| Summary of Significant Accounting Policies | Note
2 - Summary of Significant Accounting Policies Principles
of Consolidation These
consolidated financial statements have been prepared in accordance with U.S. GAAP and include the accounts of the Company and its wholly
owned subsidiaries. All intercompany transactions and balances have been eliminated. Business
Combinations The
Company accounts for business acquisitions using the acquisition method of accounting, in accordance with which assets acquired and liabilities
assumed are recorded at their respective fair values at the acquisition date. The
fair value of the consideration paid, including contingent consideration, is assigned to the assets acquired and liabilities assumed
based on their respective fair values. Goodwill represents excess of the purchase price over the estimated fair values of the assets
acquired and liabilities assumed. SURGEPAYS,
INC. AND SUBSIDIARIES NOTES
TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS JUNE
30, 2021 Significant
judgments are used in determining fair values of assets acquired and liabilities assumed, as well as intangibles. Fair value and useful
life determinations are based on, among other factors, estimates of future expected cash flows, and appropriate discount rates used in
computing present values. These judgments may materially impact the estimates used in allocating acquisition date fair values to assets
acquired and liabilities assumed, as well as the Company’s current and future operating results. Actual results may vary from these
estimates which may result in adjustments to goodwill and acquisition date fair values of assets and liabilities during a measurement
period or upon a final determination of asset and liability fair values, whichever occurs first. Adjustments to fair values of assets
and liabilities made after the end of the measurement period are recorded within the Company’s operating results. At June 30, 2021
and December 31, 2020, goodwill was $866,782, respectively. Deconsolidation
of Subsidiary In
accordance with ASC Topic 810-10-40, a parent company must deconsolidate a subsidiary as of the date the parent ceases to have a controlling
interest in that subsidiary and recognize a gain or loss in net income at that time. On
May 7, 2021, the Company disposed of its subsidiary True Wireless, Inc. (“TW”), however we retained $ 1,097,659 1,077,659 20,000 176,851 0.6 10 7,461 Scheduled of Receivables
For the Year Ended December 31, 2021
2021 (6 months) $ -
2022 -
2023 52,227
2024 89,532
2025 44,766
Notes Receivable Gross 186,525
Less: amount representing interest receivable (9,674 )
Total $ 176,851 SURGEPAYS,
INC. AND SUBSIDIARIES NOTES
TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS JUNE
30, 2021 As
a result of the sale, we deconsolidated our entire ownership interest in TW from our consolidated financial statements on May 7, 2021,
the effective date of the sale agreement, and recognized a gain on deconsolidation of $ 1,895,871 Scheduled of Deconsolidated Ownership
Consideration
Note receivable $ 176,851
Fair value of consideration received 176,851
Recognized amounts of identifiable assets sold and liabilities assumed by buyer:
Cash 325,316
Lifeline revenue due from USAC 74,650
Inventory 107,089
Property and equipment - net 20,645
Operating lease - right of use asset - net 10,981
Total assets sold 538,681
Accounts payable and accrued expenses 1,183,850
Line of credit 912,870
Loan payable - SBA government 150,000
Operating lease liability 10,981
Total liabilities assumed by buyer 2,257,701
Total net liabilities assumed by buyer 1,719,020
Gain on deconsolidation of True Wireless $ 1,895,871 Business
Segments and Concentrations The
Company uses the “management approach” to identify its reportable segments. The management approach requires companies to
report segment financial information consistent with information used by management for making operating decisions and assessing performance
as the basis for identifying the Company’s reportable segments. The Company manages its business as multiple reportable segments. Customers
in the United States accounted for 100% of our revenues. We do not have any property or equipment outside of the United States. See
Note 10 regarding segment disclosure. SURGEPAYS,
INC. AND SUBSIDIARIES NOTES
TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS JUNE
30, 2021 Use
of Estimates Preparing
financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts
of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and revenues
and expenses during the reported period. Actual results could differ from those estimates, and those estimates may be material. Significant
estimates during the six months ended June 30, 2021 and 2020, respectively, include, allowance for doubtful accounts and other receivables,
inventory reserves and classifications, valuation of beneficial conversion features in convertible debt, valuation of loss contingencies,
valuation of derivative liabilities, valuation of stock-based compensation, estimated useful lives related to intangible assets and property
and equipment, implicit interest rate in right-of-use operating leases, uncertain tax positions, and the valuation allowance on deferred
tax assets. Risks
and Uncertainties The
Company operates in an industry that is subject to intense competition and change in consumer demand. The Company’s operations
are subject to significant risk and uncertainties including financial and operational risks including the potential risk of business
failure. The
Company has experienced, and in the future expects to continue to experience, variability in sales and earnings. The factors expected
to contribute to this variability include, among others, (i) the cyclical nature of the industry, (ii) general economic conditions in
the various local markets in which the Company competes, including a potential general downturn in the economy, and (iii) the volatility
of prices in connection with the Company’s distribution of the product. These factors, among others, make it difficult to project
the Company’s operating results on a consistent basis. Fair
Value of Financial Instruments The
Company accounts for financial instruments under Financial Accounting Standards Board (“FASB”) ASC 820, Fair Value Measurements SURGEPAYS,
INC. AND SUBSIDIARIES NOTES
TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS JUNE
30, 2021 The
Company uses a three-tier fair value hierarchy to classify and disclose all assets and liabilities measured at fair value on a recurring
basis, as well as assets and liabilities measured at fair value on a non-recurring basis, in periods subsequent to their initial measurement.
