Q1 2024 SurgePays Inc Earnings Call

Speaker Change: [music].

Yeah.

Okay.

Operator: Greetings and welcome to the SurgePays Q1 2024 earnings call. At this time, all participants are in a listen-only mode. A brief question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star and then zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Gwynne Cullinan. Thank you.

Speaker Change: Greetings and welcome to the search page Q1, 2020 full earnings.

Speaker Change: At this time all participants are in a listen only mode.

Speaker Change: A brief question and answer session will follow the formal presentation.

Speaker Change: If anyone should require operator assistance during the conference. Please press Star then zero on your telephone keypad.

Speaker Change: As a reminder, this conference is being recorded it.

Speaker Change: It is now my pleasure to introduce your host Quinn Cullinan, Thank you, you're making but maybe.

Gwynne Cullinan: Thank you, Operator, and good afternoon, everyone. Welcome to the SurgePays First Quarter 2024 Earnings Webcast and Conference Call. Today's date is May 13, 2024, and on the call today from SurgePays are Brian Cox, President and Chief Executive Officer, and Tony Evers, Chief Finance 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 statement.

Quinn Cullinan: Thank you operator, and good afternoon, everyone welcome to the search page first quarter 'twenty 'twenty four earnings webcast and conference call. Today's date is May 13, 2024 and beyond.

Gwynne Cullinan: For a discussion of such risks and uncertainties, please see SurgePays' 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. In addition, SurgePay's Form 10-Q for the quarter ended March 31st, 2024, will also be available on SurgePay's Investor Relations website. And now, I'd like to turn the call over to President and Chief Executive Officer Brian Thompson.

Quinn Cullinan: The call today from search Taser, Brian Cox.

Speaker Change: Chief Executive Officer, and Tony Ebers, Chief Financial Officer, before we begin I'd like to remind everyone that this call may contain forward looking statements.

Speaker Change: Are defined under the private Securities Litigation Reform Act of 1995.

Speaker Change: These statements are subject to certain risks and uncertainties that could cause actual results to differ materially from those expressed in forward looking statements for a discussion of such risks and uncertainties. Please see <unk> most recent filings with the SEC.

Speaker Change: All forward looking statements made today reflect our current expectations only and.

Speaker Change: 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 search days Investor Relations website.

Speaker Change: In addition search page Form 10-Q for the quarter ended March 31, 2024 will also be available on church fees Investor Relations website, and now I'd like to turn the call over to our President and Chief Executive Officer Bryan Cox.

Bryan Cox: Thanks Quinn.

Brian Cox: First, I would like to thank our shareholders and those interested in SurgePays for joining the call. As we have expanded and continue to expand our audience, I'd like to give a brief overview of who we are, what we do, and our target market. Our core mission at SurgePays is to provide financial technology and prepaid wireless services to the underbanked and underserved populations at the grassroots level where they live and shop. Studies have shown that the underbanked do most of their financial transactions at the trusted local convenience store closest to their home.

Bryan Cox: First I would like to thank our shareholders and those interested in search tastes for joining the call.

Bryan Cox: As we have expanded and continue expanding our audience I'd like to give a brief overview of who we are what we do and our target market.

Bryan Cox: Our core mission at search page is to provide financial technology and prepaid wireless services to the Underbanked and underserved populations at the grassroots level, where they live and shop.

Bryan Cox: Studies have shown that the underbanked do most of their financial transactions and the trusted local convenience store closest to their homes.

Brian Cox: SurgePay's technology-layered platform empowers clerks at these convenience stores to provide a suite of prepaid wireless and financial products to underbanked customers at the register. Before we dive into Q1 results, let's address the 800-pound gorilla. We are currently in a complicated environment, pending government approval to continue the funding of ACP, the Affordable Connectivity Program. The ACP funding provision made it to the floor by being attached to the FAA Reauthorization Act. So it's likely it could come to a vote with Rip and Replace, another program, or be attached to another bill. We could know in a few weeks.

Bryan Cox: Search page technology layered platform empowers clerks at these convenience stores to provide a suite of prepaid wireless and financial products to underbanked customers at the register.

Speaker Change: Before we dive into Q1 results, let's address the 800 pound gorilla.

Speaker Change: We are currently in a complicated environment pending government approval of continuing the funding of ACP the affordable connectivity program.

Speaker Change: The ACP funding provision made it to the floor by being attached to the FAA reauthorization.

Speaker Change: It's likely it could come to a boat with rip and replace another program or be attached to another bill.

Speaker Change: We could know in a few weeks.

Brian Cox: We are hopeful that ACP passes, but we aren't waiting around for approval. Three months ago, I challenged my team to make a plan to replace or duplicate all ACP revenue within 12 months. I'm thrilled to announce that I believe that they have not only met this challenge but exceeded it with the successful rollout of our prepaid wireless company LinkUp Mobile combined with ramping up our legacy prepaid wireless top-up business. Strategic hires, new technology, and other corporate initiatives have put us in a great position.

We are hopeful ACP passes, but we arent waiting around for approval.

Speaker Change: Three months ago I challenged my team to make a plan to replace or duplicate all ACP revenue within 12 months.

Speaker Change: I'm thrilled to announce that I believe that they have not only met this challenge, but exceeded it with the successful rollout of our prepaid wireless company linked up mobile combined with ramping up our legacy prepaid wireless pop up business.

Speaker Change: Strategic hires new technology, and other corporate initiatives have put us in a great position.

Brian Cox: Our team has put together a comprehensive strategic plan that we are confident will enable us to grow our SurgePays nationwide network, which is a product-agnostic delivery system to the underbanked and underserved, utilizing convenience stores as the points of distribution. If the ACP is funded, we will be in a fantastic situation immediately.

Speaker Change: Our team has put together a comprehensive strategic plan that we are confident will enable us to grow our surge taste nationwide network, which is a product agnostic delivery system to the underbanked and underserved utilizing convenience stores as the points of distribution.

Speaker Change: If the a C T as funded we will be initiating tastic situation immediately.

Brian Cox: If the ACP is not funded, I expect us not only to just replace our current ACP revenue but to exceed it in 12 months with the rollout and scaling of our prepaid wireless company, LinkUp Mobile, utilizing our own distribution platform, SurgePays. As an example of the traction we've accomplished, we now have signed over nine master nationwide dealers for link-up, distribution, and prepaid top-up business. We believe the combination of our own MB&O prepaid wireless company and the TopUp platform is compelling longstanding distribution businesses to switch to us.

Speaker Change: If the ACP is not funded I expect us not only to just replace our current ACP revenue, but exceed it in 12 months with the rollout and scaling of our prepaid wireless company wake up mobile utilizing our own distribution platform surged pace.

Speaker Change: As an example of the traction we've accomplished we now have signed over nine master nationwide dealers for the linked up distribution and prepaid top up business we.

Speaker Change: We believe the combination of our own M. BMO prepaid wireless company in the top up platform is compelling longstanding distribution business to switch to us.

Brian Cox: We will help those companies roll out our program into wireless dealers, convenience stores, and bodegas. It bears emphasizing that the timing of this rollout and expected revenue growth should happen independently of ACP and is a direct result of our team's execution. Touching on our financial results for the quarter, overall revenues were affected by our decision last year to shift focus away from Logics IQ. This effectively eliminated the $3.2 million of revenue that Logics IQ contributed in the first quarter of 2023.

Speaker Change: We will help those companies rollout our program into wireless dealers convenience stores and bodegas.

It bears emphasizing that the timing of this rollout and expected revenue growth should happen independently of ACP and is a direct result of our team's execution.

