Surgepays - Q2 2023

Executive Summary

• Q2 2023 delivered profitable growth: revenue $35.9M (+28% YoY), gross margin 28% (vs 8% YoY), net income $6.0M ($0.40 EPS), and EBITDA $6.4M; results tracked management’s expectation that Q2 revenue would align with Q1 ($34.8M).
• Upside drivers: ACP subscriber growth, lower device costs, and lower interest expense as debt declined; gross profit rose to $10.0M (from $2.2M YoY) and operating income to $10.9M (from a $1.9M loss YoY).
• Execution focus shifted to low-CAC in-store enrollments and new partnerships (ParichuteConnect, Boys & Girls Clubs on native lands, LeadEx ATMs), with growth expected to accelerate from late Q3 through 2H; target 13,000 stores on network by year-end and positive operating cash flow in 2023.
• Risk/controversy: July 13 8‑K rebutted allegations, asserted ACP compliance, and disclosed preliminary Q2 net income of “over $6 million,” reinforcing profitability momentum into the quarter.

What Went Well and What Went Wrong

What Went Well

• Profitability inflection sustained: “net income of $6 million and EBITDA of $6.4 million,” with gross margin expanding to 28% (from 8% YoY) on ACP scale and cost tailwinds.
• Channel expansion: signed partnerships with ParichuteConnect, Boys & Girls Clubs on native lands, and LeadEx to source ACP leads via schools, community orgs, and ATMs; management expects these to bear fruit from late Q3 onward.
• Strategic moat via convenience-store footprint and proprietary fintech/CRM; pipeline >25,000 stores and only ACP player initiating brick‑and‑mortar sign‑ups inside stores.

What Went Wrong

• Mixed operating expenses optics: SG&A rose 26% YoY (management cites one-time bonus timing dynamics across prior periods), complicating a clean YoY OpEx compare despite strong margins.
• Store-channel still early: <10% of ACP sign‑ups came via stores in Q2 as teams refine follow-up conversion for ATM and in-store leads; execution work remains.
• Competitive and regulatory overhangs: management acknowledged more ACP competition; July 13 8‑K addressed a critical report and emphasized compliance, underscoring headline risk despite strong results.

Transcript

Operator (participant)

Good day. Welcome to the SurgePays Second Quarter 2023 Earnings Conference Call. All participants will be in a listen-only mode. Should you need assistance, please signal a conference specialist by pressing star then zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on a touch-tone phone. To withdraw your question, please press star then two. Please note, this event is being recorded. I would now like to turn the conference over to Brian Prenoveau, Investor Relations. Please go ahead.

Brian Prenoveau (Managing Director of Investor Relations)

Thank you, Operator, and good afternoon, everyone. Welcome to the SurgePays second quarter 2023 earnings webcast and conference call. Today's date is August 10th 2023, and on the call today from SurgePays are Brian Cox, President and Chief Executive Officer, and Tony Evers, Chief Financial 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 statements. 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 statements to reflect the events that occur after this call.

Also, during the course of today's call, the company will be discussing one or more non-GAAP financial measures. Reconciliations of these non-GAAP financial measures to the most directly comparable GAAP measures are included in the press release we issued this afternoon. Copies of today's press release are accessible on SurgePays Investor Relations website, ir.surgepays.com. In addition, SurgePays' Form 10-Q for the quarter ended June 30th 2023, is also available on SurgePays Investor Relations website. Now I'd like to turn the call over to President and Chief Executive Officer, Brian Cox.

Brian Cox (President and CEO)

Thanks, Brian. First, I'd like to thank our shareholders and those interested in what we're building at SurgePays for joining the call. As we continue to expand our audience, I'd like to give a brief overview of who we are, what we do, and our addressable market. SurgePays brings financial and telecom products to the underbanked and underserved populations at a grassroots level where they live and shop. Our fintech platform empowers clerks at thousands of convenience stores to provide a suite of prepaid wireless and financial products to lower-income and underbanked consumers.

Our prepaid wireless companies provide service to hundreds of thousands of subscribers. With this profitable suite of underbanked products and services, we are well-positioned to grow our footprint and owner-operated convenience stores nationwide, with the goal of building the largest direct distribution network of underbanked products and services in the country.

The underbanked are almost a third of the country and do most of their financial transactions at their trusted local community store that's closest to their home. The real influencer in these neighborhoods is the clerk behind the counter. SurgePays utilizes these convenience stores as the points of distribution into these communities.

