VerticalScope Holdings Inc. ($FORA)

Welcome to the Annual General Meeting of the Shareholders of VerticalScope Holdings Inc. Please note that the meeting is being recorded. I would like to introduce Diane Yu, Chief Legal Officer and Corporate Secretary of the company, who will provide some introductory remarks before the formal portion of this meeting. Diane, please go ahead.

Good afternoon, and welcome to the 2026 Annual General Meeting of the Shareholders of VerticalScope Holdings, Inc. My name is Diane Yu, and I am the Chief Legal Officer and Corporate Secretary of the company. Before we begin the formal proceedings, I would like to introduce the following members of our Board who are present at today's meeting. We have Robert Laidlaw, Wayne Bigby, Michael Washinushi, Cory Janssen and Neil Oliver. In addition to myself, the following members of management are present for today's meeting: Chris Goodridge, the Chief Executive Officer; and Vince Bellissimo, the Chief Financial Officer. This meeting is being held as a completely virtual meeting. The meeting will be conducted in the same manner as an in-person meeting, and our goal is to replicate the experience you would have had if we were able to come together today in-person. We would like to remind you that only registered shareholders and duly appointed proxy holders who have signed in using a control number, are able to ask questions during the meeting. Instructions on how to ask questions are on your screen. In order for us to run the meeting efficiently, the Chair will pause before calling for a vote on any matter of business to allow time for any questions on that matter of business. General questions will be addressed during the question period following the conclusion of the formal business to be conducted at the meeting and the business update. Voting at today's meeting will be conducted by online ballot for all matters. Registered holders of subordinate voting shares and multiple voting shares who we will refer to as registered shareholders for ease and their duly appointed proxy holders who have signed in using a control number may vote on the online platform with respect to each item of business once the Chair advises that the polls are open and until the Chair declares that the polls are closed. Instructions on how to vote are on your screen. Please remember that if you have already voted by proxy and you vote again during the online ballot, your online vote will revoke your previously submitted proxy. If you have already voted by proxy and do not wish to revoke your previously submitted proxy, do not vote again during the meeting. We have two matters of business to be voted on at this meeting, being the election of the directors and the reappointment and remuneration of the company's auditor for the coming year. The results of the votes on each matter will be announced prior to the close of the meeting. Each item of business requires that a majority of the votes cast by holders of subordinate voting shares and multiple voting shares voting together as a single class with each multiple voting share representing 10 votes per share and each subordinate voting share representing 1 vote per share be voted in favor in order for the resolution to pass. I will now hand the meeting over to Rob Laidlaw, our Founder and Chairman, to conduct the formal business of the meeting. Rob, please go ahead.

Thanks, Diane. Welcome all to the Annual General Meeting of the Shareholders of VerticalScope Holdings, Inc. The meeting is now called to order. In accordance with the bylaws of the company, I will preside as Chair of this meeting, and Diane Yu will act as Secretary of this meeting. I appoint Rebecca Prentice of TSX Trust Company to act as scrutineer for the meeting. In order to make the best use of our time, certain shareholders have been asked to move and second motions relating to the business to be conducted at this meeting. That is not intended in any way to limit your right to participate in this meeting. I now declare that the polls are open for voting on each item of business. The notice calling this meeting and the management information circular describing the business of the meeting have been made available to holders of subordinate voting shares and multiple voting shares of the company as of May 1, 2026. Copies of the 2025 audited annual financial statements of the company and the auditor's report thereon as well as the related management's discussion and analysis are available on the company's website and under the company's profile on SEDAR+. Accordingly, I will dispense with the reading of the notice of meeting. Prior to the commencement of this meeting, the scrutineer filed a preliminary report on attendance, and the Secretary has confirmed to me that there is a quorum of shareholders present at this meeting. Accordingly, the meeting is duly and properly constituted for the transaction of business. I direct that the confirmation of mailing of the notice of the meeting and management information circular received from the TSX Trust Company and the scrutineers' complete report on attendance be attached to the minutes of the meeting. We will now proceed with the presentation of the company's audited consolidated financial statements for the year ended December 31, 2025 and the auditor's report thereon, which are available under the company's profile on SEDAR+. I declare that the company's audited consolidated financial statements for the year ended December 31, 2025, and the auditor's report thereon have been received. The next item of business at this meeting is the election of the directors of the company. The number of directors to be elected at this meeting is 5. The management information circular contains the names and backgrounds of the 5 individuals that have been nominated by the company for election as directors until close of business of the next Annual General Meeting. I now declare the meeting open for nominations. In the interest of expediency, I will ask Diane Yu, Chief Legal Officer and Corporate Secretary of the company, to make the nominations on behalf of management of the company.

