Earnings call transcript: Surgepays Q4 2024 sees stock surge despite EPS miss

Surgepays Inc. (SURG) reported a mixed performance for Q4 2024, with revenues surpassing forecasts but earnings per share (EPS) falling short. The company’s stock reacted positively, jumping 107.25% in aftermarket trading to $2.86, driven by strong revenue figures and strategic initiatives. According to InvestingPro analysis, the company currently trades below its Fair Value, with a strong current ratio of 6.24 indicating solid short-term liquidity despite recent challenges.

Key Takeaways

• Revenue for 2024 was $60.9 million, exceeding the forecast of $9.02 million.
• The company reported a net loss of $45.7 million, or $2.39 per share, missing the EPS forecast of -$0.225.
• Stock price surged by 107.25% in aftermarket trading, reflecting positive investor sentiment.
• Surgepays launched new products, including the Link Up Mobile prepaid brand and eSIM capabilities.
• The company aims for over $200 million in revenue in the next 12 months.

Company Performance

Surgepays experienced a challenging year with a significant drop in total revenue from $137.1 million in 2023 to $60.9 million in 2024. However, the company’s platform service revenue grew from $11.3 million to $17.4 million, highlighting growth in specific segments. Despite the overall revenue decline, strategic product launches and network integrations indicate a focus on future growth.

Financial Highlights

• Revenue: $60.9 million in 2024, down 56% from $137.1 million in 2023.
• Platform Service Revenue: $17.4 million, up from $11.3 million in 2023.
• Net Loss: $45.7 million, or $2.39 per share.
• Cash Balance: $12.8 million, down from $23.7 million in Q3 2024.

Market Reaction

Following the earnings release, Surgepays’ stock price surged by 107.25% to $2.86 in aftermarket trading. This significant increase reflects investor confidence in the company’s future prospects, despite the earnings miss. The stock’s movement contrasts with its 52-week high of $4.38 and low of $1.049, indicating a volatile trading environment. With a beta of 1.46, the stock shows higher volatility than the broader market, while year-to-date returns show a decline of 22.47%.

Outlook & Guidance

Surgepays projects over $200 million in revenue for the next 12 months, starting April 1. The revenue is expected to be driven by the Link Up Mobile prepaid brand, Lifeline, wholesale MVNE services, and the point-of-sale platform. Analyst consensus from InvestingPro shows mixed sentiment, with price targets ranging from $3.00 to $8.50, suggesting significant potential upside despite current challenges. Get access to detailed analyst forecasts and the comprehensive Pro Research Report covering SURG and 1,400+ other US stocks. The company aims to be cash flow positive by the end of 2025, focusing on high-margin states and channels.

Executive Commentary

CEO Brian Cox emphasized the company’s strategic investments, stating, "We’ve built the platform, we’ve made the investment, now comes the return." He also highlighted the challenge of managing growth and cash flow, saying, "One of our biggest challenges is going to be to ride and control the growth, stay focused, stay under control, manage the cash flow as we grow."

Risks and Challenges

• The significant net loss and cash flow challenges could impact future operations.
• The transition from the ACP federal funding program may affect customer retention.
• Competition in the prepaid and government-subsidized wireless markets remains intense.
• Economic conditions could influence consumer demand in target markets.
• Execution risks associated with new product launches and market expansions.

Q&A

During the earnings call, analysts questioned the company’s SIM card strategy and distribution, economic outlook for target markets, and transition strategy for previous ACP customers. Executives provided insights into margin profiles across different service channels, emphasizing the focus on high-margin states and channels.

Full transcript - Surgepays Inc (SURG) Q4 2024:

Conference Operator: Please note this conference is being recorded.

I will now turn the conference over to your host, Mike McCormack, Investor Relations at SurgeBase. Mike, you may begin.

