XS Financial Inc.

Welcome to the Excess Financial, Inc. First Quarter 2023 Results Conference Call. As a reminder, all participants are in listen-only mode and the conference is being recorded. After the presentation, there will be an opportunity to ask questions. To join the question queue, you may press star then 1 on your telephone keypad. Should you need assistance during the conference call, you may signal an operator by pressing star then 0 I would now like to turn the conference over to David Kivetz, CEO. Please, go ahead, David.

Good afternoon, everyone, and welcome to XS Financial's first quarter 2023 earnings call. We are excited to share our financial results for the quarter with you today. I encourage everyone to visit our website at xsfinancial.com forward slash investors for the most up-to-date corporate presentations, news, and upcoming events. Our financial statements and MDNA for the quarter ended March 31st, 2023 have been filed on cdar.com. We will be taking questions at the end of the call. So please feel free to send in any questions you might have. The first quarter of 2023 was highlighted by record revenue and positive operational performance. We are focused on profitability and given the lack of available financing in cannabis and our unique vendor partnerships, we are working to maximize returns on new leases. Our focus on industry-wide recognition as a better alternative for non-dilutive CapEx and equipment financing has seen positive reinforcement throughout the quarter and subsequent to quarter end. While we continue seeing a slowdown in the cannabis market relative to prior years, our pipeline remains active with both existing and prospective customers. Our non-dilutive financing is a welcome solution as equity valuations for plant touching cannabis companies continue to see challenges. As states continue to expand from medicinal markets to adult use and new states legalize, different capital solutions are being explored from our current partners and new prospects. We believe that our competitive non-dilutive financing to purchase capex and equipment nationwide continues to see a significant runway as one of the only institutional platforms for companies within the cannabis industry, and results to date have solidified that assumption. However, given the slowdown in the market, we are exploring non-cannabis capex financing as a potential opportunity. We are in the preliminary stages of evaluating non-cannabis deals and capitalization to determine the feasibility of this effort. We have sufficient availability to fund our pipeline under our credit facility with two bank syndication partners, which has a borrowing rate of prime plus 100 basis points and was upsized to $39 million in Q4 2022. We are proud to be one of the few companies to solidify a credit facility from a commercial bank syndicate in the cannabis space, which is a testament to our underwriting capabilities, portfolio strength, and employee talent. Our current funding capacity has set us up with a long runway for scaling through 2023 and beyond. Our first quarter of 2023 continued our historically strong trends, which delivered increased revenue growth and monthly recurring customer payments. At the end of Q1, we had 189 active lease schedules compared to 174 as of the end of Q4 2022. Currently active in 15 states, we have achieved broad diversification across several existing markets, and we are ensuring that our infrastructure will support our partners wherever the market is headed. As cultivators, processors, and manufacturers seek out alternative financing solutions, our trustworthy, transparent, and reliable funding for CapEx needs is continually relevant and sought out. With that said, I would now like to turn the call over to Steven Christopherson, our CFO, who will provide more detail on our financial results for the quarter ended March 31st, 2023. Thank you, David.

I'll now walk you through the key points of our financial results in the first quarter that ended March 31st, 2023. In Q1, Access delivered another strong quarter. Our revenue was $2.8 million, representing a year-over-year increase of 121% compared to Q1 2022. Our gross receivables increased to $111.7 million compared to $47.9 million a year ago. And as David mentioned, we had 189 active leases across 16 customers as of the end of the quarter. Our operating expenses were $2.4 million compared to $1.1 million in the same quarter last year. The increase was primarily a result of a one-time non-cash expense related to our forfeited options. Our net loss for Q1 was $1.98 million, or two cents per share. Our net distributable earnings, which is a non-IFRS metric we use as a proxy for profitability, was positive $19,000 in the quarter compared to a negative $438,000 a year ago. You can find a breakdown of that calculation in our earnings press release. As of the end of the quarter, we had approximately $700,000 in cash and $12 million in availability on our line of credit. Combined with our $2.9 million in monthly receivables, the company has adequate liquidity to fund future leases. With that, I will turn the call back over to David for closing remarks.

Thank you, Stephen, for that insightful overview of our financial results. As we reflect on the past quarter, we are proud of our achievements and the progress we have made in establishing XS Financial as the leader in the CapEx finance industry. Moving forward, we are excited about the opportunities that lie ahead for our business. We remain focused on executing our growth strategy while maintaining our strong underwriting policies, risk management framework, and commitment to sustainability. I want to thank our employees, partners, and shareholders for their continued support and dedication. We look forward to delivering continued growth and value to all of our stakeholders in the years to come. Finally, I would like to thank Steven Christopherson for his time spent as CFO at XS Financial. As previously announced, Steven will be stepping down as CFO on June 1st, and we look forward to his continued involvement as an active board member of the company. Thank you all for joining us today. We will now send it back to the operator for questions.

We will now begin the question and answer session. To join the question queue, you may press star then 1 on your telephone keypad. You'll hear a tone acknowledging your request. If you're using a speakerphone, please pick up your handset before pressing any keys. To withdraw your question, please press star then 2. We'll pause for a moment as callers join the queue. Once again, if you have a question, please press star, then 1. Once again, if you have a question, please press star, then 1. Since there are no questions, this concludes the question and answer session and today's conference call. You may disconnect your lines.