Brian Cox: However, it allowed our team to be completely focused on verticals aligned with our profitable and scalable business model, despite the recent quarterly loss in lead generation revenue. We believe our new focus will benefit the company in the long term. Our Mobile Virtual Network Operator, or MVNO, wireless revenue increased from $28.7 million in the first quarter of 2023 to $28.9 million in the first quarter of 2024. Gross profit increased 6% to $8.2 million, compared to $7.7 million in the year-ago period.

Speaker Change: Touching on our financial results for the quarter.

Speaker Change: Overall revenues were affected by our decision last year to shift focus away from logic side Q.

Speaker Change: This effectively eliminated the $3 2 million of revenue that logic side Q contributed in the first quarter of 2023. However, it allowed our team to be completely focused on verticals aligned with our profitable and scalable business model.

Speaker Change: Despite the recent quarterly loss in lead generation revenue.

Speaker Change: We believe our new focus will benefit the company in the long term.

Speaker Change: Our mobile virtual network, operator, or M. D N O wireless revenue increased from $28 7 million in the first quarter of 2023 to $28 9 million in the first quarter of 2024.

Speaker Change: Gross profit increased 6% to $8 2 million compared to $7.7 million in the year ago period, and gross margin increased about 4% to 26%.

Brian Cox: And gross margin increased about 4% to 26%. I'm looking for big things and big revenue coming from our team's future effort and execution. Whether or not the ACP is funded, we are confident we can continue to build the largest distribution network of underbanked products and services utilizing convenience stores as the points of distribution with or without ACP. If the ACP is funded, we plan to expand our ACP customer base with the use of our base of stores and other mechanisms in place. I'd like to emphasize this point.

Speaker Change: I'm looking for big things and big revenue coming from our team's future effort and execution.

Speaker Change: Whether or not the ACP is funded we are confident we can continue to build the largest distribution network of underbanked products and services utilizing convenient stores as the points of distribution with or without ACP.

Speaker Change: If the ACP is funded we plan to expand our ACP customer base with the use of our base of stores and other mechanisms in place.

Speaker Change: I'd like to emphasize this point.

Brian Cox: Our business plan never had the word ACP in it. Our team has been relentlessly working for well over a year on the cornerstone of our business, our prepaid wireless brand, LinkUp Mobile, and our fintech platform, SurgePays, which represents our distribution, integrations with carriers, endless APIs, and partners, and development highlight what the team has accomplished. Our wireless and fintech products work in synergy and, when combined, represent an offering never seen in our industry.

Speaker Change: Our business plan never had the word a C T and <unk>.

Speaker Change: Our team has been relentlessly working for well over a year on the cornerstone of our business our prepaid wireless brand, we've got mobile and our Fintech platform surged pace, which represents our distribution.

Integrations with carriers in let's say P eyes and to partners.

Speaker Change: And development highlight what the team has accomplished.

Speaker Change: Wireless and Fintech products work in synergy and when combined represent an offering never seen in our industry.

Brian Cox: Whether or not the ACP is funded, we will look to aggressively increase revenue in LinkUp Mobile and our prepaid platform transactions through strategic distribution partnerships, organic sales, key hires, and, as opportunities arise, complementary acquisitions that are synergistic and accretive to our business model. Keep in mind that if ACP is not funded, millions of current ACP customers left in the lurch will be looking for a new prepaid wireless company to replace their subsidized service.

Speaker Change: Whether or not the ACP is funded we will look to aggressively increase revenue and link up mobile and our prepaid platform transactions through strategic distribution partnerships organic sales key hires and those opportunities arise complementary acquisitions that are synergistic and <unk>.

Speaker Change: Accretive to our business model.

Speaker Change: Keep in mind that if HCP is not funded millions of current ACP customers left in the lurch, we'll be looking for a new prepaid wireless company to replace their subsidized service.

Brian Cox: It is our plan to leverage our relationship with our existing ACP base to convert them to low-cost value plans while offering aggressive promotions to the convenience stores and wireless dealers who are frontline access to those utilizing all other ACP companies. We think this will give us the upper hand in converting many ACP customers into LinkUp Mobile customers. In any scenario, we believe we have the team, the product, and the distribution to be extremely successful regardless of how the ACP funding situation plays out.

Speaker Change: It is our plan to leverage our relationship with our existing ACP base to convert them to low cost value plans, while offering aggressive promotions to the convenient stores and wireless dealers, who are frontline access to those utilizing all other ACP companies.

Speaker Change: We think this will give us the upper hand, and converting many ACP customers into linked up mobile customers.

In any scenario, we believe we have the team.

Speaker Change: The products.

Speaker Change: And the distribution to be extremely successful regardless of how the ACP funding situation plays out.

Brian Cox: We have aggressive internal targets and anticipate this contributing to positive cash flow in 2024. In the meantime, as of March 31st, 2024, we had approximately $43 million in cash in the bank and are looking for accretive acquisitions. Our focus is on positive net earnings businesses that complement our model. I'll turn the call over to Tony to review our financial results before summarizing today's call. Tony? Thank you, Brian.

Speaker Change: We have aggressive internal targets and anticipate this contributing to positive cash flow in 2024.

Speaker Change: In the meantime, as of March 31st 2024, we had approximately $43 million in cash in the bank and are looking for accretive acquisitions. Our focus is on positive net earnings businesses that complement our model.

Speaker Change: I'll turn the call over to Tony to review, our financial results before summarizing today's call Tony.

Tony Evers: Thank you, Brian, and good afternoon, everyone. I will begin with an overview of the first quarter's financial results. For the first quarter, we reported revenues of $31.4 million, compared to $34.8 million in 2023, representing a decrease of 10%. The decrease was primarily due to operational changes by management in late 2023 to our lead generation services consisting of Logix IQ, with its revenues decreasing by $3.2 million. Gross profit increased 6% in the first quarter to $8.2 million compared to $7.7 million a year ago.

Tony Ebers: Thank you, Brian and good afternoon, everyone.

Tony Ebers: I'll begin my overview of the first quarter's financial results.

Tony Ebers: But the first quarter, we reported revenues of $31 4 million compared to $34.8 million in 2023, representing a decrease of 10%.

Tony Ebers: The decrease was primarily due to the operational changes by management in late 2023 to our lead generation services, consisting of logics IQ with its revenues decreasing by $3 2 million.

Tony Ebers: Gross profit increased 6%.

Tony Ebers: And then during the first quarter to $8 2 million compared to $7 7 million in the year ago period.

Tony Evers: First quarter gross margin also showed improvement to 26% versus 22.1% in the first quarter of last year. SG&A expenses increased by 115% year-over-year. The increase was primarily due to non-cash stock compensation for management. The stock compensation relates to employment agreements signed in late 2023. We also had additional expenses for contractor and consultant fees related to the purchase of Clearline earlier this year.

Tony Ebers: First quarter gross margin also showed improvement to 26% versus 22, 1% in the first quarter of last year.

Tony Ebers: S G and <unk> expenses increased by 115% year over year.

Tony Ebers: The increase was primarily due to noncash stock compensation for management.

Tony Ebers: The stock compensation relates to employment agreement signed in late 2023.

Tony Ebers: We also had additional expenses for contractor and consulting fees related to the purchase of clear line earlier this year.

Tony Evers: Income from operations was $1.8 million during the first quarter, compared to $4.6 million in the year-ago period. Net income for the first quarter was $1.2 million, or a gain of $0.07 per share, compared to $4.5 million, or $0.32 per share, in the prior year quarter. Our reported net income and EPS were $1.2 million and $0.07 per share. Our income and earnings per share were adversely impacted by non-cash expenses in the quarter, primarily related to non-cash compensation to executives based on the employment agreement.