As we onboard the store to our software platform, we enable the clerk at the register to perform transactions such as prepaid wireless activation and payments, along with activating and reloading debit cards and other transactional services, with the motive of improving the daily lives of those without traditional access to banks, credit, and checking accounts. In other words, provide essential products and services people need and want. One of the motivating aspects of our business case is that our revenue is directly tied to how many essential services we provide to those who need the most.

The Affordable Connectivity Program, or ACP, has been the revenue driver for SurgePays growth the last two years. When this program was stamped into the infrastructure bill, we shifted a majority of our short-term bandwidth to growing our base of subscribers to accomplish the goals of profitability, debt reduction, and stability. ACP offers a federal subsidy for a tablet device and monthly wireless service to recipients of any income-based government benefit, such as Medicaid, Veterans Pension, Section 8, and most notably, the program historically called Food Stamps or EBT, which now goes by the name SNAP.

Several wireless companies have licenses to offer the ACP program to the public. However, we are uniquely positioned as the only ACP company with its own customer relationship management software, CRM, platform, integrated with the FCC's Accessibility Clearinghouse database and also into the AT&T and T-Mobile networks.

Further, we are the only authorized ACP company that owns one of the few prepaid transaction platforms that has a nationwide network of convenience stores. These competitive advantages paved the way for us to be the only ACP company able to initiate brick-and-mortar signups for ACP inside convenience stores. Store owners are always looking for more foot traffic and ways to create loyalty in their community. The industrial logic we applied to our platform is inescapable and so compelling that our intake team is working on a pipeline of over 25,000 stores that will soon have a SurgePays presence with a staging target of less than 12 months. Our research shows, in some areas, more than 30% of convenience stores and supermarket transactions use the SNAP EBT card. Every customer who pulls out that card is eligible for free service through ACP.

Our research also has shown each one of these households that is qualified for ACP also has, on average, three to four smartphones on another prepaid wireless company plan. With our presence in these stores where these customers shop, and the ability to pay their monthly prepaid bills at the same store, it's a fantastic launch pad for our non-ACP prepaid wireless subscriber push coming in the few months ahead of us. In this macro environment, where interest rates on store inventory lines of credit are squeezing small business profits, the profitable relationship between SurgePays and the convenience store owner/operator has created big opportunities where these owners are readily receptive to selling additional SurgePays products distributed to their store. The key phrase we focus on constantly is that a beneficial relationship with the store owner creates endless opportunities for sales.

Our developers have been working to separate us further from the pack of convenience store fintech software companies. We are now testing customer-facing LCD touchscreens at the register to promote our products, activate wireless subscribers, and create customer engagement. I'm really excited to transition into this equipment phase of what I think will be the flywheel of our business plan. This customer-facing touchscreen at the register, connected to our servers, further solidifies our roots and abilities inside the store. It provides us with a 24/7 marketing opportunity to promote our products and enable customers to enter their own information as needed for various transactions. This opens many doors down the road for us and is the next step in advancement and a part of our strategy to solidify SurgePays as the innovative market leader in our space.

Even with most of the team and developers' energy focused on growth, I'm pleased to announce that the second quarter of 2023 continues the profitability trend that we began to see at the end of 2022, delivering net income of $6 million and EBITDA of $6.4 million. This puts us over $10 million in net income for the first two quarters, with the expectation to continue this trajectory. As I mentioned in last quarter's call, the key metric is future new stores on our platform. More stores on our platform mean more wireless subscribers, more products on the shelf, more transactions over our fintech platform, and more sales for individual stores. SurgePays is now reaching beyond stores for ACP sign-ups, leveraging the workforce of new partner organizations. You might have seen some of our announcements during the quarter.

Our first partnership was with ParichuteConnect, a social impact investor looking to drive ACP sign-ups, leveraging the SurgePays platform. ParichuteConnect is an arm of a larger investment firm that is devoting time, resources, and social media platforms to raise money for worthy causes. Through ParichuteConnect, we can sign up ACP enrollees in city and state school systems, community service organizations, and public service organizations.

