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Usio(USIO) - 2022 Q4 - Earnings Call Transcript
2023-03-09 00:19
Usio, Inc. (NASDAQ:USIO) Q4 2022 Results Conference Call March 8, 2023 4:30 PM ET Company Participants Paul Manley - SVP, IR Louis Hoch - Chairman and CEO Tom Jewell - SVP and CFO Greg Carter - EVP, Payment Acceptance Houston Frost - SVP, Prepaid Services Conference Call Participants Stephen Wagner - Integrity Wealth Advisors Michael Diana - Maxim Group Gary Prestopino - Barrington Research Operator Good afternoon, and welcome to the Usio Earnings Conference Call for the Fourth Quarter and Fiscal Ended Dece ...
Usio(USIO) - 2022 Q4 - Annual Report
2023-03-08 21:01
Part I [Business](index=6&type=section&id=Item%201.%20Business.) Usio, Inc. offers integrated electronic payment processing, including ACH, credit/debit, and prepaid card solutions, expanded by acquisitions like Output Solutions and a "PayFac-in-a-Box" platform - Usio offers comprehensive payment services, including ACH, credit/debit, and prepaid cards, alongside electronic bill presentment via its Output Solutions division[22](index=22&type=chunk)[24](index=24&type=chunk)[25](index=25&type=chunk) - The company's growth strategy leverages a one-to-many distribution model, primarily through its "PayFac-in-a-Box" platform, targeting software developers[27](index=27&type=chunk) - Usio holds a prestigious NACHA certification for Third-Party Senders, underscoring its expertise in ACH processing[25](index=25&type=chunk) - The customer base expanded by **11%** in 2022 to **5,601** merchant accounts, with no single customer exceeding **10%** of revenues in 2021 or 2022[60](index=60&type=chunk)[61](index=61&type=chunk) [Risk Factors](index=16&type=section&id=Item%201A.%20Risk%20Factors.) Usio faces significant business, industry, and stock-related risks, including reliance on resellers, cybersecurity threats, product expansion challenges, and stock price volatility - Business risks include reliance on key resellers, potential cybersecurity breaches, and product portfolio expansion challenges, though a December 2021 ransomware attack had no material impact[85](index=85&type=chunk)[87](index=87&type=chunk)[89](index=89&type=chunk) - Financial and operational risks encompass the need for future financing, potential system failures, business interruptions, and liability for unauthorized cardholder data disclosure[91](index=91&type=chunk)[93](index=93&type=chunk)[96](index=96&type=chunk) - The bankruptcy of its largest cryptocurrency customer in July 2022 led to an approximate **$0.8 million** revenue loss, alongside risks from complex regulations like the Dodd-Frank Act and anti-money laundering laws[103](index=103&type=chunk)[68](index=68&type=chunk)[73](index=73&type=chunk) - Stock-related risks include price volatility and potential dilution from future equity issuances, with directors and officers beneficially owning approximately **19%** of outstanding common stock as of March 3, 2023[162](index=162&type=chunk)[165](index=165&type=chunk)[172](index=172&type=chunk) [Properties](index=33&type=section&id=Item%202.%20Properties.) Usio leases its San Antonio headquarters and Output Solutions warehouse until 2024, did not renew its Nashville sales office lease, and extended its Austin technology office lease to 2025 - The company leases its San Antonio headquarters (**10,535 sq ft**, expires July 2024) and an Output Solutions warehouse (**22,400 sq ft**, expires September 2024)[176](index=176&type=chunk)[178](index=178&type=chunk) - The Nashville, TN sales office lease (**3,794 sq ft**) expired on April 30, 2023, and will not be renewed[177](index=177&type=chunk) - The Austin, TX technology office lease (**1,890 sq ft**) was extended to January 31, 2025[179](index=179&type=chunk) [Legal Proceedings](index=33&type=section&id=Item%203.%20Legal%20Proceedings.) Usio is involved in a lawsuit with KDHM, LLC regarding alleged improper customer deposit transfers, with Usio filing a counterclaim for misrepresentation and breach of contract, considering the risk of loss remote - On September 1, 2021, KDHM, LLC sued Usio Output Solutions, Inc., alleging breach of contract and improper transfer of **$317,000** in customer deposits[184](index=184&type=chunk) - Usio counterclaimed for fraud and breach of contract, asserting KDHM misrepresented and failed to disclose an additional **$305,000** in customer deposits and withheld customer lists[186](index=186&type=chunk)[187](index=187&type=chunk) - Management believes KDHM's claims lack merit and considers the risk of loss from this lawsuit to be remote[185](index=185&type=chunk)[188](index=188&type=chunk) [Mine Safety Disclosures](index=34&type=section&id=Item%204.%20Mine%20Safety%20Disclosures.) This item is not applicable to the company - Not applicable[189](index=189&type=chunk) Part II [Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=35&type=section&id=Item%205.%20Market%20for%20Registrant%27s%20Common%20Equity%2C%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities.) Usio's common stock trades on Nasdaq under "USIO", with **26.4 million** shares outstanding as of March 2023; the company has never paid dividends and repurchased **243,347** shares in Q4 2022 - The company's common stock is listed on the Nasdaq Global Market® Exchange under the ticker symbol **"USIO"**[192](index=192&type=chunk) - As of March 3, 2023, **26,392,315** shares of common stock were outstanding, held by **3,548** stockholders of record[193](index=193&type=chunk) - The company has never paid dividends and does not plan to in the foreseeable future[194](index=194&type=chunk) Fourth Quarter 2022 Stock Repurchases | Period | Total number of shares purchased | Average price paid per share ($) | | :--- | :--- | :--- | | October 1, 2022 to October 31, 2022 | 184,019 | $1.71 | | November 1, 2022 to November 30, 2022 | 54,606 | $2.24 | | December 1, 2022 to December 31, 2022 | 4,722 | $2.03 | | **Total** | **243,347** | | [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=36&type=section&id=Item%207.