Tony Ebers: Income from operations was $1 8 million during the first quarter compared to $4 6 million in the year ago period.

Tony Ebers: Net income for the first quarter was up was $1 $2 million or a gain of seven cents per share compared to $4 5 million or 32 cents per share in the prior year quarter.

Our reported net income and EPS were $1 2 million and seven cents per share our income and earnings per share were adversely impacted by the noncash expenses in the quarter, primarily related to noncash compensation to executives based on the employment agreements for.

Tony Evers: For a comparative purpose, first quarter 2023, adding back the $1.5 million in stock compensation in the first quarter of 2024 would have resulted in an EPS of $0.15 per share. However, EPS was also diluted by a 34% increase in shares outstanding related to the capital raise and the warrant conversions occurring in the first quarter of 2024. Turning to the balance sheet liquidity and cash flow, the cash balance as of March 31, 2024 was $42.9 million compared to $14.6 million at year-end 2023.

Tony Ebers: For comparative purposes, two quarter first quarter 2023, adding back the $1 5 million and stock compensation in the first quarter of 'twenty 'twenty four it would have resulted in an E. P. S at 15 cents per share.

Tony Ebers: EPS was also diluted by a 34% increase in shares outstanding related to the capital raise and the warrant conversions.

Tony Ebers: Conversions occurring in the first quarter of 2024.

Tony Ebers: Turning to the balance sheet liquidity and cash flow our cash balance as of March 31, 2024, It was $42 9 million compared to $14 6 million at year end 2023.

Tony Evers: The increase was attributable to both the capital raise in January of approximately $17 million and the exercise of warrants during the first quarter of 2024 of over $8 million. However, sums receivable decreased by $1.3 million from year-end 2023 to $8.3 million. The ACP stopped accepting subscribers in February of 2024. As a result, our overall receivable from the U.S. government decreased as of quarter-end. Given our strength in the financial position, cash balance, and capital structure, our cash allocation priorities focus on investing in the business and maintaining ample liquidity for future growth. I will now pass the call back to Brian for some closing remarks.

Tony Ebers: The increase was attributable to both the capital raised in January of approximately $17 million and the exercise of warrants during the first quarter of 'twenty 'twenty four of over $8 million.

Tony Ebers: It sounds receivables decreased by $1 3 million from year end 2020 328.3.

Tony Ebers: $3 million the ACP stopped accepting subscribers in February of 2024 as a result, our overall receivable from the U S government decreased as of quarter end.

Tony Ebers: Given our strengthened financial position cash balance and capital structure, our cash allocation priorities focus on investing in the business and maintaining ample liquidity for future growth.

Tony Ebers: I will now call pass the call back to Brian for some closing remarks.

Tony Ebers: Yeah.

Brian Cox: Thanks, Tony.

Brian Cox: I believe the four key components to a company's success are the team, the products, the distribution, and the funding. I believe we have assembled the best and most experienced team in the history of prepaid wireless. We have the most compelling offering in the market currently. We own our own distribution, and we have over $42 million in the bank to execute our plan. I believe SurgePays is built for success regardless of how the ACP funding situation plays out. Thank you so much for your time today. We will now open up the call to questions.

Brian Cox: I believe the four key components to our company's success or the team the products the distribution and the funding.

Brian Cox: I believe we have assembled the best and most experienced team in the history of prepaid wireless.

Brian Cox: We have the most compelling offering in the market currently.

Brian Cox: We own our own distribution.

Brian Cox: And we have over 42 million cash in the bank to execute our plan.

Brian Cox: I believe search pages built for success, regardless of how the ACP funding situation plays out.

Speaker Change: Thank you so much for your time today, we will now open up the call to questions.

Speaker Change: Operator.

Operator: Thank you. We will now be conducting a question and answer session. If you would like to ask a question, please press star and then 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press Star and then 2 if you would like to remove a question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the start key. The first question we have is from Andrew Scott of OIAS. Please go ahead.

Operator: Thank you.

Speaker Change: We'll now be conducting a question and answer session. If you would like to ask a question. Please press star and then one on your telephone keypad.

A confirmation tone will indicate your line is in the question queue.

Operator: Press Star and then T. He would like to me the question from the queue.

Operator: For participants using speaker equipment, it may be necessary to pick up your handset before pressing this talkies.

Operator: The first question we have is from Andrew Scott of IAC. Please go ahead.

Andrew Scott: Oh, hey, Brian. Hey, Tony. Uh, interesting situation, um, didn't really look like a bad quarter when

Andrew Scott: Oh, Hey, Brian Hey, Tony a interesting situation.

Andrew Scott:

Doesn't really look like a bad quarter. When you look at the 2 million non stock compensation charge.

Andrew Scott:

Andrew Scott: And you think of what's your feel on ACP I know that there's like you'd called out the big 800 pound gorilla.

Speaker Change: You guys getting any more body language out of Washington, We're seeing a lot of senators talk about it can you just I got two other quick questions, but can you give us any thoughts though.

Speaker Change: I think more you're saying.

Brian Cox: Yeah, sure, Andrew. Thank you for the question. And yeah, that's day to day. I think we all have learned more about civics in the last 30 days than we did in any classes that we took in school, for sure, because now it applies to us. You know, as we stated in the script, that they leveraged the FAA bill to get it to the floor, which makes it a lot more probable, got it out of committee, and a lot more probable now that people will have to vote on it.

Speaker Change: Yeah sure Andrew Thank you for the question and Yeah. That's a it's day to day I think we all have learned more about civics in the last 30 days than we did in any classes that we took in school for sure because now it applies to US you know as we stated in the script that they did leverage the FAA bill to get.

Speaker Change: It to the floor, which makes it a lot more probably got it out of committee and a lot more probable now that people will have to vote on it.

Brian Cox: If you Google ACP funding, you can see additional senators lining up even over the weekend. I don't want to get into too much politics, but we have been told from our advocates in Washington that it's definitely a situation where, you know, if it is funded, people want to take credit for it. So I think people like to swoop in with, you know, on the white horse in the last minutes to save the day, especially in an election year.

Speaker Change: You can Google ACP funding and you could see additional senators lining up even over the weekend.

Speaker Change: I don't want to get off into too much politics, but we've been told from our advocates in Washington, It's definitely a situation where if it is funded people want to take credit for it.

Speaker Change: So I think people like to swoop in with a you know on a white horse.

Speaker Change: In the last minute to save the day, especially in an election year and as far as body language, you know I I watch the folks that have better connectivity to Washington that we do and what I mean, as you know don't watch the dealer watch the other people at the table and when I have a spill.

Brian Cox: And as far as body language is concerned, you know, I watch the folks that have better connectivity to Washington than we do. And what I mean is, you know, don't watch the dealer. Watch the other people at the table.

Brian Cox: And when I have an SPF that was pulled off the table last week by AT&T, its original intention was to try to go snag a bunch of ACP customers that lost their service. When ACP pulled that, it was basically a promotional wholesale offer to us to go try to grab a bunch of customers. It was pulled off the table Friday because they believe ACP is funded. So that would be the body language that I would look for, the people who have a whole lot more cocktail parties in Washington than we're a part of and are normally a lot more in the know.

Speaker Change: That was pulled off the table last week by AT&T. It was original intention was to try to go snag a bunch of ACP customers that lost their service when ACP pulled that there was a basically a promotional wholesale spiff to us to go try to grab a bunch of customers. It was pulled off the table Friday because they believe.

