Usio Inc.

Company Overview

Business Model: Usio, Inc. operates as a cloud-based Fintech payment processor, offering a full-stack ecosystem for payment acceptance and funds disbursement. The company generates revenue through payment facilitation, prepaid card services, and electronic billing products and services for businesses, merchants, and consumers. Usio, Inc. aims for growth through organic development and enhancement of its product and service offerings, as well as through strategic acquisitions.

Market Position: With over 25 years in the industry, Usio, Inc. has cultivated a loyal customer base and established long-standing relationships with premier banking institutions, including Fifth Third Bank, Sunrise Bank, and TransPecos Banks. The company holds a prestigious NACHA certification for Third-Party Senders, being one of nine companies to achieve this and the second most tenured. Usio, Inc. differentiates itself through proprietary systems, the ability to create corporate-branded card programs in shorter timeframes, over ten years of prepaid industry experience, and an integrated payment warehouse that consolidates, processes, tracks, and reports all payments regardless of source or channel. The company also leverages customized technology solutions and high service levels, particularly for smaller businesses, and offers connectivity to mobile payment platforms such as Apple Pay®, Samsung Pay™ and Google Pay™.

Recent Strategic Developments:

• Consumer Choice Product (2022): Introduced to provide flexible payment distribution options, including physical and virtual prepaid cards, ACH, paper checks, and real-time PINless debit, enhancing cross-selling opportunities.
• Real Time Payments (RTP) Expansion (2023): Began expansion into the RTP market as an alternative to traditional ACH payments, reflecting an investment in faster payment technologies.
• Cloud-Based Platform Transition: Completed a transition to a cloud-based platform, leveraging Microsoft Azure's hub-spoke architecture for enhanced speed, security, and scalability in payment processing.
• Output Solutions Investment (2024): Invested in new equipment, including an inserter and folder, for its Output Solutions business unit, implemented throughout 2024 to enhance capacity and speed.
• Outsourced Presorting Partnership (December 2024): Partnered with an outsourced presorting company for Output Solutions to reduce postage and labor costs while increasing mail delivery speed.
• "One Usio" Strategy (December 2024): Initiated a strategy to unify its brand, sales approach, and payment offerings, focusing on enhanced client onboarding, improved customer management, better reporting, fraud monitoring, and a consolidated sales and marketing team to cross-sell services.

Geographic Footprint: Usio, Inc.'s operations and customer base are primarily located and geographically dispersed throughout the United States. Key operational facilities include executive offices and operations in San Antonio, TX, a technology organization in Austin, TX, and Output Solutions warehouse operations also in San Antonio, TX. The company's Nashville, TN sales office lease expired in April 2023 and was not renewed.

Financial Performance

Revenue Analysis

Profitability Metrics (2024):

• Gross Margin: 23.7%
• Operating Margin: -1.8%
• Net Margin: 4.0%

Investment in Growth:

• Capital Expenditures: $0.99 million (2024)
• Strategic Investments: Investment in new equipment for Output Solutions ($0.81 million in 2023), expansion into Real Time Payments, and the "One Usio" strategy for unified brand and enhanced client services. The company also capitalizes costs associated with internal use software development, which is continually developed to offer new or improved consumer offerings.

Business Segment Analysis

ACH and complementary service revenue

Financial Performance:

• Revenue: $16.7 million (+12% YoY)
• Key Growth Drivers: Strong organic growth and net new customer acquisitions, successful cross-selling efforts through the Consumer Choice product, and the expansion of PINless debit and Real Time Payments (RTP) offerings. Interest earned on settlement processing assets and merchant reserves also contributed to revenue.

Product Portfolio:

• Integrated electronic payment processing services, including electronic funds transfer via the Automated Clearing House (ACH) network.
• Services include e-checks, PINless debit, Remotely Created Checks (RCC), account validation, and account inquiry.
• Expansion into Real Time Payments (RTP) as an alternative to ACH.

Market Dynamics:

• Benefits from the accelerating growth of ACH payments, which increased 8.3% per year by number and 12.7% per year by value from 2018 to 2021, accounting for over 90% of the rise in non-cash payments.
• Usio, Inc. is one of nine companies holding the NACHA certification for Third-Party Senders, being the second to receive it and the most tenured.

Credit card revenue

Financial Performance:

• Revenue: $29.3 million (+3% YoY)
• Key Growth Drivers: Significant traction from the PayFac-in-a-Box platform, which grew 22% and now represents over 50% of total credit card processing revenues. This growth successfully offset attrition in legacy credit card processing portfolios, driven by a focus on the distributed sales force and Independent Software Vendor (ISV) market.

