SurgePays, Inc.

Greetings. Welcome to Search Pays Incorporated First Quarter 2022 Financial Results Call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. Please note this conference is being recorded. I will now turn the conference over to Brian Pennebroe, IR. Thank you. You may begin.

Thank you, Operator, and good morning, everyone. Welcome to the Surge Pays First Quarter 2022 Earnings Webcast and Conference Call. Today's date is May 16, 2022, and on the call today from Surge Pays are 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 certain 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 SurgePay's 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 morning. Copies of today's press release are accessible on SurgePay's investor relations website, ir.surgepays.com. In addition, SurgePay's Form 10-Q for the quarter ended March 31, 2022, will also be available on the SurgePay's Investor Relations website. And now, I'd like to turn the call over to President and Chief Executive Officer, Brian Cox.

Thanks, Brian, and good morning, and thanks to everyone who is joining our call today. We're really excited to be able to demonstrate the success of the mobile broadband subscriber business with the financial results that are more fully reflecting the trajectory of the company. Revenue growth accelerated in a meaningful way in the first quarter of this year. As expected, net loss and EBITDA loss narrowed considerably in the quarter when compared to the first quarter of last year. The Affordable Connectivity Program, or ACP, which started off as the Temporary Emergency Broadband Benefit Program, is now a permanent part of the government budget. Just last week, as many of you noticed, the White House made formal public remarks about this program for the first time. I was excited to see this underserved market that I've worked in for almost 20 years being brought into the mainstream. For surge pays to ultimately achieve favor in the stock market, I believe we must be considered a relevant provider of important products to a large group of people who not only want our products, but need and depend on them. I've been asked several questions over the last week regarding the mention of large companies in the White House speech. I think it's important to note that these companies have always had the ability to provide subsidized telecom services to the underbanked going back to 1985. The fact is, it's not economically enticing for these companies to provide services to this market, or the literal definition of our market would not be called the underserved. The ACP program is intended to bridge the digital divide for low income households who previously did not have reasonable or affordable access to high speed mobile broadband or internet. While most of us on this call probably take quality internet service for granted, lower income households do not. In the age of COVID with closed schools or limited access to healthcare professionals, those without reliable broadband access were at a disadvantage. It was harder for school-aged children to attend Zoom or online classes. It was harder for sick people to get access to telemedicine. With inflation as high as it's been in nearly 40 years, paychecks often can't cover the rising costs of housing, food, utilities, including internet or phone service. The ACP is set up to help millions of households across the country and allow them to stay connected and maintain online access to have access to education, employment, and healthcare. In addition to the fund, to reach these individuals and families, it was reported that the FCC is prepared to spend $100 million on ACP outreach programs over the next five years. We're excited that the market of the underbanked and underserved are no longer in the shadows. Initially, Search Phone Wireless was licensed to offer this program in 14 states. As we grew our enrollment from zero customers in August of last year to over 100,000 in those 14 states, each subscriber provides $30 of monthly reoccurring revenue. This includes the cost of equipment and commissions paid to sales. Our gross margin is approximately 40% per subscriber. Last month with our announcement of the acquisition of Torch Wireless, We are now licensed to offer this program in all 50 states. We were especially excited that we're able to complete this acquisition without diluting shareholders. I believe this acquisition will also provide us the ability to initiate our online enrollment effort nationwide using a broad scope, which should drive subscriber acquisition costs lower and increase subscribers per day. We've developed a bot that communicates with people through Facebook and Instagram Messenger. After someone clicks on one of our ads, the bot communicates with them through Messenger and asks them questions while their answers are securely used to populate an ACP application. This happens automatically. We've achieved over 1,000 successful compliant enrollments online during our testing and expect to ramp this up immediately. Today, our biggest challenge is managing cash flow and growth. We are expanding our sales force into these new markets while the sales teams that started with us last year are growing just as quickly. We have ramped up the ordering of phones and tablets. The hyper growth that we're going through has two primary challenges that I want to quickly discuss. One, a new subscriber is cash flow negative for the first two months after signing up. We need to purchase the tablet and pay a sales commission all before we begin receiving the subsidy payment from the government. So we are actively managing the cash flow from the business and reinvesting in order to buy new tablets and phones while getting those in the hands of our sales team to sign up customers and subscribers. As an example, we have 35,000 tablets currently in the hands of our sales teams nationwide. Challenge number two is managing and predicting EBITDA. Faster growth today means lower EBITDA today, but higher EBITDA later, along with higher long-term shareholder value. The upfront costs depress EBITDA in the near term because of the two-month negative carry, but will level out and accelerate positive as the subscriber base continues to increase and reoccurring revenue stair-steps monthly. Our philosophy is to maximize the growth opportunity while we have it. I'm not going to shortchange the sales team's potential by limiting their ability to sign up new subscribers simply to show better EBITDA in the short term. We do believe that given our higher subscriber base reoccurring revenue and growth rates, we should show positive EBITDA in the second quarter. We believe we are uniquely positioned to take advantage of this once in a lifetime opportunity. Our company was uniquely poised to best serve this market through the grassroots approach I've utilized for over 20 years. To be successful in reaching this customer group, you must have boots on the ground in the neighborhoods and communities. And this is done by having relationships with local store owners. The true influencers for this underserved market don't originate from Silicon Valley. However, they're the people standing behind the counter at the corner store which is normally visited five to seven times a week by lower-income consumers. Being a licensed provider of mobile broadband is a perfect complement to our existing business of providing financial services to the underbanked and underserved communities. Our suite of financial and prepaid products essentially converts corner stores and bodegas into tech hubs for the underbanked neighborhoods. These corner stores Bodegas and local convenience stores are profit partners that provide prepaid debit card, wireless minutes, top-ups, and cash to digital currency conversions, as well as capture data and build a loyal customer base. You might think that the variety of these store interactions wouldn't happen at the corner store, but they do. Corner stores, convenience stores, bodegas, whatever name that you or they go by, are all integral parts of this community. They provide necessary goods to the community. They're sometimes the only option for fresh food, and as we discussed, provide financial services that people often can't access, either because they don't have a checking or savings account, or bank branches aren't located in their neighborhoods. Even the CDC has published research about the importance of bodegas to local communities. To quote from a recent CDC research report published a few years ago, and I quote, owners agreed the role of the corner store was to provide for the local community. Most store owners explained their main priority was to provide whatever goods their surrounding community needed and wanted. As one owner stated, well, it's a convenience store. It's a convenience for the neighborhood that they have everything close and accessible. They emphasize the importance of variety and of providing goods that would otherwise be difficult for this community to find. We feel this fits our model perfectly. As I've said earlier, we believe we are uniquely positioned to best offer these products and services to the underbanked and underserved because for so long these communities have been overlooked by larger corporations. We still have a goal to reach a billion dollars in annual sales with profitable growth, and in communities that haven't been adequately addressed. We are now operating a business that has the ability to grow organically and through accretive acquisitions while simultaneously making money across our core revenue channels. I'll turn the call over to Tony to provide a brief review of our financial results before summarizing today's call. Tony?