We recently announced that we are partnering with the Boys & Girls Clubs of America Native Services on native lands to get those eligible household populations signed up. This setup allows Boys & Girls Clubs of America Native Services representatives to leverage our platform, expanding our reach at minimal expense to SurgePays. It's through the ParichuteConnect relationship that we began working with the Boys & Girls Clubs of America Native Services. Lastly, on the partnership front, in July, we announced a new partnership with LeadEx.

This partnership allows us to communicate directly on an ATM with individuals who might qualify for the ACP through tens of thousands of LeadEx ATMs. Most of these ATMs are located in owner/operator convenience stores. In this case, if you're using an EBT card or other benefit card or reloadable debit card, you might see an ACP prompt from SurgePays for free wireless service via a full-screen ad on the ATM. At this point, we've just begun to scratch the surface of the potential means SurgePays has to drive additional subscribers and stores. As always, we're focused on managing our cash and cash flow and deploying that cash to maximize growth with discipline. We expected second quarter revenues to align with first quarter revenues, precisely what happened, but with even stronger positive cash flow.

We anticipate the full benefit of these new partnerships beginning to bear fruit toward the end of the third quarter, with growth accelerating quickly and continuing in the year's second half. We expect 13,000 stores to operate on the SurgePays network by the end of the year and see positive operating cash flow during the year. I'll turn the call over to Tony to review our financial results before summarizing today's call. Tony?

Tony Evers (CFO)

Thank you, Brian. Good afternoon, everyone. I'll begin my overview of the second quarter's financial results. For the quarter, we reported revenues of $35.9 million, compared to $28 million in the second quarter of 2022, representing an increase of 28%. The increased sales for the quarter were primarily attributable to the subscriber growth in our mobile broadband business. Gross profit increased 358% in the second quarter to $10 million, compared to $2.2 million in the year ago period. Second quarter gross margin also showed significant improvement, up to 28% versus 8% in the second quarter last year. SG&A expenses increased by 26% year-over-year. The increase was primarily driven by one-time bonuses paid to various management personnel, which were paid out in Q1 of 2022.

Income from operations was positive for the quarter at $10.9 million, compared to a loss of $1.9 million in the year ago period. Net income for the quarter was $6 million, or a gain of $0.40 per share, compared to a net loss of $973,000, or a loss of $0.08 per share last year. Of the $6 million gain, the second quarter included lower interest expense than a year ago, as our debt, overall debt has decreased significantly from that period. Turning to the balance sheet, liquidity, and cash flow. Our cash balance as of June 30 was $5.2 million, compared to $7 million at the year-end 2022. Accounts receivable have increased by $1 million from year-end 2022 to $10.3 million. Receivable is from the U.S. government for the mobile broadband subsidy.

Payment usually occurs approximately 30-60 days after a new customer is verified and signed up. 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. I will now pass the call back to Brian for closing remarks. Brian?

Brian Cox (President and CEO)

Thanks, Tony. SurgePays is now on sound financial footing with a healthy balance sheet, a great team assembled, consistent earnings and growth. We are in complete control of our own destiny and poised to create one of the largest direct distribution networks of underbanked products and services in the country, a vast market with tremendous growth potential awaits. These results have proven we can accomplish our goals with discipline and persistence while delivering positive cash flow. Thank you so much for your time today. We will now open up the call to questions. Operator?

Operator (participant)

We will now begin the question-and-answer session. To ask a question, you may press star then one on your touch-tone phone. If you're using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed, and you would like to withdraw your question, please press star then two. At this time, we will pause momentarily to assemble our roster. Our first question comes from Ed Woo with Ascendiant Capital. Please go ahead.

Ed Woo (Director of Research and Senior Analyst)

Congratulations on the quarter. With your, you know, strong track record and success, have that, you know, enticed other people to enter your market or be, you know, or any change in step up in the competition?

Brian Cox (President and CEO)

Hey, Ed, I appreciate the question. I assume you're talking about the ACP business, the line?

Ed Woo (Director of Research and Senior Analyst)

Yes, the ACP business.

Brian Cox (President and CEO)

Are you just talking about the overall business model?

Ed Woo (Director of Research and Senior Analyst)

Mainly the ACP.

Brian Cox (President and CEO)

Good question. I appreciate it. I think that it's, it's not just our strength in the ACP, but it's also what the assumption is of the longevity of the program, with Congress setting aside $80 million in awareness money last October to get more adoption into the program. Also as recently as last week, where Congress worked with the FCC to expand payments on ACP in certain rural areas of the country. I think there's the understanding now that there's, you know, the program's gonna be around, or they wouldn't be expanding the program, that they don't plan on continuing to fund, you know, in the budget each year.