Mike McCormack, Investor Relations, SurgeBase: Thank you, operator, and good afternoon, everyone. Welcome to the SurgeBase fourth quarter twenty twenty four earnings webcast and conference call. On the call today from SurgePay are Brian Cox, President and Chief Executive Officer and Tony Everest, Chief Financial Officer. Before we begin, I’d like to remind everyone 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 SurgeBase 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 events that occur after this call. Copies of today’s press release are accessible on Surgepay’s Investor Relations website, ir.surgepay.com. In addition, SurgePay’s Form 10 ks for the year ended 12/31/2024 is also available on the SurgePay’s Investor Relations website. With that, I’ll turn the call over to Brian.

Brian Cox, President and Chief Executive Officer, SurgeBase: Thank you, Mike. Good afternoon, everyone. Thank you for joining us. Today, we will cover our 2024 results, but more importantly, I want to focus on where we’re going and why we’re confident. Investments over the last couple of years have positioned Surge Pace for the most significant revenue acceleration in our history with a clear path to sustainable positive cash flow in the next twelve months.

From August 2021 through April 2024, we capitalized on the federally funded Affordable Connectivity Program or ACP. During that period, we generated over $250,000,000 in revenue, acquired more than 285,000 wireless subscribers and built a retail distribution network of nearly 9,000 convenience and community stores nationwide. At the same time, we fortified our balance sheet, not just to sustain that momentum, but to build for what comes next. And make no mistake, we believe we have built and positioned our company for this next bigger and greater phase. Even with the advent and sunset of ACP, our mission hasn’t changed.

Connecting and serving underserved communities where they live, shop and work. The ACP experience sharpens two truths. First, seize opportunities. Second, never rely on a single revenue stream. Today, we’re a more efficient and diversified company and we’re entering a period when the revenue opportunity far exceeds what we generated previously.

Let’s talk about how. SurgePay operates across two primary segments, wireless and our point of sale POS software platform. On the wireless side, we are a mobile virtual network operator or MVNO operating across three key channels. Link Up Mobile is our prepaid brand, Torch Wireless is our government subsidized offering and Wholesale Airtime providing wireless access to third party companies through our MVNE platform. Link Up Mobile is now launching nationwide and we expect to share more updates soon as growth accelerates.

Torch Wireless supported by the Lifeline program continues to enroll new customers daily. When ACP ended, we chose to self fund this transition, not only to preserve connectivity for our customers, but to retain the base we built. This was both a responsible move and a strategic one. And we’ve unlocked an entirely new revenue engine as a mobile virtual network enabler, an MVNE. Thanks to our AT and T partnership, we can now provide wireless infrastructure, billing, provisioning and SIMS to other wireless companies who don’t have direct carrier access.

These wholesale relationships are highly profitable and scale with minimal incremental costs. We expect this to be a significant cash flow driver. Our point of sale software platform is the core of our retail distribution and a major differentiator. Thousands of stores nationwide already use it for top ups and product activations. Our top up platform saw over 300% revenue growth from Q1 to Q4 in 2024.

That’s not just strong revenue, it’s activation readiness. Every store joining our POS platform becomes a distribution point for LinkUp Mobile. The synergy between wireless and POS is the power of our model. It’s a self reinforcing ecosystem that we believe no competitor in our space can replicate. We’re not just in wireless, we’re not just in fintech, we are a platform built for underserved communities, built to scale and built for growth.

In November, we announced a multi year agreement with AT and T providing our customers with full access to the nation’s largest wireless network, four gs LTE and five gs coverage coast to coast. This has been a decade long goal. I’m proud to share that the integration is complete. We launched April 1. Our soft launch in March exceeded expectations, over 30,000 SIMs deployed, 200,000 more SIMs just arrived and another 250,000 SIMs are already on order.

Based on current demand, we expect to ship 250,000 to 300,000 SIMs per month moving forward. We’ve strengthened our leadership team to drive this growth. Mark Garner was promoted to EVP, brings nearly thirty years of telecom experience to managing our software platforms. Alison Seiler, now VP of Sales is executing across direct, partner and reseller channels. Our infrastructure, operations and software stack are now in place.

