, estimates and projections about future events and financial trends affecting the financial condition of its business based on information currently available to the Company and speaks only as of the date when made. Forward-looking statements are not historical facts or guarantees of future performance. Because forward-looking statements relate to the future, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict, many of which are outside of the Company’s control. Actual results may differ materially from this forward-looking information and therefore, should not be unduly relied upon. Among the factors that could cause actual results to differ materially are the following: the effect of business and economic conditions, including the possibility of a downturn or disruptions in the U.S. economy; the impact of US tariff policies; the effect of the dramatic changes taking place in IT and healthcare; continuation of the GEHC agreement; the impact of competitive technology and products and their pricing; medical insurance reimbursement policies; unexpected manufacturing or supplier problems; unforeseen difficulties and delays in product development programs; the actions of regulatory authorities and third-party payers in the United States and overseas; and the risk factors reported from time to time in the Company’s SEC reports. The Company undertakes no obligation to update forward-looking statements as a result of future events or developments.
Unless the context requires otherwise, all references to “we”, “our”, “us”, “Company”, “registrant”, “Vaso” or “management” refer to Vaso Corporation and its subsidiaries.
General Overview
Our Business Segments
Vaso Corporation (“Vaso”) was incorporated in Delaware in July 1987. We principally operate in three distinct business segments in the healthcare and information technology industries. We manage and evaluate our operations, and report our financial results, through these three business segments.
| ● | IT segment, operating through a wholly-owned subsidiary VasoTechnology, Inc. (“VasoTechnology”), primarily focuses on healthcare IT and managed network technology services; |
| ● | Professional sales service segment, operating through a wholly-owned subsidiary Vaso Diagnostics, Inc. d/b/a VasoHealthcare, primarily focuses on the sale of healthcare capital equipment for GE HealthCare Technologies, Inc. (“GEHC”) into the healthcare provider middle market; and |
| ● | Equipment segment, operating through a wholly-owned subsidiary VasoMedical, Inc., which in turn operates through Vasomedical Solutions, Inc. for domestic business and Vasomedical Global Corp. for international business, respectively, primarily focuses on the design, manufacture, sale and service of proprietary medical devices and software. |
Termination of Business Combination Agreement
On September 17, 2024 Vaso provided notice to Achari to terminate its previously disclosed Business Combination Agreement with Achari. Vaso intends to continue to seek opportunities to increase stockholder value, including through internal growth, new partnerships and strategic investments with a concentration on medical and IT service companies.
Page 18
Vaso Corporation and Subsidiaries
Critical Accounting Policies and Estimates
Our discussion and analysis of our financial condition and results of operations are based upon the accompanying unaudited condensed consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”). The preparation of financial statements in conformity with U.S. GAAP requires management to make judgments, estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, expenses, and the related disclosures at the date of the financial statements and during the reporting period. Although these estimates are based on our knowledge of current events, our actual amounts and results could differ from those estimates. The estimates made are based on historical factors, current circumstances, and the experience and judgment of our management, who continually evaluate the judgments, estimates and assumptions and may employ outside experts to assist in the evaluations.
Certain of our accounting policies are deemed “critical”, as they are both most important to the financial statement presentation and require management’s most difficult, subjective or complex judgments as a result of the need to make estimates about the effect of matters that are inherently uncertain. For a discussion of our critical accounting policies, see Note B to the condensed consolidated financial statements and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the year ended December 31, 2024 as filed with the SEC on March 31, 2025.
Results of Operations – For the Three Months Ended September 30, 2025 and 2024
Revenues
Total revenue for the three months ended September 30, 2025 and 2024 was $22,657,000 and $20,769,000, respectively, representing an increase of $1,888,000, or 9% year-over-year. On a segment basis, revenue in the IT, professional sales services and equipment segments increased by $136,000, $1,706,000 and $46,000, respectively.
Revenue in the IT segment for the three months ended September 30, 2025 was $11,218,000 compared to $11,082,000 for the three months ended September 30, 2024, an increase of $136,000, or 1%, of which $299,000 resulted from higher network services revenue, offset by $163,000 lower revenues in the healthcare IT business. Monthly recurring revenue in the IT segment accounted for $9,806,000 or 87% of the segment revenue in the third quarter of 2025, and $9,341,000 or 84% of the segment revenue for the same quarter last year (see Note C).