Product Portfolio:

• Card-based processing services for traditional card-present, tap-and-pay, and card-not-present transactions.
• "PayFac-in-a-Box" platform for payment facilitation, targeting app and software developers in bill-centric verticals (e.g., legal, healthcare, property management, utilities, insurance).
• Offers real-time merchant enrollment, credit card, debit card, ACH, and prepaid card issuance capabilities through a single API.

Market Dynamics:

• Operates within a growing market for general-purpose card payments, which increased 6.0% by number and 10.5% by value from 2021 to 2022.
• Remote payments constituted 36.2% of total card payments in 2022, indicating continued digital transaction trends.
• Chip-authenticated payments accounted for 87.5% of in-person general-purpose card payments in 2022.

Prepaid card services revenue

Financial Performance:

• Revenue: $14.1 million (-25% YoY)
• Key Growth Drivers: Despite a 25% decline primarily due to the anticipated wind-down of highly profitable COVID incentive programs (which contributed approximately $12.1 million in 2023), the company saw growth in existing relationships and new customer acquisitions, particularly in the corporate and commercial card space. Prepaid card load volume increased by 34.8%, and transaction volume increased by 45.1%.

Product Portfolio:

• Customizable prepaid cards, including reloadable, incentive, promotional, general, government disbursement, and corporate expense cards.
• Offers solutions for expense management, incentives, refunds, claims, and unique forms of compensation (e.g., per diem payments).
• The UsioCard platform supports mobile wallet services such as Apple Pay®, Samsung Pay™ and Google Pay™.
• Consumer Choice product provides flexible payment distributions.

Market Dynamics:

• Prepaid debit card payments exhibited the highest growth rate by value (20.6% annually from 2018 to 2021) within card payments.
• Mobile wallet payments showed strong growth, reaching 14.4 billion transactions in 2022, up from 2.9 billion in 2018.

Output Solutions revenue

Financial Performance:

• Revenue: $20.6 million (+1% YoY)
• Key Growth Drivers: Investment in new processing equipment (inserter and folder, implemented throughout 2024) and a partnership with an outsourced presorting company (December 2024) aimed at lowering costs and increasing mail delivery speed. The company also focuses on cross-selling existing service offerings to its customer base.

Product Portfolio:

• Electronic bill presentment, document composition, document decomposition, and printing and mailing services.
• Provides an outsourced solution for document design, print, and electronic delivery.
• Operates as a seamless mailer with USPS, catering to high-volume billing and printing needs.

Market Dynamics:

• Serves a diverse range of industry verticals, including utilities, healthcare providers, credit unions, banks, governmental agencies, and manufacturing.

Capital Allocation Strategy

Shareholder Returns:

• Share Repurchases: $1.4 million (698,553 shares purchased in Q4 2024)
• Dividend Payments: Usio, Inc. has never declared or paid cash or stock dividends and has no plans to do so in the foreseeable future, intending to reinvest earnings for future expansion.
• Future Capital Return Commitments: The Board of Directors authorized a renewal of the share buy-back program on March 24, 2025, with a limit of up to $4 million of the company's common stock and a three-year duration.

Balance Sheet Position (as of December 31, 2024):

• Cash and Equivalents: $8.1 million
• Total Debt: $0.7 million (comprising current and non-current portions of equipment loans)
• Net Cash Position: $7.3 million
• Debt Maturity Profile: Equipment loan payments are scheduled as $0.15 million in 2025, $0.16 million in 2026, $0.17 million in 2027, $0.18 million in 2028, and $0.06 million in 2029.
• Credit Facilities: The company maintains an undrawn unsecured revolving line of credit with a maximum borrowing capacity of $0.48 million (matures June 5, 2026) and an irrevocable letter of credit for $0.47 million (matures July 3, 2025), both established in connection with a bond for the KDHM, LLC lawsuit appeal.

Cash Flow Generation (Year Ended December 31, 2024):

• Operating Cash Flow: $2.9 million
• Free Cash Flow: $1.9 million (Calculated as Operating Cash Flow less Purchases of property and equipment)

Operational Excellence

Production & Service Model: Usio, Inc.'s payment solutions are built on a sophisticated cloud-based infrastructure, primarily utilizing Microsoft Azure's robust security features and hub-spoke architecture. This platform ensures secure, scalable, and resilient payment processing, facilitating seamless integrations with third-party processors. The company's direct Fed ACH system integration, supported by its NACHA certification, optimizes processing efficiency. For prepaid cards, an external authorization engine provides real-time transaction authorization through a dual-funding mechanism, enabling rapid custom solution deployment. The Output Solutions business provides outsourced document design, printing, and electronic delivery, operating as a seamless mailer with USPS.

