Posabit Systems Corp

Good day, ladies and gentlemen, and welcome to the Positbit Systems Corporation fourth quarter and full year 2021 earnings call. All participants have been placed on a listen-only mode, and the floor will be open for questions and comments after the presentation. It is now my pleasure to turn the floor over to your host, James Carbonara. Sir, the floor is yours.

Thank you, and once again, welcome. With me on this call are Ryan Hamlin, Chief Executive Officer of and Matthew Fowler, Chief Financial Officer. I would like to begin the call by reading the Safe Harbor Statement. This statement is made pursuant to the Safe Harbor for forward-looking statements described in the Private Securities Litigation Reform Act of 1995. All statements made on this call with the exception of historical facts may be considered forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Although the company believes that expectations and assumptions reflected in these forward-looking statements are reasonable, it makes no assurances that such expectations will prove to have been correct. Actual results may differ materially from those expressed or implied in forward-looking statements due to various risks and uncertainties. For a discussion of such risks and uncertainties, which could cause actual results to differ from those expressed or implied in the forward-looking statements, Please see risk factors detailed in the company's annual report and subsequently filed reports, as well as in other reports that the company files from time to time with CDAR. Any forward-looking statements included in this earnings call are made only as of the date of this call. We do not undertake any obligation to update or supplement any forward-looking statements to reflect subsequent knowledge, events, or circumstances. The company will also be citing adjusted EBITDA and adjusted net loss in today's discussions. Adjusted EBITDA and adjusted net loss are non-IFRS measures used by management that do not have any prescribed meaning by IFRS and that may not be comparable to similar measures presented by other companies. The company defines adjusted EBITDA as net income or loss generated for the period as reported before interest, taxes, depreciation, and amortization, and it's further adjusted to remove changes in fair values and expected credit losses, foreign exchange gains, and or losses and impairments. The company defines Adjusted net loss as net loss generated for the period, as reported, adjusted to remove changes in the fair values of derivative liabilities. The company believes that these are useful metrics to evaluate its core operating performance. Now, I would like to turn the call over to Ryan Hamlin, Chief Executive Officer. Ryan, please proceed.

Thanks, James, and thanks, everyone, for joining the call today. We have a few prepared remarks, and then we'll open up for some questions at the end. First, an overview of our financial results. As a reminder, all numbers that we're reporting today are in U.S. dollars. 2021 was another great year of growth and expansion for us. Strong market trends, entry into new regions, same-store growth with existing merchants, new product launches, and alignment with key industry leaders through strategic partnerships enabled us to drive record revenue of 21.3 million, more than doubling the 7.8 million we've reported in 2020. Our transactional sales volume increased to $362 million compared to $132 million in the prior year. We're also very pleased to report that we more than doubled our point of sale footprint over the course of the last year. Our adjusted net loss, which is a non-IFRS metric that Matt will discuss in further detail in a few minutes, was a loss of $829,000 in 2021 compared to a loss of $1.2 million in 2020, reflecting a narrowing of our loss by more than 30% year over year, while our total revenue grew by 172%. Adjusted net loss isolates the non-cash impact of items below the operating line, which we believe helps investors to better understand the true operating business and performance of our business. Investment in our platforms and scaling our team to support our continued growth is essential to gaining market share and executing our plans for further expansion. We accelerated this reinvestment in the second half of the year. Our team now consists of 48 employees and contractors. New additions have primarily been in sales and product development resources. On the sales side, we have expanded our sales organization by 300%. As a result, we currently have the largest backlog and pipeline of new merchants to onboard in the history of our company. At this time, we have more than 100 contracted retail locations that are queued up to go live over the next 60 days. Based on historical averages, transactional sales of these locations alone are expected to total more than $100 million, which we estimate will add approximately $5.5 million in new incremental revenue to our business on an annualized basis. These new retail locations combined with same store growth, new product offerings, a robust pipeline of new potential merchants, a larger sales team with increased geographic coverage, and a strong focus on engaging with large MSOs gives us a high level of confidence in our ability to hit our guidance for the year. Now turning to the market. The cannabis market continues to be an exciting and dynamic space in which to operate. with strong market trends that favor our continued growth. New merchants are emerging regularly, state legislation efforts are advancing across the country, and acceptance of digital payments is becoming more normalized as retailers recognize the importance of reducing the amount of cash in their stores to create a safer work environment for their employees. All of this translates to industry growth and increasing opportunities for POSBIT. The total payment processing opportunity in the U.S. for cannabis sales is estimated by Forbes to grow to more than $43 billion by 2025. There clearly is still a massive opportunity for our business moving forward. Entry into new geographies is an important element to capturing an increased share of this opportunity and one of the several key drivers of our growth. We started the year with operations in 10 states in the US and ended with 15. Subsequent to the year end, we've added three more states, Georgia, Texas, and West Virginia. and have plans in motion to end 2022 with deployments in eight more states, concentrating primarily in U.S. Mid-Atlantic and Northeast regions. Our entrance into the CBD market in states such as Texas and Georgia has opened up a massive new pool of potential customers across the country. Additionally, our ever-increasing success with large MSO chains has provided excellent momentum and continued opportunities among the biggest and most successful companies in the cannabis industry. In fact, we recently began deploying our payment solution in the Loom dispensary chain, which currently operates over 30 retail locations in Michigan, making it the largest operator in the state. Just as important in 2021 was our success with increasing same-store revenue growth for Positbit. We continue to see a rise in percent of non-cash payments following the onboarding of new merchants, typically a 30% to 40% increase in the six months following our installation. We had a number of new product launches during 2021 that increased the breadth of what we offer to merchants. In the back half of the year, we launched our kiosk, a standalone hardware option for dispensaries and retailers that allow customers to build out a cart of products, either in-store or online, and pay for orders with a debit card directly at the kiosk. We are now preparing for a full-scale release and launch of our kiosk in Q2 across multiple states. As a company, we firmly believe that providing ample choice to our current merchants and the cannabis market at large sets us apart from the competition. Retailers want options and prefer to use solutions and products they're comfortable and familiar with. As such, a major focus in the past year was bolstering our positive connect API. a publicly available open API that allows third-party integrators to gain access to our expanding suite of products. As the industry leader in payment infrastructure for the cannabis sector, our open platform allows access to our complete ecosystem, enables third-party integrations of every kind. We are the only processor and POS provider that offers merchants the flexibility to plug into any or all of our product offerings. We also continue to strengthen our current partnerships with industry leaders such as Spring Big and iHeartGene. This shows our commitment to customer choice and the idea that merchants deserve optionality as the industry matures. Product extension through innovation remains a priority for 2022. We're increasing the size of our product engineering team to support the launch of new products and further expand our portfolio. We plan to continue releasing new and exciting features within our point of sale technology, expanding our offerings with a wide array of features for retailers across the industry. A few examples of this include newly released safety features on our point of sale to alert authorities of a crime in progress, as well as new integrated debit payment features that promote solutions to reduce cash on hand at store locations. Additionally, we are focused on building out innovative features for the benefit of large MSO chains. all with an eye towards helping merchants drive incremental sales and improving both the merchant and customer experience on an enterprise level. Looking ahead, our operational plans for this year are built upon our success in 2021, which we believe makes our company increasingly attractive to a wide range of investors. Market demand for our offerings is robust, and we have a proven track record of delivering results. I'll now turn the call over to Matt Fowler, our CFO, for a more detailed review of our financial results for both the quarter and year ending December 31st, 2021. Matt, take it over.