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations.) In FY2022, Usio's total revenues grew **12%** to **$69.4 million**, driven by Prepaid Card and Output Solutions, despite a net loss of **$5.5 million** due to decreased gross profit and higher operating expenses FY 2022 vs FY 2021 Revenue by Segment | Revenue Segment | 2022 ($) | 2021 ($) | $ Change | % Change | | :--- | :--- | :--- | :--- | :--- | | ACH and complementary service | $14,782,606 | $15,432,787 | $(650,181) | (4)% | | Credit card | $27,121,621 | $25,174,579 | $1,947,042 | 8% | | Prepaid card services | $9,117,670 | $6,542,651 | $2,575,019 | 39% | | Output solutions | $18,406,388 | $14,792,299 | $3,614,089 | 24% | | **Total Revenue** | **$69,428,285** | **$61,942,316** | **$7,485,969** | **12%** | - The company reported a net loss of **$5.5 million** in 2022, compared to a **$0.3 million** net loss in 2021, primarily due to decreased gross profits and higher SG&A expenses[257](index=257&type=chunk)[211](index=211&type=chunk) - Gross profit decreased by **7%** to **$14.6 million** in 2022 from **$15.6 million** in 2021, driven by exiting the high-margin crypto space and increased lower-margin business[248](index=248&type=chunk) - The bankruptcy of Voyager Digital, the largest cryptocurrency customer, on July 6, 2022, resulted in an approximate **$0.8 million** revenue loss and the company's exit from the crypto space[213](index=213&type=chunk) Adjusted EBITDA Reconciliation (FY 2022 vs FY 2021) | | Twelve Months Ended December 31, 2022 ($) | Twelve Months Ended December 31, 2021 ($) | | :--- | :--- | :--- | | Operating (Loss) | $(5,214,430) | $(155,381) | | Depreciation and amortization | $2,735,118 | $2,643,675 | | EBITDA | $(2,479,312) | $2,488,294 | | Non-cash stock-based compensation expense, net | $2,072,041 | $1,489,976 | | **Adjusted EBITDA** | **$(407,271)** | **$3,978,270** | - Net cash used by operating activities was **$17.0 million** in 2022, a significant shift from **$29.8 million** provided in 2021, while adjusted operating cash flow was **$0.7 million** in 2022, down from **$2.6 million** in 2021[261](index=261&type=chunk) [Quantitative and Qualitative Disclosures about Market Risk](index=45&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk.) As a smaller reporting company, Usio is not required to provide the information for this item - The company is a smaller reporting company and is not required to provide the information for this Item[265](index=265&type=chunk) [Financial Statements and Supplementary Data](index=46&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data.) Audited consolidated financial statements for 2022 and 2021 are presented, showing **$97.9 million** in total assets and a **$5.5 million** net loss in 2022, with auditor-identified critical audit matters - The independent auditor, ADKF, P.C., issued an unqualified opinion, identifying the valuation of intangible customer lists and deferred tax asset valuation allowance as critical audit matters[269](index=269&type=chunk)[275](index=275&type=chunk)[277](index=277&type=chunk) Consolidated Balance Sheet Data (as of Dec 31) | | 2022 ($) | 2021 ($) | | :--- | :--- | :--- | | Total current assets | $87,409,953 | $121,257,194 | | Total Assets | $97,912,969 | $133,679,715 | | Total current liabilities | $81,624,930 | $112,463,084 | | Total Liabilities | $83,978,871 | $115,010,809 | | Total stockholders' equity | $13,934,098 | $18,668,906 | Consolidated Statement of Operations Data (Year Ended Dec 31) | | 2022 ($) | 2021 ($) | | :--- | :--- | :--- | | Revenues | $69,428,285 | $61,942,316 | | Gross profit | $14,593,216 | $15,632,610 | | Operating (loss) | $(5,214,430) | $(155,381) | | Net (Loss) | $(5,483,244) | $(321,634) | | Basic (loss) per common share | $(0.27) | $(0.02) | | Diluted (loss) per common share | $(0.27) | $(0.02) | Consolidated Statement of Cash Flows Data (Year Ended Dec 31) | | 2022 ($) | 2021 ($) | | :--- | :--- | :--- | | Net cash provided (used) by operating activities | $(17,036,477) | $29,784,917 | | Net cash (used) by investing activities | $(812,242) | $(1,273,039) | | Net cash provided (used) by financing activities | $(1,399,340) | $887,457 | [Changes In and Disagreements with Accountants on Accounting and Financial Disclosure](index=70&type=section&id=Item%209.%20Changes%20In%20and%20Disagreements%20with%20Accountants%20on%20Accounting%20and%20Financial%20Disclosure.) There were no changes in or disagreements with accountants on accounting and financial disclosure - None[384](index=384&type=chunk) [Controls and Procedures](index=70&type=section&id=Item%209A.%20Controls%20and%20Procedures.) Management concluded that disclosure controls and internal control over financial reporting were effective as of December 31, 2022, with no material changes during the year - As of December 31, 2022, the CEO and CFO concluded the company's disclosure controls and procedures are effective[385](index=385&type=chunk) - Management concluded that internal control over financial reporting was effective as of December 31, 2022, based on the COSO framework[387](index=387&type=chunk) - No material changes to internal control over financial reporting occurred during the year ended December 31, 2022[389](index=389&type=chunk) [Other Information](index=71&type=section&id=Item%209B.