The hierarchy requires the Company to use observable inputs when available, and to minimize the use of unobservable inputs, when determining
fair value. The
three tiers are defined as follows:
● Level
1 —Observable inputs that reflect quoted market prices (unadjusted) for identical assets
or liabilities in active markets;
● Level
2—Observable inputs other than quoted prices in active markets that are observable
either directly or indirectly in the marketplace for identical or similar assets and liabilities;
and
● Level
3—Unobservable inputs that are supported by little or no market data, which require
the Company to develop its own assumptions. The
determination of fair value and the assessment of a measurement’s placement within the hierarchy requires judgment. Level 3 valuations
often involve a higher degree of judgment and complexity. Level 3 valuations may require the use of various cost, market, or income valuation
methodologies applied to unobservable management estimates and assumptions. Management’s assumptions could vary depending on the
asset or liability valued and the valuation method used. Such assumptions could include estimates of prices, earnings, costs, actions
of market participants, market factors, or the weighting of various valuation methods. The Company may also engage external advisors
to assist us in determining fair value, as appropriate. Although
the Company believes that the recorded fair value of our financial instruments is appropriate, these fair values may not be indicative
of net realizable value or reflective of future fair values. The
Company’s financial instruments, including cash, accounts receivable, accounts payable and accrued expenses, and accounts payable
and accrued expenses – related party, are carried at historical cost. At June 30, 2021 and December 31, 2020, respectively, the
carrying amounts of these instruments approximated their fair values because of the short-term nature of these instruments. ASC
825-10 “Financial Instruments” SURGEPAYS,
INC. AND SUBSIDIARIES NOTES
TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS JUNE
30, 2021 Cash
and Cash Equivalents and Concentration of Credit Risk For
purposes of the consolidated statements of cash flows, the Company considers all highly liquid instruments with a maturity of three months
or less at the purchase date and money market accounts to be cash equivalents. At
June 30, 2021 and December 31, 2020, respectively, the Company did not have any cash equivalents. The
Company is exposed to credit risk on its cash and cash equivalents in the event of default by the financial institutions to the extent
account balances exceed the amount insured by the FDIC, which is $ 250,000 Accounts
Receivable Accounts
receivable are stated at the amount management expects to collect from outstanding customer balances. Credit is extended to customers
based on an evaluation of their financial condition and other factors. Interest is not accrued on overdue accounts receivable. The Company
does not require collateral. Management
periodically assesses the Company’s accounts receivable and, if necessary, establishes an allowance for estimated uncollectible
amounts. The Company provides an allowance for doubtful accounts based upon a review of the outstanding accounts receivable, historical
collection information and existing economic conditions. Accounts determined to be uncollectible are charged to operations when that
determination is made. Allowance
for doubtful accounts was $ 116,664 For the three months ended June 30, 2021 and 2020, the Company recorded bad debt
expense of $ 0 0 For
the six months ended June 30, 2021 and 2020, the Company recorded bad debt expense of $ 4,287
and $ 0 ,
respectively. Bad debt expense has been recorded as a component of general and administrative expenses in the accompanying consolidated
statements of operations. Inventory Inventory
primarily consists of masks, hand sanitizer and other miscellaneous items. Inventories are stated at the lower of cost or net realizable
value using the first-in, first-out (FIFO) valuation method. As of June 30, 2021 and December 31, 2020, the Company had inventory of
$ 175,359 and
$ 178,309 ,
respectively. SURGEPAYS,
INC. AND SUBSIDIARIES NOTES
TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS JUNE
30, 2021 Impairment
of Long-lived Assets Management
evaluates the recoverability of the Company’s identifiable intangible assets and other long-lived assets when events or circumstances
indicate a potential impairment exists, in accordance with the provisions of ASC 360-10-35-15 “Impairment or Disposal of Long-Lived