Now we scale. Tony will take you through the 2024 numbers in a moment. Looking ahead, we expect Q1 of twenty twenty five revenue to track closely with Q4 twenty twenty four. But starting in Q2, we turn the corner. We expect over $200,000,000 in revenue over the next twelve months.

And with this ramp, we expect to exit 2025 cash flow positive and entering 2026 with momentum. With that, I will turn it over to Tony.

Tony Everest, Chief Financial Officer, SurgeBase: Thank you, Brian, and good afternoon, everyone. I will begin my overview of our 2024 financial results. In 2024, we reported revenues of $60,900,000 compared to $137,100,000 for the same period in 2023, representing a decrease of 56%. The decrease was primarily due to the shutdown of the ACP federal funding, which ceased as of June 2024. In addition, we received no revenues from our lead generation services in 2024 and have discontinued that business as of 12/31/2024.

Our platform service revenue growth was robust generating $17,400,000 in 2024 compared to $11,300,000 in 2023. This increase is a direct result of our new sales director hired earlier in the year. Gross loss was $14,300,000 in 2024 versus a $35,600,000 gross profit in 2023 due to the shutdown of the ACP federal funding and our strategic decision to utilize our strong balance sheet to protect our previous ACP subscriber base and distribution network while we transition the base over to either a non subsidized MVNO business model, Link Up Mobile or into another subsidized program, Lifeline. Additionally, the de emphasis of our lead generation business resulted in lower gross profits in that segment as well. SG and A expenses increased by 57% year over year.

The increase was primarily due to additional non cash stock compensation for management. This stock compensation relates to vesting of restricted share awards granted via employment agreements signed in late twenty twenty three. We also had additional expenses for contractor and consultant fees. The company continued to engage several contractors to overhaul the financial platform to allow for the conversion to a tablet based transaction at the store level from the outdated Verifone terminal. The company also engaged with consultants to provide advisory services specifically in the area of investment relations to identify opportunities to increase our shareholder value.

Loss from operations was $41,800,000 in 2024 compared to $18,900,000 profit in 2023. Our reported net loss and loss per share were $45,700,000 and $2,390,000 negative per share. Our loss and loss per share were adversely impacted primarily by the ending of the federally funded ACP. Turning to the balance sheet liquidity and cash flow, our cash, cash equivalents and investment balances as of 12/31/2024 were collectively $12,800,000 compared to $23,700,000 at the end of the third quarter. Our cash from operations was $21,300,000 use in 2024 versus a $10,300,000 source in 2023, a large negative swing due to the winding down of the federally funded ACP and our continued servicing of the subscribers for the fourth quarter of twenty twenty four.

The accounts receivable decreased by $3,000,000 at 12/31/2024 from $9,500,000 at the end of twenty twenty three. Given our cash balance and capital structure, our cash allocation priority is in financing the transition of our subscribers to either LinkUp mobile or Lifeline and the continued emphasis of establishing our LinkUp mobile brand. I will now pass the call back to Brian for some closing remarks.

Brian Cox, President and Chief Executive Officer, SurgeBase: Thank you, Tony. I’ve never been more confident in the Surge Pace team, our strategy and the value we’re building for shareholders. We’ve built the platform, we’ve made the investment, now comes the return. Thank you so much for your time today. We will now open the call to questions.

Operator?

Conference Operator: Thank you. And the first question today is coming from Kunal Madhukar from Water Tower Research. Kunal, your line is live.

Kunal Madhukar, Analyst, Water Tower Research: Great. Thank you for taking my questions. A couple if I could. One, basically just on the SIM card itself and the SIM card orders that you have already placed. Wanted to get a sense of like when is it that you place the orders?

How soon does it get delivered? And does it have to be physically present in the stores for you to be able to convert subscribers or potential customers into subscribers?

