Cover
Cover - USD ($) | 12 Months Ended | ||
Dec. 31, 2021 | Mar. 22, 2022 | Jun. 30, 2021 | |
Document Type | 10-K | ||
Amendment Flag | false | ||
Document Annual Report | true | ||
Document Transition Report | false | ||
Document Period End Date | Dec. 31, 2021 | ||
Document Fiscal Period Focus | FY | ||
Document Fiscal Year Focus | 2021 | ||
Current Fiscal Year End Date | --12-31 | ||
Entity File Number | 001-40992 | ||
Entity Registrant Name | SURGEPAYS, INC. | ||
Entity Central Index Key | 0001392694 | ||
Entity Tax Identification Number | 98-0550352 | ||
Entity Incorporation, State or Country Code | NV | ||
Entity Address, Address Line One | 3124 Brother Blvd | ||
Entity Address, Address Line Two | Suite 104 | ||
Entity Address, City or Town | Bartlett | ||
Entity Address, State or Province | TN | ||
Entity Address, Postal Zip Code | 38133 | ||
City Area Code | 847 | ||
Local Phone Number | 648-7541 | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Interactive Data Current | Yes | ||
Entity Filer Category | Non-accelerated Filer | ||
Entity Small Business | true | ||
Entity Emerging Growth Company | false | ||
Entity Shell Company | false | ||
Entity Public Float | $ 15,868,839 | ||
Entity Common Stock, Shares Outstanding | 12,048,775 | ||
ICFR Auditor Attestation Flag | false | ||
Auditor Firm ID | 910 | ||
Auditor Name | Rodefer Moss & Co, PLLC | ||
Auditor Location | Brentwood, Tennessee | ||
Common Stock [Member] | |||
Title of 12(b) Security | Common Stock | ||
Trading Symbol | SURG | ||
Security Exchange Name | NASDAQ | ||
Common Stock Purchase Warrants [Member] | |||
Title of 12(b) Security | Common Stock Purchase Warrants | ||
Trading Symbol | SURGW | ||
Security Exchange Name | NASDAQ |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) | Dec. 31, 2021 | Dec. 31, 2020 |
Current Assets | ||
Cash | $ 6,283,496 | $ 673,995 |
Accounts receivable - net | 3,249,889 | 180,499 |
Lifeline revenue - due from USAC | 212,621 | |
Inventory | 4,359,296 | 178,309 |
Prepaids | 5,605 | |
Total Current Assets | 13,892,681 | 1,251,029 |
Property and equipment - net | 200,448 | 236,810 |
Other Assets | ||
Note receivable | 176,851 | |
Intangibles - net | 3,433,484 | 4,125,742 |
Goodwill | 866,782 | 866,782 |
Investment in Centercom - related party | 443,288 | 414,612 |
Operating lease - right of use asset - net | 486,668 | 368,638 |
Other | 61,458 | |
Total Other Assets | 5,407,073 | 5,837,232 |
Total Assets | 19,500,202 | 7,325,071 |
Current Liabilities | ||
Accounts payable and accrued expenses | 6,602,577 | 6,827,487 |
Accounts payable and accrued expenses - related party | 1,389,798 | 1,753,837 |
Deferred revenue | 276,250 | 443,300 |
Operating lease liability | 49,352 | 210,556 |
Line of credit | 912,870 | |
Loans payable - related parties | 1,553,799 | 2,389,000 |
Notes payable - SBA government | 126,418 | |
Notes payable - net | 250,000 | |
Convertible notes payable - net | 1,516,170 | |
Derivative liabilities | 1,357,528 | |
Total Current Liabilities | 9,998,194 | 15,660,748 |
Long Term Liabilities | ||
Loans payable - related parties | 4,507,017 | 1,100,440 |
Notes payable - SBA government | 1,004,767 | 1,134,682 |
Operating lease liability | 438,903 | 155,167 |
Total Long Term Liabilities | 5,950,687 | 2,390,289 |
Total Liabilities | 15,948,881 | 18,051,037 |
Commitments and Contingencies (Note 8) | ||
Stockholders’ Equity (Deficit) | ||
Common stock, $0.001 par value, 500,000,000 shares authorized 12,063,834 and 2,542,624 shares issued and outstanding, respectively | 12,064 | 2,543 |
Additional paid-in capital | 38,662,340 | 10,862,708 |
Accumulated deficit | (35,123,343) | (21,592,199) |
Total Stockholders’ Equity (Deficit) | 3,551,321 | (10,725,966) |
Total Liabilities and Stockholders’ Equity (Deficit) | 19,500,202 | 7,325,071 |
Series A Convertible Preferred Stock [Member] | ||
Stockholders’ Equity (Deficit) | ||
Preferred stock | 260 | 260 |
Series C Convertible Preferred Stock [Member] | ||
Stockholders’ Equity (Deficit) | ||
Preferred stock | $ 722 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - $ / shares | Dec. 31, 2021 | Dec. 31, 2020 |
Common stock, par value | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 500,000,000 | 500,000,000 |
