Good day, and welcome to the SurgePays' Q3 2023 Earnings Conference Call. All participants will be in a listen-only mode. After today’s presentation, there will be an opportunity to ask questions. Please note this event is being recorded. I would now like to turn the conference over to Brian Prenoveau, Investor Relations. Please go ahead.

Thank you, operator, and good afternoon, everyone. Welcome to the SurgePays' third quarter 2023 earnings webcast and conference call. Today's date is November 14, 2023, and on the call today from SurgePays, Brian Cox, President and Chief Executive Officer; and Tony Evers, Chief Financial Officer. Before we begin, I'd like to remind everyone that this call may contain forward-looking statements as they are defined under the Private Securities Litigation Reform Act of 1995. These statements are subject to risks and uncertainties that could cause actual results to differ materially from those expressed in the forward-looking statements. For a discussion of such risks and uncertainties, please see SurgePays' most recent filings with the SEC. All forward-looking statements made today reflect our current expectations only, and we undertake no obligation to update any statement to reflect the events that occur after this call. Also during the course of today's call, the company will be discussing one or more non-GAAP financial measures. Reconciliations of these non-GAAP financial measures to the most directly comparable GAAP measures are included in the press release we issued this afternoon. Copies of today's press release are accessible in SurgePays' Investor Relations website. In addition, SurgePays' Form 10-Q for the quarter ended September 30, 2023, will also be available on SurgePays' Investor Relations website. Now I'd like to turn the call over to President and Chief Executive Officer, Brian Cox.