I nominate each of the persons specified in the management information circular delivered with the notice of meeting, namely Rob Laidlaw, Wayne Bigby, Cory Janssen, Michael Washinushi, Neil Oliver; to serve as directors of the company and to hold office until the close of the next Annual Meeting of Shareholders of the company or until their respective successors are duly elected or appointed.

As the company did not previously receive timely notice of any further nominations of persons for election as directors of the company as required by the advanced notice provisions of the company's bylaw #3, I declare the nominations closed. In order that a vote may be held on the matter, I request a motion that the 5 persons nominated as directors of the company be so elected.

I so move.

I second the motion.

Before I call for a vote on the nominated directors, I will pause for a moment to allow for any questions on the matter to be submitted.

I confirm that we have not received any questions relevant to this motion.

Thank you. Registered shareholders and duly appointed proxy holders who have signed in using a control number can now vote by online ballot [Voting]

I will now proceed with the next item of business and report on the votes at the conclusion of this meeting. We will now proceed with the reappointment and fixing of the remuneration of the auditor of the company. In order that a vote may be held on the matter, I request a motion that MNP LLP be reappointed as the auditor of the company until the close of the next Annual Meeting of Shareholders of the company and that the Board of Directors of the company be authorized to fix their remuneration.

I so move.

I second the motion.

Before I call for a vote on the motion, I will now pause for a moment to allow for any questions on this matter to be submitted.

I confirm that we have not received any questions relevant to this motion.

Thank you. Registered shareholders and duly appointed proxy holders who have signed in using a control number can now vote by online ballot. [Voting]

We have now dealt with all items of business, and I declare that the polls are closed for voting. I'm pleased to confirm that the scrutineer has reported to me that all matters put to a ballot have been passed with the requisite shareholder approval. Accordingly, I hereby declare the nominated directors elected, the auditors reappointed and the Board of Directors authorized to fix the auditor's remuneration. A press release will be issued forthwith following this meeting. This concludes the formal business brought before the meeting. As there's no further business that may be properly considered at this meeting, I declare the meeting to be terminated.

Thanks, Rob. Management will now present a business update that includes an overview of the market landscape and certain strategic priorities and initiatives. This presentation contains forward-looking information within the meaning of applicable securities laws. Forward-looking information is based on certain expectations and assumptions and are subject to known and unknown risks, uncertainties and other factors, which may cause actual results to differ materially from those anticipated. VerticalScope does not undertake any obligation to update forward-looking information, whether as a result of new information, future events or otherwise, except as required by law. I will now turn to Chris for the management presentation. Chris?