Assets.” If
impairment is indicated based on a comparison of the assets’ carrying values and the undiscounted cash flows, the impairment to
be recognized is measured as the amount by which the carrying amount of the assets exceeds the fair value of the assets. There
were no Property
and Equipment Property
and equipment is stated at cost less accumulated depreciation. Depreciation is provided on the straight-line basis over the estimated
useful lives of the assets. Expenditures
for repair and maintenance which do not materially extend the useful lives of property and equipment are charged to operations. When
property or equipment is sold or otherwise disposed of, the cost and related accumulated depreciation are removed from the respective
accounts with the resulting gain or loss reflected in operations. Management
reviews the carrying value of its property and equipment whenever events or changes in circumstances indicate that the carrying amount
of the asset may not be recoverable. There
were no Right
of Use Assets and Lease Obligations The
Right of Use Asset and Lease Liability reflect the present value of the Company’s estimated future minimum lease payments over
the lease term, which may include options that are reasonably assured of being exercised, discounted using a collateralized incremental
borrowing rate. SURGEPAYS,
INC. AND SUBSIDIARIES NOTES
TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS JUNE
30, 2021 Typically,
renewal options are considered reasonably assured of being exercised if the associated asset lives of the building or leasehold improvements
exceed that of the initial lease term, and the performance of the business remains strong. Therefore, the Right of Use Asset and Lease
Liability may include an assumption on renewal options that have not yet been exercised by the Company. At June 30, 2021, the Company’s
operating leases contained renewal options for periods ranging from three to five years that expire at various dates with no residual
value guarantees. As
the rate implicit in leases are not readily determinable, the Company uses an incremental borrowing rate to calculate the lease liability
that represents an estimate of the interest rate the Company would incur to borrow on a collateralized basis over the term of a lease
within a particular currency environment. Derivative
Liabilities The
Company analyzes all financial instruments with features of both liabilities and equity under FASB ASC Topic No. 480, (“ASC 480”),
“ Distinguishing Liabilities from Equity” Derivatives
and Hedging” Upon
conversion of a note where the embedded conversion option has been bifurcated and accounted for as a derivative liability, the Company
records the shares at fair value, relieves all related notes, derivatives, and debt discounts, and recognizes a net gain or loss on extinguishment.
Equity instruments that are initially classified as equity that become subject to reclassification under ASC Topic 815 are reclassified
to liabilities at the fair value of the instrument on the reclassification date. The
Company has adopted ASU 2017-11, “ Earnings per share (Topic 260)” SURGEPAYS,
INC. AND SUBSIDIARIES NOTES
TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS JUNE
30, 2021 The
guidance simplifies the accounting for certain equity-linked financial instruments and embedded features with down round features that
reduce the exercise price when the pricing of a future round of financing is lower. This allows the company to treat such instruments
or their embedded features as equity instead of considering them as a derivative liability. If such a feature is triggered the value
is measured pre-trigger and post-trigger. The difference in these two measurements is treated as a dividend, reducing income, which will
reduce the income available to common stockholders. If
a down round feature on the conversion option embedded in the note is triggered, the Company will evaluate whether a beneficial conversion
feature exists, the Company will record the amount as a debt discount and will amortize it over the remaining term of the debt. Convertible
Notes with Fixed Rate Conversion Options The
Company may enter into convertible notes, some of which may contain fixed rate conversion features, whereby the outstanding principal
and accrued interest may be converted, by the holder, into common shares at a fixed discount to the price of the common stock at the
time of conversion. The Company measures the fair value of the notes at the time of issuance, which is the result of the share price