Brian Cox, President and Chief Executive Officer, SurgeBase: Yes. Good question. The SIM cards are, let’s just say historically, completely the activation is completely dependent on the SIM card up until April 1. We’ve added a new capability now. One of the things that our guys have been working really hard on in the integration with AT and T And one of the other benefits of going direct is to be able to do eSIMs, where you can bypass the actual physical SIM card for newer phones and the network is able to connect directly to device without SIMs.

But you’re right, the SIMs need to be in the stores and that’s why we refer to the soft launch last month of getting in 30,000 SIMs, getting them out there and that was at the request of AT and T. We both wanted to test and pressure test both sides of the platform, their platform and network and our platform. We got those out. The 200,000 came in last week. Those are being triaged out and really more throttled and parsed out to folks because the demand was higher than 200,000.

So we’ve got our management team making the decisions on where those go. And then another PO for 250,000. So whether it’s a convenience store, wireless store, whether it’s in the hands of our fulfillment center sending out direct orders to customers, whether it be on Lifeline or LinkUp. Your activation is dependent on the SIM. And so you can almost indirectly kind of poor man’s math look at the SIM orders as representative of backfilling and fulfilling and replacing as activations happen.

Kunal Madhukar, Analyst, Water Tower Research: Thanks. So effectively, one could assume that when you’re talking about 250,000 to 300,000 SIMs that you expect to order on a monthly basis to be probably a reflection of the gross adds that you expect for Link Up Mobile?

Brian Cox, President and Chief Executive Officer, SurgeBase: Yes, across the three channels and we’ve looked this up and down. I hope to give some updates here soon as we start to see how this shakes out for the wholesale channel, the MB and E channel as we talked about. That’s actually gaining a tremendous amount of momentum. And by the way, these companies who will access the network through us, that’s what we’ve done for the past ten years. That’s the way we’ve never my team has never had a direct carrier relationship.

So you would be surprised most of the MVNOs you see out there are actually sub MVNOs. There’s not a whole lot of people that have direct access. So you could look at that, the $250,000 to $300,000 yes and know that those are going to the three channels. They’re going out to link up mobile distributors and link up mobile customers. Those are being allocated to lifeline customers and those are being allocated to third parties for their activations through our interconnectivity on the AT and T network.

Kunal Madhukar, Analyst, Water Tower Research: Great. Thank you. And one last one before I let you go. The $200,000,000 over $200,000,000 of revenue that you’re talking about for the next twelve months, is that from 2Q25 through 1Q twenty six or is that for 2025? Hello?

Tony Everest, Chief Financial Officer, SurgeBase: I’ll answer the question. It is for $12,000,000.

Brian Cox, President and Chief Executive Officer, SurgeBase: Hey guys, sorry about that. No, sorry about that guys. I, you know what, I was reeling off a phenomenal answer. It was almost poetic. And you guys, and it can’t be recreated.

Sorry about that. I had tapped mute on the device here. But, no, the way I would look at that is we don’t get to choose when we were able to go full throttle on the AT and T network. Obviously, when you’re dealing with somewhat of a trillion dollar company, we’re on their timeline. And so if you look at it as April 1, that’s the full launch of everything we’ve been putting together over the last few years, the millions of dollars of development, all the backbones, building the team, building the distribution.

So you could look at that, that will not be 2025, that will be starting April 1.

Kunal Madhukar, Analyst, Water Tower Research: Great. Thank you so much.

Conference Operator: Thank you. The next question will be from Anya Soderstrom from Sidoti. Anya, your line is live.

Anya Soderstrom, Analyst, Sidoti: Hi. Thank you for taking my question and congrats on the progress here. It looks like you have a lot of exciting things going on. I’m just curious about the SIM card. Can you talk about the economics behind these and sort of the margin profile of it?

Brian Cox, President and Chief Executive Officer, SurgeBase: Sure. Would you anything specific you’d like me to focus on? Or I don’t want to just

Michael Diana, Analyst, Maxim Group: tell me what you’d like me to focus on? I’m sorry, what

Anya Soderstrom, Analyst, Sidoti: your spread will be on them in terms of gross margin.

