SurgePays, Inc.

Welcome to SurgePay's second quarter 2024 earnings conference call. At this time, all participants are in listen-only mode. A question and answer session will follow the former presentation. If you wish to ask a question on today's call, please press star 1 on your phone at any time. That's star 1 if you wish to ask a question on today's call. 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 your host, Doug Lane, investor relations at SurgePays. Doug, you may begin.

Thank you, operator, and good afternoon, everyone. Welcome to the SurgePays second quarter 2024 earnings webcast and conference call. Today's date is August 13th, 2024, 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 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. Copies of today's press release are accessible on SurgePay's investor relations website, ir.surgepays.com. In addition, Surge Pays Form 10-Q for the quarter ended June 30, 2024 will also be available on the Surge Pays Investor Relations website. And now I'd like to turn the call over to President and Chief Executive Officer Brian Cox.

Thanks, Doug. Thank you for joining today's call and your continued interest in Surge Pays. I want to start by reiterating our unwavering commitment to providing financial technology and prepaid wireless services to the underbanked and underserved populations at the grassroots level where they live and shop. This commitment is at the core of our mission and guides all of our actions. Over the past few years, we have successfully acquired over 250,000 subscribers to our mobile virtual network operators or MVNO business. which at its peak accounted for over 90% of our consolidated sales. This was made possible by offering plans subsidized by the Federally Funded Affordable Connectivity Program, or ACP. We were aware that this program's funding could run out in the first half of this year, which it did. However, the uncertainty lay in whether Congress would authorize additional funding for the program, which unfortunately, as of this date, did not happen. We want to ensure you we are fully informed about the challenges we face. But as said on the last call, we could no longer wait around to find out. We had contingencies and had already begun implementing non-subsidized MVNO business, LinkUp Mobile, which was launched in early June. We aim to offer our subscribers the option to remain on a free monthly plan subsidized by a sister subsidy program or transition them over to LinkUp Mobile, which we price to be attractive to our target customer. We also hired Joe Gomez, a senior telecommunications industry executive for the newly created position of vice president of MVNO operations. Joe spent over 18 years at AT&T and brings a wealth of experience to the team. He is charged with helping to develop innovative products and services for the value market segment where we believe our competitive position is enhanced in a non-subsidized market environment. Stay tuned for further developments to come in our ongoing efforts to build out our prepaid wireless MVNO business. In the meantime, we are going through a transition phase in the business. It would have been an easy, though short-sighted decision to let our subscribers go once the ACP funding ran out. That's losing sight of the fact that we now have an existing subscriber base of 250,000 customers, not to mention a distribution network of thousands of local convenience stores and bodegas where our customers shop every day. Those are huge and valuable assets. Therefore, to hold on to these valuable assets during this transition period, we chose to keep our subscribers active, absorb the wholesale costs, and put our strong balance sheet to work to replace the cash flow we lost once ACP funding ran out. But rest assured, this is only temporary. We do not like talking about cash burn rates around here, and we plan to put that in the rearview mirror by the time we close the year in December. So in looking at the second quarter 2024 results, our sales were 15.1 million compared to 35.9 million in the year-ago quarter which were about as expected with the ACP program winding down mid-quarter and Congress declining to provide it with new funding, at least as of yet. Our MVNO revenues were $12.5 million versus $30.2 million in the same quarter of last year when ACP was fully funded throughout the quarter. Also impacting sales were the operational changes made by management in Surge Logic's lead generation services which had 2.8 million in sales a year ago quarter, but did not contribute sales this quarter. What was not expected in our planning coming into 2024 was that the second quarter gross profits would be a loss of 3.4 million versus a 10 million profit the year ago quarter. This was due to the double whammy of Congress letting the original ACP funding run out and not immediately renewing the program. coupled with our decision to have our balance sheet take on the funding to maintain continuity within our subscriber base. So why would we continue to provide wireless services and absorb the costs? For three main reasons. Number one, Congress could renew the ACP program at any time, and if we terminated service, we would have to go out and reacquire customers from a standing start, which would cost tens of millions of dollars. Number two, If Congress delayed or didn't fund the program, we had as a backup plan B to acquire a company with licenses to provide a similar subsidy program to our customer base and recapture a lower but viable and sustainable reoccurring revenue stream. This is in conjunction with incentivizing customers to switch over to LinkUp Mobile, our non-subsidized prepaid wireless brand. Number three. We know how critical a role broadband service plays in everybody's life, and we believe it was simply the right thing to do. As we evolve, we want to become a more increasingly important provider of goods and services to our convenience store and bodega partners. While prepaid wireless and FinTech are the main products we now provide, We look to expand our offerings to these points of distribution in the community since we know that our customer base of underbanked and underserved consumers conduct most of their financial transactions at their trusted local convenience store. We recognize that the delay in ACP funding has adversely impacted our business and stock price. Therefore, we feel it's an opportunistic time to announce a corporate stock buyback so our long-term investors know interests are aligned. We have announced a buyback of up to five million dollars of surge pays common stock in the open market over the next six months. We are in a transition phase and are looking to get back to generating positive free cash flow by the end of this year through the following initiatives. Number one, continue to grow our ACP revenue stream should Congress continue to fund it. Number two, offer our subscriber base a sister subsidy program while enticing customers with a cost-saving LinkUp prepaid wireless plan. Number three, scaling up our third-party wholesale transactions for other prepaid wireless company payments at convenience stores. This initiative has been necessary because it's a relationship gateway product for LinkUp activations and subscriber growth at the convenience store. Number four, expand our offerings outside of wireless. For instance, we recently launched our Clearline customer engagement platform for convenience stores at last month's Retail Now conference in Las Vegas. Number five, expand product and service offerings to the same nationwide network of convenience stores we are building by exploring and executing prospective partnering or product distribution opportunities. Number six, identify unique market opportunities that represent potential positive short-term cash flow. As I said at the outset, we knew that the ACP funding could run out and we were not waiting around for Congress to provide additional funding. Many initiatives are underway to expand surge-based footprint among the underbanked and underserved who remain our key customers. Stay tuned for more news on this front as we move into the back half of 2024. I'll turn the call over to Tony to review our financial results before summarizing today's call. Tony?