I think that has brought competition, as we've talked about, and hopefully if people have picked up on it, we're using ACP as a tool to accomplish our overall business goals. You know, we never want to be labeled as just an ACP company. It's been a great product for us to expand our company and accomplish the short-term goals we've talked about. Leveraging the ACP program to accomplish our greater goal, which builds a moat, it really does, not just metaphorically, but it actually does, because us being the only ACP company that's a part of a broader software company, opens up so many different verticals and doors for us, where we're not just stacking subscribers on top of each other that really have no other value. There's no upsell, there's no roots in the community.

Using the ACP program to build relationships that's, you know, that kind of unfurl other opportunities and further our business thesis, was really the goal all along. Is there companies out there that can go pop up a tent and sign up ACP consumers? Yes. Are there companies that can do what we're doing and take millions of dollars of development and years of development and use ACP as a tool to get into convenience stores and have competition in our business use case? No.

Ed Woo (Director of Research and Senior Analyst)

Great! Well, thank you for answering my questions. I wish you guys good luck. Thank you.

Brian Cox (President and CEO)

Thanks, Ed.

Operator (participant)

Our next question comes from Michael Diana with Maxim Group. Please go ahead.

Michael Diana (Managing Director and Senior Research Analyst)

Okay. Hey, Brian. It sounds like you're really leaning into building out the convenience store network. I'd like to, to ask about a few of the things you mentioned inside this store. One being your, your LeadEx Solutions. Did you say that most of their ATMs are actually in convenience stores?

Brian Cox (President and CEO)

Yes, keeping in mind, LeadEx is, let's see, call it the independent-- I hate to use the phrase independent owner/operator, but the network, independent networks of ATMs, LeadEx is one of the providers of software to those folks that run their own territories. That wouldn't be, say, for example, like Regions, Bank of America, Wells Fargo. It's the no-name ATMs that you would find in convenience stores and grocery stores and retail stores, in these areas. They would be primarily in a convenience store, bodega-type setting.

Michael Diana (Managing Director and Senior Research Analyst)

Okay. Okay, that's great. So when someone uses the ATM, are you saying you're going to have an ad trying to introduce them to ACP?

Brian Cox (President and CEO)

Yes. One of the... and this has been a learning experience for us as well. When you put your ATM card in the machine, instantly they know what the bank is, what type of card it is. There's a lot of things that happen instantaneously. There's a grouping of categories that would be designated, that we feel would be designated as more of an underbanked. A person that obviously has some type of benefit card would fall into our category immediately. We also feel that someone that has a reloadable debit card, chances are they don't have a debit card because they don't, which means they don't have a checking account. Don't have a debit card checking account, you probably don't have credit, most likely underbanked, and most likely somebody in your household is on some income-based benefit.

Those people who are ascertained immediately when they put their card in, it's during the process of the transaction, where normally you would look at the screen and it would, you know, the transaction's processing, and it usually maybe show you a graphic of, you know, money being counted behind the scenes. You know, two good things about that. Number one, we have the attention of the folks, because of all times in a convenience store that you're focused, it's when a machine, you think it's counting your cash behind the screen. It's a great opportunity for us to, for us to have their focus and attention.

What it'll be, it'll, it'll pop up on the screen and, for example, paraphrasing, "If you or anyone in your household is on government benefits, SSI, Medicaid, you know, Veterans Pension, SNAP/EBT, you know, hit Enter." They hit Enter, they can put their telephone number in, and that immediately goes to our, our, our, let's just call them our, our white glove enrollee specialists, who will reach out and communicate with that customer now and reference the fact of what did they just, you know, they just created that engagement there, and then work to sign the customer up.

Michael Diana (Managing Director and Senior Research Analyst)

Okay, that sounds great. So that's already... That's ready to go. Is that right? It's already in place, or?

Brian Cox (President and CEO)

We're rolling that out right now. We're watching the numbers. The leads that we're seeing, we're very happy with. What we're working to fine-tune is when a consumer enters their number, what is the absolute best methodology for following up? I'll tell you, without getting way off in the weeds, at the moment we get the number, that's not the best time to reach out. There's a window of time that you don't want to wait too far, where it doesn't mean anything anymore. The reason for that is, you're standing in front of an ATM in a convenience store, you're about to get your cash.