Common stock, shares issued | 12,063,834 | 2,542,624 |
Common stock, shares outstanding | 12,063,834 | 2,542,624 |
Series A Convertible Preferred Stock [Member] | ||
Preferred stock, par value | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized | 100,000,000 | 100,000,000 |
Preferred stock, shares issued | 13,000,000 | 13,000,000 |
Preferred stock, shares outstanding | 13,000,000 | 13,000,000 |
Series C Convertible Preferred Stock [Member] | ||
Preferred stock, par value | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized | 1,000,000 | 1,000,000 |
Preferred stock, shares issued | 0 | 721,598 |
Preferred stock, shares outstanding | 0 | 721,598 |
Consolidated Statements of Oper
Consolidated Statements of Operations - USD ($) | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Income Statement [Abstract] | ||
Revenues | $ 51,060,589 | $ 54,406,788 |
Costs and expenses | ||
Cost of revenue | 44,890,610 | 51,938,111 |
General and administrative expenses | 12,162,547 | 12,614,345 |
Total costs and expenses | 57,053,157 | 64,552,456 |
Loss from operations | (5,992,568) | (10,145,668) |
Other income (expense) | ||
Interest expense | (3,840,616) | (4,801,520) |
Derivative expense | (1,775,057) | (566,789) |
Change in fair value of derivative liabilities | 1,806,763 | 577,936 |
Gain on investment in Centercom - related party | 28,676 | 210,912 |
Gain on settlement of liabilities | 1,469,641 | 2,575,978 |
Amortization of debt discount | (3,677,121) | 1,417,524 |
Gain on deconsolidation of True Wireless | 1,895,871 | |
Settlement expense | (3,750,000) | |
Warrant modification expense | (74,476) | |
Other income | 377,743 | 10,000 |
Total other income (expense) - net | (7,538,576) | (575,959) |
Net loss | $ (13,531,144) | $ (10,721,627) |
Loss per share - basic and diluted | $ (3.09) | $ (5.02) |
Weighted average number of shares - basic and diluted | 4,381,709 | 2,134,417 |
Consolidated Statements of Chan
Consolidated Statements of Changes in Stockholders' Equity (Deficit) - USD ($) | Series A Preferred Stock [Member]Preferred Stock [Member] | Series C Preferred Stock [Member]Preferred Stock [Member] | Common Stock [Member] | Additional Paid-in Capital [Member] | Retained Earnings [Member] | Total |
Beginning balance, value at Dec. 31, 2019 | $ 260 | $ 722 | $ 2,042 | $ 6,167,933 | $ (10,870,572) | $ (4,699,615) |
Beginning balance, shares at Dec. 31, 2019 | 260,000 | 721,598 | 2,043,872 | |||
Stock issued for cash, shares | 113,563 | |||||
Recognition of share based compensation | $ 2 | 182,966 | $ 182,968 | |||
Recognition of share based compensation, shares | 1,720 | |||||
Stock and warrants issued for cash ($9.41/share) | $ 114 | 1,068,386 | 1,068,500 | |||
Stock and warrants issued for cash, shares | 113,563 | |||||
Stock issued with debt recorded as a debt discount ($17.18/share) | $ 58 | 993,722 | 993,780 | |||
Stock issued with debt recorded as a debt discount, shares | 57,840 | |||||
Stock issued for conversion of debt ($8.51/share) | $ 269 | 2,284,771 | 2,285,040 | |||
Stock issued for conversion of debt, shares | 268,534 | |||||
Make whole stock issued pursuant to SPA ($4.74/share) | $ 80 | 377,412 | 377,492 | |||
Make whole stock issued pursuant to SPA, shares | 79,614 | |||||
Stock issued for modification of debt ($7.05/share) | $ 10 | 67,640 | 67,650 | |||
Stock issued for modification of debt, shares | 9,600 | |||||
Stock issued for acquisition ($14.18/share) | $ 16 | 219,830 | 219,846 | |||
Stock issued for acquisition, shares | 15,500 | |||||
Stock repurchased for cash ($10.50/share) | $ (48) | (499,952) | (500,000) | |||
Stock repurchased for cash, shares | (47,619) | |||||
Net loss | (10,721,627) | (10,721,627) | ||||
Ending balance, value at Dec. 31, 2020 | $ 260 | $ 722 | $ 2,543 | 10,862,708 | (21,592,199) | (10,725,966) |
Ending balance, shares at Dec. 31, 2020 | 260,000 | 721,598 | 2,542,624 | |||
Stock issued for services rendered and recognition of share based compensation ($5 - $14.05/share) | $ 13 | 3,562 | 3,575 | |||
Stock issued for services rendered and recognition of share based compensation,shares | 13,411 | |||||
Conversion of Series C, preferred stock into common stock | $ (722) | $ 3,608 | (2,886) | |||
