Usio, Inc. Common Stock LD Micro 20th Annual Main Event Conference

Hello, everybody. Quick housekeeping thing. If you do not have a raffle ticket, see Kim at the back. We are giving away a $500 Mastercard wearable, but you have to be at this presentation to win it. If you do not have one of those red tickets, go get one because it could be worth $500.

Wow. Yeah. I think she is taking bribes, so it is not a bad thing if you pay her $100 to get $500.

I am Louis Hoch. I am the CEO of Usio, and Usio is a fintech payment processor. We are unique because we believe that consumers should be able to choose how they get paid, and merchants should be able to offer all payment channels. All of our tech supports every payment channel that exists today. Last year, for example, from checks, last year we printed 8 million checks, believe it or not, and it goes up every year, to the latest and greatest is a clearinghouse or Fed ACH real-time payments that we support, and everything in between. We have four divisions within our company. They are all very complementary. In fact, we have customers that use all four, including L.A. County here. This is 12 million people.

We are the company that mails your fees and fines letter and embed a QR code so that it populates your payment screen for you. We also, for L.A. County, we mail out checks for if you pay too much taxes or too much fees. They also have 13 active card programs for us. Of course, we process when you pay your parking fines, that is us. Because we are in L.A., people always ask me if I can get rid of their parking tickets, and the quick answer is yes, I can prevent not mailing you the letter, but it is not going to do you any good. Four operating divisions we will go through in detail, me and Michael. Even though we are a micro-cap company, we deal with the biggest companies in the United States. Verizon is a customer. T-Mobile is a customer.

Top four drug companies, Pfizer, Medtronic, Eli Lilly, they're all customers. 200 cities and counties in the U.S. do business with Usio, including seven out of the top 10 largest cities like L.A. and New York City. We're going to talk about each one of the divisions in detail here, but the first one is payment facilitation. Payment facilitation is card processing. So it's credit and debit card processing. But what's unique about payment facilitation is that we only sell to integrated software vendors. A lot of our competitors spend time trying to sell to individual merchants. We don't believe that that's the best go-to-market strategy. Instead, we sell to software vendors that write software for industry vertical. One of our customers is a company called PracticeSuite.

They have 20,000 doctor's offices that runs their software, and they've chose to integrate in our tech stack so that they can control the whole workflow of the payment, which makes sense for their customer base. They get to control all the branding. But in payment facilitation, we also share half of the revenue derived from a payment with our software companies or our integrated software companies. This part of our business, as you'll see on every part of our business, is growing through some exponential growth. Not only our revenues are up, our profitability is way up. This has been a year that our operating leverage is really being demonstrated in the metrics and financials that we're producing. ACH is direct debit or credit off your checking account. We run that through the Fed. We are a very large ACH processor.

In fact, if we were a bank, we'd be the 50th largest bank at all Fed windows where our competition can't. This part of our business, like all divisions, is growing really, really well. We pre-announced the metrics for this current reporting period, which we are going to report on November 10th. You can see on our next slide, but you can also see on this slide that we're experiencing 34% year-over-year growth on our volume that we're processing for ACH as compared to the same six-month period of last year. Again, ACH has a 70% gross margin for Usio. In the pre-announcement, we talked about this last quarter, Q3, for our ACH division set all-time records for Usio in volume. That's something really to say because we do a huge amount of volume in ACH.

So for Usio to grow that much, it's growing off a big number. Last quarter, third quarter, was the best ever which beat the previous best, which was Q2 of this year, which Q2 beat the previous best was Q1. I guess you're kind of getting the story. The last six quarters have been all record volumes for ACH, all-time records. So really excited about seeing that trend continue, but not only continue in a big way for the third quarter. Michael White, our Chief Accounting Officer, is going to pick up here with card issuing.

Thanks, everyone. Card issuing is our disbursement platform where we issue prepaid Mastercards primarily through government programs and nonprofits. Louis mentioned L.A. County as a great example. They have 13 active card programs. An example is there is a program for if people are applying for a job and they need to get to their job interview, and do not have access to transportation. L.A. County has a program where funds will go onto a prepaid card to pay for the transportation. That is just one example. As you can see, in the first half of 2026, just under $115 million was spent on prepaid cards that we issued. That is up 9% year-over-year.

You can see over the past several periods here, we have had some difficult comps in this business line, whether there was a couple one-time programs, and then just last year there was a loss of a customer through a reseller. It was not our direct customer, but a customer of one of our customers. On the next slide, I am going to talk about some exciting things ahead for this business line. Both of these in the education realm, one being state school vouchers. Through a partner, we currently process 37 state school voucher programs. In the past 12 months, that equates to $1.3 billion in payments. The great thing about these programs is they are recurring. Of those 37 states, five are active card programs. The remaining go out via ACH.

What is really great about the card programs is that as you can see, we are earning revenue on the spend. Like I said, there are 37 active states that we are working with. There is one additional state that is over $1 billion that is in implementation. Really excited about this. Like I said, it is recurring in payments. Just to kind of give you, recurring in nature, kind of give you an idea of the scale of a billion-dollar state. Last year, Usio processed around 8 billion payments total. The volume of these deals are significant. We are also working with universities for Title IV refunds, which are basically payments back to students that come from the federal government. If you receive a loan that covers both housing and tuition, part of that needs to go back to the student.

What allows us to win deals like this is our consumer choice platform, which allows, Louis alluded to at the beginning, the end user, the student in this case, to choose how they receive their funds. They will receive typically an email from the university, and then letting them know that they have funds available. From there, they can choose to receive the funds via ACH, a prepaid card to their digital wallet, an instant transaction via pinless debit or RTP. We can even send a check. It reduces all barriers to dispersing funds. That same model works for a university, works for a nonprofit, works for a government. We are seeing it is a great selling point for card issuing. Moving on to Output Solutions. Output Solutions is our print and mail division. We purchased this business in 2020, and again, seeing significant growth here.

You may wonder why a fintech company purchased a print mail facility. Speaking about L.A. County, where we are today, all their fees and fines, we print those notices, and on the notice, we embed a QR code where you scan to pay. This we primarily sell here to banks, utilities, governments, anyone that is sending recurring statement or recurring invoice. Over first half of the year is up 36% in printed and mailed and 45% in electronic. We also do electronic document hosting. This is talking about Los Angeles County. At the beginning of 2025, we launched what began as an internal initiative, Usio One, which brought all of these four business lines under one umbrella. We had each business line operating separately, and we consolidated to a single sales organization, a single customer support organization, IT, finance, all under one roof.