Speaker Change: C. P is funded so that would be the body language that I would look for the people who have a whole lot more cocktail parties in Washington than they were a part of and normally a lot more in the no but that's really I mean, your guess is as good as mine, it's Washington, I mean, so there's 50 million people I saw an advocate over the weekend. So good but it's not as 23 million.

Speaker Change: Households, but it's 50 million people and it's everybody from J D. Vanska Fetterman, So you've got the extremes and everything in the middle both sides of the aisle, we're very very hopeful but again you know, we're we're not walking outside and praying to the sun everyday we're definitely execute our business model and thank goodness the timing couldn't be.

Speaker Change: For us because the launch of link up mobile with a C. P was perfectly fine we would still be launching link up mobile now that's how long it took to put that together so either way, where we're either in a phenomenal situation or were in a great situation.

Andrew Scott: All right, Brian, any more comments on LinkUp Mobile? I know it's a new division. You said some strategic hires. Is there any kind of more guidance you can give us on what you're looking to accomplish there?

Speaker Change: Hi, Brian any more comments on linkup mobile I know, it's a new division you said some strategic hires is there any kind of any more guidance you can give us on what you're looking to accomplish there.

Brian Cox: Yeah, I don't know about guidance because that's a funny word on these calls. But definitely, we didn't get into that.

Brian Cox: Yeah, I don't know about guidance because I know that's a that's a funny word on these calls, but it's definitely a we didn't get into this and let's just go and my background for those that don't know I jumped into wireless I am one of the original guidance would have been since day one.

Brian Cox: And let's just go, in my background, for those that don't know, I jumped into wireless. I am one of the original guys that have been since day one. I sold five Copperline Sealex that I owned when I saw people lining up around a convenience store, buying boost flip phones out of the trunks of cars. So, you know, we've been in wireless since day one. And the entire reason I got into wireless was to launch my own and our own prepaid wireless brand one day when I had a really compelling offer that wouldn't be an also ran. And, you know, that's a reference to, you know, horse racing. Don't just be in the races and an also ran; we wanted to be in the top. So I never really had that opportunity until now.

Brian Cox: I sold five copper lines helix that I owned when I saw people lining up around the convenience store buying boost flip phones out of the trunk of course.

So you know we've been in wireless since day, one and the entire reason I got into wireless was to launch my own and our own prepaid wireless brand one day when I had a really compelling offer that wouldn't be an also ran and you know that's a that's a reference to you know horseracing don't just being the races and also.

Brian Cox: And we wanted to be in the top three.

Brian Cox: Never never really had that opportunity until now and for those that don't know the distribution of the prepaid wireless is predicated on a couple of things primarily getting to dealers.

Brian Cox: And for those that don't know, distribution of the prepaid wireless is predicated on a couple of things, primarily getting to dealers that would be like your A++ wireless and more, you know, wireless guys. It's those resellers of prepaid wireless that are now all over the city, even in the, let's call it kind of the upper class parts. You know, they're everywhere because there are over 100 million prepaid wireless customers. And the way that these folks make money, well, they make money on the front end spiff on activating prepaid wireless customers, and then also they make a percentage of taking payments for these customers every month.

Brian Cox: That would be like your a plus plus wireless and more you know wireless guys. It's those are resellers of prepaid wireless that are now all over the city even in the let's call it kind of upper class parts of town.

Brian Cox: They're everywhere, because theres over 100 million prepaid wireless customers.

And the way that these folks make money when they make money by the front end spiff on activating prepaid wireless customers and then also they make a percentage of taking payments for these customers every month well, we never really had the right combination of both components there the ability to not only off from <unk>.

Brian Cox: Well, we never really had the right combination of both components there. The ability to not only offer them the ability to take our payments but great rates on all the competition as well, now we do, and we're head-to-head with the guys out there. The other folks who do all the payments, the third-party fintech, as they call it, the transactions for third-party wireless companies, none of those companies own their own wireless company.

Brian Cox: <unk> take our payments, but great rates on all the competition as well now we do.

Brian Cox: And where we're head to head with the guys out there the other folks who do all the payments to third party fintech as they call it.

Brian Cox: The transactions for third party wireless companies, none of those companies that own their own wireless company. So when we go head to head win that master dealer or win that storefront is debating whether they should go with search page or not we have the ability to throw a few more points on the board utilizing linkup mobile so we're not trying to for example.

Brian Cox: So when we go head to head, when that master dealer, or when that storefront is debating, you know, whether they should go with SurgePays or not, we have the ability to throw a few more points on the board utilizing LinkUp Mobile. So we're not trying to, for example, negotiate over a quarter of a point on Verizon prepaid, and then we'll get your business. Because now we can just say, hey, you know what? We own this product. We have huge margins that are very similar to ACP. Absolutely, we'll give you 10% to take the payment for us, sir.

Brian Cox: Hempel to negotiate over a quarter of a point on Verizon prepaid and then we'll get your business because now we can just say hey, you know we own this product with huge margins that are very similar to ACP, absolutely will give you 10% to take the payment processor. So that's that's kind of the process and that's the phase one is how we're rolling out and so far.

Brian Cox: So that's kind of the process, and that's phase one of how we're rolling out. And so far, this is the most excited I've been since I got my first SELEC approval in Tennessee in 2005. This is so fun. This is so much fun. We've got a great team. We've got great technology. And head-to-head, we win. I like to fight. And we win. We're winning! And I think that as the year progresses, you guys are going to start seeing winning as the point.

Brian Cox: Where I'm. This is the most excited Andrew that Ive been I think so.

Brian Cox: Since I got my first CLEC approval in Tennessee in 2005, Oh. This is this is fun. This is fun. We've got a great team, we've got great technology and head to head. We win you know I like to fight and we win we're winning and I think that you know as the year progresses, you guys are going to start seeing the winning is the.

0.2, the scoreboard.

Brian Cox: Yeah, and I'd love to see what you guys are going to do with that $43 million in cash. There's a lot you could do. I'll finish there, but I've got a couple other questions. I don't want to hog the line. Hey, don't forget, I started this company with a mattress on the floor, a dorm fridge, and a dog, and a credit card with a $10,000 limit. I definitely didn't have $43 million in the bank, but I'm still the same guy that did it.

Speaker Change: Yeah, and I'd love to see what you guys are going to do at that $43 million in cash.

Speaker Change: There's a lot to do I'll finish there, but I got a couple of other questions I don't want to hog the line.

Speaker Change: No I think you guys I don't forget I started this company with a mattress on the floor of dorm fridge and a dog.

Speaker Change: And a credit card with a 10000 dollar limit I definitely didn't have $43 million in the bank, but I'm still the same guy that did it and I've got a I've got a fantastic team now that can help me execute on so I appreciate the questions Andrew.

Speaker Change: Okay.

Speaker Change: Yes.

Ed Wu: The next question we have is from Ed Wu of Ascendian Capital Markets. Please go ahead.

Speaker Change: The next question. We have is from eight food all of a sudden didn't capital market. Please go ahead.

Ed Wu: Yeah, congratulations on the quarter and definitely managing through the ACP process. And like I said, you and a lot of people out there are rooting for this to get funded. My question is, you know, obviously, congratulations on having such a huge war chest.

Speaker Change: Yeah, congratulations on the quarter and definitely managing through are the ACP process and like I said, you and a lot of people out there are rooting for this to get funded my question is you know obviously you know congratulations on having such a huge war chest.

Ed Wu: You know, some of your recent acquisitions have been pretty minor, relatively small for technology. Do you anticipate maybe doing a major shift and maybe buying, you know, one of your competitors to expand into, you know, the MVNO space? Or will it be kind of more of the same going forward?