Brian Cox, President and Chief Executive Officer, SurgeBase: Yes. Okay. And know that for example, even in link up, your various plans have different margins. The higher the plan, the higher the margin. We think the blended average on LinkUp mobile, which is our prepaid brand, we’re very similar to the ACP.

You’re going to be anywhere from $8 to $15 depending on the plan. So those are really good plans for us. Those are definitely some meat on the bone there. Very excited about that. And that’s we’ve got that allocating about 37% of that $200,000,000 if you wanted to just make some notes there.

On the lifeline side of things, various states, we’re going to start focusing on the states that have additional money. There’s some states out there that have again similar to the ACP world of that $12 to $13 a month. We’re going to pinpoint our focus on those states. So that would be about the same as ACP as well. You’re going to be looking at about 24% of the $200,000,000 through there.

On the wholesale MV and E, the goal is to make a buck or 2 per subscriber per month. Again, that’s there’s no cost to us. We’re purely providing access. We’re wholesaling to other people. That’s why that’s really exciting to me being able to make money off other folks’ sweat.

You’re going to be looking at about somewhere around 13% there. And then the rest of the percentage that goes toward that top up, you’ve got your Clearline, some other ancillary channels that will hopefully be kick started this year. And then the top up is going to be around 24%. That’s the third party transactions, doing top ups and reloads for all of our competitors in the prepaid wireless world.

Anya Soderstrom, Analyst, Sidoti: Okay. Thank you. And then in terms of your sort of revenue target for the next twelve months, How should we think about the composition for that? Is that a majority from SIM cards or what else are you expecting to contribute to that?

Brian Cox, President and Chief Executive Officer, SurgeBase: The majority of it will be from the wireless segment. Let me do some quick math here. Over 50% of that will be from our wireless and our most profitable highest margin products that will come from Link Up mobile prepaid and from the Lifeline. You’re looking at about 60% of that coming directly from those two. You’ll have another 13% coming from the wholesale side, still on the wireless, still relating to SIM cards, but that would sum up the wireless segment.

Looking at around 25% to 26% in the lower margin point of sale platform transactions, but the point of sale transaction is critical to us being able to do activations. That’s what makes us so unique is we’re able to use our own platform to do our own transactions and our own activations and our own payments, everything closed loop with our platforms.

Anya Soderstrom, Analyst, Sidoti: Okay. And it seems that you partnered up with a couple of companies here in terms of rolling that out. How many more opportunities are there? How many of these companies are there out there that you could partner up with?

Brian Cox, President and Chief Executive Officer, SurgeBase: See, this is what gets exciting. And this is why my team as a whole is almost walking on air right now. And let me create a little bit of the back story and then answer your question. We’ve got three or four people on our team right now who have started from scratch companies that launched MBNOs, other MBNOs. It’s always been the other MBNO on strictly top up platforms.

Matter of fact, we were just having a conversation a little while ago where there’s three people on our team who’ve built 10,000,000 plus a month, 10,000,000 plus a month in revenue top up businesses independent of each other at the same time. We know different people. You put all that together, there’s a lot of people that our team has helped over the years, a lot of master agents. You think about the country and then you branch that into master agent territorial agents and they have sub agents. And ultimately those sub agents go down to the people that actually go pull the doors and call them the stores, kind of that traditional distribution model.

There’s distributors that we have downrange on our hit list, if you will, that we haven’t even talked to yet because we want to get 300,000, four hundred thousand subscribers under our belt first to make sure that we’ve got all the tools. All the tools, there’s still some development going on that will allow us to talk to the biggest distributors in the country. I’ll give you example, eSIM that I just mentioned. That’s a very important thing because a lot of people in the prepaid business now, it’s not the $50 phone that you see. A lot of folks have Galaxies, iPhones and they need the ability to do eSIM.

You’ve got number portability. One of the biggest changes in the prepaid industry over the past five or six years, now there was a period of time where people wanted to change their number for various reasons. Now people want to keep their number for all the 2FA and the other things that are really important to keep your number. It’s become more of an identity for our customer base. So number portability is important.