Commission revenues in the professional sales service segment were $10,820,000 in the third quarter of 2025, an increase of $1,706,000, or 19%, as compared to $9,114,000 in the same quarter of 2024. The increase in commission revenues was due primarily to an increase in the volume of underlying equipment delivered by GEHC during the period, slightly offset by a lower blended commission rate applicable to such deliveries. The Company only recognizes commission revenue when the underlying equipment has been accepted at the customer site in accordance with the specific terms of the sales agreement. Consequently, amounts billable, or billed and received, under the agreement with GEHC prior to customer acceptance of the equipment are recorded as deferred revenue in the condensed consolidated balance sheet. As of September 30, 2025, $39,412,000 in deferred commission revenue was recorded in the Company’s condensed consolidated balance sheet, of which $21,854,000 was long-term. As of September 30, 2024, $33,117,000 in deferred commission revenue was recorded in the Company’s condensed consolidated balance sheet, of which $15,623,000 was long-term. The increase in deferred revenue is principally due to new orders exceeding deliveries during the period.
Revenue in the equipment segment increased by $46,000, or 8%, to $619,000 for the three-month period ended September 30, 2025 from $573,000 for the same period of the prior year, due primarily to higher ARCS® subscription revenues in our US operations, partially offset by lower deliveries in our China operations.
Gross Profit
Gross profit for the three months ended September 30, 2025 and 2024 was $13,896,000, or 61% of revenue, and $11,756,000, or 57% of revenue, respectively, representing an increase of $2,140,000, or 18% year-over-year. On a segment basis, gross profit in the IT, professional sales service and equipment segments increased $622,000, or 15%; $1,471,000, or 20%; and $47,000, or 13%, respectively.
Page 19
Vaso Corporation and Subsidiaries
IT segment gross profit for the three months ended September 30, 2025 was $4,733,000, or 42% of the segment revenue, compared to $4,111,000, or 37% of the segment revenue for the three months ended September 30, 2024. The year-over-year increase of $622,000, or 15%, was primarily a result of a higher margin sales mix in the network services business.
Professional sales service segment gross profit was $8,747,000, or 81% of segment revenue, for the three months ended September 30, 2025 as compared to $7,276,000, or 80% of the segment revenue, for the three months ended September 30, 2024, reflecting an increase of $1,471,000, or 20%. The increase was due to higher commission revenue as a result of higher volume of GEHC equipment delivered during the third quarter of 2025, when compared to the same period last year, offset by a lower blended commission rate and higher commission expenses. Cost of commissions in the professional sales service segment of $2,073,000 and $1,838,000, for the three months ended September 30, 2025 and 2024, respectively, reflected commission expense associated with recognized commission revenues.
Commission expense associated with short-term deferred revenue is recorded as short-term deferred commission expense, or with long-term deferred revenue as part of other assets, on the balance sheet until the related commission revenue is recognized.
Equipment segment gross profit increased to $416,000, or 67% of segment revenues, for the third quarter of 2025 compared to $369,000, or 64% of segment revenues, for the same quarter of 2024. The $47,000, or 13%, increase in gross profit was primarily the result of higher ARCS® subscription revenues in the US market and improved gross margin in our China operations.
Operating Income (Loss)
Operating income (loss) for the three months ended September 30, 2025 was $1,538,000 compared to $(1,393,000) for the same quarter in 2024, representing an increase of $2,931,000, or 210%, due primarily to $1,549,000 lower costs for investment banking activities, and to increased gross profit in all three operating segments. On a segment basis, the IT segment recorded an operating loss of $93,000 in the third quarter of 2025 as compared to an operating loss of $695,000 in the same period of 2024; the professional sales service segment recorded operating income of $2,108,000 in the third quarter of 2025 as opposed to operating income of $1,531,000 in the same period of 2024; and the equipment segment recorded an operating loss of $163,000 in the third quarter of 2025 as compared to an operating loss of $223,000 in the same period of 2024.