You're not going to sit there on your phone and text back and forth and click on an enrollment form because you're going to take the cash and put it in your wallet or purse and make sure that you get to your car or the register and are able to do the, the whole purpose you're getting cash out of the ATM. We're working on the timing for follow-up. Is it the best methodology, phone call mixed with text messages, mixed, you know, how the best... We're working through that right now. You know, we, we do have this out on ATMs. I'm pleased with the number of leads that we're getting. That's going great. But I'm a, bluntly, a maniac about converting leads into sales.

A customer's qualified, they said they're qualified. They said, they raised their hand, said, "We want the service." Right now, we're just plowing through the best way to create a good protocol to get them onboarded.

Michael Diana (Managing Director and Senior Research Analyst)

Okay. Virtually every convenience store has an ATM machine. Now, the next thing you're talking about, I think, is sort of your own device that is an LCD screen. Is this something that would just that you'd have to supply, that would just relate to you?

Brian Cox (President and CEO)

Yes, we would own this equipment. This would go on the counter next to the register. To give a visual, for example, the coffee places that sometimes we go, and they flip the screen over and we overtip because they're staring at us.

Michael Diana (Managing Director and Senior Research Analyst)

Yeah.

Brian Cox (President and CEO)

It's that same technology. It's the same technology where we tip on a $4 cup of coffee, except ours would be facing out all the time. 24/7, it could be running different ads, 10-inch LCD screen running different ads for whether it be ACP, whether it be our prepaid wireless brand, that we're looking to be able to undercut TracFone and Boost Mobile and all these guys. Whatever it is, whatever products we roll out, we would be able to promote that constantly and really kind of big benefit other than allowing that consumer to carry a little bit of the burden of the transaction. For example, you know, "Michael, enter your telephone number so I can post your payment", or certain things like that. It's also the ability to control the marketing in real time.

Anybody that's ever dealt with a distribution network, and it doesn't matter what products it is, knows one of the biggest challenges is when you have a turnover in point-of-sale material, your posters, stickers, things on the door, things on the wall, and there's also competition in the store. You know, every time we put a poster up, if the beer or cigarette guys come behind us, there's a constant whoever's there last gets the space. This would be something we could control in real time from our servers instantly, and, you know, any products we introduce, we could actually promote them.

You know, I would argue, other than the focus on the ATM when it's counting your money, the other time, the single most focused in a convenience store, especially a low-income convenience store, would be at the moment you're standing there in front of the cash register, which is why all the impulse buys are usually surrounding the cash register. We're really excited about that. This has been a part of the business plan all along. I wasn't particularly planning on it being right now, but an opportunity has presented itself. You know, we, we made mention in the press release that some of the crazy macro stuff that's going on has opened doors for us before we were actually prepared to kick the doors down.

You know, we're going to take advantage of those, and that's one of the cool things about having cash flow and profitability. It enables us to make moves when they present themselves.

Michael Diana (Managing Director and Senior Research Analyst)

Okay. Now, I, I take it this strategy would depend heavily, maybe, upon the convenience store owner/operator assisting you, right? I mean, they'd have to let you put the screen there and then they could help you actually direct people's attention there, I would imagine.

Brian Cox (President and CEO)

It's actually an assistance to the owner/operator, whether they're behind the counter or an hourly clerk is.

Michael Diana (Managing Director and Senior Research Analyst)

Right.

Brian Cox (President and CEO)

What I mean is, you know, sometimes when you have a chain store, your success at that store really depends on the clerk and their... You know, if the clerk doesn't make money on every dime that goes through that register, they're not incentivized to push other products or talk to the customer, engage them. You know, "Hey, Michael, how are you doing today, man? Hey, you're on EBT. Man, let me help you take... Hey, let me help you save on your wireless bill." They don't have that engagement. They're just trying to clock in, clock out, and go home.

Having that LCD screen, promoting the products, is going to make that store owner more money, and it's also going to reduce the amount of time we have to train someone if that LCD will allow the customer to input some information. If they're inputting their number, if they're doing some type of activation, inputting their name, inputting their email address, that'll allow that clerk to be more focused on being a clerk, doing things at a convenience store that can rep things out quicker, get people in and out, and allow consumers to carry a little bit more of the burden of that transaction.