Conversion of Series C, preferred stock into common stock, shares | (721,598) | 3,607,980 | ||||
Stock issued for cash ($4.30 - $8/share) | $ 4,862 | 21,294,800 | 21,299,662 | |||
Stock issued for cash, shares | 4,862,247 | |||||
Direct offering costs paid in connection with stock issued for cash | (2,222,952) | (2,222,952) | ||||
Stock and warrants issued with debt recorded as a debt discount | $ 18 | 2,645,872 | 2,645,890 | |||
Stock and warrants issued with debt recorded as a debt discount, shares | 18,000 | |||||
Conversion of debt ($.05 - $10.38/share) | $ 710 | 3,362,851 | 3,363,561 | |||
Conversion of debt, shares | 709,674 | |||||
Stock issued under make-whole arrangement ($5.60 - $6/share) | $ 15 | 90,386 | 90,401 | |||
Stock issued under make-whole arrangement, shares | 15,147 | |||||
Stock issued in connection with debt modification ($5.60 - $8/share) | $ 14 | 108,917 | 108,931 | |||
Stock issued in connection with debt modification, shares | 13,916 | |||||
Stock issued in settlement of liabilities ($4.50 - $15.99/share) | $ 277 | 1,997,700 | 1,997,977 | |||
Stock issued in settlement of liabilities, shares | 276,702 | |||||
Stock issued for acquisition of membership interest in ECS ($8.95/share) | $ 2 | 17,898 | 17,900 | |||
Stock issued for acquisition of membership interest in ECS, shares | 2,000 | |||||
Exercise of warrants ($0.001/share) | $ 2 | (2) | ||||
Exercise of warrants, shares | 2,133 | |||||
Warrant modification expense | 74,476 | 74,476 | ||||
Forgiveness of accounts payable - Centercom - related party | 429,010 | 429,010 | ||||
Net loss | (13,531,144) | (13,531,144) | ||||
Ending balance, value at Dec. 31, 2021 | $ 260 | $ 12,064 | $ 38,662,340 | $ (35,123,343) | $ 3,551,321 | |
Ending balance, shares at Dec. 31, 2021 | 260,000 | 12,063,834 |
Consolidated Statements of Ch_2
Consolidated Statements of Changes in Stockholders' Equity (Deficit) (Parenthetical) - $ / shares | Dec. 31, 2021 | Dec. 31, 2020 |
Shares issued, price per share | $ 4.74 | |
Stock Issued for Service [Member] | Minimum [Member] | ||
Shares issued, price per share | $ 5 | |
Stock Issued for Service [Member] | Maximum [Member] | ||
Shares issued, price per share | 14.05 | |
Stock Issued for Cash [Member] | Minimum [Member] | ||
Shares issued, price per share | 4.30 | |
Stock Issued for Cash [Member] | Maximum [Member] | ||
Shares issued, price per share | 8 | |
Common Stock [Member] | Minimum [Member] | ||
Shares issued, price per share | 5 | |
Debt instrument, convertible, conversion price | 0.05 | |
Common Stock [Member] | Maximum [Member] | ||
Shares issued, price per share | 14.05 | |
Debt instrument, convertible, conversion price | 10.38 | |
Stock Issued Under Make Hole Arrangement [Member] | Minimum [Member] | ||
Shares issued, price per share | 5.60 | |
Stock Issued Under Make Hole Arrangement [Member] | Maximum [Member] | ||
Shares issued, price per share | 6 | |
Stock Issued For Debt Modification [Member] | Minimum [Member] | ||
Shares issued, price per share | 5.60 | |
Stock Issued For Debt Modification [Member] | Maximum [Member] | ||
Shares issued, price per share | 8 | |
Stock Issued For Settlement of Liabilities [Member] | Minimum [Member] | ||
Shares issued, price per share | 4.50 | |
Stock Issued For Settlement of Liabilities [Member] | Maximum [Member] | ||
Shares issued, price per share | 15.99 | |
Stock Issued For Acquisition [Member] | ||
Shares issued, price per share | 8.95 | 14.18 |
Stock Issued For Warrants [Member] | ||
Shares issued, price per share | $ 0.001 | |
Stock Issued for Debt Discount [Member] | ||
Shares issued, price per share | 17.18 | |
Stock and Warrants Issued [Member] | ||
Shares issued, price per share | 9.41 | |
Stock Issued Conversion of Debt [Member] | ||
Shares issued, price per share | 8.51 | |
Stock issued Pursuant to SPA [Member] | ||
Shares issued, price per share | 4.74 | |
Modification of Debt [Member] | ||
Shares issued, price per share | 7.05 | |
Stock Repurchased for Cash [Member] | ||
Shares issued, price per share | $ 10.50 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Operating activities | ||
Net loss | $ (13,531,144) | $ (10,721,627) |
Adjustments to reconcile net loss to net cash used in operations | ||
Bad debt expense | 24,841 | 1,750,239 |