Supply Chain Architecture: Key Suppliers & Partners:

• Banking Sponsors (ACH): North American Banking Company, Metropolitan Commercial Bank, TransPecos Banks.
• Banking Sponsors (Card Processing): Central Bank of St. Louis, Fifth Third Bank, Wells Fargo Bank.
• Banking Sponsors (Prepaid Cards): Sunrise Banks, N.A.
• Banking Sponsors (PINless Debit): Evolve Bank & Trust, TransPecos Bank.
• Card Networks: Visa, Mastercard, American Express, Discover.
• Payment Processors: TriSource Solutions, LLC, Global Payments, Inc., Card Connect / First Data Merchant Services Corp.
• Cloud Provider: Microsoft Azure.
• Presorting Company: An outsourced presorting company (partnered December 2024) for Output Solutions.

Facility Network:

• Manufacturing: San Antonio, TX (22,400 square feet for Output Solutions warehouse operations, including new inserter and folder equipment).
• Research & Development: Austin, TX (1,890 square feet for technology organization).
• Distribution: San Antonio, TX (Output Solutions warehouse).
• Offices: San Antonio, TX (executive offices and operations, totaling approximately 19,897 square feet across multiple leases).

Operational Metrics (2024):

• Total Payment Volume Processed: $7.1 billion (+33% YoY from $5.3 billion in 2023)
• Total Transactions Processed: 46.9 million (+26% YoY)
• ACH Transactions Processed: +18.5% YoY
• Credit Card Dollars Processed: +9.9% YoY (all-time record)
• Credit Card Transactions Processed: +23.8% YoY (all-time record)
• Prepaid Card Load Volume: +34.8% YoY
• Prepaid Card Transaction Volume: +45.1% YoY
• Merchant Accounts: 7,549 (+20% from 6,281 in 2023)

Market Access & Customer Relationships

Go-to-Market Strategy: Distribution Channels:

• Direct Sales: Utilizes a direct sales force, including two sales executives, focusing on companies generating high volumes of electronic payment transactions.
• Channel Partners: Leverages non-exclusive resellers as an external sales force. The PayFac-in-a-Box platform targets partnership opportunities with app and software developers (Independent Software Vendors, or ISVs) in bill-centric verticals.
• Digital Platforms: Markets and sells prepaid card programs directly to consumers through the Internet.
• "One Usio" Strategy: A major initiative launched in December 2024 to unify the brand, sales approach, and payment offerings, aiming to cross-sell multiple complementary products to clients.

Customer Portfolio: Enterprise Customers:

• Usio, Inc. serves a diverse customer base, including system integrators, law firms, churches, charitable organizations, medical and dental clinics, doctor's offices, property management and homeowner associations, hospitality firms, and municipalities.
• Most merchant customers are under long-term contracts, generally with three-year terms, featuring volume-based transaction fees.
• Customer Concentration: No single customer accounted for more than 10% of total revenues in 2024 or 2023.

Geographic Revenue Distribution:

• Usio, Inc.'s customers are geographically dispersed throughout the United States. Specific revenue distribution by region or country is not disclosed.

Competitive Intelligence

Market Structure & Dynamics

Industry Characteristics: The electronic payment processing industry is characterized by rapid technological change, evolving industry standards, and emerging competition. The market for non-cash payments in the United States continues to grow, with core non-cash payments (debit, credit, ACH, check) reaching 204.5 billion in 2021, an increase of 30.7 billion from 2018. The value of these payments totaled $128.51 trillion in 2021, an increase of $31.47 trillion from 2018.

• ACH Payments: Exhibited accelerating growth, increasing 8.3% per year by number and 12.7% per year by value from 2018 to 2021, accounting for over 90% of the rise in non-cash payments.
• Card Payments: General-purpose card payments reached 153.3 billion transactions and $9.76 trillion in value in 2022, growing 6.0% by number and 10.5% by value from 2021 to 2022. Prepaid debit card payments had the highest growth rate by value at 20.6% from 2018 to 2021.
• Mobile Wallets: Continued strong growth, reaching 14.4 billion transactions in 2022, up from 2.9 billion in 2018.
• E-commerce: Estimated retail e-commerce sales for 2024 were $1,192.6 billion, an 8.1% increase from 2023, accounting for 16.1% of total sales.
• Favorable Demographics: Younger consumers are increasingly adopting card-based and electronic payment methods.
• Small Business Adoption: Small businesses are increasingly accepting electronic payment methods to remain competitive and meet consumer expectations.