Also device compatibility lookup. Now that we’re direct with AT and T, they have certain criteria needs to be approved or certified AT and T phone. It can’t be a $40 piece of junk. It won’t activate. And most all of these tools that I just mentioned are significant time and investment into those tools and we’ve got those now.

So those will enable us to go talk to more people than we’ve already talked to Anjit. I mean, it’s exciting. As a matter of fact, I think our one of our biggest challenges is going to be to ride and control the growth, stay focused, stay under control, manage the cash flow as we grow and be able to maximize and monetize the opportunities.

Conference Operator: Thank you. The next question will be from Ed Woo from Ascendiant Capital. Ed, your line is live.

Ed Woo, Analyst, Ascendiant Capital: Yes. Congratulations on all the progress you made this year. My question is, you guys have a very unique relationship with the working class. What did you guys hear in terms of the economic outlook? How are they doing?

And how will you think that that will help or hurt your businesses? Thank you.

Brian Cox, President and Chief Executive Officer, SurgeBase: No, Ed. Hey, good. Thanks for the question. Our market, I’ve just said for those of you that are new to surge page, most of our team has been in this specific market. Let’s just call it the overlooked market, the underserved, the third of our country.

It’s still going to be the same market no matter what happens with GDP or tariffs or other things. Now obviously if gas skyrockets or other macroeconomic things happen, it affects them. But what we have found is when things are tight, that’s when people subconsciously and consciously look for value. Otherwise, when things are great and everything is just flowing, you’re not really paying attention to saving that dollar. It has a different value when there’s extra dollars.

But when it’s tight, that’s when you are more willing to make a change, Change your cell phone vendor, change your your, your number if need be, change over to a different carrier if you’re a store, if you’re an, you know, you’re a convenience store. I’ve never taken wireless payments before, but you know what? I could use a couple extra hundred bucks a month. Yeah, let me try this. Let me try it, bring it in.

You know, some of the in store marketing, let’s try that. So I think it’s not only from our actual consumer, if you will, look at it as a subscriber and the people who are on our network, on our wireless network, our customers. The store owners, the bodega owners, the, that community store entrepreneur, that’s a client. That’s what’s really unique about our model. And they’re in the same community, they’re in the same neighborhoods, they fit together.

So I think it gives us a really, really unique opportunity to make that cold door handle a little warmer when we’re coming in to help the store owner, the client and allowing him to help the customer, the folks living in his neighborhood.

Ed Woo, Analyst, Ascendiant Capital: Great. Well, thanks for answering my questions and I wish you guys good luck this year. Thank you.

Brian Cox, President and Chief Executive Officer, SurgeBase: Thanks, Ed.

Conference Operator: Thank you. The next question will be from Michael Diana from Maxim Group. Michael, your line is live.

Michael Diana, Analyst, Maxim Group: Okay. Thank you. Hey, Brian. First of all, just to clarify, when you were talking about the percentages of each program, 37%, twenty four %, thirteen %, that was a percentage of your $200,000,000 of projected revenue. Is that right or wrong?

Yes, you’re correct. Okay, good. Okay. Then you exited ACP with about 280,000 customers who are obviously your most likely targets. I understand you’re going after much bigger base than that.

But the strategy for those two eighty, I mean, you want to sign them all link up and not Torch, but somehow you can’t afford link up. Have you gone after the more likely Torch people yet or you’re just waiting for April 1 to just hit everyone and try to get them on link up?

Brian Cox, President and Chief Executive Officer, SurgeBase: No, we actually were able to convert about a third of those over to Lifeline. One of the challenges that we had on getting a much higher number than that was keeping in mind Lifeline has to do with voice and talking and requires a smartphone for Lifeline is literally the old Reagan program, verbal communication. We had a percentage of our customers that had tablets that were very difficult to get a hold of. So we’ve already made the run. We that’s if you look at the expense in Q4 specifically, a majority of that expense was covering the airtime for the customers as we worked really hard at our team, every communication mechanism that we could do to reach out to them.