Capital Market: You know some of your recent acquisitions have them you know pretty minor are relatively small for technology do you anticipate maybe doing a major shift that maybe by you know one of your competitors to expand into M. D&O space or will it be kind of more of the same going forward.

Brian Cox: No, you know what, Ed, that's a fantastic question. You know, I talk with Tony, our CFO, about that exact same thing quite often. You know, we have people who send us potential acquisitions that are not necessarily on our route. They're in our neighborhood, but they're not on our route trying to accomplish what we're building.

Speaker Change: No no. That's it that's a fantastic question you know I talk with county, our CFO about that exact same thing quite often we have people who send us potential acquisitions that are not necessarily.

Speaker Change: On a route and aren't there in our neighborhood, but they're not on a route trying to accomplish of what we're building I do we do have competitors out there that I think at the right time.

Brian Cox: I do. We do have competitors out there that I think, at the right time, would be a good acquisition for us. But what I'm watching right now, with as many NDAs, contracts being executed, and known revenue of these distributors, what I'm watching, we basically have a spreadsheet that's almost like a draft board of all of our targets for master dealers, which represent, you know, tens of millions in revenue a month, targeting them, and going after these guys, and then going after these networks, and then going after some of these technology service I think when it comes to acquiring a company, If Let me try to word this as politically correct as I can.

Speaker Change: Would be a good acquisition for us but.

Speaker Change: What I'm watching right now where as many N D A's contracts being executed and known revenue of these distributors when I'm watching where we basically have a spreadsheet, it's almost like a draft board.

Speaker Change: Of all of our all of our targets for master dealers, which represent.

Speaker Change: Tens of millions in revenue a month and targeting them in going after these guys and they are going after these networks and then going after some of these technology service providers.

Speaker Change: Think when it comes to acquiring a company.

Speaker Change: Yes.

Speaker Change: Let me try to word this is politically correct because I can't.

Brian Cox: If we're going in with a compelling offer that others can't compete with, there's an argument that people may be willing to... value their company less after they've been knocked around for a few rounds. We have a tremendous amount of revenue that's low-lying fruit for us right now with our offering. So what I'd like to do, and what we're doing, is putting this behind our Link Up mobile push

If we're going in with a compelling offer that others can't compete with there is an argument that it.

Speaker Change: People may be willing to do.

Speaker Change: The value of their company last after they've been knocked around for a few rounds, we have a tremendous amount of revenue that's low lying fruit for us right now with our offering so what I'd like to do and what we're doing is putting this behind our linkup mobile purse.

Brian Cox: And then, you know, for example, I'm not going to say you buy your revenue, but it's almost like acquiring subscribers in an acquisition. If, let's say, a competitor is offering X for an activation, and we know that a master dealer is doing 10,000 activations a month for that carrier, that competitor, well, how much are they paying? Why is that master dealer working with them? What can we do to bring them

Speaker Change: And then you know for example, I'm not going to say you buy your revenue, but it's almost like acquiring subscribers in an acquisition.

Speaker Change: Let's say a competitor is offering X for Activations and we know that a master dealer is doing 10000 activations per month for that carrier that competitor well how much are they paying wires that master dealer working with them what can we do to bring them to us and then if maybe we pay them.

Brian Cox: And then, maybe we pay them a couple of bucks more for the activation, maybe we give them a residual kicker. Maybe we give them access to me and other people and make them feel more like a part. You know, they've got input. It's more of a little bit of a cooperative attack.

Speaker Change: A couple of Bucks more for the activation, maybe it would give them a residual kicker maybe we give them access to me and other people and make them feel more apart you know they've got input it's more of a little bit of a co op attack, but whatever it is we have the flexibility to do those things. So we're paying an upfront stuff for activations.

Brian Cox: But whatever it is, we have the flexibility to do those things. So we're paying an upfront fee for activations. It's almost like we're acquiring that 10,000 activations now. And that's exactly what I gave you a real-life scenario of what I'm watching and where I'm pulled in to authorize, you know, thumbs up, let's go.

Speaker Change: It's almost like we're acquiring that 10000, Activations now and that's exactly I gave you a real life scenario of what I'm watching and we're I'm pulled in to authorize you know thumbs up let's go.

Brian Cox: And so, those are the kind of things that we're seeing right now, Ed. And I think what we're going to do, we're going to hit the market hard with LinkUp. You're going to be, you guys are going to be hearing a lot more about that here in the coming week or two.

Speaker Change: So those are the kinds of things that we're seeing right now and I think what when are we going to do we're going to hit the market hard with link up.

Speaker Change: You're gonna be you guys are going to be hearing a lot more about that here in the coming week or two you know and by the way link up mobile Dot com.

Brian Cox: And by the way, LinkUpMobile.com, we've got a few fine-tuned things left about that. But phase two is going to be our online push, but people can go ahead and check that out right now.

Speaker Change: Got a few fine tune things left about that phase two is going to be our online push.

But people can go ahead and check that out right now.

Brian Cox: And when you roll out into a market where they're really a value-centric market, and most of the people on this call are probably at our core, not what is deemed value-centric. And what I mean is, you go to the grocery store, and you add up every dollar of what goes into your cart while it hits your cart. We get things, we put them on the credit card, we've got things on automated payment.

When you rollout into our market.

Speaker Change: They're they're really a value centric market and most of the people on this call.

Speaker Change: Probably at our core not what is deemed value centric and what I mean as you go to the grocery store and you add up every dollar of what goes into your cart, while it hits your cart, we get things we'd put it on the credit card. We've got things on automated payment, there's always going to be on months enough check for the month or.

Brian Cox: There's always going to be enough checks for the month. Our market is value-oriented. So, when we can roll out a $10 plan, a $15 plan, a $25 plan, all in, you know, with no additional taxes and fees, we do feel like we've got something special. And so, we are going to push that very, very hard. But again, we go out there, we knock some heads, and there are some opportunities. I will absolutely make a move on a competitor.

Speaker Change: Market is value oriented so when we can roll out a 10 dollar plan at $15 plan a $25 plan all in.

Speaker Change: There are no additional taxes and fees, we do feel like we've got something special and so we are going to push that very very hard but again, we go out there we're not we knock some heads and there's some opportunities I will absolutely make a move on a competitor.

Ed Wu: Great. Well, thank you. And I know you guys are very experienced to be able to take advantage of that. And congratulations, and good luck. Thank you.

Speaker Change: Great well, thank you and I know you guys are very well experienced to be able to take advantage of that and congratulations and good luck. Thank you.

Speaker Change: Thanks, Ed.

Curtis Shunger: The next question we have is from Curtis Shunger of Water Tower Research. Please go ahead.

Speaker Change: The next question, we have is from Curtis younger.

Curtis Younger: Well to tell her research. Please go ahead.

Curtis Shunger: Yeah, hi. Good afternoon, and congratulations on your execution in what can only be described as a challenging environment with ACP. If I could, for the help of all investors out there, could you provide maybe a little bit more on the partnerships you mentioned? You mentioned master dealers, but are these folks that are going to help you populate the convenience stores and bodegas, or do they have a more diverse distribution network themselves?

Curtis Younger: Yeah, Hi, good.

Curtis Younger: Good afternoon, and congrats on your execution in what can only be described as a challenging environment with ACP.

Curtis Younger: If I could.

Curtis Younger: With the help of all investors out there can you provide maybe a little bit more on the partnerships. You mentioned your you mentioned master dealers are these folks that are going to help you populate the convenient stores in Vegas or.

Curtis Younger: Do they have a more diverse distribution network themselves.