Competitive Positioning Matrix:

Direct Competitors

Primary Competitors:

• Large Transaction Processors: Fiserv, Inc., Elavon Inc., WorldPay, Stripe, Block, Inc. (formerly known as Square). These competitors often have substantially greater capital resources and may operate as subsidiaries of financial or bank holding companies.

Competitive Response Strategy: Usio, Inc. maintains its competitive advantage through its specific focus on providing integrated payment processing solutions, a deep understanding of the needs and risks in electronic payments, and its internal technology that offers a single integrated payment warehouse. The company emphasizes superior service quality, industry-leading implementation times, and platform reliability. Its customized technology solutions and high level of service are particularly beneficial for smaller businesses. For prepaid cards, proprietary systems and the ability to establish corporate-branded programs quickly, combined with over ten years of industry experience and mobile wallet connectivity, provide a significant advantage. The "One Usio" strategy further aims to unify and strengthen its market approach.

Risk Assessment Framework

Strategic & Market Risks

Market Dynamics: The electronic commerce market is characterized by rapid technological change, evolving industry standards, emerging competition, and frequent new product introductions. Failure to adapt to these changes, including the growing use of artificial intelligence (AI), could adversely affect the business. Reduced levels of consumer spending due to general economic conditions, inflation, or higher interest rates could negatively impact revenues and earnings. Security and privacy concerns may also inhibit market growth. Technology Disruption: The company's success depends on its ability to develop new and enhanced services. Failure to adapt to new developments in hardware, software, operating systems, programming technology, and the growing use of AI and machine learning could lead to business failure. AI algorithms may be flawed, datasets insufficient, or data practices inappropriate, leading to competitive harm, legal liability, or reputational damage. Evolving regulatory review of AI could also impose restrictions. Customer Concentration: Loss of key resellers, who are strong contributors to revenue growth, could reduce revenue and lead to the loss of existing merchants.

Operational & Execution Risks

Supply Chain Vulnerabilities: Usio, Inc. relies on relationships with third-party card processing providers and bank sponsors (e.g., North American Banking Company, Metropolitan Commercial Bank, TransPecos Banks, Central Bank of St. Louis, Fifth Third Bank, Wells Fargo Bank, Sunrise Banks, N.A., Evolve Bank & Trust). Failure of these partners to comply with card network requirements or termination of these agreements could increase costs or disrupt services. Security Breaches: The company faces risks from cyberattacks (e.g., ransomware, distributed denial-of-service, malware), human error, and system vulnerabilities. A ransomware attack in December 2021 accessed and encrypted a small portion of IT systems, but payment processing data was not compromised, and systems were restored and enhanced. Unauthorized disclosure of cardholder data could lead to significant costs, fines, penalties, and litigation. Systems Failures: Business interruptions or degradation can occur due to cyberattacks, hardware/software defects, natural disasters, power losses, or telecommunications failures. Reliance on third-party facilities and services (e.g., data centers, cloud providers) also presents risks. System upgrades and re-platforming efforts are costly and time-consuming. Fraud: Potential liability for fraudulent bankcard, ACH, and prepaid card transactions initiated by merchants or others. Fraud losses were $311,306 in 2024 and $573,281 in 2023. Risks also include losses from overdrawn cardholder accounts. Software Failure: Software products could contain errors or "bugs" affecting performance or damaging user data, potentially leading to warranty claims and increased costs. Acquisition Integration: The company's growth strategy includes acquisitions, which carry risks such as diversion of management attention, difficulties integrating businesses/technologies/personnel, inability to obtain regulatory approvals, potential loss of key employees/customers, and assumption of unforeseen liabilities.

Financial & Regulatory Risks

Market & Financial Risks: Macroeconomic conditions, including international conflicts, supply chain shortages, recession, inflation, and higher interest rates, could negatively impact consumer spending, increase merchant/consumer bankruptcies, and lead to higher credit losses. The company has incurred substantial losses in the past and may incur additional losses. Inability to obtain or maintain sufficient insurance coverage could expose the company to significant financial impact. Credit risks related to merchant accounts (e.g., returned transactions, chargebacks) could result in significant losses. Regulatory & Compliance Risks: The industry is highly regulated by federal, state, and local laws, card network rules, and industry standards. Non-compliance can result in fines, suspension of services, or termination of registrations.