Thanks, Brian. First, I want to express my gratitude to our shareholders and everyone interested in SurgePays for being part of this call. As we grow and continue to expand our audience, I’d like to provide a brief introduction to who we are, what we do, and our target market. SurgePays offers financial and telecommunications products to underbanked and underserved communities at a grassroots level where they reside and shop. Most of the underbanked conduct their financial transactions at their trusted local convenience stores near their homes. We use these stores as distribution points within these communities. Our technology platform enables clerks at thousands of convenience stores to offer prepaid wireless and financial products to lower-income and underbanked consumers who don’t have access to traditional credit cards or checking accounts. The FCC has authorized us to provide subsidized wireless service to qualifying subscribers through the affordable connectivity program, commonly known as ACP. Our ACP prepaid wireless services cater to hundreds of thousands of subscribers nationwide. This attractive and beneficial program serves as the primary product to introduce our platform into stores across the country. Store owners quickly realize that in lower-income areas, typically more than 20% of the transactions occur through government-supported programs, and those customers are eligible for ACP. In a high-interest rate environment, where store owners seek additional transactional revenue without affecting their credit for inventory, SurgePays offers an appealing solution for owners who wish to transform their stores into transactional tech hubs for the underbanked community. With this market approach and a profitable range of underbanked products and services, we are well-positioned for significant growth among owner-operated convenience stores nationwide. Our strategy is to evolve into a multiproduct company with an ecosystem surrounding us, allowing us to build the largest distribution of products and services aimed at the underbanked population. I’m pleased to share that the third quarter of 2023 continues the profitability trend we observed at the end of 2022, achieving our highest-ever net income of $7.1 million and EBITDA of $7.5 million. This year has indeed showcased the long-term profitability potential of our business, and we are only beginning. We have recorded over $17 million in net income year-to-date, with our profitability margins continuing to improve. Our cash balance has increased to over $12 million with minimal debt. This year shows a significant contrast to September 30 of last year when we experienced a net loss of approximately $3.7 million. The remarkable level of profitability achieved by SurgePays has opened doors to many opportunities that wouldn't have been feasible in the past, especially in this economic landscape. SurgePays can now concentrate on proactive growth and make strategic decisions that will lead to both short and long-term growth and profitability. In my 20 years of successful business, I have never hesitated to express my goals and make tough decisions, whether it meant delayed gratification or actions that might seem confusing or unpopular to bystanders. Achieving our NASDAQ listing was just the first of several goals we anticipated reaching. The next target is to transition from a micro-cap to a small-cap company. After extensive discussions and over a year of consultations with analysts, portfolio managers, and fund managers, we realized that to achieve this next goal, we need to attract impactful institutional stakeholders. One of our challenges has been the potentially confusing scope of our operations beyond our core model. It was evident that we needed to set aside the legacy mass tort lead generation company, LogicsIQ, and refine our messaging alongside our finances. Our company’s story, focus, and market strategy must be defined with a clear vision for what we can achieve in the future. Even though LogicsIQ contributed $4.1 million to our sales last year in Q3, we felt that winding down its operations was essential to realizing our larger goals. Another example of our long-term strategic profit approach is our focus on transitioning ACP sign-ups to convenience stores. Although this slowed down subscriber growth short-term compared to outdoor pop-up sales, given the economics of the store model versus tent sales, it was the right decision. Expanding our network of stores while establishing a strong presence in these communities creates substantial revenue opportunities both organically and through controlling our distribution platform, ultimately allowing us to pursue acquisitions of companies with existing store relationships or complementary products for our platform. Revenue decreased by $2.1 million in Q3 year-over-year, which is primarily attributed to the winding down of LogicsIQ, which contributed $4.1 million last year. For those doing the math, this indicates that our core business in wireless and fintech actually increased by over $2 million in Q3, contributing to the record $7.1 million in net income. Reflecting back, in 2021, when we uplisted to NASDAQ, we faced a net loss of $13.5 million for that year. It's truly impressive what our team has achieved, and we continue to add like-minded individuals to our team each quarter. From our leaders across the country to our fantastic team at our bilingual operations center in El Salvador, Chris and Franklin lead a strong group of over 150 dedicated individuals at every operational level, ready to scale our store and subscriber growth immediately. As I mentioned in the previous quarter's call, the future key metric is the number of new stores using our platform. More stores on the platform will lead to increased ACP sign-ups, more products and services offered, greater transaction volumes, and higher revenues for SurgePays. Our model for acquiring ACP subscribers through stores has been remarkably effective. However, converting leads into customers directly through text messaging hasn’t achieved the success we anticipated. After analysis, we found that relying on customers to follow up for eligibility consent was the challenge. We realized we needed customer-facing equipment at the register that would allow customers to complete the necessary compliance steps for ACP enrollment in the moment before leaving the store. This initial hurdle became the foundation for a great success that has paved the way for an improved market approach with our own customer-facing point-of-sale equipment. We can now market our other products through 24/7 promotions on the LCD screens at the register. This includes raising awareness of prepaid top-up options for customers and announcing the upcoming launch of our prepaid wireless brand, Linkup Mobile, alongside other products on our platform. In the past, we depended solely on posters and promotional materials in stores to inform customers about our products since we didn’t have shelf space. Now, our products will be visible on screens positioned in prime locations at the checkout counter. In essence, this initiative has launched our point-of-sale equipment channel. We have partnered with ClearLine Mobile to trial customer-facing LCD screens at the register to showcase our products, activate wireless subscribers, and enhance customer engagement. This advancement in our point-of-sale strategy positions SurgePays as a market leader in delivering wireless telecommunications and fintech products to the underbanked and underserved communities where they live and shop. This move will also help inform potential investors by visually demonstrating our equipment's presence at store registers and illustrating the positive impact we can make throughout our network. We have currently deployed over 100 LCD screens and are pleased with the results. An additional shipment of 1,000 units arrived this month, and we will roll these out immediately while placing orders for more units in larger quantities. At this early stage, we've only begun to tap into the revenue-generating potential SurgePays can realize through our store partnerships. We remain focused on managing our cash and cash flow and investing that cash for maximum growth. Now that we have integrated our equipment and software platform and expanded our sales leadership team, we can place greater emphasis on driving revenue organically and through acquisitions while nurturing relationships that help us achieve our revenue targets. We anticipated that third-quarter revenues would align with those of the second quarter, which they did, but with even stronger cash flow. Now, I will hand the call over to Tony to discuss our financial results before we summarize today's call.