Brian Cox: Yeah, no, Curtis, hey, thank you for the question. That's a really good question because, you know, sometimes I guess those of us who deal with this every day can, you know, get used to it and use all the acronyms and everything else in wireless that we take for granted. The way that we're approaching the rollout is phase one is through using master dealers, or master agents, as they're called, and normally how that's set up.

Speaker Change: Yeah, no courtesy thank you for the question.

That's a really good question because you know, sometimes I guess those of US who deal with this every day.

Speaker Change: You can get used to it using all the acronyms and everything else in wireless that we take for granted.

Speaker Change: The way that we're approaching the rollout.

Speaker Change: Is phase one.

Speaker Change: Is through using master dealers or master agents as they are called and normally how that's set up.

Brian Cox: If you look at the map of a country and you have a territory that a master would be able to control, And these guys have been in this for a long time, there's an expectation that they know the activations that they're going to do.

Speaker Change: If you look at the map of the country.

Speaker Change: And you have a territory that a master would be over.

Speaker Change: And these guys have been in this a long time.

Speaker Change: There is an expectation of they know the activations that theyre going to do they are ordering their sims from the dealers and the most of the masters utilized two or three prepaid carriers.

Brian Cox: They're ordering their SIMs from the dealers, and most of the masters utilize two or three prepaid carriers. And keep in mind T-Mobile, AT&T, and Verizon; everybody has their own prepaid brand too. So you know there's usually a combination of two or three companies that they carry, and they know about how many activations they're going to do a month, which is really exciting for Tony and myself because we're about to embark on a revenue channel where we can start having a little more predictability than the ACP piece.

Speaker Change: Keep in mind also T mobile AT&T Verizon everybody has their own prepaid brand too. So there's usually a combination of two or three.

Speaker Change: The companies that they carry and they know about how many activations theyre going to do a month, which is really exciting for Tony and myself, because we're about to embark into a revenue channel, where we can start having a little more predictability than the ACP piece.

Brian Cox: You know, especially once we dig our feet in and we better understand attrition specifically geared to our product on the prepaid side with LinkUp, we're going to have a significant amount of predictability because we're going to have the SIM cards ordered by the tens of thousands from our masters, and they're going to be accountable for activating those in a certain amount of time.

Speaker Change: Especially once we dig our feed in and we better understand attrition specifically geared to our product on the prepaid side with link up.

Speaker Change: To have a significant amount of predictability because we're gonna have the Sim cards ordered by the tens of thousands from our masters and Theyre going to be accountable for activating those in a certain amount of time and theyre doing business with everything from the convenience stores that kind of have a little whinging over to the side for wireless or just.

Brian Cox: And they're doing business with everything from, you know, the convenience stores that kind of have a little wing over to the side for wireless, or just straight-up freestanding wireless stores. It's a great low-lying fruit opportunity for us and for those that don't know how our company has been put together. We have folks that have been in wireless since the first days of wireless, especially prepaid wireless. There are a lot of favors that are being called in right now. There were a lot of pats on the back. There were a lot of rekindling phone calls because we've got the product now. You know, we're very, very proud of it. Our team is very, very proud of it.

Speaker Change: Straight up freestanding wireless stores.

Speaker Change: It's a great.

Speaker Change: Low lying fruit opportunity for us and for those that don't know how our company has been put together.

Speaker Change: We have folks that have been in wireless since the first days of wireless, especially prepaid wireless there's a lot of favors that are being called in right now there's a lot of pats on the back there's a lot of rekindling phone calls because we've got we've got the product now.

Speaker Change: We're very very proud of and our team is very very proud of it so that master dealer approach phase one.

Brian Cox: So that master dealer approach, phase one, would be online and also putting together the piece to go straight through our existing convenience store network and as we grow our convenience stores. It's a little bit different in the convenience stores. Your volume is definitely not going to be the same number of activations, but it's a great volume. And a lot of times, those customers may be a little bit more loyal over time because that is the place they go five times a week. People don't go to a wireless dealer five times a week. So, you know, I always love the customers that come from the convenience store.

Speaker Change: Phase two would be online and also putting together the piece to go straight through our existing convenient store network and as we grow our convenience stores, it's a little bit different in the convenient store. Your volume is definitely not going to be the same number of activations, but its great volume and a lot of times those customers, maybe a little bit more.

Speaker Change: Our loyal overtime because that is the place. They go five times a week people don't go to a wireless deal or five times a week. So you know I always loved the customers that come from the convenience store space, three ironically and going back to kind of you know Edwards' question is integrating with.

Brian Cox: Phase three, ironically, and going back to kind of, you know, Ed Wu's question, is integrating with our competitors. The guys who do prepaid top-ups for everyone. They're called TSPs, technology service providers.

Speaker Change: Our competitors are.

Speaker Change: The guys, who do prepaid top ups for everyone. They're called T. S piece technology service providers and at the end of the day.

Brian Cox: And, you know, at the end of the day, you do business with your competition to get the most subscribers and to maximize your revenue that way. But that would be phase three. So that's kind of the way we look at this. And the way I would look at it is as a 30-day march. Phase one, 30 days. Next, you know, then you add phase two and then add phase three. So by Q3, we're homing on all cylinders, and we've got a much clearer picture of what we've got in this bottle of lightning and what, how, and I use the reference of, you know, putting points on the board. We're going to be able to see, you know, a little bit more predictability about where this thing is going and how fast we can ramp it up.

Speaker Change: You do business with your competition to get the most subscribers and to maximize your.

Speaker Change: Your revenue that way, but that would be the phase three so that's kind of the way we look at this and the way I would look at it as a 30 day March Phase 130 days. Next then you add phase two and then add phase III. So by Q3, we're humming on all cylinders and we've got a much clearer picture of what we've got in this.

Speaker Change: Bottle of lightning and what how I use the reference of putting points on the board, we're gonna be able to see.

Speaker Change: Little bit more predictability about where this thing is going and how fast we can ramp it up.

Curtis Shunger: Excellent. If I could follow up with a quick question about Logic's IQ. I know we've talked about it before in terms of it going into, you know, dormant mode or non-operable status, but is it, you know, is there any, I know there was a point in which you thought about divesting it. Can you give us any idea about what the kind of finality of that is, if at all?

Speaker Change: Excellent if I could a follow up with a quick question about logics IQ is oh, we've talked about it before in terms of it going into you know.

Speaker Change: Dormant mode or or or non operable status, but is it.

Speaker Change: Is there any.

Speaker Change: I know there was a point in which you thought about divesting it is it.

Speaker Change: Can you give us any idea about what the kind of finality of that is there if at all thanks.

Speaker Change: Yeah.

Brian Cox: Yeah, no, sure; I appreciate the question. It is an interesting question.

Speaker Change: Yeah, I'm not sure I. Appreciate the question. It is an interesting question and just as a side note.

Brian Cox: And just as a side note, you know, it was a little bit of a strain having even Tony at the CFO level having to wear completely different hats, dealing with prepaid underbanked customers, transactions, fintech, and wireless, and all that vernacular, and then immediately jumping into lead generation for mass tort lawsuits. I mean, I could see the stress across the company, and it was creating a scenario that just wasn't a part of my model. And to be completely honest with you, I was not a subject matter expert, and the people I was bringing on were not subject matter experts in that field. It didn't make sense to me.

Speaker Change: It was a little bit of a strange having even tony at the CFO level, having to wear completely different hats dealing with prepaid under bank and transactions and Fintech in wireless and all that monocular and then immediately jumping into lead generation for mass tort lawsuits I mean, it was I could see distress.

Speaker Change: Across the company and it was creating a scenario there just wasn't a part of my model and to be completely honest with you I was not a subject matter expert and the people I was bringing on we're not subject matter experts in that field it didn't make sense.