Operating loss in the IT segment decreased to $93,000 for the three-month period ended September 30, 2025 from an operating loss of $695,000 in the same period of 2024, due mainly to higher gross profit. Operating income in the professional sales service segment increased to $2,108,000 in the three-month period ended September 30, 2025 as compared to operating income of $1,531,000 in the same period of 2024, due to higher gross profit, partially offset by higher SG&A costs. The equipment segment reported an operating loss of $163,000 in the third quarter of 2025, compared to an operating loss of $223,000 in the third quarter 2024, a decrease of $60,000, primarily due to higher gross profit.
SG&A costs for the three months ended September 30, 2025 and 2024 were $12,212,000 and $11,409,000, respectively, representing an increase of $803,000, or 7% year-over-year. On a segment basis, SG&A costs in the IT segment increased by $38,000 in the third quarter of 2025 from the same quarter of the prior year due primarily to higher personnel and credit loss costs, partially offset by lower credit card fees and third-party commission costs; SG&A costs in the professional sales service segment increased by $894,000 due mainly to higher personnel costs associated with provision of expanded services; and SG&A costs in the equipment segment increased by $14,000 due primarily to higher personnel costs. Corporate SG&A costs not allocated to segments decreased $143,000 due mainly to lower annual meeting costs, partially offset by higher legal fees. Investment banking expenses for the business combination with Achari Ventures Holdings I were $1,539,000 in the third quarter of 2024 and none incurred in 2025.
Research and development expenses were $146,000, or 1% of revenues, for the third quarter of 2025, a decrease of $45,000, or 24%, from $191,000, or 1% of revenues, for the third quarter of 2024. The decrease is primarily attributable to lower product development expenses in both the IT and equipment segments.
Page 20
Vaso Corporation and Subsidiaries
Adjusted EBITDA
We utilize Adjusted EBITDA in evaluating our performance internally, and this non-GAAP financial measure is frequently used by securities analysts, investors and other interested parties in the evaluation of companies in the Company’s industry. Management believes that this non-GAAP financial measure, in addition to GAAP measures, is also useful to investors to evaluate the Company’s results.
Adjusted EBITDA is not a measure of financial performance under U.S. GAAP and should not be considered a substitute for net income (loss), which we consider to be the most directly comparable U.S. GAAP measure. Adjusted EBITDA has limitations as an analytical tool, and when assessing our operating performance, you should not consider Adjusted EBITDA in isolation, or as a substitute for net income or other consolidated income statement data prepared in accordance with U.S. GAAP. Investors should recognize that the Company’s presentation of this non-GAAP financial measure might not be comparable to similarly-titled measures of other companies limiting its usefulness as a comparative measure.
A reconciliation of net income (loss) to Adjusted EBITDA is set forth below:
| (in thousands) | ||||||||
| Three Months Ended September 30, | ||||||||
| 2025 | 2024 | |||||||
| (unaudited) | (unaudited) | |||||||
| Net income (loss) | $ | 1,711 | $ | (1,181 | ) | |||
| Interest expense (income), net | (316 | ) | (284 | ) | ||||
| Income tax expense | 35 | 30 | ||||||
| Depreciation and amortization | 179 | 219 | ||||||
| Share-based compensation | 8 | 8 | ||||||
| Adjusted EBITDA | $ | 1,617 | $ | (1,208 | ) | |||
Adjusted EBITDA increased by $2,825,000, to $1,617,000 in the quarter ended September 30, 2025 from $(1,208,000) in the quarter ended September 30, 2024. The increase was primarily attributable to the increase in net income partially offset by lower depreciation and amortization.
Interest and Other Income (Expense)
Interest and other income (expense) for the three months ended September 30, 2025 was $208,000 as compared to $242,000 for the corresponding period of 2024. The decrease in interest and other income (expense) was due primarily to higher loss at EECP Global, partially offset by higher interest income resulting from higher money market and US Treasury bill balances.
Income Tax Expense
For the three months ended September 30, 2025, we recorded income tax expense of $35,000 as compared to $30,000 for the corresponding period of 2024. The $5,000 increase is due mainly to higher state tax expense.
Net Income (Loss)
Net income for the three months ended September 30, 2025 was $1,711,000 as compared to net loss of $1,181,000 for the three months ended September 30, 2024, representing an increase of $2,892,000. Income (loss) per share of $0.01 and $(0.01) was recorded in the three-month periods ended September 30, 2025 and 2024, respectively. The principal cause of the increase in net income is the increase in gross profit and decrease in business combination transaction costs, partially offset by the increase in SG&A costs.
