Qyou Media Inc.

Good afternoon and welcome to QU Media's fourth quarter and fiscal year 2022 conference call. As a reminder, this call is being recorded and all participants are in a listen-only mode. We will open the call for question and answers following the presentation. On the call today are QU's co-founder and CEO, Kurt Marvis, and CFO, Kevin Williams. The company would like to remind everyone that various remarks about future expectations, plans, and prospects constitute forward-looking statements for purposes of safe harbor provisions under the Private Security Litigations Reform Act of 1995. QU cautions that these forward-looking statements are subject to risks and uncertainties that may cause their actual results to differ materially from those indicated, including risks described in the company's filings with the SEC. Any forward-looking statements made at this conference call speak only as of today's date, Monday, May 1st, 2023, and QU does not intend to update any of these forward-looking statements to reflect events or circumstances that occur after today. A replay of today's call will be available on QU's website at www.qumedia.com. With that, I'd like to turn the call over to QU Media's co-founder and CEO, Mr. Kirk Marvis. Mr. Marvis, please go ahead.

Great. Thanks very much, Latonya. I'd like to welcome all of our QU Media followers and investors to the call, and happy May Day to everyone. I'm Kurt Marvis. I'm the CEO and co-founder of QU Media. And as she said, joining me on the call today, we have our CFO, Kevin Williams. We're excited today to share with you the results that we just published for the quarter ended December 31st, 2022, which also marked the end of our 2022 fiscal year. Kevin and I will take you through some of the financial highlights and then share with you some of the activities that that have driven really the strong business growth along with some of the key strategies and goals we have for 2023. At the end of this review, we'll open up for questions. Before I begin, I want to point out to those that review our notes to financials and our MDA that is filed on CDER that there can be a little bit of confusion due to the change in our fiscal year end to December 31st, 2022, or now equal to a calendar year end. Previously, our fiscal year ended on June 30. For purposes of clarity, both on this call and in our press release, we are comparing the year-over-year results for the calendar year 2021 and 2022, and we will continue to report and compare results on that basis and on the basis of our new fiscal year. At the same time, we will compare year-over-year quarter to the same quarter one year ago. meaning the period of October 1st, 2021 to December 31st, 2021, is being compared to the year-over-year results of those same dates in 2022. Again, the MD&A and notes to financials can be helpful in seeing this in more detail as desired by investors. As our previous fiscal year ended on June 30th, there can be considerable confusion in comparing year-over-year financials that are not in the same monthly or quarterly time frame. you'll see if you look at the notes to financials that there's a significant reference in them to the fiscal year that ended as of June 30th, 2021, as well as in the MDNA. Again, the CEEDAR filings can help clarify all that. And frankly, given the powerful revenue growth that we've experienced over the last two years, it only makes our results appear massively more impressive when we go all the way back to compare it against the June 30 year end. So nevertheless, We think we're still pretty happy and thrilled with what we're reporting, given the timeframes that we're talking about for our new fiscal year. So now on to that financial news that was just published. Today, May 1st, we are reporting that Q4 2022 marked the highest quarter of revenue in company history, and fiscal 2022 was the highest revenue year in company history. We recorded revenue of $7.8 million in Q4, a year-over-year quarterly increase of $2,221,342, or 40%. For the 12 months ended December 31st, 2022, as compared to the same period last year, we have recorded total revenue of $27,169,584, representing an overall year-over-year revenue increase of $14,035,030 or 107%. We're obviously very proud of these results, particularly in a market environment where the emphasis on growth needed to be kept in check somewhat in the second half of 2022 and continuing into the current timeframe. This sentiment and commitment continues as currently the markets we all know are demanding a more strident focus on shorter term positive cash flow operating efficiency and profitability. Year over year adjusted EBITDA for the 12 months ended December 31st, 2022 also improved by $938,650 or 24%, which is particularly encouraging given the significant investments we made in 2022 into launching new content, new products and new channels. While we did not provide any formal guidance for 2022, We had set an internal goal for the year of approximately $28 million in total revenue. We fell slightly below this at $27.2 million, which is a function of really two main factors. The first is the lack of closing of our MaximTech Digital Ventures acquisition, which was delayed until Q1 2023, along with the decision to back off on certain top-line revenue-generating marketing activities, that initially drive a larger bottom line loss before you make the turn to more profitable spend against revenue. As I've previously noted, we are working hard to straddle that fine line between rapid and even exponential growth in top line revenue with the need to get an operating business that is cash flow positive. This is a daily push and pull process across all of our business units and requires certain sacrifices to be made in the speed with which we would like to drive more products into the market, to which we'd like to make more creative acquisitions, and overall take advantage of the significant market growth and audience scale that we now experience. This is almost always in competition with significantly more highly financed competitors. This is something we will continue to monitor and work with going forward. And to some extent, the overall health of the capital markets, which obviously we have no control over, will also affect our strategy and path forward. I'll be speaking more about our acquisition of Maxim Tech Digital Ventures in 2023 in a bit, along with go-forward plans there that include what's happening after the launch of our first product with Maxim Tech, QGames Mela, that we announced last Wednesday. But before I get to that, I want to turn the call over to our CFO, Kevin Williams, to give you all a few more financial details. So over to you, Kevin.

