Posabit Systems Corp

Greetings and welcome to the Positbit Systems Corporation fourth quarter and full year 2025 earnings call. At this time, all participants have been placed on a listen-only mode. We will be monitoring for questions and comments via email. You can submit any questions or comments to investors at Positbit.com. Once again, that's investors at Positbit.com. Please note, this conference is being recorded. It's now my pleasure to turn the floor over to your host, Oscar Dahl. The floor is yours.

Thank you, Operator. With me on this call are Ryan Hamlin, Chief Executive Officer, and Emily Egan, Vice President of Finance. 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 the forward-looking statements due to various risks and uncertainties. For 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 subsequent file reports, as well as in other reports that the company files from time to time with CDAR. Any forward-looking statements included in this call are made only at 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, adjusted revenue, and adjusted gross profit in today's discussion. Adjusted revenue, adjusted gross profit, and adjusted EBITDA are non-IFRS measures used by management that do not have any prescribed meaning by IFRS and may not be comparable to similar measures presented by other companies. The company defines adjusted revenue as gross revenue minus license support revenue plus actual licensing cash received as part of POSBIT's licensing deals. The company defines adjusted gross profit as adjusted revenue less company cost of goods sold. The company defines adjusted EBITDA as net income or loss generated for the period as reported before interest, taxes, depreciation, and amortization, and further adjusted to remove changes in fair values and expected credit losses, foreign exchange gains, and or losses and impairments. The company believes these non-IFRS measures are useful metrics to evaluate its core operating performance and uses these measures to provide shareholders and others with supplemental measures of its operating performance. The company also believes that securities analysts, investors, and other interested parties frequently use these non-IFRS measures in the evaluation of companies, many of which present similar metrics when reporting their results. We caution that adjusted revenue, adjusted gross profit, and adjusted EBITDA are not substitutes for gross revenue, gross profit, or profit loss, respectively. Now, I would like to turn the call over to Ryan Hamlin, Chief Executive Officer. Ryan, please proceed.

Thanks, Oscar, and welcome everyone to our annual earnings call. As a reminder, all numbers that we'll be talking about today are in U.S. dollars. Q4 capped off an outstanding year for POSBIT. It was perhaps the most significant and meaningful year for us in our 10-year history of our company. We continued to execute on the strategy we've been talking about for several years, growing our reoccurring SaaS revenue, expanding our margins, driving profitability, and putting more cash on the balance sheet. I'm proud that our team delivered on the goals we laid out for them in January of 2025. Gross profit dollars grew year over year, even though top line revenue was down. We'll talk about that shortly. Adjusted EBITDA for the full year reached a positive 2.5 million, up over 400% from 2024. And we ended the year with meaningfully more cash in the bank than we started with. In fact, 76% more. We accomplished this while continuing to streamline the business, remain disciplined on expenses, and investing in the future of Positbit. To start with, I want to address the elephant in the room. At first glance, many investors will just read the headline that Positbit's top line revenue went down year over year. This is not the story that should be told. In fact, the reason our top line revenue went down was 100% driven by a strategic decision that we made as a company. to shift the relationship we have with our payment processors. To de-risk our payments business, we moved to an agent model where we now refer merchants to processors and in return, we get a residual payment. As a result, the top line accounting of our revenue changed. Prior to the agent model that we're now in, we recognized the full grossed amount of the consumer fee. This included our cost to the payment processor as well as any revenue sharing we did with our referral partners. This is why you will see a drop in top line revenue in 2025 versus 24. But if you look at gross profit dollars, which is the money that all companies use to run their business, you will see we actually grew year over year. Also note that we grew our cash. So while top line revenue looks odd because it is down in 25, the positive business is much healthier today than it was at the end of 2024. Unfortunately, many of the less sophisticated investors and, frankly, AI bots who trade our stock will fail to realize this and instead will simply look at the top line, which is not an accurate depiction of the true positive story in 2025. So if you hear one thing on this call today, the theme is simple. Positive is profitable. We are growing our gross profit dollars year over year. We are seeing significant growth in our point-of-sale business. and we continue to increase our cash in the bank. And now a couple of financial highlights. Our full year adjusted EBITDA was approximately 2.5 million. This is the highest in our 10-year company history. Adjusted gross profit was over 80%, again, the highest in our 10-year company history. Q4 represented another profitable quarter for Positbit, continuing the momentum we built throughout the year. We increased cash on hand by approximately $800,000 during the year, ending 2025 with over $1.8 billion in cash on the balance sheet. And we continue to grow our core reoccurring revenue businesses, led by our point of sale and our e-commerce. While our retail business remains extremely strong, 2025 also marked the beginning of a very important new chapter for POSBIT that I'm excited to share a little bit with you today. Late in the year, we introduced our beta of our new brand portal service. You may have seen the press release that came out on this yesterday. The name of this new AI-driven service is called Positive Brands. Historically, Positive has been exclusively working with cannabis retailers. Positive Brands opens up an entirely new market for us, producers and processors. Think of this as the other half of the $35 billion cannabis industry in 2025. This new service taps into a brand new revenue stream and a new set of customers for Positivit. We are incredibly excited about what Positivit Brands can and has already become in early 2026. The platform gives brands and manufacturers access to real-time reporting, business intelligence, product catalogs, inventory management or VMI, B2B payments, and much more. It is a powerful new technology platform supported by an AI-driven backend that helps automate and simplify many of the manual tasks that producers and processors deal with today. We believe POSBIT brands will become a major growth driver for POSBIT over the next several years. The reason this product is so unique to POSBIT and such a great opportunity is that no other point-of-sale company in the U.S. has the market share in any single state that POSBIT has in Washington State. Remember, cannabis producers and processors can only sell within their own state. We already have strong relationships with the majority of all the retailers in Washington State, which is why we have initiated our launch of positive brands here in Washington State. This gives us a unique opportunity to connect both sides of the cannabis ecosystem, retailers on one side and producers and processors on the other. Because POSBIT is where the data is created, for example, all the inventory comes in our POS, all the sales initiate in our POS, we are the only one that can provide this real-time data to the brands. Brands can now see in real-time their inventory at a store, how well it's selling, manage expiration dates, and much more. As we head into 2026 and beyond, you'll hear much more from us about POSBIT brands and other new products we've been developing. We are now in a position where we can make thoughtful investments in new revenue opportunities while still remaining disciplined and fiscally responsible. Now I'll turn it over to Emily Egan, our Vice President of Finance, to dive a little bit deeper into our full year numbers. Emily?