Greetings. Welcome to Posabit Systems Corporation Q2 2024 earnings conference call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. Please note, this conference is being recorded. I will now turn the conference over to your host, Oscar Dahl, Chief of Staff at Posabit. Oscar, you may begin. Thank you, operator. With me on this call are Ryan Hamlin, Chief Executive Officer, and Chelsea Bolander, Posabit's Corporate Controller. I would like to begin the call by reading the Safe Harbor statement. This statement is made pursuant to the Safe Harbor for forward-looking statements described in the Private Securities Litigation Reform Act of 1995. All statements made on this call, with the exception of historical facts, may be considered forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Although the company believes that expectations and assumptions reflected in these forward-looking statements are reasonable, it makes no assurances that such expectations will prove to have been correct. Actual results may differ materially from those expressed or implied in the forward-looking statements due to various risks and uncertainties. For discussion of such risks and uncertainties, which could cause actual results to differ from those expressed or implied in the forward-looking statements, please see risk factors detailed in the company's annual report and subsequent filed reports, as well as in other reports that the company files from time to time with SEDAR. Any forward-looking statements included in this call are made only at the date of this call. We do not undertake any obligation to update or supplement any forward-looking statements to reflect subsequent knowledge, events, or circumstances. The company will also be citing adjusted EBITDA, adjusted revenue, and adjusted gross profit in today's discussion. Adjusted revenue, adjusted gross profit, and adjusted EBITDA are non-IFRS measures used by management that do not have any prescribed meaning by IFRS and may not be comparable to similar measures presented by other companies. The company defines adjusted revenue as gross revenue minus license support revenue, plus actual re-licensing cash received as part of Posabit's licensing deals. The company defines adjusted gross profit as adjusted revenue less company cost of goods sold. The company defines adjusted EBITDA as net income or loss generated for the period as reported, before interest, taxes, depreciation, and amortization, and further adjusted to remove changes in fair values and expected credit losses, foreign exchange gains, and/or losses and impairments. The company believes these non-IFRS measures are useful metrics to evaluate its core operating performance and uses these measures to provide shareholders and others with supplemental measures of its operating performance. The company also believes that securities, analysts, investors, and other interested parties frequently use these non-IFRS measures in the evaluation of companies, many of which present similar metrics when reporting their results. We caution that adjusted revenue, adjusted gross profit, and adjusted EBITDA are not substitutes for gross revenue, gross profit, or profit or loss, respectively. Now, I would like to turn the call over to Ryan Hamlin, Chief Executive Officer. Ryan, please proceed. Thanks, Oscar, and welcome, everyone. As a reminder, all numbers that we'll be talking about today are gonna be in US dollars. Our Q2 results had several firsts for Posabit. It was the first time that we've been both Adjusted EBITDA positive, finishing the quarter with nearly $100,000 in Adjusted EBITDA profit, but we also finished the quarter with positive free cash flow, adding $200,000 more to our cash on hand. This is a very significant accomplishment for Posabit. We not only have righted the ship from the challenges over the last twelve months, but we are now growing and are cash flow positive. In Q2, we saw solid quarter-over-quarter growth across the board. Revenue was up 13%, payments revenue was up 24%, gross margin dollars were up 47%, and our overall gross margin percentage grew to a historic record of 59%, which is representative of not only the continued focus we are putting on controlling our costs, but also a nice increase in quarter-over-quarter revenue. It is important to note when looking at our year-over-year comparisons, our gross revenue decreased, but our gross margin percent increased. I bring this up so that you understand why gross revenue was higher in 2023 than it has been in 2024. In the past, in 2023 and before, we recognized both merchant fees and consumer fees in our payments revenue. In 2024, we moved to a new method of processing, which resulted in no more merchant fees, just consumer fees. In prior years, we had a much larger revenue share pass-through to the merchant to offset their fees. Thus, our COGS were much higher and our gross percentage margin was much smaller. As we go forward, a much better metric to track year-over-year improvements is to look at our gross margin dollars and gross margin percent, as opposed to just gross revenue. As mentioned above, we are laser-focused on growing our gross margin dollars and adjusted EBITDA profitability. We added $200,000 to our cash reserves, despite paying down a host of outstanding aged accounts payable, in addition to our normal Q2 payables. While we are happy we're able to add $200,000 to our reserves, we are even more pleased that we have been able to pay down our large AP balance that had accumulated over the last twelve months during more difficult times. Our internal goal is to pay off a substantial amount of our outstanding vendor debt by the end of 2023, while still maintaining free cash flow and increasing cash on hand. To reiterate, financially, as we have exited this quarter, we are in much stronger position for the present and the future. I would like to now briefly discuss a few material product releases we had in Q2. We officially launched our Posabit Pay application, our