Thanks, Kurt. Before Kurt speaks a little bit more about the business, I wanted to pass on just a few more important financial details that we believe investors will be interested in. The company concluded the quarter ended December 31st, 2022 with cash of $3,510,951 compared to the prior quarter end September 30th of $3,077,769. The increase in cash is due to the small capital raise that we did. at the end of November in Q4 offset by the cash that we used in operating activities and investments in new products and initiatives. Cash used in operating activities for the three months ended December 31st, 2022 was $1,871,858 compared to the cash used in operating activities for the three months ended December 31st, 2021 of $1,032,624. The increase in cash used is primarily from the increase in trade accounts receivable of $2.8 million year-on-year, driven from the revenue growth of the business, which is offset by trade accounts payable. Cash used in operating activities for the 12 months ended December 31, 2022, was $4,845,669, compared to the cash used in operating activities for the 12 months ended June 30th. 2021 of $6,314,537. The decrease in cash used represents the improvement in EBITDA for the business and the continued push around what Kurt mentioned earlier around getting to cash flow positive. I also think it's really important for investors to understand the decisions that we made concerning the timing and the reasoning behind those decisions to take a significant non-cash write-down of our goodwill related to the chatterbox acquisition. Goodwill arose from the acquisition which reflected the benefits attributable to the synergies, the potential revenue growth and future market development. The Goodwill is tested for impairment annually as at December 31st or more frequently if the events or the changes in circumstances indicate they may be impaired. The macroeconomic environment became increasingly uncertain characterized by rising inflation and the growing risk of recession, which has put some pressure on profit margins in the business. In addition, there was a significant decline in the overall company share price from August 31st, 2021, which resulted in Chatterbox's carrying value being greater than its current market enterprise value. As the Chatterbox division had actual results that fell short of previous estimates and an outlook that was a little less robust We took a non-cash goodwill impairment charge of $3.3 million that was recorded in the three months ended December 31st, 2022. Partially offsetting that is a gain on the contingent consideration that we'd had recorded. The contingent consideration fair value is based on the present value of the estimated likely obligations. During the period ended December 31st, 2022, the company recorded a gain on the re-measurement of contingent consideration of $1,005,000 in 292. This is a result from the company shorted the previous estimates of profit margin and the less robust outlook from the macroeconomic environment. As at December 31st, 2022, the fair value of the contingent consideration was $994,197. Coming back to revenue, the company only had one customer that represented over 10% of the company's revenue in this past fiscal year, which is two less than the prior year. Even more importantly, this customer only represented 13% of the company's revenue versus the prior year. when the customers over 10% accounted for 40% of revenue in the prior year. So this broadening of our revenue base is a testament to the number of new advertising partners that have been brought on board over the course of this fiscal year. As a company, we continue to push forward into 2023 with a keen eye on the goal that Kurt mentioned earlier and being cashflow positive in 2023. Thanks back, back over to you, Kurt.