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Results of Operations – For the Nine Months Ended September 30, 2025 and 2024
Revenues
Total revenue for the nine months ended September 30, 2025 and 2024 was $62,076,000 and $59,732,000, respectively, representing an increase of $2,344,000, or 4% year-over-year. On a segment basis, revenue in the IT, professional sales service and equipment segments increased $393,000, $1,919,000 and $32,000, respectively.
Revenue in the IT segment for the nine months ended September 30, 2025 was $32,218,000 compared to $31,825,000 for the nine months ended September 30, 2024, an increase of $393,000, or 1%, of which $840,000 resulted from higher network services revenue, partially offset by $447,000 lower revenue from healthcare IT services. Our monthly recurring revenue in the IT segment accounted for $29,034,000 or 90% of the segment revenue in the first nine months of 2025, and $27,445,000 or 86% of the segment revenue for the same period last year (see Note C).
Commission revenues in the professional sales service segment were $28,269,000 in the first nine months of 2025, an increase of $1,919,000, or 7%, as compared to $26,350,000 in the first nine months of 2024. The increase in commission revenues was due to both an increase in the volume of underlying equipment delivered by GEHC during the period and a higher blended commission rate applicable to such deliveries. The Company recognizes commission revenue when the underlying equipment has been accepted at the customer site in accordance with the specific terms of the sales agreement. Consequently, amounts billable, or billed and received, under the agreement with GEHC prior to customer acceptance of the equipment are recorded as deferred revenue in the condensed consolidated balance sheet. As of September 30, 2025, $39,412,000 in deferred commission revenue was recorded in the Company’s condensed consolidated balance sheet, of which $21,854,000 was long-term. As of September 30, 2024, $33,117,000 in deferred commission revenue was recorded in the Company’s condensed consolidated balance sheet, of which $15,623,000 was long-term. The increase in deferred revenue is principally due to new orders exceeding deliveries during the period.
Revenue in the equipment segment increased by $32,000, or 2%, to $1,589,000 for the nine-month period ended September 30, 2025 from $1,557,000 for the same period of the prior year, due primarily to higher ARCS® subscription revenues in our US operations, partially offset by lower deliveries in our China operations.
Gross Profit
Gross profit for the nine months ended September 30, 2025 and 2024 was $37,053,000, or 60% of revenue, and $34,824,000, or 58% of revenue, respectively, representing an increase of $2,229,000, or 6% year-over-year. On a segment basis, gross profit in the IT, professional sales service, and equipment segments increased $311,000, or 2%; $1,900,000, or 9%; and $18,000, or 2%, respectively.
IT segment gross profit for the nine months ended September 30, 2025 was $13,197,000, or 41% of the segment revenue, compared to $12,886,000, or 40% of the segment revenue for the nine months ended September 30, 2024. The year-over-year increase of $311,000, or 2%, was primarily a result of higher margin product sales mix and increased revenues in the network service business, offset by lower margin product sales mix and decreased revenues in the healthcare IT business.
Professional sales service segment gross profit was $22,727,000, or 80% of segment revenue, for the nine months ended September 30, 2025 as compared to $20,827,000, or 79% of the segment revenue, for the nine months ended September 30, 2024, reflecting an increase of $1,900,000, or 9%. The increase was due to higher commission revenue as a result of higher volume of GEHC equipment delivered during the nine months ended September 30, 2025, when compared to the same period last year, and a higher blended commission rate. Cost of commissions in the professional sales service segment of $5,542,000 and $5,523,000, for the nine months ended September 30, 2025 and 2024, respectively, reflected commission expense associated with recognized commission revenues.
Commission expense associated with short-term deferred revenue is recorded as short-term deferred commission expense, or with long-term deferred revenue as part of other assets, on the balance sheet until the related commission revenue is recognized.
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Equipment segment gross profit increased to $1,129,000, or 71% of segment revenues, for the first nine months of 2025 compared to $1,111,000, or 71% of segment revenues, for the same period in 2024. The $18,000, or 2%, increase in gross profit was primarily the result of higher ARCS® subscription revenues in the US market, partially offset by lower revenues in our China operations.