The reception so far by convenience store owners is actually very receptive, especially with the products that we're bringing in, in a crazy world where they are getting squeezed on the lines of credit for inventory, and we're presenting them with a way to make money transactionally that does not cost them out-of-pocket money. You know, every transaction, every time they take a payment, a part of that is theirs, and they've made money while putting money in the register. They don't have to come out-of-pocket and hope that things on the shelf sell when they're dealing with SurgePays. I think that's very unique. Something I can't say enough in the relationship, we're one of the few vendors that sell into the store where all of our transactions are positive for the store owner.

Michael Diana (Managing Director and Senior Research Analyst)

Yeah. No, that's all very, very interesting. If you can disclose it for, you know, competitive reasons, what percentage of your total ACP sign-ups last quarter or in the last month or whatever the appropriate period is, have come through convenience stores?

Brian Cox (President and CEO)

That's a good question, Michael. As we're phasing down the field sales, and if you want to think of it like a soundboard, where you've kind of got your treble and your bass or, you know, we're phasing things in, and we're throttling the field sales because of the cost for acquisition and other things we've talked about, competition, et cetera. I don't have that number in front of me, but I would suspect less than 10% because this has been something that we've gradually been going store by store, really watching. There's a compliance component to it, that there's a lot of other things where we have to white glove this rollout, so we've been very, very, very careful with how we've done it.

There's certain things where we look and we see shrinkage or, let's say, lost leads, which we talked about before with the ATM. That drives me nuts. I want to make sure that if somebody is qualified and they've raised their hand and said, "I want it." I wanna do everything we can, move hell and earth to get, you know, to get that customer signed up. That's one of the things that we've been working on, how to perfect it, so as we roll this out and we add these stores, and we've added salespeople. Excuse me, we've added folks here in Memphis just to try to keep up with sending the fulfillment of the point-of-sale materials, sending things out, helping train stores.

That's one of the really, I'd say, burdened areas of our company right now, is the sales intake, which is in business, that's the best part of your company to be burdened for sure. That's one of the areas where we're looking at hiring, looking at bringing folks on, and how to better bring stores on.

Michael Diana (Managing Director and Senior Research Analyst)

Okay. I think you said the target for the end of the year is 13,000 convenience stores. If you hit that target, what percentage, what part of your ACP sign-ups would you imagine would then be made through the convenience stores?

Brian Cox (President and CEO)

That's a good question. My goal would be to split it by the end of the year, 50/50. Also simultaneous with that shift, it's not just splitting what we're doing, it's to increase subscribers, but increase them through the store. You've got your field sales would remain a constant while increasing the sales per store. I'd like to have them 50/50 together, which would be a net positive subscribers, you know, more than what we're doing now. Also hand-in-hand with that, and probably one of the things I'm most excited about, which really is a part of our big, big picture valuation, is our non-ACP subscribers. We have accelerated the rollout of that. We're having weekly meetings. I've brought on gentlemen and, you know, folks who have run MVNOs or prepaid wireless companies before.

Across the board, whether it's attending events, conventions, working with other third parties, they've got the absolute green light from me to roll that out ASAP. I'm watching the branding right now, all of the, let's say, what would normally be in the startup category of a prepaid wireless company. What's unique about ours is we have the luxury of already owning all the software platforms that you would need, where you normally have to onboard with third-party developers. We already have the buying power with AT&T and T-Mobile of hundreds of thousands of subscribers. We really do have a unique competitive advantage where...

It's a, "Oh, by the way, upsell to a store that's already making money with you." Like I said, the relationship with that store owner/operator, we do have their ear. They do see us as a profit partner that's very unique, as opposed to somebody that's trying to jam inventory down their throat, and they don't have the shelf space. We're gonna utilize that and leverage it.

Michael Diana (Managing Director and Senior Research Analyst)

All right. That's all very, very interesting. Thank you, Brian.

Brian Cox (President and CEO)

Thank you, Michael. Appreciate the questions.

Operator (participant)

This concludes our question-and-answer session. I would like to turn the conference back over to Brian Cox for any closing remarks.

Brian Cox (President and CEO)

Sure. Again, I appreciate everyone for joining the call. Thank you, shareholders, and thank you for those of you who are interested in SurgePays, and look forward to talking to you next quarter. Thank you.

Operator (participant)

The conference is now concluded. Thank you for attending today's presentation. You may all now disconnect.