Venmo-type payment app for both in-store payments and online orders. We expect continued growth with Posabit Pay over the remainder of 2024 and into 2025. In addition to the incremental revenue that Posabit Pay will bring in, it is also another example of how we are adding redundant payment solutions into our overall offering for our merchants. We are now seeing about 50% adoption rate of all new debit payment merchants also signing up for Posabit Pay. We will continue to share more about Posabit Pay as we continue its rollout. In Q2, we also successfully launched the beta of our very own e-commerce and menu platform at about a dozen of our current point-of-sale stores. While it is still early, the feedback to date has been very positive, and we are hearing from many of our merchants that they plan to move away from their current e-com provider to the new Posabit Menus. We anticipate many more merchants will adopt our menus in Q3 and Q4, and expect about 50% of our POS base to eventually adopt our platform and move away from traditional menu providers. Our point-of-sale growth remains strong. We're gaining traction outside of our home state of Washington, specifically in Oregon, New Mexico, and Colorado. Our significant growth in the POS space over the last twelve months has had a material effect on the overall percentage of POS revenue versus payments revenue. It currently represents roughly 23% of Posabit total revenue. The POS monthly recurring cash flow is steady, predictable, and forecastable revenue source. Lastly, our point-of-sale licensing deal continues to be a great source of cash that goes straight to the bottom line. There is still an expected $12 million in cash that will be paid to Posabit over the next 24 months. With that, I'll now turn the call over to Chelsea Bolander, our Corporate Controller, for a more detailed review of our financial results. Thank you, Ryan. Total revenue was $4.3 million in the Q2 of 2024, up 13% compared to $3.8 million in the prior quarter. Adjusted revenue was $5 million in the Q1 of 2024, compared to $4.6 million in the prior quarter. We define adjusted revenue as gross revenue as reported, minus license support revenue, plus actual cash received in the current period's asset receivable for the licensing contract. Adjusted gross margin was $3 million for the Q2 of 2024, or 59% of adjusted revenue. This compares to an adjusted gross margin of $2.3 million in the prior quarter, or 50% of adjusted revenue. Adjusted EBITDA was a profit of approximately $97,000 in the Q2 of 2024, compared to an adjusted EBITDA loss of $684,000 in the prior quarter. Gross margin, as reported in the current quarter, was approximately $2.2 million, or 51% of revenue, compared with $1.5 million, or 39% of revenue in the prior quarter. The increase in gross margin percent compared to the prior quarter is primarily the result of a shift in partners used for processing at a reduced rate, coupled with increased revenue. Operating expenses were $2.8 million in the Q2 of 2024, compared to $6 million in the same period of the prior year. The primary drivers of the decrease in operating expenses were reductions in salaries and benefits, share-based compensation expense, and professional fees, coupled with a favorable foreign exchange rate. Administrative expenses were $2 million for the Q2 of 2024. The largest driver of administrative expenses are people costs. These were $1.7 million in the Q2, compared to $3 million in the prior year period. The decrease year over year is primarily driven by a reduction in headcount. Net loss was $454,000 for the Q2 of 2024. This compares with a net loss of $1.5 million in the Q2 of 2023, and a net loss last quarter in Q1 2024 of $1.9 million. Cash on hand at June 30th was approximately $1.1 million. This compares to $900,000 as of March thirtieth, 2024. Our debt balance remains low at $4.5 million of debt, consisting of an SBA loan and a five-year term loan payable in 2028. With that, I'll turn the call back to you, Ryan, for closing remarks. Thanks, Chelsea. Our focus for the next six months is simple: We want to grow our cash in the bank and increase our gross margin dollars. The goal is for Posabit to achieve long-term, sustainable profitability while executing a moderate and consistent rate of growth. As I mentioned last quarter, we are ready for rescheduling if and when it happens, but we aren't holding our breath. Just yesterday, the DEA announced it has now delayed the final public hearing to be after the election, now scheduled for December second of this year. Given this delay, it is now really anyone's guess on what will happen to rescheduling until we know the results of the November presidential election. However, we have had some great state wins of late. Ohio launched its recreational marijuana sales on August sixth, just a few weeks ago. Posabit already has three stores live and processing in Ohio. Florida is also on the ballot in November for legalization of recreational sales. They're already legal for medical sales. This would be a big boost for the industry and for Posabit. We currently operate in Florida and are live in over forty dispensaries. So if rec passes, it'll be a nice lift for Posabit in sales in that state. All right, now we're going to jump to the Q&A portion of the call. In the press release, we asked for questions to be submitted ahead of time, which I'll be answering first. That's the same format we used in prior calls. We like to do that because for those that can't make the call, they get to send in questions. And we make sure they get a chance to have their questions answered, but we also will be opening up the call at the end for any questions the callers may have. So operator, let's go ahead and start the Q&A. Certainly. At this time, we'll be conducting a question-and-answer session. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. Once again, please press star one if you wish to ask a question on today's call, and while we poll for questions, I will hand the call back to Ryan Hamlin for some pre-submitted questions. Thanks, operator, and Oscar, I think you're gonna ask the pre-canned questions. Go for it. That would be the investors. Can you speak a little bit about the results of the share consolidation that was described as part of the annual shareholder meeting and in the information circular? Yes, had this question. Most of you, and hopefully all of you, voted on your proxy, but we had something on the ballot, which would allow us to do a basically a reverse stock split. And the reason being is that, you know, a lot of investors look at stocks like ours right now, that's, you know, pretty low, unfortunately, as a kind of a penny stock. And so to create more visibility and more investor eyeballs on our stock, we may choose to do a reverse split and increase the price. Another reason that we might do this is if we're looking to uplist to a bigger exchange, like the TSX, or even as maybe a potential merger, that it makes business sense to do a reverse split. I will say nothing's planned to do any of that today, but we wanted to vote on it so that it is an available tool for us in the next twelve months, if we need to do that. Because it does require shareholder approval, we wanted to have it as part of the annual meeting. All right, next question. Why does the company feel it's not important to be updating the market and investors outside of, just earnings calls? We definitely think it's important. It's not. We're not being intentionally quiet. We have been pretty heads down, though, and I think if you have been watching our finances and our stock over the last twelve months, you understand that that was probably the best use of time for us, is to focus in on our business, execute, and get our position, you know, back to where, frankly, it is today, where we had the ability today to announce positive cash flow and just a little bit of profitability. Yes, you will hear a little bit more from us as we have more product releases, but to be honest, our last twelve months has just been a lot of focus on just getting back on track to where we know the company needs to be. Has the board considered a stock buyback, and why have insiders not bought more stock when the price is so low? Yeah, we're definitely not considering a stock buyback. I think, you know, that is done typically by companies that have a fair amount of reserves of cash, and right now, as we just talked through, you know, we have $1.1 million. Yes, we are putting cash in the bank, which is fantastic, but to use those very valuable resources to do a buyback just doesn't make financial or business sense right now. You know, however, the other question, I think, was about insiders, and one of the things I want to make sure I educate investors about is that blackout periods for insiders. It's not just around earnings. It's also around any sort of big material events that we may be aware of as an insider. So it's not as simple as, oh, we can buy stock right after earnings. If we are working on big deals, which we have in the past, we've made acquisitions and mergers, then that's another sign where we just frankly can't be purchasing because we have that insider information. I would also remind our investors that insiders own about 40% of the company already. So, believe me, we are very invested in the future of the company, and by no means is it any sort of a sign of anything by ownership if we're not picking up additional shares. It's, we're fully in with our 40%, for sure. All right. Your investor presentation on the website is quite old. When can we expect an updated version? Yes, pretty simple answer here. Yeah, kind of embarrassed that that is so old, and we do apologize. It's going to be updated. There's, in fact, a couple of us already working on the draft, reviewing it, and you should see a new version of our investor deck up on the website in the next seven days. Great. The cannabis market and Posabit stock have been hit hard over the last twelve months. What can you say to investors to instill confidence in the company for the next year, and why is the stock price so low? Yeah. You know, we talked about this last call. Stock price has been low. You know, no one knows that. I wish I knew the answer. You know, the industry has been hit hard. I would say the entire market has, but cannabis especially, given kind of the back and forth rescheduling and safe banking. I think that hasn't helped investor confidence. I will say, you know, we are seeing more money coming into this sector now, finally. I think, you know, states like Ohio that legalize and are taking off and having great success, and all indications look like Florida is going to pass for rec. Those are all good signs of, you know, more money pouring into this space, and thus hopefully creating more investor excitement for, you know, what the future holds for this industry. You know, as far as Posabit, it's pretty straightforward. It's what I said earlier. We're really focusing in on execution, on growing our gross margin dollars, and staying profitable, and putting more cash in the bank. I mean, it's we believe, and we've always said this: If we execute and we do those things, then naturally, the good things should happen to the company and to the stock. And you know, that's just where we're at today, and we're excited for the next twelve months. We're in a much healthier position. And you know, we have great products that we just put into the market with our menus and Posabit Pay, so excited for what the next twelve months looks like for us. All right, Operator, we'll send it back to you for any, anyone who has questions on the line. Perfect. Thank you. And once again, it is star one if you wish to ask a question on the lines today. We did have a question come from the phone lines. It's coming from James Baglanis. James is a private investor. James, your line is live. All right. Thanks for taking my question. Hey, James. I just wanted to start