Operating Loss
Operating loss for the nine months ended September 30, 2025 and 2024 was $101,000, and $1,866,000, respectively, representing a decrease in loss of $1,765,000 as a combined result of gross profit increasing $2,229,000 and operating costs (below) increasing $464,000, year-over-year. On a segment basis, the IT segment recorded an operating loss of $1,479,000 in the first nine months of 2025 as compared to an operating loss of $1,288,000 in the same period of 2024; operating income in the professional sales service segment decreased by $93,000, from $3,182,000 in the first nine months of 2024 to $3,089,000 in the same period of 2025; and the equipment segment recorded an operating loss of $572,000 in the first nine months of 2025 as compared to an operating loss of $809,000 in the same period of 2024.
Operating loss in the IT segment increased to $1,479,000 for the nine-month period ended September 30, 2025 as compared to an operating loss of $1,288,000 in the same period of 2024, due primarily to higher SG&A costs partially offset by higher gross profit. Operating income in the professional sales service segment decreased $93,000 to $3,089,000 in the nine-month period ended September 30, 2025 as compared to operating income of $3,182,000 in the same period of 2024, due to higher SG&A costs partially offset by higher gross profit. The equipment segment reported an operating loss of $572,000 in the first nine months of 2025, compared to an operating loss of $809,000 in the first nine months of 2024, a decrease of $237,000, due mainly to lower SG&A and R&D costs.
SG&A costs for the nine months ended September 30, 2025 and 2024 were $36,663,000 and $34,316,000, respectively, representing an increase of $2,347,000, or 7% year-over-year. On a segment basis, SG&A costs in the IT segment increased by $554,000 in the first nine months of 2025 from the same period of the prior year due mainly to higher personnel and credit loss costs, partially offset by lower credit card fees and third-party commission costs; SG&A costs in the professional sales service segment increased by $1,993,000 due to higher personnel costs associated with the provision of expanded services, and to higher IT infrastructure costs; and SG&A costs in the equipment segment decreased by $174,000 due mainly to lower personnel costs in our China operations. Corporate SG&A costs not allocated to segments decreased $27,000 due mainly to lower annual meeting costs, partially offset by higher insurance costs. Expenses for investment banking activities associated with the business combination with Achari Ventures Holdings I were $1,787,000 in the nine months ended September 30, 2024 as compared to none in the same period of 2025.
Research and development (“R&D”) expenses were $491,000, or 1% of revenues, for the first nine months of 2025, a decrease of $96,000, or 16%, from $587,000, or 1% of revenues, for the first nine months of 2024. The decrease is primarily attributable to lower product development expenses in the IT and equipment segments.
Adjusted EBITDA
We utilize Adjusted EBITDA in evaluating our performance internally, and this non-GAAP financial measure is frequently used by securities analysts, investors and other interested parties in the evaluation of companies in the Company’s industry. Management believes that this non-GAAP financial measure, in addition to GAAP measures, is also useful to investors to evaluate the Company’s results.
Adjusted EBITDA is not a measure of financial performance under U.S. GAAP and should not be considered a substitute for net income (loss), which we consider to be the most directly comparable U.S. GAAP measure. Adjusted EBITDA has limitations as an analytical tool, and when assessing our operating performance, you should not consider Adjusted EBITDA in isolation, or as a substitute for net income or other consolidated income statement data prepared in accordance with U.S. GAAP. Investors should recognize that the Company’s presentation of this non-GAAP financial measure might not be comparable to similarly-titled measures of other companies limiting its usefulness as a comparative measure.
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A reconciliation of net income (loss) to Adjusted EBITDA is set forth below:
| (in thousands) | ||||||||
| Nine Months Ended September 30, | ||||||||
| 2025 | 2024 | |||||||
| Net income (loss) | $ | 439 | $ | (1,199 | ) | |||
| Interest expense (income), net | (862 | ) | (884 | ) | ||||
| Income tax expense | 115 | 154 | ||||||
| Depreciation and amortization | 531 | 630 | ||||||
| Share-based compensation | 25 | 26 | ||||||
| Adjusted EBITDA | $ | 248 | $ | (1,273 | ) | |||
Adjusted EBITDA increased by $1,521,000 to $248,000 in the nine months ended September 30, 2025 from $(1,273,000) in the nine months ended September 30, 2024. The increase was primarily attributable to higher net income, partially offset by lower depreciation and amortization.