Brian Cox: Now, the last year of Logix IQ, when we were pushing the subsidiary, we did a partnership where we share in the outcome of a certain number of, let's just call them book cases, science-filled and delivered book cases that are pending the outcome of those cases in certain courts around the country. You know, various things, Camp Lejeune, 3M, Earbuds, some other mass tort cases out there that are waiting to see how the chips fall.

Speaker Change: Now the last year logics Ikea when we were.

Speaker Change: Pushing the subsidiary we.

Speaker Change: We did a partnership.

Speaker Change: Where we share in the outcome of a certain number of let's just call them book cases.

Speaker Change: Signed sealed and delivered book cases that are pending the outcome of those cases and certain courts around the country you know various things accomplished June three.

Speaker Change: <unk> ear buds, some other mass tort cases out there that are waiting for to see how the chips fall.

Brian Cox: We do have vested interests, and we have had that valued, you know, and that could come back from X million to X million. So we are debating whether it makes sense to divest, excuse me, divest ourselves of that because that's really almost an asset. If you will, it's not a gap asset, but to us in the real world, that would be something that has value. So we would consider it an asset, and would we go ahead and be willing to offload it at a discount just to have access to the cash?

Speaker Change: We do have vested interests.

And we have had that valuation and that could come back from X to X millions.

Speaker Change: So we are debating does it makes sense to device excuse me divest ourselves of that because that's really almost an asset. If you will find a GAAP asset but to us in the real world that would be something that has value. So we are considered an asset and where do we go ahead and be willing to offload that at a discount just to have access to the cash.

Brian Cox: I think so, but the worst-case scenario is sitting over on deck, and as those cases come to fruition over the next year, two, three, four years, then that, you know, that share, our share of the outcome of the legal fees associated with those cases would come to us. So that's where we are right now. Excellent.

Speaker Change: Think so but worst case scenario, it's setting over to the side on deck and as those cases come.

Speaker Change: Come to fruition over the next year or two or three or four years than that.

Speaker Change: Sure our share of the outcome of the legal fees associated with those cases would come to us. So that's where we are right now.

Curtis Shunger: Excellent. That's all I have for today. Thanks.

Speaker Change: Excellent.

Speaker Change: That's all I have for today.

Speaker Change: Thanks, guys.

Anja Söderström: The next question we have is from Anja Soderstrom of Doty & Co. Please go ahead.

Speaker Change: The next question we have is from Anya. So just from <unk>. Please go ahead.

Brian Cox: Hi, thank you for taking my question. So, I'm just curious, with the ACP not taking any more new sign-ups in February, and it stopped funding totally in April, how are you seeing the transition sort of trending? Is that above expectations, or...

Anya: Thank you for taking my question so.

Anya: I'm just curious whether it's a P. Yeah, not taking anymore and you sign up some temporary and it stopped funding Pauline and Paul how are you seeing that transition.

So that's trending above expectations are.

Brian Cox: You know, that's a good question. I appreciate the question, and to clarify, because we did touch on this in, I think, both the press release and the call earlier. On February 7th, they stopped, or the government stopped, allowing new enrollments. It's almost like the Obamacare open enrollment period has closed out.

Speaker Change: No. That's a good question and I appreciate the question and to clarify.

Speaker Change: Because we did touch on this.

Speaker Change: And I think both the press release and the like.

Speaker Change: Recall earlier.

Speaker Change: On February 7th they stopped or the you know the government stopped allowing new enrollments, it's almost like the Obamacare open enrollment they closed out.

Brian Cox: So, they did allow it, which I really wasn't a big fan of, but they allowed us to take customers from competitors but not bring in any new customers. I think they looked at it as a way of capping whatever their spend would be. They didn't care whether they were sending us or another ACP company the money; they just wanted to cap the money. Where it affected us, you know, was the fact that if you're pulling a customer from a competitor, the $100 credit for a tablet most likely has already been used. So that did hurt our, you know, this is called our top line revenue, you know, a hundred bucks a pop for anybody that has not used that tablet credit.

Speaker Change: So they did allow us without really wasn't a big fan of but they allowed us to take customers from competitors, but not bring in any new customers I think they looked at it as a way of capping whatever their spend would be they didn't care, whether they were sending us or another ACP company and the money. They just wanted to cap the money.

Where it affected us.

Speaker Change: How was the fact that if you're pulling a customer from a competitor.

Speaker Change: That $100 credit for a tablet most likely has already been used.

Speaker Change: That did hurt our you know this is called our topline revenue 100 Bucks a pop for anybody that is not used that tablet credit.

Brian Cox: So, you know, when you talk about expectations... This has been, I mean, again, this is not all-consuming. You know, I always want to make... 95% of my day, the word ACP never crosses my emails, texts, or lips; it's not a part of what we're building. But the time that we are spending on it is looking at competitors, and the irony is, all of our competitors, we're all collectively in advocacy groups. Because while we may go beat each other up in the street, right now, we're all looking to make sure that the program's funded so we can get back to beating each other up.

Speaker Change: So you know.

Speaker Change: When you talk about expectations.

Speaker Change: This is Ben I mean again this is not all consuming you know I always want to make.

Speaker Change: Clear, 95% of my day.

Speaker Change: A word ACP never crosses my emails text mouth, it's not a part of what we're building, but the time that we are spending on it is looking at competitors and they are at the irony of all of our competitors, we're all collectively and advocacy groups because while we may go beat each other up in the street.

Speaker Change: Right now, we're all looking to make sure that the programs funded so we can get back to beating each other up.

Brian Cox: So most companies out there are still continuing to go after customers, the ones that we talked to. They're all very hopeful. They believe that, especially in an election year, you've got bipartisanship on both sides. Not a whole lot of people are speaking out against it. I think it's just a fact that it is a new program. It's run in an efficient manner where it's technically government-subsidized but not a government program. You know, there are no people in Washington, really, that get rich off of it.

Speaker Change: So you know most companies out there.

Speaker Change: Are still continuing to go after customers.

Speaker Change: The ones that we've talked to they're they're all very helpful. They believe that especially in an election year.

Speaker Change: You know you've got bipartisan both sides not a whole lot of people are speaking out against it.

Speaker Change: Think it's just the fact that it.

Speaker Change: It is a new program.

Speaker Change: It's run in an efficient manner.

Speaker Change: It's technically government subsidized, but not a government program.

Speaker Change: There's no people in Washington are really they get rich off of it.

Brian Cox: It is truly a program of the people. And I think that's actually one of the things that's kind of helped hold this back a little bit and not pushed it forward because it doesn't have people fighting for it as advocates. But you know, I think in the next couple of weeks, from what I'm hearing, we're going to find out. I do believe, as you know, that the funding runs out at the end of this month.

Speaker Change: It is a it truly program or the people and I think that's actually one of the things that are.

Speaker Change: Kind of.

Speaker Change: Helped a hold us back a little bit and not pushed it forward because it doesn't have people fighting for it.

Speaker Change: Advocates but.

You know I think in the next couple of weeks from what I'm hearing.

Speaker Change: We're going to find out I do believe as you know that the funding runs out at the end of this month.

Brian Cox: And I think that there are a lot of people, and from what I've been told, there are a lot of people who, at the last minute, pile on to claim victory once they know the team is going to win. And it seems to be moving in that direction. I think there's a lot of momentum, even over the weekend. You've got the White House, which has essentially gotten everything they've wanted now for a couple of years. You've got the FCC. You've got the Senate. I mean, I think we're close. So, let's see.

Speaker Change: And I think that there's a lot of people and from what Ive been told there is a lot of people who at the last minute pile on to claim victory. Once they know the team is going to win.