discount at the time of conversion and records the premium to interest expense on the note issuance date. Beneficial
Conversion Features For
instruments that are not considered liabilities under ASC 480 or ASC 815, the Company applies ASC 470-20 to convertible securities with
beneficial conversion features that must be settled in stock. ASC 470-20 requires that the beneficial conversion feature be valued at
the commitment date as the difference between the effective conversion price and the fair market value of the common stock (whereby the
conversion price is lower than the fair market value) into which the security is convertible, multiplied by the number of shares into
which the security is convertible limited to the amount of the loan. This amount is recorded as a debt discount and amortized to interest
expense in the Consolidated Statements of Operations. Debt
Issue Cost Debt
issuance cost paid to lenders, or third parties are recorded as debt discounts and amortized to interest expense in the consolidated
statements of operations, over the life of the underlying debt instrument. SURGEPAYS,
INC. AND SUBSIDIARIES NOTES
TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS JUNE
30, 2021 Revenue
Recognition The
Company recognizes revenue in accordance with ASC 606 to align revenue recognition more closely with the delivery of the Company’s
services and will provide financial statement readers with enhanced disclosures. In accordance with ASC 606, revenue is recognized when
a customer obtains control of promised services. The amount of revenue recognized reflects the consideration to which the Company expects
to be entitled to receive in exchange for these services. To achieve this core principle, the Company applies the following five steps: Identify
the contract with a customer A
contract with a customer exists when (i) the Company enters into an enforceable contract with a customer that defines each party’s
rights regarding the services to be transferred and identifies the payment terms related to these services, (ii) the contract has commercial
substance and, (iii) the Company determines that collection of substantially all consideration for services that are transferred is probable
based on the customer’s intent and ability to pay the promised consideration. The Company applies judgment in determining the customer’s
ability and intention to pay, which is based on a variety of factors including the customer’s historical payment experience or,
in the case of a new customer, published credit and financial information pertaining to the customer. Identify
the performance obligations in the contract Performance
obligations promised in a contract are identified based on the services that will be transferred to the customer that are both capable
of being distinct, whereby the customer can benefit from the service either on its own or together with other resources that are readily
available from third parties or from the Company, and are distinct in the context of the contract, whereby the transfer of the services
is separately identifiable from other promises in the contract. To the extent a contract includes multiple promised services, the Company
must apply judgment to determine whether promised services are capable of being distinct and distinct in the context of the contract.
If these criteria are not met the promised services are accounted for as a combined performance obligation. Determine
the transaction price The
transaction price is determined based on the consideration to which the Company will be entitled in exchange for transferring services
to the customer. To the extent the transaction price includes variable consideration, the Company estimates the amount of variable consideration
that should be included in the transaction price utilizing either the expected value method or the most likely amount method depending
on the nature of the variable consideration. Variable consideration is included in the transaction price if, in the Company’s judgment,
it is probable that a significant future reversal of cumulative revenue under the contract will not occur. None of the Company’s
contracts as of December 31, 2020 and 2019 contained a significant financing component. SURGEPAYS,
INC. AND SUBSIDIARIES NOTES
TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS JUNE
30, 2021 Allocate
the transaction price to performance obligations in the contract If
the contract contains a single performance obligation, the entire transaction price is allocated to the single performance obligation.