%20Other%20Information.) There is no other information to report for this item - None[390](index=390&type=chunk) Part III [Directors, Executive Officers and Corporate Governance](index=72&type=section&id=Item%2010.%20Directors%2C%20Executive%20Officers%20and%20Corporate%20Governance.) Information on directors, executive officers, and corporate governance is incorporated by reference from the 2023 Proxy Statement, including the company's Code of Ethics - Information for this item is incorporated by reference from the 2023 Annual Meeting of Stockholders proxy statement[394](index=394&type=chunk) - The company has adopted a Code of Ethics applicable to its principal executive and financial officers[396](index=396&type=chunk) [Executive Compensation](index=72&type=section&id=Item%2011.%20Executive%20Compensation.) Information regarding executive compensation is incorporated by reference from the company's 2023 Proxy Statement - Information for this item is incorporated by reference from the 2023 Proxy Statement[399](index=399&type=chunk) [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](index=72&type=section&id=Item%2012.%20Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management%20and%20Related%20Stockholder%20Matters.) Information regarding security ownership of beneficial owners and management, as well as matters related to equity compensation plans, is incorporated by reference from the company's 2023 Proxy Statement - Information for this item is incorporated by reference from the 2023 Proxy Statement[400](index=400&type=chunk) [Certain Relationships and Related Transactions, and Director Independence](index=72&type=section&id=Item%2013.%20Certain%20Relationships%20and%20Related%20Transactions%2C%20and%20Director%20Independence.) Information regarding certain relationships, related party transactions, and director independence is incorporated by reference from the company's 2023 Proxy Statement - Information for this item is incorporated by reference from the 2023 Proxy Statement[401](index=401&type=chunk) [Principal Accounting Fees and Services](index=72&type=section&id=Item%2014.%20Principal%20Accounting%20Fees%20and%20Services.) Information regarding principal accounting fees and services is incorporated by reference from the company's 2023 Proxy Statement - Information for this item is incorporated by reference from the 2023 Proxy Statement[402](index=402&type=chunk) Part IV [Exhibits, Financial Statement Schedules](index=73&type=section&id=Item%2015.%20Exhibits%2C%20Financial%20Statement%20Schedules.) This section lists financial statements and exhibits filed with the Form 10-K, including corporate governance documents, material contracts, and required certifications - Consolidated financial statements are filed in Part II, Item 8 of the report[404](index=404&type=chunk) - All financial statement schedules are omitted as not required, applicable, or included elsewhere[405](index=405&type=chunk) - A list of exhibits is provided, including corporate governance documents, material contracts, and various required certifications[407](index=407&type=chunk)[408](index=408&type=chunk)[410](index=410&type=chunk) [Form 10-K Summary](index=78&type=section&id=Item%2016.%20Form%2010-K%20Summary.) No Form 10-K summary is provided - None[413](index=413&type=chunk)
Usio(USIO) - 2022 Q3 - Earnings Call Transcript
2022-11-10 02:04
Usio, Inc. (NASDAQ:USIO) Q3 2022 Earnings Conference Call November 9, 2022 5:00 PM ET Company Participants Paul Manley - SVP, IR Louis Hoch - Co-Founder, Chairman, President, CEO & COO Houston Frost - SVP, Corporate Development & Prepaid Products Greg Carter - EVP, Payment Acceptance Lowell Jewell - SVP & CFO Conference Call Participants Jon Hickman - Ladenburg Thalmann & Co. Michael Diana - Maxim Group Operator Good afternoon, and welcome to the Usio Earnings Conference Call for the Third Quarter Ended Sep ...
Usio(USIO) - 2022 Q3 - Quarterly Report
2022-11-09 21:03
Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2022 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ________ to ________. Commission File Number: 000-30152 USIO, INC. (Exact name of registrant as specified in its charter) Nevada 98-0190072 (State ...
Usio(USIO) - 2022 Q2 - Earnings Call Transcript
2022-08-12 20:59
Usio, Inc. (NASDAQ:USIO) Q2 2022 Earnings Conference Call August 12, 2022 11:00 AM ET Company Participants Joe Hassett – Investor Relations Louis Hoch – President and Chief Executive Officer Houston Frost – Senior Vice President, Prepaid Services Greg Carter – Executive Vice President, Payment Acceptance Tom Jewell – Senior Vice President and Chief Financial Officer Conference Call Participants Barry Sine – Spartan Capital Securities Jon Hickman – Ladenburg Michael Diana – Maxim Group Operator Good morning, ...
Usio(USIO) - 2022 Q2 - Quarterly Report
2022-08-11 20:01
Table of Contents ☐ TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ________ to ________. Commission File Number:000-30152 USIO, INC. (Exact name of registrant as specified in its charter) (State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.) 3611 Paesanos Parkway, Suite 300, San Antonio, TX 78231 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q ☒ QUARTERLY R ...
Usio(USIO) - 2022 Q1 - Earnings Call Transcript
2022-05-12 19:32
Usio, Inc. (NASDAQ:USIO) Q1 2022 Earnings Conference Call May 12, 2022 11:00 AM ET Company Participants Joseph Hassett - IR Louis Hoch - Co-Founder, Vice-Chairman, President, CEO & COO Houston Frost - SVP, Corporate Development & Prepaid Products Gregory Carter - EVP, Payment Acceptance Lowell Jewell - SVP & CFO Conference Call Participants Barry Sine - Spartan Capital Securities Gary Prestopino - Barrington Research Associates Jon Hickman - Ladenburg Thalmann & Co. Michael Diana - Maxim Group Operator Good ...