by saying, and this is the first time we could say this in a while, just a really impressive, just a great quarter overall. I think it's just the execution since the October setbacks has just really, really impressed me. I mean, your gross profit has gone up from $1 million a quarter to kind of the $3 million you reported. So I guess, just as I think about kind of coming out of the recovery, getting back to kind of business as usual, how do I think about the trajectory of kind of the growth of the business going forward? Because I guess run rate last quarter was $9 million of adjusted gross profit, now it's $12 million. I know you'll provide that disclosure going forward. Yeah. But just how do I think about that, you know, going forward? Yeah. Well, thanks, James. Appreciate you always as an investor, and also thanks for recognizing that. Yes, we've we really have hunkered down and focused in on the business and our costs and, you know, and growing. Yeah, I mean, as I look out over the next twelve months, I think, you know, we saw a really nice growth between Q1 and Q2, and a lot of that was, you know, getting our payments business back in order. I think I won't say it's a surprise, because I think our POS is a fantastic product, and we have had great success with it. But if there is kind of a surprise coming out of it, is just the amount of new point of sale subscribers that are coming on board. And the reason that that's super important is that not only is that a customer that is a set of recurring revenue, because those typically are, you know, year to multiyear deals, but it also gives us a relationship that we can then sell our payments to. And so as that shift has happened, and it's pretty drastic in the last 12 months, of just the sheer number of people that were signing up, I was just looking at our stats just for the state of Washington, and I think, we'll process well over $1 billion in sales through our POS, and I think we now have something like 28 or 29 of the top 30 stores in Washington alone. So, I think as you look out, you're gonna see, yes, payment growth, but I would, you know, let our investors know that the POS growth is the thing that really has been excellent and will continue to go. And as that goes and grows, then I would expect our payments to follow along, because we're gonna be pushing our payments with that business. So yeah, it's a little bit of business as usual, execute like we have, but it's also excitement about the POS growth and now with our menus coming out. Because our menus, that creates a whole new source of revenue, because now we're in the space where, you know, like, you think of Jane and Dutch and others that have menus, we now get to be in that same space and get a pull from that revenue, too. So I know we didn't talk a whole lot about menus, but next quarter you'll probably hear a lot more about it because that truly is a whole new source of revenue for us. So thanks, James. Yeah, and I have a couple other follow-ups, too. As you mentioned, the 23% of revenue that's recurring revenue, I think from the point of sale, which I- Yep ... I think, is a really interesting and probably underappreciated point. But how do I think about kind of the penetration within the base of the five hundred plus stores you have of, I guess, first, of anything that you monetize through recurring revenue, and then second, of payments penetration into that base, too? Because just thinking about the different growth levers even before you add in the additional customers. Yeah. So if you look at, and you said it right, 23% of our revenue is from the POS. When we look at that POS base, you know, unfortunately, I'd love to say 95% of those customers use our payments. It's about 50%, in fact, it's just a shade below 50%, use our payments in our POS. There's two main reasons for that. One is, in the state of Washington, for some reason, the ATMs are just something that owners love. It's, you know, Washington being the second state that legalized, ATMs were the first real source of, you know, making sure that people had cash to pay. And so we've had a more difficult time selling payments in Washington. So it's unfortunate, because Washington is our strongest POS market. What we are seeing is as we venture outside of Washington and into new markets, for example, like New Mexico, our hit rate is much better. So you're getting a much better payments to POS kind of percent. So kind of the long answer to your question is, you know, we want to watch both that percent of recurring revenue, that 23% grow, but we also want to see the percent of POS merchants using our payments grow, too. Because that, obviously, in the long run, is gonna have a big effect on revenue, but it's also gonna have a big effect when legalization eventually happens, because now you have a much more secure customer relationship with a point-of-sale customer versus with just a payments customer. Yeah, that, that makes sense. I guess just it's, it's interesting, you know, last year, 2023, your guidance was for $12-14 million gross profit. You've now returned to this kind of run rate level, and I expect pretty considerable growth from here. The stock is at $0.09 versus $0.60-$0.70 last year, and it's just, it, I don't know how to make it make sense. Yeah, I don't either, James. I do think... I mean, my hope is, I mean, I think we signaled that things were improving in Q1, and now we're coming out, and we're showing those results. So yeah, the hope is that- Yeah ... through these results, people are paying attention, and they're seeing that, yeah, that we're turning this thing around and that the stock is certainly depressed, in my mind. Yeah. Well, that's certainly clear to me. But thanks so much for taking my question. Appreciate it. Thanks, James. Appreciate it, buddy. Thank you. There were no other questions in queue at this time, and that does conclude our conference today. You may disconnect your lines at this time. Thank you for your participation.