Usio, Inc. USIO) Q2 2023 Results Conference Call August 14, 2023 4:30 PM ET Company Participants Paul Manley - Senior Vice President of Investor Relations Louis Hoch - Chairman, Chief Executive Officer Tom Jewell - Senior Vice President, Chief Financial Officer Greg Carter - Executive Vice President of Payment and Acceptance Houston Frost - Senior Vice President of Prepaid Services Conference Call Participants Scott Buck - H.C. Wainwright Michael Diana - Maxim Group Jon Hickman - Ladenburg Gary Prestopino - ...

Table of Contents 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.) 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 June 30, 2023 or ☐ TRANSITION REPORT P ...

Usio, Inc. (NASDAQ:USIO) Q1 2023 Earnings Conference Call May 6, 2023 4:30 PM ET Company Participants Louis Hoch - Chairman, Chief Executive Officer Tom Jewell - Senior Vice President, Chief Financial Officer Greg Carter - Executive Vice President of Payment and Acceptance Houston Frost - Senior Vice President of Prepaid Services Paul Manley - Senior Vice President of Investor Relations Conference Call Participants Jon Hickman - Ladenburg Gary Prestopino - Barrington Research Operator Good afternoon, everyo ...

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 March 31, 2023 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Nevada 98-0190072 (State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.) 3611 Paesanos Parkway, Suite 300, San Antonio, TX 78231 (Address ...

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 ...

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, 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 ...

Revenue Performance - Total revenue for Q3 2022 was $16.4 million, a 4% increase from $15.8 million in Q3 2021, driven by growth in PayFac and Output Solutions despite declines in Prepaid and ACH services [85]. - Credit card revenue increased by 5% to $6.8 million in Q3 2022 compared to $6.5 million in Q3 2021, while ACH and complementary service revenue decreased by 13% to $3.2 million [85]. - Revenue from Output Solutions increased by 32% to $4.7 million in Q3 2022 compared to $3.6 million in Q3 2021 [85]. - For the nine months ended September 30, 2022, total revenue increased by 14% to $50.7 million from $44.5 million in the same period in 2021 [86]. Operational Metrics - Total dollar volumes processed across all business lines in Q3 2022 were $2.4 billion, down from $2.7 billion in Q3 2021, primarily due to decreased cryptocurrency activity and the winding down of COVID-19 government assistance programs [75]. - Prepaid card load volumes decreased by 41% in Q3 2022 compared to Q3 2021, while prepaid card transaction counts increased by 5% [74]. - ACH transaction counts decreased by 4% in Q3 2022 compared to Q3 2021, with returned check transactions increasing by 72% [73]. Financial Losses and Costs - Adjusted EBITDA loss for Q3 2022 was $0.5 million, compared to an adjusted EBITDA of $1.2 million in Q3 2021, attributed to increased SG&A and reduced profit margins [81]. - Cost of services increased by $1.5 million, or 13%, to $13.3 million for the quarter ended September 30, 2022, compared to $11.8 million for the same period in the prior year [88]. - Gross profits decreased by 22% to $3.1 million for the quarter ended September 30, 2022, with a gross margin percentage of 19.1%, down from 25.5% in the prior year [91]. - Stock-based compensation expenses rose by 50.2% to $0.5 million for the quarter ended September 30, 2022, compared to $0.3 million for the same period in the prior year [93]. - Other selling, general and administrative expenses increased by 29% to $3.7 million for the quarter ended September 30, 2022, reflecting continued investments in various business lines [95]. - The company reported a net loss of $1.8 million for the quarter ended September 30, 2022, compared to a net income of $0.1 million for the same period in the prior year [102]. Cash Flow and Financial Position - Cash used in operations was $22.8 million for the nine months ended September 30, 2022, compared to cash provided by operations of $8.7 million for the same period in the prior year [107]. - Net cash used by financing activities increased to $935,513 for the nine months ended September 30, 2022, compared to $58,800 for the same period in the prior year, due to the stock buyback program [109]. - The company had cash and cash equivalents of $4.6 million as of September 30, 2022 [105]. - Accumulated deficit reached $70.7 million as of September 30, 2022 [106]. - Depreciation and amortization totaled $2.2 million for the nine months ended September 30, 2022, compared to $1.9 million for the same period in the prior year [99]. Strategic Initiatives - The company aims to grow revenues by expanding its ACH merchants and adding new software integrators while optimizing its infrastructure to expand payment processing capabilities without significantly increasing operating costs [71]. - The company has established long-standing relationships with premier banking institutions, enhancing its service offerings and customer base [68].

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, ...

Revenue Performance - Total revenue for Q2 2022 increased by 6% to $16.2 million compared to $15.2 million in Q2 2021, driven by growth in prepaid and PayFac lines of business [73]. - Revenues for the six months ended June 30, 2022 increased by 20% to $34.3 million compared to $28.7 million for the same period in 2021 [74]. Transaction Volumes - Prepaid card load volumes processed in Q2 2022 increased by 81%, and transaction counts increased by 190% compared to Q2 2021, largely due to government assistance programs [67]. - Credit card transactions processed increased by 35% in Q2 2022, with the volume of credit card dollars processed rising by 9% compared to the same period in 2021 [65]. - ACH transaction counts decreased by 8% in Q2 2022, while returned check transactions increased by 39% compared to Q2 2021 [66]. - Total dollar volumes processed across all business lines in Q2 2022 were $2.4 billion, down from $2.7 billion in Q2 2021 [68]. Profitability and Loss - Gross profit for Q2 2022 decreased by 21% to $3.3 million, with a gross margin percentage of 20.1%, down from 27.1% in the prior year [78]. - Net loss for Q2 2022 was $1.9 million, compared to a net income of $0.2 million in the same period last year, attributed to increased SG&A and reduced profit margins [88]. - The company reported a net loss of $1.9 million for the quarter ended June 30, 2022, with an accumulated deficit of $68.9 million [93]. Operating Expenses - Cost of services rose by 17% to $13.0 million in Q2 2022, compared to $11.1 million in Q2 2021, due to growing revenues and associated costs [76]. - Other SG&A expenses increased by 35% to $3.8 million in Q2 2022, reflecting investments in various business lines and infrastructure [83]. Cash Flow and Financial Position - As of June 30, 2022, the company had cash and cash equivalents of $5.1 million, down from $7.3 million at December 31, 2021 [93]. - Net cash used by operating activities for the six months ended June 30, 2022, was $22.1 million, compared to net cash provided of $2.6 million for the same period in 2021 [94]. - Cash used by operating activities, excluding certain reserves and assets, was $1.2 million for the six months ended June 30, 2022, compared to cash provided of $1.1 million for the same period in 2021 [94]. - Net cash used by investing activities was $411,818 for the six months ended June 30, 2022, down from $533,854 for the same period in 2021 [95]. - Net cash used by financing activities for the six months ended June 30, 2022, was $573,699, compared to net cash provided of $73,511 for the same period in 2021 [96]. Strategic Focus - The company is focused on growing ACH merchants and expanding electronic bill presentment and related services [91]. - The company aims to optimize its infrastructure to expand payment processing capabilities without significantly increasing operating costs [91]. - The company continues to invest in resources and infrastructure to achieve scale across all business lines [94]. - There are currently no off-balance sheet arrangements that could materially affect the company's financial condition [98].