Speaker Change: And it seems to be moving in that direction, I think theres a lot of momentum.

Speaker Change: You know even over the weekend.

Speaker Change: A lot of momentum you've got the White house, who is essentially gotten everything they want it now for a couple of years, you've got the FCC you've got the Senate I mean, I think that I think we're close so let's see.

Anja Söderström: Okay, thank you. That was helpful.

Speaker Change: Okay. Thank you that's helpful and then in terms of your breasts Megan.

Brian Cox: And then, in terms of the gross margin, That's been improved, though, thanks to those tablet sign-ups, right, rather than the in-person representatives. How should we think about that going forward? How's that rolling out?

Speaker Change: That's a that's been improved also helped by not having the sign ups rather than that in person and represent our case Uh huh, how should we think about that.

Speaker Change: So I guess, how is that rolling out.

Brian Cox: Going forward, I think, well, there again, I almost have to answer these types of questions with either or. If ACP is funded, I think you should see gross margins do well and keep that trend moving forward. If it's not, I'm going to go into absolute aggression mode to grow LinkUp mobile subscribers.

Speaker Change: Going forward I think well there again it really you know I almost have to answer these types of questions with either or.

Speaker Change: If ACP is funded.

Speaker Change: You I think you should see gross margins do well and keep that trend moving forward. If it's not I'm going to go into absolute aggression mode to grow linkup mobile subscribers. So in the short term if gross margins because we will have frontloaded spiff.

Brian Cox: In the short term, if gross margins, because we'll have front-loaded spiffs, incentives, promotions, branding, if those things pull down margins in the short run to achieve hundreds of thousands and lead up to millions of subscribers, I have no problem with that. That's one of the great things about having cash in the bank is being able to model that out and track and chart your growth trajectory to make sure that you're maximizing it. But the worst thing we could ever do, in my opinion, is focus every day on gross margin and then grow, you know, one pebble at a time. That is absolutely not why I'm here.

Speaker Change: Incentives promotions pushing.

Speaker Change: Pushing branding if those things pull down margins.

Speaker Change: Margins in the short run to achieve hundreds of thousands and leading up to millions of subscribers I have no problem with that that was one of the that's one of the great things about having cash in the bank is being able to model that out and track and chart your growth trajectory to make sure that you're maximizing that but the.

Speaker Change: Worse thing, we could ever do and my.

Speaker Change: My opinion is focus everyday on gross margin and then grow one pebble at a time that is absolutely not why I'm here.

Brian Cox: You know, I see $140 million in revenue. I'm asking my team, how do we double it? How do we double $280 million? How do we double $560 million? That's just the way I'm wired.

Speaker Change: I I I I.

Speaker Change: I see 140 million in revenue.

Speaker Change: I'm asking my team how do we double it how do we doubled to 80, how do we double 560, that's just the way I'm wired and so I think that when you look at margins not something obviously coming from the entrepreneur side of the world. It was important for me, making money is important.

Brian Cox: And so I think that when you look at margins, it's not something, obviously, coming from the entrepreneur side of the world. It was important for me. Making money is important. Absolutely. But right now, growing and getting a subscriber base to where we are profitable, regardless of whether ACP is funded or not, is definitely way higher on my priority list.

Speaker Change: Absolutely, but right now growing and getting a subscriber base to where we are profitable regardless of whether ACP is funded or not is definitely way higher on my priority list.

Anja Söderström: Okay, thank you. And one last one. Ilona, you said earlier that you expected LinkUp Mobile, in case ACP does not get refunded, that it should replace the ACP revenue. What kind of timeframe do you have on that?

Speaker Change: Okay, and one last one and.

Speaker Change: I know that you expect a lift up in mobile and in case ACP does not get refunded that that should replace the ACP brands when you what kind of.

Speaker Change: Timeframe do you have on that.

Brian Cox: We have SIM cards going out now. That's a good question. We have SIM cards going out now, and we have contracts and APIs being finalized. You gave me an opportunity to add maybe a little bit more color to a question I answered earlier.

Speaker Change: We have a sim cards going out now.

Speaker Change: It's a good question, we have Sim cards going out now.

We have contracts in API is being finalized and let me know.

Speaker Change: You gave me an opportunity to add maybe a little bit more color to the question I answered earlier, let's say that you you have 100 wireless dealers that you distribute to.

Brian Cox: Let's say that you have 100 wireless dealers that you distribute to, and you sign the deal with me today. You're coming exclusively for LinkUp Mobile. We got a deal. We high five, now we're in business together. Because you also are supplying them with the ability to top up.

Speaker Change: And you sign the deal with me today.

Speaker Change: To your coming exclusively for Linkup mobile we got a deal we hired five we're now we're in business together.

Speaker Change: Because you also are supplying them with the ability to top up.

Brian Cox: Now your IT guys are going to work with the API and integrate it into our platform so that we can process all of those transactions seamlessly: activations, payments, and then also payments for, like I said, our competitors. So we're watching these contracts and APIs. Essentially, I'm redlining my development and IT guys right now. I think I'm working them to the bone. They're definitely burning the midnight oil to keep up with what the sales team is doing.

Speaker Change: Your I T guys are going to work to API and integrate into our platform.

Speaker Change: So that we can process all of those transactions seamlessly activations payments.

Speaker Change: And then also payments for like I said our competitors.

Speaker Change: So we're watching these contracts and API essentially redlining My my development guys right now I think I'm working them to the bone.

Speaker Change: They are definitely burning the midnight oil to keep up with what the sales team is doing.

Brian Cox: But I think that, and by the way, we're gonna start reporting some of these milestones. I'm really excited. We did a little bit of that early on in ACP, and I don't wanna get stuck in a rut of creating an expectation, but I do wanna start reporting some milestones, like, hey, we just hit 50,000. Hey, we just hit 100,000. We do look forward to starting showing people what we can do in this non-subsidized, non-ACP market.

Speaker Change: But I think that you know and by the way we're going to start reporting some of these milestones I'm really excited you know we did a little bit of that early on in ACP and I don't want to get stuck in a rut of creating an expectation, but I do want to start reporting some milestones that hey, we just said 50000, Hey, we had 100000, we do look forward to start showing people what.

Speaker Change: We can do in this non subsidized non.

Speaker Change: Non ICP market, so I think like I said.

Brian Cox: So I think, like I said, look for some news over the next week or two as we formally roll this out, and then I think you're going to see some really special stuff. Okay, thank you. That will solve it for me.

Speaker Change: Look for some news over the next week or two as we formally roll this out.

Speaker Change: And then I think youre going to see some really special things.

Anja Söderström: Okay, thank you. That will help me.

Speaker Change: Okay. Thank you do something for me.

Speaker Change: Thank you Donna.

Brian Cox: We have come to the end of the question and answer session, and I will turn the phone call back over to Brian Cox for any closing remarks. All right, thanks.

Speaker Change: We have come to the end of the question and answer session and I would have to tender.

Speaker Change: Back over to Bryan Cox for any closing remarks.

Brian Cox: Hi, thanks again to everyone that joined the call. We appreciate you, appreciate you being a shareholder, and look forward to the next quarter. Bye-bye. Ladies and gentlemen.

Bryan Cox: Alright, Thanks again for everyone that joined the call. We appreciate you appreciate you being a shareholder and look forward to next quarter.

Bryan Cox: Good day Bye bye.

Operator: Ladies and gentlemen, that concludes this conference. Thank you for joining us. You may now disconnect your lines. Thank you for watching!

Speaker Change: Ladies and gentlemen that concludes this conference. Thank you for joining US you may now disconnect your lines.

Speaker Change: [music].