Thanks a lot, Diane, and thanks, everyone, for joining today. The past year brought significant change and opportunity to VerticalScope. As AI reshapes how users discover content, we move deliberately to build new sources of value for our users, customers and shareholders. Our ability to adapt and evolve as a defining strength of this company and our core operating model continues to do what it has always done, build a stronger balance sheet and create optionality for what comes next. Before we get into what's ahead, here's a look at where we stand today. Our community platform sits at the intersection of passion, AI and commerce. We build, acquire and operate enthusiast communities. And what makes them unique and increasingly valuable is that they're powered by real people sharing authentic firsthand perspectives. In a world rapidly filling with AI-generated content, authenticity is our moat. And that moat is substantial. 86 million monthly active users, over 71 million registered members, more than 2.1 billion community posts on our proprietary Fora platform. And these aren't passive page views, these are enthusiasts, superfans, hobbyists and professionals who come to our communities because they trust the voice is there. All of that runs on Fora, one unified proprietary platform, purpose built for enthusiast communities. That matters because it gives us the ability to innovate once and deploy everywhere. And that 2.1 billion posts of community content is now powering our AI layer, which I'll come back to in a moment. On the portfolio side, we have over 1,200 brands and hyper-focused communities spanning automotive, outdoors, power sports, DIY, collectibles and more. Over 230 acquisitions completed. We have a well-developed playbook for finding these assets, migrating them onto to Fora and unlocking value. Our financial profile is something we're genuinely proud of. We've converted 94% of trailing 12-month adjusted EBITDA to free cash flow, and we're sitting on $76 million in total liquidity. That gives us real flexibility to keep investing in AI and to move on M&A when the right opportunities present themselves. We're in the early stages of something we think could be transformative for VerticalScope. The reason we're confident isn't hype, it's because of what we already have, a proprietary platform with a deep repository of authentic, structured community content and millions of users who trust our communities. That's a remarkable foundation to build our AI strategy on. That foundation, the platform, the content, the communities, the data is what makes our AI strategy so compelling. There's a lot happening across the business, but let me highlight a few of the initiatives we're most excited about right now. Within our communities, our approach with AI is clear. AI must be used to enhance the human experience for our community members, not replace it, making it easier to find content, to post and engage with other community members. We created our community AI assistant, [ ForaFrank ], to support these goals, and it's been driving meaningful engagement improvements across Fora. AudienceEngine is our proprietary AI that identifies high-intent users and matches them to yield optimize experiences across our network. It's already contributing meaningful revenue and EBITDA, and we're learning as we build staying focused on audience quality and performance optimization. AI-powered commerce pairs communitycontext with commerce intent expanding our affiliate and direct merchant opportunities. Within weeks of launching our latest commerce-focused AI feature, we're already at over $500,000 in annualized revenue. We believe we have several paths to scale that further among our users, who are actively researching and discussing products they intend to buy. In our recently announced partnership with AltaML, a proven Canadian AI leader, is about accelerating AI across vertical scope. We signed this partnership in April and have embedded their AI engineers directly into our operations, building production-grade agentic workflows across our business. We expect this work to support operating leverage over time and to show up in our results as we move through the year. Turning to financials, our performance is improving, momentum is building and the numbers reflect the foundation that's been deliberately built to hold up in any environment. On a trailing 12-month basis through Q1 2026, we generated $56.1 million in revenue, $19.8 million in adjusted EBITDA at a 35% margin, an $18.6 million of free cash flow and a 94% conversion rate. We ended Q1 with close to $76 million in total liquidity. Our leverage is low, and we're targeting it for it to fall below 1x by the end of the year in absence of compelling M&A opportunities. Our MAU base averaged approximately 86 million with over 71 million registered users. And as I mentioned in our last earnings call, we saw MAUs clients to 90 million in March and in April and May, continue to show improving trends. What this foundation gives us is optionality. The cash generation is consistent, the balance sheet is getting stronger every quarter, and our liquidity gives us the flexibility to invest behind AI and pursue selective M&A when the right opportunities present themselves. With that, I'm going to pass it over to Vince to provide a closer look at our financial performance and our approach to managing capital.