So we were pretty happy with what we were able to get over to Lifeline, but those are no longer on our network. We didn’t want to carry the expense any further. So we salvaged what we could from that and now we’re looking forward.

Michael Diana, Analyst, Maxim Group: Okay. That was sort of my next question. So the $280,000 you’ve converted roughly one third to lifeline and you’re not supporting the rest of them now. Is that right?

Brian Cox, President and Chief Executive Officer, SurgeBase: You’re correct.

Michael Diana, Analyst, Maxim Group: Okay. So they’re going to be your first call though for LinkUp, right? The ones that aren’t on Lifeline?

Brian Cox, President and Chief Executive Officer, SurgeBase: Any customer that we have to date, we’re always going to incentivize referrals. So yes, we’ll constantly use that as a growth channel.

Michael Diana, Analyst, Maxim Group: Right. Okay. And last quarter, you’re talking about a much lower margin for Torch, but I guess you’re saying state by state, the margin varies and you’re just focused on the higher margin states. Is that the idea?

Brian Cox, President and Chief Executive Officer, SurgeBase: I think a good way to word it as we peeled the onion back and we looked at the opportunities, the margins with Link Up were so significant and knowing that we don’t have $100,000,000 in the bank to just slam the gas in all three channels, it made sense for us to focus our revenue where we get the highest return, but also we don’t want to do this for twenty years. We want to get it now. I mean, I’m impatient. We’ve been revenue fasting for eight months. This is not our team’s normal MO.

So what we did was let’s not the Lifeline program is a great program and we’ve already built a significant platform for enrolling customers compliantly, all the federal guidelines. Let’s focus on the states that have higher margins. Let’s put this out there in the states where the it’s not just $9.25 but where it’s $15 16 dollars where it’s $26 give or take. So that’s where you hear the bigger margin. We’re just going to put the money where we get the most bang for the buck.

And it’s a scenario where we could actually grow bigger numbers faster. And what’s unique about these models, Michael, is the link up model is prepaid. And I think this is important for everybody to as you’re visualizing this. Prepaid, we get paid upfront. It’s prepaid.

Linkup, prepaid. Customers pay upfront, then we pay in arrears for the airtime. So you have that counterbalance with your lifeline where we provide the service, we file to the federal government what we’ve done and then we get paid thirty days later. So there’s a juggle triage that you have to do with cash flow to minimize that cost per acquisition dip, but to make sure that you can realize the margins there in Lifeline, which are good. And it’s also a great way to differentiate from other prepaid wireless companies.

When we can offer a convenience store owner the ability to do activations, but also to give service away every time someone pulls out that SNAP EBT Food Snap card. It’s a differentiator for us. So we’re going to look to maximize that and that’s the thought process that went into these projections.

Michael Diana, Analyst, Maxim Group: Okay, thanks. And then on your platform services, your top up. So in 2023, you made $11,000,000 dollars doing that and in 2024, ’17 million dollars But that’s I take it that’s before you really started or about to ramp up. Is that right?

Brian Cox, President and Chief Executive Officer, SurgeBase: The if you were looking at month over month, that top up services continued to fall during 2024 until we put things together and started growing. As I was saying earlier, growing it with the anticipation of the coming link up mobile activations. That was the trigger, the catalyst that allowed us to get this in front of master agents who then went and got stores. Yes. So 2024 continued to dip, but then it significantly started skewing up in Q3 and Q4 in anticipation of the link up mobile.

Yes, it’s almost like that was the sales pitch of it. Hey, we have this coming. You have to be on our network to be able to activate. Why not go ahead and do it now?

Michael Diana, Analyst, Maxim Group: Okay, great. Okay. Thanks a lot, Brian. Thank you, Michael.

Conference Operator: Thank you. This concludes today’s Q and A session and it also concludes today’s conference. You may disconnect your lines at this time. Thank you for your participation.

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