• Dodd-Frank Act: Established the Consumer Financial Protection Bureau (CFPB), which regulates consumer financial services and prepaid cards, imposing rules on disclosures, fees, and error resolution.
• CARD Act: Imposes requirements on gift certificates, store gift cards, and general-use prepaid cards. There is a risk that reloadable prepaid cards could lose their exemption if marketed as gift cards, leading to violations and adverse financial impact.
• Data Privacy Laws: Subject to Gramm-Leach-Bliley Act, CCPA/CPRA, state data breach laws, and FTC regulations. Evolving privacy laws could increase compliance costs and litigation risk.
• AML Laws: Subject to U.S. federal anti-money laundering (AML) laws and regulations, including the Bank Secrecy Act (BSA) and USA PATRIOT Act, requiring risk-based AML programs and suspicious activity reporting. Increased regulatory scrutiny and potential misinterpretation of services as unlicensed money transmission are risks.
• CFPB Proposed Rule: A proposed CFPB rule in late 2023 could subject large technology firms and digital wallet providers to the same oversight as large banks, potentially increasing regulatory risks and impacting business conduct.

Geopolitical & External Risks

Geographic Dependencies: Not explicitly detailed beyond general US operations. Trade Relations: Not explicitly detailed. Sanctions & Export Controls: Subject to Treasury Department’s Office of Foreign Assets Control (OFAC) sanctions programs, prohibiting or restricting transactions with specified countries, governments, and individuals.

Innovation & Technology Leadership

Research & Development Focus: Core Technology Areas:

• Cloud Computing: Utilizes Microsoft Azure's robust security features and hub-spoke architecture for enhanced performance and security in payment processing.
• Payment Processing Platforms: Proprietary platform merges ACH and card processing capabilities, enabling efficient handling of e-checks and card payments.
• Real-Time Authorization: Employs an external authorization engine for prepaid cards, providing real-time transaction authorization through a unique dual-funding mechanism.
• API Integration: Offers a robust API set for clients to initiate transactions via an online portal or leverage Usio, Inc.'s expertise for transaction processing.
• Internal Use Software: Continually develops internal use software to offer new or improved consumer offerings, with capitalized costs of $0.87 million in 2024. Innovation Pipeline:
• Expansion into Real Time Payments (RTP) as an alternative to ACH payments.
• Ongoing enhancements to existing product offerings, including improvements in reporting, data management, fraud and risk monitoring, ease of access, and accelerations in client onboarding and implementation times.

Intellectual Property Portfolio:

• Patent Strategy: Relies on a combination of copyright, trademark, and trade secret laws, along with employee and third-party nondisclosure agreements, to protect its services and related products.
• Trademarks: Owns federally registered trademarks including "Usio," "Payment Data Systems, Inc.," "Akimbo," "FiCentive Innovations in Prepaid Card Solutions," "Don’t change your bank, just your card," and "ZBILL."

Technology Partnerships:

• Strategic Alliances: Leverages strategic alliances, such as with Microsoft Azure, to enhance its sophisticated infrastructure.

Leadership & Governance

Executive Leadership Team

Leadership Continuity: The company's success is significantly dependent on the continued contributions of its key management, particularly Louis A. Hoch. Employment agreements include separation payments for Mr. Hoch in the event of a change in control, termination without cause, non-renewal, death, or disability, with estimated cash disbursements of $5.9 million for termination and $3.5 million for death or disability.

Board Composition: The Board of Directors members are classified into three classes, serving staggered three-year terms. This structure may make it more difficult for a third party to acquire control of the company without Board approval.

Human Capital Strategy

Workforce Composition (as of December 31, 2024):

• Total Employees: 107 full-time employees and 4 part-time employees.

Talent Management: Acquisition & Retention:

• Hiring Strategy: Emphasizes attracting, recruiting, retaining, and developing necessary personnel with expertise and skills.
• Employee Value Proposition: Promotes core values of ownership, innovation, camaraderie, service, authenticity, and trust. Offers awards to employees exemplifying these qualities.
• Training: Requires a mandatory online training curriculum for employees, including annual anti-harassment and anti-discrimination training.