Usio(USIO) - 2022 Q1 - Quarterly Report
2022-05-11 20:01
PART I – FINANCIAL INFORMATION [Item 1. Financial Statements (Unaudited).](index=3&type=section&id=Item%201.%20Financial%20Statements%20(Unaudited).) Presents Usio, Inc.'s unaudited condensed consolidated financial statements, including balance sheets, operations, cash flows, and equity [Condensed Consolidated Balance Sheets](index=3&type=section&id=Condensed%20Consolidated%20Balance%20Sheets%20as%20of%20March%2031%2C%202022%20and%20December%2031%2C%202021) Details Usio, Inc.'s financial position, including assets, liabilities, and equity, for Q1 2022 and FY 2021 Condensed Consolidated Balance Sheets | Metric | March 31, 2022 (Unaudited) ($) | December 31, 2021 ($) | | :-------------------------------- | :------------------------- | :------------------ | | Total Assets | $111,756,096 | $133,679,715 | | Total Liabilities | $94,216,289 | $115,010,809 | | Total Stockholders' Equity | $17,539,807 | $18,668,906 | | Cash and cash equivalents | $7,590,951 | $7,255,321 | | Settlement processing assets | $50,591,364 | $63,824,646 | | Prepaid card load assets | $28,846,980 | $36,590,893 | - Total assets decreased by **16.4%** from **$133.7 million** at December 31, 2021, to **$111.8 million** at March 31, 2022, primarily due to reductions in settlement processing assets and prepaid card load assets[8](index=8&type=chunk) - Total liabilities decreased by **18.1%** from **$115.0 million** at December 31, 2021, to **$94.2 million** at March 31, 2022, largely mirroring the decrease in settlement processing obligations and prepaid card load obligations[8](index=8&type=chunk)[9](index=9&type=chunk) [Condensed Consolidated Statements of Operations](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations%20for%20the%20Three%20Months%20ended%20March%2031%2C%202022%20and%202021) Summarizes Usio, Inc.'s financial performance, including revenues, expenses, and net loss, for Q1 2022 and 2021 Condensed Consolidated Statements of Operations | Metric | Three Months Ended March 31, 2022 ($) | Three Months Ended March 31, 2021 ($) | Change (YoY) ($) | % Change (YoY) | | :----------------------------------- | :-------------------------------- | :-------------------------------- | :----------- | :------------- | | Revenues | $18,111,343 | $13,461,550 | $4,649,793 | 34.5% | | Cost of services | $14,602,214 | $10,554,313 | $4,047,901 | 38.4% | | Gross profit | $3,509,129 | $2,907,237 | $601,892 | 20.7% | | Total selling, general and administrative expenses | $5,060,763 | $3,609,956 | $1,450,807 | 40.2% | | Operating (loss) | $(1,551,634) | $(702,719) | $(848,915) | 120.8% | | Net (loss) | $(1,622,270) | $(720,252) | $(902,018) | 125.2% | | Basic (loss) per common share | $(0.08) | $(0.04) | $(0.04) | 100.0% | - Gross margin percentage decreased to **19.4%** in Q1 2022 from **21.6%** in Q1 2021, indicating increased revenue growth from business lines with lower profit margins[11](index=11&type=chunk)[66](index=66&type=chunk)[76](index=76&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows%20for%20the%20Three%20Months%20ended%20March%2031%2C%202022%20and%202021) Presents Usio, Inc.'s cash flows from operating, investing, and financing activities for Q1 2022 and 2021 Condensed Consolidated Statements of Cash Flows | Cash Flow Activity | Three Months Ended March 31, 2022 ($) | Three Months Ended March 31, 2021 ($) | | :------------------------------------------------------------------------------------------------ | :-------------------------------- | :-------------------------------- | | Net (loss) | $(1,622,270) | $(720,252) | | Net cash provided (used) by operating activities | $(7,223,960) | $10,480,238 | | Net cash (used) by investing activities | $(72,069) | $(274,467) | | Net cash (used) provided by financing activities | $(79,982) | $116,542 | | Change in cash, cash equivalents, prepaid card load assets, customer deposits and merchant reserves | $(7,376,011) | $10,322,313 | | Cash, Cash Equivalents, Prepaid Card Load Assets, Customer Deposits and Merchant Reserves, End of Period | $44,215,549 | $32,514,538 | - Operating activities shifted from providing **$10.5 million** in cash in Q1 2021 to using **$7.2 million** in Q1 2022, largely influenced by a significant decrease in prepaid card load obligations[13](index=13&type=chunk)[86](index=86&type=chunk) [Condensed Consolidated Statements of Stockholders' Equity](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Stockholders%27%20Equity%20for%20the%20Three%20Months%20ended%20March%2031%2C%202022%20and%202021) Details changes in Usio, Inc.'s stockholders' equity, including common stock, paid-in capital, and accumulated deficit Condensed Consolidated Statements of Stockholders' Equity | Stockholders' Equity Item | Balance at Dec 31, 2021 ($) | Changes in Q1 2022 ($) | Balance at Mar 31, 2022 ($) | | :------------------------ | :---------------------- | :----------------- | :---------------------- | | Common Stock Shares | 26,807,145 | 61,600 | 26,868,745 | | Common Stock Amount | $195,235 | $62 | $195,297 | | Additional Paid-In Capital | $93,100,129 | $276,841 | $93,376,970 | | Treasury Stock | $(2,404,458) | $(66,494) | $(2,470,952) | | Deferred Compensation | $(6,842,195) | $282,762 | $(6,559,433) | | Accumulated Deficit | $(65,379,805) | $(1,622,270) | $(67,002,075) | | Total Stockholders' Equity | $18,668,906 | $(1,129,099) | $17,539,807 | - Total stockholders' equity decreased by **$1,129,099** from December 31, 2021, to March 31, 2022, primarily due to the net loss for the period, partially offset by common stock issuances and deferred compensation amortization[14](index=14&type=chunk) [Notes to Condensed Consolidated Financial Statements](index=8&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) Provides detailed explanations of Usio, Inc.'s accounting policies, financial instruments, debt, equity, income taxes, and related events [Note 1. Basis of Presentation](index=8&type=section&id=Note%201.