However, if a series of distinct services that are substantially the same qualifies as a single performance obligation in a contract
with variable consideration, the Company must determine if the variable consideration is attributable to the entire contract or to a
specific part of the contract. For example, a bonus or penalty may be associated with one or more, but not all, distinct services promised
in a series of distinct services that forms part of a single performance obligation. Contracts that contain multiple performance obligations
require an allocation of the transaction price to each performance obligation based on a relative standalone selling price basis unless
the transaction price is variable and meets the criteria to be allocated entirely to a performance obligation or to a distinct service
that forms part of a single performance obligation. The Company determines standalone selling price based on the price at which the performance
obligation is sold separately. If the standalone selling price is not observable through past transactions, the Company estimates the
standalone selling price taking into account available information such as market conditions and internally approved pricing guidelines
related to the performance obligations. Recognize
revenue when or as the Company satisfies a performance obligation The
Company satisfies performance obligations either over time or at a point in time. Revenue is recognized at the time the related performance
obligation is satisfied by transferring a promised service to a customer. The
following reflects additional discussion regarding our revenue recognition policies for each of our material revenue streams. For each
revenue stream we do not offer any returns, refunds or warranties, and no arrangements are cancellable. Additionally, all contract consideration
is fixed and determinable at the initiation of the contract. Performance
obligations for TW and LogicsIQ are satisfied when services are performed. Performance obligations for ECS and SB are satisfied at point
of sale. For each revenue stream we only have a single performance obligation. True
Wireless (TW) TW
is licensed to provide wireless services to qualifying low-income customers in five states. Revenues are recognized when a lifeline application
is completed and accepted. Each month we reconcile subscriber usage to ensure the service was utilized. A monthly file is submitted to
the Universal Service Administrative Company for review and approval, at which time we have completed our performance obligation and
recognize accounts receivable and revenue. Revenues are recorded in the month when services were rendered, with payment typically received
on the 15 th SURGEPAYS,
INC. AND SUBSIDIARIES NOTES
TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS JUNE
30, 2021 ECS
and Surge Blockchain (SB) Revenues
are generated through the re-sale of telecommunication products such as mobile phones, wireless top-up refills, and other mobile related
products. At the time in which our products are sold through our online web portal (point of sale), our performance obligation is considered
complete. At point of sale, our web portal platform initiates an automated clearing house transaction (ACH) resulting in the recording
revenue. LogicsIQ LogicsIQ
is an enterprise software development company providing marketing business intelligence (“BI”), plaintiff generation and
case load management solutions for law firms representing plaintiffs in Mass Tort legal cases. Revenues are earned from our lead generation
and retained services offerings. Lead
generation consist of sourcing leads, which requires us to drive traffic to our landing pages for a specific marketing campaign. We also
achieve this in certain marketing campaigns by using third-party preferred vendors to meet the needs of our clients. Revenues are recognized
at the time the lead is delivered to the client. If payment is received in advance of the delivery of services, it is included in deferred
revenue, and subsequently recognized once the performance obligation has been completed. Retained
service offerings consist of turning leads into a retained legal case. To provide this service to our customers, we qualify leads through
verification of information collected during the lead generation process. Additionally, we further qualify these leads using a client
questionnaire which assists in determining the services to be provided. The qualification process is completed using our call center
operations. If
payment is received in advance of the delivery of services, it is included in deferred revenue, and subsequently recognized once the
performance obligation has been completed. At the time of delivery of leads and the creation of retained cases (customers are qualified
at this point), our performance obligation has been completed and revenues are recognized. Arrangements with customers do not provide
the customer with the right to take possession of our software or platform at any time. Once the advertising is delivered, it is non-refundable. SURGEPAYS,
INC. AND SUBSIDIARIES NOTES
TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS JUNE
30, 2021 Contract
Liabilities (Deferred Revenue) Contract
liabilities represent deposits made by customers before the satisfaction of performance obligation and recognition of revenue. Upon completion
of the performance obligation(s) that the Company has with the customer based on the terms of the contract, the liability for the customer
deposit is relieved and revenue is recognized. The Company recorded $ 565,900 443,300 The
following represents the Company’s disaggregation of revenues for the six months ended June 30, 2021 and 2020: Schedule of Disaggregation of Revenue from Contracts with Customers
Six Months Ended June 30,
2021 2020
Revenue Revenue % of Revenues Revenue % of Revenues
ECS $ 13,172,325 58.89 % $ 18,724,604 61.79 %
LogicsIQ, Inc. 7,897,455 35.31 % 9,908,046 32.70 %
True Wireless 1,157,837 5.18 % 1,044,848 3.45 %
Surge Blockchain, LLC 77,918 0.35 % 423,478 1.40 %
Other 61,341 0.27 % 201,619 0.67 %