Diversity & Development:

• Diversity Metrics: The company's inclusion and diversity program focuses on employees, the workplace, and the community, believing a diverse workforce strengthens the business and reflects the communities in which it operates.
• Culture & Engagement: All employees are treated with respect and equality, regardless of gender, ethnicity, sexual orientation, gender identity, religious beliefs, or other characteristics.

Regulatory Environment & Compliance

Regulatory Framework: Industry-Specific Regulations: Usio, Inc. operates in a highly regulated industry and is subject to U.S. federal, state, and local laws, as well as card network rules and industry standards (e.g., PCI-DSS). These regulations cover payment services, anti-money laundering (AML), combating terrorist financing, escheatment, and international sanctions regimes.

• Dodd-Frank Act: Requires significant changes to financial regulations, including debit transaction fees and the establishment of the Consumer Financial Protection Bureau (CFPB), which regulates consumer financial services and prepaid cards.
• CARD Act: Imposes requirements on disclosures, fees, and expiration dates for gift certificates, store gift cards, and general-use prepaid cards. The company manages compliance to maintain exemptions for reloadable prepaid cards.
• AML Laws: Subject to U.S. federal AML laws and regulations, including the Bank Secrecy Act (BSA) and USA PATRIOT Act, requiring risk-based AML programs, reporting of large cash transactions, and suspicious activity.
• Data Privacy Laws: Subject to various laws and regulations related to privacy, data protection, and information security, including the Gramm-Leach-Bliley Act, California Consumer Privacy Act (CCPA) as amended by the California Privacy Rights Act (CPRA), and state data breach laws across all 50 states.
• CFPB Proposed Rule: A proposed CFPB rule in late 2023 could extend federal oversight to large technology firms and digital wallet providers, potentially increasing regulatory risks.

Trade & Export Controls:

• Export Restrictions: Subject to economic and trade sanctions programs administered by the Treasury Department’s Office of Foreign Assets Control (OFAC), which prohibit or restrict transactions with specified countries, governments, and individuals.

Legal Proceedings:

• BEN KAUDER, NINA PIOLETTI, & TRIPLE PAY PLAY, INC.: Usio, Inc. filed a lawsuit in February 2024 in Tennessee against former executives and their new competing company for breach of contract, misappropriation of trade secrets, and unfair business competition. A motion to dismiss was denied on March 14, 2025, and future proceedings are pending. Usio, Inc. considers the risk of loss remote.
• GREENWICH BUSINESS CAPITAL, LLC: A lawsuit filed against Usio, Inc. in November 2023 alleging NACHA rule violations was dismissed in favor of Usio, Inc. on December 6, 2024.
• KDHM, LLC: A lawsuit filed in September 2021 claims breach of an asset purchase agreement related to customer deposits. Usio, Inc. counterclaimed, alleging misrepresentations and undisclosed deposits. An appeal was filed on July 12, 2024, requiring a bond of $474,229. Usio, Inc. considers the risk of loss remote.

Tax Strategy & Considerations

Tax Profile:

• Effective Tax Rate: Not explicitly stated, but the company recognized a federal income tax benefit of $3.0 million in 2024 due to a decrease in its valuation allowance.
• Geographic Tax Planning: Subject to the Texas margin tax and Tennessee franchise tax.
• Tax Reform Impact: The Inflation Reduction Act (IRA) implemented a 1% excise tax on corporate stock repurchases exceeding $1 million annually. Usio, Inc. repurchased approximately $1.4 million in stock in 2024, potentially incurring an estimated $14,000 in excise tax.
• Net Operating Loss (NOL) Carryforwards: As of December 31, 2024, Usio, Inc. had total NOLs of approximately $21.8 million. This includes $8.8 million from 2017 and prior years (expiring between 2025 and 2037) and $13.0 million from 2018 and later years (which do not expire). The utilization of these NOLs is subject to restrictions under IRC Sections 382 and 383 in the event of an ownership change.

Insurance & Risk Transfer

Risk Management Framework: Usio, Inc. insures against a majority of its business risks, including liability for cyber incidents and Director and Officer (D&O) liability. The company's cybersecurity insurance largely covered the financial impact of a ransomware attack in December 2021, excluding a deductible.

Insurance Coverage: The market for D&O and cyber insurance is becoming increasingly challenging, with rising premiums and deductibles, and a reduced supply of coverage. There is a risk that Usio, Inc. may not be able to maintain sufficient insurance on acceptable terms in the future, or that existing coverage may be inadequate for future claims.