Thank you, Brian, and good afternoon, everyone. I will begin my overview of the third quarter's financial results. For the quarter, we reported revenues of $34.2 million compared to $36.2 million in the third quarter of 2022, representing a decrease of 6%. The decrease was primarily due to a $4.1 million decrease in the revenues from the company's LogicsIQ business. Revenues related to providing mobile broadband and wireless service to low-income subscribers through the ACP increased 12% to $30.7 million in the third quarter of 2023. Gross profit increased 446% in the third quarter to $10.5 million compared to $1.9 million in the year ago period. Third quarter gross margin also showed significant improvement up to 30.7% versus 5.3% in the third quarter last year. SG&A expenses increased by 19% year-over-year. The increase was primarily driven by contractor and consultant expenses, legal fees and expenses related to the acquisition of ShockWave CRM. Income from operations was positive for the quarter at $7.1 million compared to a loss of $1 million in the year ago period. Net income for the third quarter was $7.1 million or a gain of $0.49 per share compared to a net loss of $1.5 million or a loss of $0.12 per share. Of the $8.6 million gain for the third quarter included lower interest expense of $503,000 less than a year ago period. Turning to the balance sheet, liquidity and cash flow. Our cash balance as of September 30 was $12.6 million compared to $7 million at the end of 2022. Accounts receivable have increased by $540,000 from year-end 2022 to $9.8 million. The receivable is from the U.S. government for the mobile broadband subsidy. Payment generally occurs approximately 30 to 60 days after a new subscriber is verified and signed up. Given our strengthened financial position, cash balance and capital structure, our cash allocation priorities focus on investing in the business and maintaining ample liquidity for future growth. I will now pass the call back to Brian for closing remarks.

Thanks, Tony. SurgePays is now on sound financial footing with a healthy cash balance, consistent earnings and growth. We are poised to create one of the largest direct distribution networks of underbanked products and services in the country and a vast market with tremendous growth potential. These results have proven we perform at a high level, are not afraid to make difficult decisions and understand how to deliver positive cash flow. Thank you so much for your time today. We will now open up the call to questions. Operator?

Thank you. We will now begin the question-and-answer session. Our first question comes from Michael Diana with Maxim Group. Please go ahead.

Sure. Hey, thank you. Congratulations on the quarter, Brian.

Hey. Thank you, Michael. Appreciate it, Michael.

You mentioned that a key metric is the number of new stores, and that screens are a main driver of business at those new stores. You also mentioned that you have 1,000 new screens coming in. So, is your growth in the number of stores going to depend on how many screens you get into the stores?

Thank you for the question, Michael. I wouldn't say that our growth in stores will depend on the number of screens we have, but one important metric we will analyze internally is the stores that already have our existing platform or those using our web interface app. For instance, we will compare stores using the reprogrammed Verifone terminal at the countertop to those that have the screen. Ideally, we aim to roll out with as many stores utilizing the point-of-sale screen as possible because, as mentioned, creating a solution for us internally has unexpectedly turned into an effective marketing tool. This realization came about after deployment, helping us promote all our products without the need for multiple rooms at the operations center to distribute posters and promotional materials, or relying on salespeople to visit stores every three months for updates. I expect that in our next discussion, we will have metrics highlighting both our stores and those where we've deployed screens. I will come up with catchy phrases to better differentiate them as this will be a crucial metric regarding our ability to offer all the products on our platform. This includes compliantly providing ACP, launching our prepaid wireless brand, and promoting services non-stop at the register. While this won't limit our ability to add stores, we should catch up quickly. I'm very aggressive about the screens and we just received 1,000, with reorders already in progress. You will see us quickly replenish and distribute them to build a good stockpile. The screens themselves will help us enter more stores because they generate excitement. Stores are more interested in our platform when paired with the point-of-sale screen rather than just the platform alone. I believe this will drive sales and revenue.

