Usio (USIO) risk factors, FY2024 10-K

RISKS RELATED TO OUR BUSINESS

1. 01If our security applications are breached by cyberattacks or are not adequate to address changing market conditions and customer concerns, we may incur significant losses and be unable to sell our services
2. 02Unauthorized disclosure of cardholder data, whether through breach of our computer systems or otherwise, could expose us to liability and protracted and costly litigation
3. 03If our efforts to protect the security of information about our customers, cardholders and vendors are unsuccessful, we may face additional costly government enforcement actions and private litigation, and our sales and reputation could suffer
4. 04If we fail to comply with the applicable requirements of the respective card networks, they could seek to fine us, suspend us or terminate our registrations
5. 05Fraud by merchants or others could have an adverse effect on our operating results and financial condition
6. 06If we do not adapt to rapid technological change, including as a result of artificial intelligence, our business may fail
7. 07Growing use of artificial intelligence has challenges that, if not properly managed could result in harm to our brand, reputation, business or customers, and adversely affect our results of operations
8. 08Our efforts to expand our product portfolio and market reach, including through acquisitions, may not succeed and may reduce our revenue growth and we may not achieve or maintain profitability
9. 09Business interruptions or systems failures may impair the availability of our websites, applications, products or services, or otherwise harm our business
10. 10We rely on our relationship with the Automated Clearing House network, and if the Federal Reserve rules were to change, our business could be adversely affected
11. 11Loss of key resellers could reduce our revenue growth
12. 12If we lose key personnel or we are unable to attract, recruit, retain and develop qualified employees, our business, financial condition and results of operations may be adversely affected
13. 13We may not be able to obtain and maintain sufficient insurance coverage
14. 14We have incurred substantial losses in the past and may incur additional losses in the future
15. 15We have recorded significant deferred tax assets, and we might never realize their full value, which would result in a charge against our earnings
16. 16Our prepaid card revenues from the sale of services to merchants that accept Mastercard cards are dependent upon our continued Mastercard registration and financial institution sponsorship and, in some cases, continued participation in certain payment networks
17. 17If our software fails, and we need to repair or replace it, or we become subject to warranty claims, our costs could increase
18. 18We depend on Louis A. Hoch, our Chairman, President, Chief Executive and Chief Operating Officer, and if he ceased to be active in our management, our business may not be successful
19. 19Risks associated with reduced levels of consumer spending could adversely affect our revenues and earnings
20. 20We are subject to risks and write-offs resulting from fraudulent activities and losses from overdrawn cardholder accounts that could adversely impact our financial performance and results of operations
21. 21Our business strategy includes identifying businesses and assets to acquire, and if we cannot integrate acquisitions into our company successfully, we may have limited growth
22. 22If we do not manage our credit risks related to our merchant accounts, we may incur significant losses
23. 23Market conditions could negatively impact our business, results of operations, cash flows and financial condition
24. 24Changes in these factors are difficult to predict, and a change in one factor could affect other factors, which could result in adverse effects to our business, results of operations, financial condition, and cash flows

RISKS RELATED TO OUR INDUSTRY

1. 25The electronic commerce market is evolving and if it does not grow, we may not be able to sell sufficient services to make our business viable
2. 26If we cannot compete successfully in our industry, we could lose market share and our costs could increase

RISKS RELATED TO REGULATION

1. 27Payments and other financial services-related regulations and oversight are material to our business and any failure by us to comply could materially harm our business
2. 28We are subject to U.S. laws, regulations, rules, standards, policies, contractual obligations and other legal obligations, particularly those related to privacy, data protection and information security, and our actual or perceived failure to comply with such obligations could harm our business
3. 29We are subject to the CARD Act which could subject us to civil and criminal liabilities
4. 30We are subject to regulations relating to prepaid card programs which could further increase our compliance costs
5. 31The use of Artificial Intelligence could make us subject to evolving regulatory risks

RISKS RELATED TO OUR COMMON STOCK

1. 32Our stock price is volatile, and you may not be able to sell your shares at a price higher than what you paid
2. 33If security or industry analysts publish reports that are interpreted negatively by the investment community, publish negative research reports about our business, cease coverage of our company or fail to regularly publish reports or us, our share price could decline
3. 34Additional stock issuances could result in significant dilution to our stockholders
4. 35We may issue additional equity securities, or engage in other transactions that could dilute our book value or affect the priority of our Common Stock, which may adversely affect the market price of our Common Stock
5. 36We may issue shares of preferred stock with greater rights than our Common Stock
6. 37We have not paid any cash dividends on our Common Stock to date and do not anticipate any cash dividends being paid to holders of our Common Stock in the foreseeable future. Any determination to pay dividends in the future will be at the discretion of our Board
7. 38Shares eligible for future sale may depress our stock price
8. 39Our directors and officers have substantial control over us
9. 40We have adopted certain measures that may make it more difficult for a third party to acquire control of our Company