Interest and Other Income (Expense)
Interest and other income (expense) for the nine months ended September 30, 2025 was $655,000 as compared to $821,000 for the corresponding period of 2024. The decrease in interest and other income was due primarily to higher loss at EECP Global.
Income Tax Expense
For the nine months ended September 30, 2025, we recorded income tax expense of $115,000 as compared to income tax expense of $154,000 for the corresponding period of 2024. The decrease was due mainly to lower state tax expense.
Net Income (Loss)
Net income for the nine months ended September 30, 2025 was $439,000 as compared to net loss of $1,199,000 for the nine months ended September 30, 2024, representing an increase of $1,638,000, or 137%. Income (loss) per share of $0.00 and $(0.01) was recorded in the nine-month periods ended September 30, 2025 and 2024, respectively. The principal cause of the increase was higher operating income, partially offset by higher loss at EECP Global as discussed above.
Liquidity and Capital Resources
Cash and Cash Flow
We have financed our operations from working capital. At September 30, 2025, we had cash and cash equivalents of $34,859,000 and working capital of $20,308,000, compared to cash and cash equivalents of $26,271,000 and working capital of $16,465,000 at December 31, 2024.
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Cash provided by operating activities was $9,012,000, which consisted of net income after adjustments to reconcile net income to net cash of $1,479,000 and cash provided by operating assets and liabilities of $7,533,000, during the nine months ended September 30, 2025, compared to cash provided by operating activities of $3,648,000 for the same period in 2024. The changes in the account balances primarily reflect a decrease in accounts and other receivables of $7,573,000 and an increase in deferred revenue of $4,518,000; partially offset by decreases in accrued commissions and accrued expenses of $1,373,000 and $2,154,000, respectively, and an increase in other assets of $1,428,000.
Cash used in investing activities during the nine-month period ended September 30, 2025 was $642,000 for the purchase of equipment and software.
Cash provided by financing activities during the nine-month period ended September 30, 2025 was $246,000 resulting primarily from $1,243,000 in proceeds from notes payable partially offset by the repayment of $996,000 in notes payable and finance lease obligations.
Liquidity
The Company expects to generate sufficient cash flow from operations to satisfy its obligations for at least the next twelve months.
ITEM 3 - Quantitative and Qualitative Disclosures About Market Risk.
Not applicable to smaller reporting companies.
ITEM 4 - CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
Disclosure controls and procedures reporting as promulgated under the Exchange Act is defined as controls and procedures that are designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act are recorded, processed, summarized and reported within the time periods specified in the SEC rules and forms. Disclosure controls and procedures include without limitation, controls and procedures designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is accumulated and communicated to our management, including our Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”), or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.
Our CEO and our CFO have evaluated the effectiveness of the design and operation of our disclosure controls and procedures as of September 30, 2025 and have concluded that the Company’s disclosure controls and procedures were effective as of September 30, 2025.
Changes in Internal Control Over Financial Reporting
There were no changes in the Company’s internal control over financial reporting during the Company’s fiscal quarter ended September 30, 2025 that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.
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PART II - OTHER INFORMATION
ITEM 1 – LEGAL PROCEEDINGS
Information with respect to this item may be found in Note O - Commitments and Contingencies under “Litigation”, in the accompanying notes to Condensed Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q, which is incorporated herein by reference.
ITEM 1A. Risk Factors.
Not applicable to smaller reporting companies.
ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds.
None.
ITEM 3. Defaults Upon Senior Securities.
None.
ITEM 4. Mine Safety Disclosures.
Not applicable.
ITEM 5. Other Information.
During the nine months ended September 30, 2025,
no director or officer of the Corporation
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ITEM 6 – EXHIBITS
Exhibits
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In accordance with the requirements of the Exchange Act, the Registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| VASO CORPORATION | ||
| By: | /s/ Jun Ma | |
| Jun Ma | ||
| President and Chief Executive Officer | ||
| (Principal Executive Officer) | ||
| /s/ Jonathan Newton | ||
| Jonathan Newton | ||
| Chief Financial Officer and Principal Accounting Officer | ||
Date: November 14, 2025
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