Okay. Great. So I know ACP has been your big product so far, but you mentioned prepaid wireless, and I think you have high hopes for that. Could you talk more about that?

Sure. We are just weeks away from launching our prepaid wireless brand, Linkup Mobile. I wanted to wait for more screens to be available because we already have store space occupied by posters to raise awareness of ACP. It’s challenging to distribute new posters and ask stores to switch out existing ones when we want to maximize our visibility on the walls. Competing for marketing space in stores can be tough. The screens at the point of sale are going to help promote Linkup Mobile. I am very excited about this because before ACP, our prepaid wireless initiative was set to be the cornerstone of our business model. We aimed to attract stores with the pitch of offering prepaid top-ups and then launching our wireless company, which provides customers with savings of $5 to $10 per plan. Additionally, we can offer higher commissions to store owners for activations and payments since we control the platform. I hadn’t fully anticipated the benefits of having hundreds of thousands of subscribers and our advantageous rates from carriers like AT&T and T-Mobile, as we possess significant buying power and credibility. We also have a seat at the table on the wholesale side. Our customer relationship management platform is fully developed, allowing us to manage every aspect of our MVNO without outsourcing. From processing payments at stores to service delivery at the towers, we maintain full ownership of the entire customer experience. This structure vastly improves upon my original plan thanks to ACP, which we can leverage to expand our prepaid wireless brand. Moreover, ACP is limited to one per qualifying household, but with our prepaid wireless brand, there are no such limitations. A household can have multiple smartphones on prepaid wireless, and there are over 100 million prepaid wireless users in the U.S. This presents a significant opportunity for us to utilize our technology and ACP to reach more neighborhoods. We anticipate this initiative will be successful, and I look forward to discussing subscriber growth for Linkup Mobile in our next call.

All right. Thank you very much and congratulations to you.

Thank you, Michael.

Our next question comes from Ed Woo with Ascendiant Capital. Please go ahead.

Congratulations on the successful quarter. My question is about the macro environment, which appears stable. Inflation is decreasing, and job growth remains relatively strong. What insights are you receiving from convenience store owners regarding their core customer base? Have there been any notable changes in the last couple of months?

Thank you for the question, Ed. I've discussed this topic for many years now, and it’s quite interesting. Lower-income individuals remain in that category. I believe that some macroeconomic factors are more impactful on the middle to upper classes than on lower-income individuals who are already receiving government assistance. There’s a possibility that additional people may join our potential customer base, including those facing financial difficulties and immigrants. We have a bilingual operations center, and all our products are available in both English and Spanish, so our potential customer base continues to grow. I don’t view this as wishing any economic problems on anyone; we provide essential services to those in need. The lower-income prepaid market will always exist, and by offering savings on wireless services, we help free up cash for other needs. From the perspective of convenience store owners, they are significantly affected by interest rates on their inventory. They are cautious about bringing in new products that aren’t proven. If we were to introduce new products or kiosks requiring upfront investment from store owners, it would be challenging. Instead, we’re approaching stores with a model that allows them to earn money through transactions without any inventory investment requirements. Customers must visit the store to make these transactions, driving foot traffic. This creates awareness that they can make wireless payments right at the convenience store and potentially switch their service while saving money. Such savings, even as small as $5 to $10, matter greatly, especially for hourly workers or those on government assistance. What we’re seeing indicates that this is a prime opportunity. In good economic times, store owners may be less inclined to seek out new products due to their comfort. However, given the current economic challenges, it’s an excellent time for a company like SurgePays to present an attractive opportunity for store owners to increase their profits while benefiting their communities.

Great. Well, thank you and make sure all your customers appreciate your – the products and services. Thank you very much and good luck.

Thanks, Ed. Appreciate it.

This concludes the question-and-answer session. I would like to turn the conference back over to Brian Cox for any closing remarks.

Thank you, operator. Thank you, everyone for joining us on the call today. We look forward to continuing to report our team's execution in the near future. Have a good evening.

The conference has now concluded. Thank you for attending today’s presentation. You may all now disconnect.