%20Basis%20of%20Presentation) Outlines the basis for interim financial statements, revenue recognition, balance sheet items, and new accounting pronouncements Revenue by Source | Revenue Source | Three Months Ended March 31, 2022 ($) | Three Months Ended March 31, 2021 ($) | Change (YoY) ($) | % Change (YoY) | | :------------------------------ | :-------------------------------- | :-------------------------------- | :----------- | :------------- | | ACH and complementary service revenue | $3,843,316 | $3,078,456 | $764,860 | 24.8% | | Credit card revenue | $6,768,222 | $5,723,709 | $1,044,513 | 18.2% | | Prepaid card services revenue | $2,768,447 | $886,576 | $1,881,871 | 212.3% | | Output solutions revenue | $4,731,358 | $3,772,809 | $958,549 | 25.4% | | **Total revenue** | **$18,111,343** | **$13,461,550** | **$4,649,793** | **34.5%** | - Deferred revenues decreased from **$17,647** at December 31, 2021, to **$4,412** at March 31, 2022[18](index=18&type=chunk) - The reserve for processing losses increased to **$656,494** at March 31, 2022, from **$623,494** at December 31, 2021[26](index=26&type=chunk) - The adoption of ASU 2016-13 (effective after December 25, 2022) is not expected to have a significant effect on the company's financial position or results of operations[28](index=28&type=chunk) [Note 2. Leases](index=12&type=section&id=Note%202.%20Leases) Details the company's operating lease agreements for facilities and equipment, noting a 15.4% expense increase Operating Lease Expenses | Metric | Three Months Ended March 31, 2022 ($) | Three Months Ended March 31, 2021 ($) | | :-------------------- | :-------------------------------- | :-------------------------------- | | Operating lease expenses | $120,151 | $104,131 | [Note 3. Accrued Expenses](index=12&type=section&id=Note%203.%20Accrued%20Expenses) Summarizes accrued expenses, which increased by 22.3% due to higher other accrued expenses and accrued salaries Accrued Expenses by Category | Accrued Expense Category | March 31, 2022 ($) | December 31, 2021 ($) | | :----------------------- | :------------- | :---------------- | | Accrued commissions | $795,729 | $879,120 | | Reserve for processing losses | $656,494 | $623,494 | | Other accrued expenses | $536,530 | $226,888 | | Accrued taxes | $375,527 | $298,168 | | Accrued salaries | $479,930 | $297,995 | | **Total accrued expenses** | **$2,844,210** | **$2,325,665** | [Note 4. Equipment Loan](index=12&type=section&id=Note%204.%20Equipment%20Loan) Describes the company's equipment loan for an Output Solutions sorter, including terms, interest rate, and Q1 2022 payments - Equipment loan for **$165,996** at **3.95%** interest rate, with a 36-month term ending March 20, 2024[33](index=33&type=chunk) - Current period payments on the equipment loan were **$13,488**[33](index=33&type=chunk) [Note 5. Stockholders' Equity](index=12&type=section&id=Note%205.%20Stockholders%27%20Equity) Details stock warrants issued, their valuation, vesting schedules, and cashless exercises impacting common stock - Warrant compensation costs amortized for the three months ended March 31, 2022 and 2021 were **$8,985**[34](index=34&type=chunk) - In February 2021, **19,795 shares** of common stock were issued in a cashless exercise for **30,000 warrants** from University FanCards, LLC[35](index=35&type=chunk) - In December 2020, warrants to purchase **945,599 shares** were issued to Information Management Solutions, LLC at an exercise price of **$4.23**, valued at **$552,283**[37](index=37&type=chunk) [Note 6. Net (Loss) Per Share](index=13&type=section&id=Note%206.%20Net%20(Loss)%20Per%20Share) Reports basic and diluted net loss per common share for Q1 2022 and Q1 2021, excluding anti-dilutive awards Net (Loss) Per Share Calculation | Metric | Three Months Ended March 31, 2022 ($) | Three Months Ended March 31, 2021 ($) | | :---------------------------------------------------------------- | :-------------------------------- | :-------------------------------- | | Numerator for basic and diluted (loss) per share, net (loss) | $(1,622,270) | $(720,252) | | Denominator for basic (loss) per share, weighted average shares | 20,280,575 | 19,931,935 | | Basic (loss) per common share | $(0.08) | $(0.04) | | Diluted (loss) per common share | $(0.08) | $(0.04) | | Anti-dilutive awards and options | 5,244,902 | 5,094,991 | [Note 7. Income Taxes](index=14&type=section&id=Note%207.%20Income%20Taxes) Details the company's net deferred tax asset, valuation allowance, and total net operating loss carryforwards - Net deferred tax asset of approximately **$1.5 million**, with a valuation allowance of approximately **$5.2 million**[41](index=41&type=chunk) - Total net operating loss carryforwards are **$29,455,176**[44](index=44&type=chunk) Net Operating Loss Carryforwards | NOL Category | Amount ($) | | :------------------------------------------------ | :------------- | | NOLs expiring between 2022-2037 (pre-2017) | $20,041,484 | | NOLs generated from 2018 onwards (indefinite carryforward) | $9,413,692 | [Note 8. Related Party Transactions](index=14&type=section&id=Note%208.%20Related%20Party%20Transactions) Describes transactions with related parties, including purchases from a CEO co-owned entity and share repurchases from the CFO - Purchased **$19,929** of corporate sportswear from Angry Pug Sportswear (50% owned by CEO Louis Hoch) during Q1 2022, an increase from **$4,009** in FY 2021[45](index=45&type=chunk) - Repurchased **11,361 shares** for **$47,930** from CFO Tom Jewell on January 6, 2022, to cover his share of taxes[46](index=46&type=chunk) - Granted **319,900 common shares** (10-year vesting) and **141,900 RSUs** (3-year vesting) to employees and Directors on November 18, 2021, as performance bonuses[47](index=47&type=chunk) [Note 9. COVID-19](index=15&type=section&id=Note%209.%20COVID-19) Discusses COVID-19's impact on prepaid business revenue, labor availability, and supply chain issues for Output Solutions - Prepaid business line revenues increased due to partnerships with major cities for vaccine incentive and cash disbursement programs[51](index=51&type=chunk) - Experienced difficulty in recruiting and retaining certain employees due to limited labor availability[52](index=52&type=chunk) - Supply chain issues, specifically reduced paper supply and growing demand, are impacting the Output Solutions line of business[53](index=53&type=chunk) [Note 10. Subsequent Events](index=15&type=section&id=Note%2010.