Total Revenues $ 22,366,876 100 % $ 30,302,595 100 % Cost
of Revenues Cost
of revenues primarily consists of purchased telecom services and access to wireless networks. Income
Taxes The
Company accounts for income tax using the asset and liability method prescribed by ASC 740, “Income Taxes”. SURGEPAYS,
INC. AND SUBSIDIARIES NOTES
TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS JUNE
30, 2021 The
Company follows the accounting guidance for uncertainty in income taxes using the provisions of ASC 740 “Income Taxes”. Using
that guidance, tax positions initially need to be recognized in the financial statements when it is more likely than not the position
will be sustained upon examination by the tax authorities. As of June 30, 2021 and December 31, 2020, respectively, the Company had no The
Company recognizes interest and penalties related to uncertain income tax positions in other expense. No As
of June 30, 2021, tax years 2018-2020 remain open for IRS audit. In
response to the COVID-19 pandemic, the Coronavirus Aid, Relief and Economic Security Act (“ CARES Act 2017
Tax Act Taxpayers may generally deduct
interest up to the sum of 50% of adjusted taxable income plus business interest income (30% limit under the 2017 Tax Act) for 2019 and
2020. The CARES Act allows taxpayers with alternative minimum tax credits to claim a refund in 2020 for the entire amount of the credits
instead of recovering the credits through refunds over a period of years, as originally enacted by the 2017 Tax Act In
addition, the CARES Act raises the corporate charitable deduction limit to 25% of taxable income and makes qualified improvement property
generally eligible for 15-year cost-recovery and 100% bonus depreciation. The enactment of the CARES Act did not result in any material
adjustments to our income tax provision for the three and six months ended June 30, 2021 and 2020, respectively Investment
– Related Party On
January 17, 2019, we announced the completion of an agreement to acquire a 40 10 SURGEPAYS,
INC. AND SUBSIDIARIES NOTES
TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS JUNE
30, 2021 The
strategic partnership with CenterCom as a bilingual operations hub has powered our growth and revenue. CenterCom has been built to support
the infrastructure required to rapidly scale in synergy and efficiency to support our sales growth, customer service and development. We
account for this investment under the equity method. Investments accounted for under the equity method are recorded based upon the amount
of our investment and adjusted each period for our share of the investee’s income or loss. All investments are reviewed for changes
in circumstance or the occurrence of events that suggest an other than temporary event where our investment may not be recoverable. At
June 30, 2021 and December 31, 2020, our investment in CenterCom was $ 389,984 414,612 During
the three months ended June 30, 2021 and 2020, we recognized a gain of $ 49,145 112,967 During
the six months ended June 30, 2021 and 2020, we recognized a loss of $ 24,628 49,145 and a gain of $ 145,336 ,
respectively. Advertising
Costs Advertising
costs are expensed as incurred. Advertising costs are included as a component of general and administrative expense in the consolidated
statements of operations. The
Company recognized $ 115,533 52,405 The
Company recognized $ 562,292 152,957 Stock-Based
Compensation We
account for our stock-based compensation under ASC 718 “Compensation – Stock Compensation” SURGEPAYS,
INC. AND SUBSIDIARIES NOTES
TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS JUNE
30, 2021 We
use the fair value method for equity instruments granted to non-employees and use the Black-Scholes model for measuring the fair value
of options. The stock based fair value compensation is determined as of the date of the grant or the date at which the performance of
the services is completed (measurement date) and is recognized over the vesting periods. When
determining fair value, the Company considers the following assumptions in the Black-Scholes model:
● Exercise price,
● Expected dividends,
● Expected volatility,
● Risk-free interest rate; and
● Expected life of option In
June 2018, the FASB issued ASU No. 2018-07, “Compensation - Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based
Payment Accounting.” Common
Stock Awards The
Company may grant common stock awards to non-employees in exchange for services provided. The Company measures the fair value of these
awards using the fair value of the services provided or the fair value of the awards granted, whichever is more reliably measurable.
The fair value measurement date of these awards is generally the date the performance of services is complete. The fair value of the
awards is recognized on a straight-line basis as services are rendered. The share-based payments related to common stock awards for the
settlement of services provided by non-employees is recorded in accordance with ASU 2018-07 (June 2018) on the consolidated statement
of operations in the same manner and charged to the same account as if such settlements had been made in cash. Stock
Warrants In
connection with certain financing, consulting and collaboration arrangements, the Company may issue warrants to purchase shares of its
common stock. The outstanding warrants are standalone instruments that are not puttable or mandatorily redeemable by the holder and are
classified as equity awards. The Company measures the fair value of the awards using the Black-Scholes option pricing model as of the
measurement date. Warrants issued in conjunction with the issuance of common stock are initially recorded at fair value as a reduction
in additional paid-in capital of the common stock issued. All other warrants are recorded at fair value as expense over the requisite
service period or at the date of issuance if there is not a service period. SURGEPAYS,
INC. AND SUBSIDIARIES NOTES
TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS JUNE
30, 2021 Basic
and Diluted Earnings (Loss) per Share and Reverse Stock Split Pursuant
to ASC 260-10-45, basic earnings (loss) per common share is |