Thanks, Chris, and thank you to everyone for joining us today. 2025 was a year of disciplined retooling for our business. While our top line was impacted by the lapping of difficult traffic comparables or fundamentals of the business continue to power through, we focused our execution on what we could control, our operational efficiency, our direct relationships and our ability to generate significant free cash flow. For the full year, we generated revenue of $58.1 million, down 16% versus 2024. The full year results were largely driven by a 22% decline in digital advertising revenue as a result of a 23% decline in MAU and the corresponding drop in programmatic impressions. The decline in MAU was driven by a broader AI-driven shift in online search behavior, which has impacted organic referral traffic across the open web. This compares to record level MAU in the prior year, driven by search tailwinds, creating a challenging comparative for the period. Despite the decline in MAU in a challenging macro environment, we saw an improving trend from our direct advertising channel on growing advertiser demand for our premium audience. In Q4 of 2025, the channel finished down just 1% compared to the prior year. And in Q1 of 2026, the channel returned to growth, up 7% compared to the prior year. It now represents over 40% of our digital advertising revenue, up from 30% last year. This is a significant shift that reflects a broader trend. As the open web gets noisier and more saturated with AI-generated content, brands are placing a premium on reaching real people in brand-safe, contextually relevant environments. That is exactly what our communities deliver, and the team has done an excellent job on winning that business. On e-commerce, the channel grew 23% in 2025 on an expanded footprint that included the April 2025 acquisition of Ritual Technologies and their marketplace app that connects users with restaurants across cities in Canada, the U.S. and Australia. The acquisition also came with a dedicated team that has in-depth knowledge of brand creation and mobile app experiences, which can be shared across our operations. E-commerce remains one of our highest conviction growth favors that will be increasingly enabled by our growing AI capabilities. Looking ahead to 2026, we will continue to see difficult top line comparables in the first half of the year as we lap the most disruptive period of the search algorithm changes. But as we move into the second half, the comparables clean up. And we transitioned from a period of lapping headwinds to a period of leveraging a much more stabilized base. The trends we are witnessing so far in 2026 are encouraging. We are seeing stabilizing MAU, sustained growth in our direct advertising channel, a narrowing year-over-year gap in our programmatic performance and the early contributions from AI-driven e-commerce initiatives. The changes in investments we made in 2025 are showing results and position us well to deliver improving trends as the year progresses. Turning to adjusted EBITDA and free cash flow, our rapid response to macro and search traffic pressures allow us to successfully achieve our full-year guidance. Adjusted EBITDA for 2025 was $21.1 million, a decrease of 29% when compared to the prior year. The result was driven by the decline in revenue in the period, which was partially offset by cost savings from our mid-2025 initiatives in that creating smaller, more action-oriented teams focused on delivering tangible results. Even with the top line pressures, our adjusted EBITDA margin for the full year was a healthy 36% and we delivered greater than 40% adjusted EBITDA margins during the second half of the year. We converted adjusted EBITDA to free cash flow at an impressive 94% for the year. Our business continues to sustain a very high conversion mechanics across varying operating environments, demonstrating the cash-generative nature of our business model, combined with a hyper focused approach to capital allocation. As we look ahead to 2026, we see further opportunities to optimize our operations through the use of AI and agentic workflow capabilities, which are being accelerated by our partnership with AltaML. We expect these AI agents to help automate high-volume busy work, freeing up our teams to drive value and growth without adding headcount and support meaningful operating leverage as we enter into the second half of 2026. Finally, let me touch on our capital allocation before turning it back to Chris. Our strengthening balance sheet is a major competitive advantage, providing us with the financial flexibility to fund our next phase of AI-driven growth both through organic initiatives and selective M&A. Our credit agreement net leverage ratio was approximately 1.3x after factoring in a $12 million voluntary payment against our revolver in April of this year. This repayment was a proactive decision to further optimize our capital structure and reduce our borrowing costs in the current interest rate environment. Moving forward, we intend to continue with debt repayments with the goal of bringing our net leverage below 1x by year-end. At the same time, our revolver remains a core strategic asset with $68 million currently available to draw at very attractive rates. This gives us a considerable amount of dry powder. We have the flexibility to deploy capital exactly where it creates the most long-term value for our shareholders, whether that means self-funding our core AI initiatives or executing on selective M&A that grow our audience or expand our capabilities. In short, our business model generates real cash. Our balance sheet is incredibly healthy, and we are well positioned to navigate a changing landscape ahead of us. With that, I'll pass it back to Chris. Chris?

Thanks, Vince. So I just wanted to sum up with the four key drivers of our strategy. First is our audience. We're growing our direct and other traffic channels and building valuable first-party data relationships. The goal is a durable owned audience that's less dependent on any single source. Second is product. We're striving to be an AI-first company in every respect. AI-driven innovation is already producing revenue and is expected to support operating leverage and growth across our business. Third is monetization and broadening our revenue sources. We're diversifying beyond programmatic advertising to grow our direct business, monetize our data and grow new AI-powered commerce experiences. Fourth is capital. We have the balance sheet to be opportunistic. Our liquidity position and free cash flow generation give us the flexibility to make disciplined investments in product, in AI and in M&A when the right opportunities present themselves. These four levers reinforce each other. A stronger audience makes our data more valuable, better data improves our products, better products drives monetization and strong monetization funds the capital deployment that accelerates everything else. That's the VerticalScope flywheel. So that concludes the business update portion of our presentation. We will now pause for a moment for any questions to be submitted.

I confirm that we have not received any questions.

On behalf of the Board and management of the company, I would like to thank everyone for attending today.

Thank you for attending today's meeting. You may now disconnect.