%20Subsequent%20Events) Details a lease amendment in San Antonio, Texas, for incremental space, commencing April 1, 2022 - Lease amendment for **6,628 square feet** of incremental space in San Antonio, Texas[55](index=55&type=chunk) - Incremental annual rent ranges from **$135,874** to **$145,816**[55](index=55&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.](index=16&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations.) Management's perspective on Usio, Inc.'s Q1 2022 financial performance, liquidity, cash flows, and strategic initiatives [Forward-Looking Statements Disclaimer](index=16&type=section&id=Forward-Looking%20Statements%20Disclaimer) Warns that forward-looking statements involve risks and uncertainties, and actual results may differ materially - The report contains forward-looking statements that involve risks and uncertainties, and actual results may differ materially from those anticipated[56](index=56&type=chunk) - The company does not intend to update forward-looking statements after the report date, except as required by law[56](index=56&type=chunk) [Name Change](index=16&type=section&id=Name%20Change) Notes the corporate name change from Payment Data Systems, Inc. to Usio, Inc. effective June 26, 2019 - The corporate name changed from Payment Data Systems, Inc. to Usio, Inc. effective June 26, 2019[58](index=58&type=chunk) [Overview](index=16&type=section&id=Overview) Provides an overview of Usio, Inc.'s integrated payment processing services and significant Q1 2022 revenue growth - Usio, Inc. provides integrated payment processing services including ACH, credit, prepaid card, and statement preparation/mailing services[59](index=59&type=chunk) Metric (Q1 2022 vs Q1 2021) | Metric (Q1 2022 vs Q1 2021) | % Change | | :-------------------------------- | :------- | | Credit card transactions processed | 48% | | Credit card dollars processed | 21% | | ACH (eCheck) transaction counts | 21% | | Electronic check dollars processed | 32% | | Prepaid card load volumes processed | 134% | | Prepaid card transaction counts processed | 270% | | Prepaid card purchase volume | 139% | | Total dollar volumes processed | 18.3% (from $1.86B to $2.2B) | - Revenue for Q1 2022 increased by **35%** to **$18.1 million**, driven by growth in prepaid and PayFac business lines[65](index=65&type=chunk) [Critical Accounting Policies](index=17&type=section&id=Critical%20Accounting%20Policies) Highlights key accounting policies for financial statement preparation, requiring management estimates and judgments - The financial statements are prepared in accordance with U.S. GAAP, requiring management to make estimates and judgments affecting reported amounts of assets, liabilities, revenues, and expenses[68](index=68&type=chunk) - Key critical accounting policies include those related to revenues and expenses, bad debt, investments, intangible assets, income taxes, and contingencies and litigation[68](index=68&type=chunk) [Results of Operations](index=18&type=section&id=Results%20of%20Operations) Analyzes Usio, Inc.'s Q1 2022 financial results, including revenues, costs, gross profit, and net loss [Revenues](index=18&type=section&id=Revenues) Total revenues for Q1 2022 increased by 35% to $18.1 million, driven by strong growth across all service categories Revenue by Source | Revenue Source | Three Months Ended March 31, 2022 ($) | Three Months Ended March 31, 2021 ($) | % Change | | :------------------------------ | :-------------------------------- | :-------------------------------- | :------- | | ACH and complementary service revenue | $3,843,316 | $3,078,456 | 25% | | Credit card revenue | $6,768,222 | $5,723,709 | 18% | | Prepaid card services revenue | $2,768,447 | $886,576 | 212% | | Output solutions revenue | $4,731,358 | $3,772,809 | 25% | | **Total Revenue** | **$18,111,343** | **$13,461,550** | **35%** | [Cost of Services](index=18&type=section&id=Cost%20of%20Services) Cost of services increased by 38% to $14.6 million in Q1 2022, primarily due to higher volume-based fees - Cost of services increased by **$4.0 million**, or **38%**, to **$14.6 million** for Q1 2022[74](index=74&type=chunk) [Gross Profit](index=18&type=section&id=Gross%20Profit) Gross profit increased by 21% to $3.5 million, but gross margin decreased to 19.4% due to lower-margin lines - Gross profits increased by **21%** to **$3.5 million** for Q1 2022[76](index=76&type=chunk) - Gross margin percentage was **19.4%** for Q1 2022, down from **21.6%** in Q1 2021[76](index=76&type=chunk) [Stock-based Compensation](index=18&type=section&id=Stock-based%20Compensation) Stock-based compensation expenses increased by 68.0% to $550,682 for Q1 2022 compared to the prior year - Stock-based compensation expenses were **$550,682** for Q1 2022, an increase of **68.0%** from **$327,715** in Q1 2021[77](index=77&type=chunk) [Other Selling, General and Administrative Expenses](index=19&type=section&id=Other%20Selling%2C%20General%20and%20Administrative%20Expenses) Other SG&A expenses increased by 43% to $3.8 million in Q1 2022, reflecting growth investments - Other SG&A expenses were **$3.8 million** for Q1 2022, a **43%** increase from **$2.7 million** in Q1 2021[79](index=79&type=chunk) - Included approximately **$200,000** of one-time non-recurring items in Q1 2022 SG&A expenses[67](index=67&type=chunk) [Depreciation and Amortization](index=19&type=section&id=Depreciation%20and%20Amortization) Depreciation and amortization expenses totaled $0.7 million for Q1 2022, a slight increase from Q1 2021 - Depreciation and amortization totaled **$0.7 million** for Q1 2022, compared to **$0.6 million** for Q1 2021[80](index=80&type=chunk) [Other Income (Expense)](index=19&type=section&id=Other%20Income%20(Expense)) Net other income and expense resulted in a $(636) expense for Q1 2022, a decrease from prior year - Other income and (expense), net, was **$(636)** for Q1 2022, compared to **$2,467** for Q1 2021[81](index=81&type=chunk) [Net Income (Loss)](index=19&type=section&id=Net%20Income%20(Loss)) Net loss for Q1 2022 was $1.6 million, a significant increase from Q1 2021, due to higher expenses - Net loss for Q1 2022 was **$1.6 million**, compared to a net loss of **$0.7 million** for Q1 2021[82](index=82&type=chunk) - Future success depends on growing revenues, managing operating expenses, adding quality customers, meeting evolving requirements, adapting to technological changes, and assimilating acquisitions[83](index=83&type=chunk)[84](index=84&type=chunk) [Liquidity and Capital Resources](index=19&type=section&id=Liquidity%20and%20Capital%20Resources) Discusses Usio, Inc.'s cash and cash equivalents, accumulated deficit, and working capital position - Cash and cash equivalents increased slightly to **$7.6 million** at March 31, 2022, from **$7.3 million** at December 31, 2021[85](index=85&type=chunk) - The company reported an accumulated deficit of **$67.0 million** at March 31, 2022[85](index=85&type=chunk) - Working capital decreased slightly to **$8.3 million** at March 31, 2022, from **$8.8 million** at December 31, 2021[85](index=85&type=chunk) [Cash Flows](index=19&type=section&id=Cash%20Flows) Analyzes Usio, Inc.'s cash flows from operating, investing, and financing activities for Q1 2022 and Q1 2021 - Net cash used by operating activities was **$7.2 million** for Q1 2022, a significant change from **$10.5 million** provided in Q1 2021[86](index=86&type=chunk) - Net cash used by investing activities was **$72,069** for Q1 2022, primarily for capitalized software development and other capital investments[87](index=87&type=chunk) - Net cash used by financing activities was **$79,982** for Q1 2022, compared to **$116,542** provided in Q1 2021[88](index=88&type=chunk) [Material Trends and Uncertainties](index=21&type=section&id=Material%20Trends%20and%20Uncertainties) Highlights risks related to the COVID-19 pandemic, including labor availability and supply chain issues - Risks related to the COVID-19 pandemic, including labor availability and supply chain issues, are discussed in Note 9 of the financial statements[90](index=90&type=chunk) [Off-Balance Sheet Arrangements](index=21&type=section&id=Off-Balance%20Sheet%20Arrangements) Confirms the absence of off-balance sheet arrangements with a material effect on financial condition - The company has no off-balance sheet arrangements that are reasonably likely to have a material effect on its financial condition or results of operations[91](index=91&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk.](index=21&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk.) As a smaller reporting company, Usio, Inc. is not required to provide detailed market risk disclosures - The company, as a smaller reporting company, is not required to provide quantitative and qualitative disclosures about market risk[92](index=92&type=chunk) [Item 4. Controls and Procedures.](index=21&type=section&id=Item%204.%20Controls%20and%20Procedures.) Management concluded that disclosure controls and procedures were effective, with no material changes in internal control [Evaluation of Disclosure Controls and Procedures](index=21&type=section&id=Evaluation%20of%20Disclosure%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective as of March 31, 2022 - The Chief Executive and Chief Financial Officers concluded that disclosure controls and procedures were effective as of March 31, 2022[93](index=93&type=chunk) [Changes in Internal Control over Financial Reporting](index=21&type=section&id=Changes%20in%20Internal%20Control%20over%20Financial%20Reporting) No material changes in internal control over financial reporting occurred during Q1 2022 - No material changes in internal control over financial reporting occurred during the quarter ended March 31, 2022[94](index=94&type=chunk) PART II – OTHER INFORMATION [Item 1. Legal Proceedings.](index=22&type=section&id=Item%201.%20Legal%20Proceedings.) Details a lawsuit with KDHM, LLC regarding an asset purchase agreement, with Usio, Inc. denying claims and filing counterclaims - KDHM, LLC sued PDS Acquisition Corp (now Usio Output Solutions, Inc.) on September 1, 2021, alleging improper transfer of **$317,000** in customer deposits[96](index=96&type=chunk) - Usio, Inc. believes KDHM's claims lack merit and has filed counterclaims for fraud, breach of contract, and conversion, alleging misrepresentations, undisclosed additional customer deposits (**$305,000**), and missing customer lists[97](index=97&type=chunk)[98](index=98&type=chunk)[99](index=99&type=chunk) - The company considers the risk of loss related to this lawsuit as remote[100](index=100&type=chunk) [Item 1A. Risk Factors.](index=22&type=section&id=Item%201A.%20Risk%20Factors.) No material changes to risk factors previously disclosed in the annual report on Form 10-K for FY 2021 - No material changes from risk factors previously disclosed in the annual report on Form 10-K for the fiscal year ended December 31, 2021[101](index=101&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.](index=23&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds.) No unregistered securities issued in Q1 2022; details share buy-back program, including CFO transaction [Recent Sales of Unregistered Securities](index=23&type=section&id=Recent%20Sales%20of%20Unregistered%20Securities) The company did not issue any unregistered securities during the quarter ended March 31, 2022 - The company did not issue unregistered securities during the quarter ended March 31, 2022[103](index=103&type=chunk) [Purchases of Equity Securities by the Issuer and Affiliated Purchasers](index=23&type=section&id=Purchases%20of%20Equity%20Securities%20by%20the%20Issuer%20and%20Affiliated%20Purchasers) Details share repurchases under the buy-back program, including a transaction with the CFO for taxes Share Buy-Back Program Activity | Period | Total number of shares purchased | Average price paid per share ($) | Maximum dollar value remaining under program ($) | | :-------------------------- | :------------------------------- | :--------------------------- | :------------------------------------------- | | January 1 - January 31, 2022 | 14,623 | $3.95 | $823,900 | | February 1 - February 28, 2022 | 1,068 | $3.45 | $820,219 | | March 1 - March 31, 2022 | 1,527 | $3.31 | $815,168 | | **Total (Q1 2022)** | **17,218** | **$3.95** | **$815,168** | - The share buy-back program, renewed on November 7, 2019, with a limit of **$1,420,000**, terminates on the earliest of September 30, 2022, fund exhaustion, or Board termination[104](index=104&type=chunk) - On January 6, 2022, **11,361 shares** were repurchased for **$47,930** from CFO Tom Jewell to cover his share of taxes[104](index=104&type=chunk) [Item 3. Defaults Upon Senior Securities.](index=23&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities.) The company reported no defaults upon senior securities - No defaults upon senior securities were reported[105](index=105&type=chunk) [Item 4. Mine Safety Disclosures (Not applicable).](index=23&type=section&id=Item%204.%20Mine%20Safety%20Disclosures%20(Not%20applicable).) This item is not applicable to the company's operations - Mine Safety Disclosures are not applicable to the registrant[106](index=106&type=chunk) [Item 5. Other Information.](index=23&type=section&id=Item%205.%20Other%20Information.) No other information was reported for this item - No other information was reported for this item[107](index=107&type=chunk) [Item 6. Exhibits.](index=24&type=section&id=Item%206.%20Exhibits.) Lists exhibits filed with Form 10-Q, including corporate governance documents, agreements, and certifications - Exhibits include Amended and Restated Articles of Incorporation, By-laws, Employment Agreements, Bank Sponsorship Agreements, Asset Purchase Agreements, Warrant Agreements, and Certifications[109](index=109&type=chunk)[110](index=110&type=chunk)[112](index=112&type=chunk)
Usio(USIO) - 2021 Q4 - Earnings Call Transcript
2022-03-18 18:57
Financial Data and Key Metrics Changes - For Q4 2021, revenues reached a record $17.4 million, an 86% increase from $9.4 million in the same period last year, with organic growth at 65% [9][33] - Total dollars processed in Q4 was $2.9 billion, up 215% year-over-year, with total transactions at 11.3 million, both achieving new quarterly records [9][10] - For the full year, revenues were $62 million, a 92% increase, with adjusted EBITDA of $4 million, an improvement of nearly $5 million from fiscal 2020 [9][37] Business Line Data and Key Metrics Changes - ACH revenues in Q4 were up 93% year-over-year, with electronic transaction volume up 108% and electronic check dollars processed up 271% [11] - The PayFac business saw a 106% increase in revenues for Q4, contributing to a total card processing volume of over $1 billion for the first time [12][26] - Prepaid revenues increased by 151% in Q4, driven by a 205% increase in transaction volume and total dollars loaded on prepaid cards exceeding $65 million [13][20] Market Data and Key Metrics Changes - The company experienced significant growth in the cryptocurrency market, which positively impacted ACH volumes and revenues [11][12] - The prepaid segment is expanding with new programs, including guaranteed income initiatives, which are expected to drive further growth [21][22] Company Strategy and Development Direction - The company aims to build strong relationships and leverage a multichannel distribution strategy to serve diverse end markets, enhancing its competitive advantage [10][11] - Focus on expanding into industries with nondiscretionary spending and recurring revenue, particularly in the prepaid and PayFac sectors [11][12] - The company is investing in infrastructure and human capital to support anticipated growth while maintaining low customer acquisition costs [16][17] Management's Comments on Operating Environment and Future Outlook - Management expects continued strong growth in 2022, projecting revenue growth of 18% to 20%, driven by the prepaid and PayFac segments [17][18] - The company has a solid cash position of over $7.2 million and no significant debt, providing a strong foundation for growth initiatives [17][37] - Management highlighted the importance of the Voyager Digital program, which is anticipated to significantly contribute to revenue in the second half of 2022 [24][56] Other Important Information - The company reported a positive adjusted EBITDA margin of 7.2% for Q4, marking the fifth consecutive quarter of positive adjusted EBITDA [36] - The company is actively enhancing its technology and infrastructure to support growth and improve service delivery [31] Q&A Session Summary Question: Increase in SG&A expenses - Management indicated that the increase is primarily due to expanding call center operations and gearing up for the Voyager Digital program, along with adding sales staff [42][43] Question: Revenue growth guidance - Management stated that all business lines are performing well, with Prepaid and PayFac expected to be the fastest-growing segments [44] Question: Stock buyback activity - The Board is reviewing potential stock buyback activity, especially in light of positive free cash flow expectations for the year [45][46] Question: ISV count and market targeting - The company signed 26 new ISV agreements in 2021, with a focus on diversifying into new vertical markets [48][49] Question: Voyager program impact on P&L - Revenue from the Voyager program is not expected in Q1, but substantial activity is anticipated in the second half of the year [55] Question: Guaranteed income programs profitability - Management noted that larger guaranteed income programs are more efficient to operate, leading to better profitability compared to smaller incentive programs [65][66]
Usio(USIO) - 2021 Q4 - Annual Report
2022-03-17 20:27
Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 10-K (Mark One) ☒ ANNUAL REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2021. ☐ TRANSITION REPORT UNDER SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ______ to ________ Commission File No. 000-30152 USIO, INC. (Exact name of registrant as specified in its charter) Nevada 98-0190072 (State or other juri ...