Depreciation and amortization | 759,383 | 1,173,369 |
Amortization of right-of-use assets | 158,085 | 197,381 |
Amortization of debt discount | 3,677,121 | 2,016,764 |
Recognition of share based compensation | 3,575 | 182,968 |
Change in fair value of derivative liabilities | (1,806,763) | (577,936) |
Derivative expense | 1,775,057 | 566,789 |
Gain on settlement of liabilities | (1,443,016) | (2,644,960) |
Gain on equity method investment - Centercom - related party | (28,676) | (210,912) |
Gain on forgiveness of PPP loan | (371,664) | |
Gain on deconsolidation of subsidiary (True Wireless) | (1,895,871) | |
Warrant modification expense | 74,476 | |
(Increase) decrease in | ||
Accounts receivable | (3,094,231) | 1,146,611 |
Lifeline revenue - due from USAC | 105,532 | (151,831) |
Inventory | (4,255,637) | (178,309) |
Prepaids | 5,605 | 91,278 |
Other | 61,458 | 4,999 |
Increase (decrease) in | ||
Accounts payable and accrued expenses | 4,056,812 | 2,824,165 |
Accounts payable and accrued expenses - related party | 757,429 | |
Deferred revenue | (167,050) | 405,260 |
Operating lease liability | (153,583) | (200,296) |
Net cash used in operating activities | (15,288,261) | (4,326,048) |
Investing activities | ||
Purchase of property and equipment | (51,408) | (6,605) |
Cash disposed in deconsolidation of subsidiary (True Wireless) | (325,316) | |
Repayment of notes receivable | 14,959 | |
Net cash provided by (used in) investing activities | (376,724) | 8,354 |
Financing activities | ||
Proceeds from stock and warrants issued for cash | 21,299,662 | 1,068,500 |
Cash paid for direct offering costs | (2,222,952) | |
Repurchase of common stock | (500,000) | |
Proceeds from loans - related party | 4,355,386 | 1,579,710 |
Repayments of loans - related party | (2,476,468) | (295,710) |
Proceeds from notes payable | 1,101,000 | 3,481,582 |
Repayments on notes payable | (1,377,257) | (280,636) |
Proceeds from SBA notes | 518,167 | |
Proceeds from convertible notes | 2,550,000 | |
Repayments on convertible notes - net of overpayment | (2,473,052) | (245,797) |
Cash paid for debt issuance costs | (162,000) | |
Net cash provided by financing activities | 21,274,486 | 4,645,649 |
Net decrease in cash | 5,609,501 | 327,955 |
Cash - beginning of year | 673,995 | 346,040 |
Cash - end of year | 6,283,496 | 673,995 |
Supplemental disclosure of cash flow information | ||
Cash paid for interest | 866,684 | 98,113 |
Supplemental disclosure of non-cash investing and financing activities | ||
Debt discount/issue costs recorded in connection with debt/derivative liabilities | 2,748,084 | 1,457,402 |
Conversion of Series C, preferred stock into common stock | 722 | |
Gain on forgiveness of Centercom AP - Related Party | 429,010 | |
Stock issued in settlement of liabilities | 1,997,977 | |
Conversion of debt into equity | 3,363,561 | |
Right-of-use asset obtained in exchange for new operating lease liability | 515,848 | 355,203 |
Termination of ECS ROU lease | 228,752 | |
Stock issued in connection with debt modification | 108,931 | 67,650 |
Stock issued under make-whole arrangement | 90,401 | 165,000 |
Stock issued for acquisition of membership interest in ECS | 17,900 | |
Reclassification of accrued interest - related party to note payable - related party | 692,458 | |
Deconsolidation of subsidiary (True Wireless) | 2,434,552 | |
Stock issued for acquisition | 210,794 | |
Stock and warrants issued with debt recorded as a debt discount | $ 993,780 |
Organization and Nature of Oper
Organization and Nature of Operations | 12 Months Ended |
Dec. 31, 2021 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Organization and Nature of Operations | Note 1 - Organization and Nature of Operations Organization and Nature of Operations SurgePays, Inc. (“SurgePays,” “SP,” “we,” “our” or “the Company”), and its operating subsidiaries, is a technology-driven company building a next generation supply chain software platform that can offer wholesale goods and services more cost efficiently than traditional and existing wholesale distribution models. The parent (SurgePays, Inc.) and subsidiaries are organized as follows: Schedule of Subsidiaries Company Name Incorporation Date State of Incorporation SurgePays, Inc. August 18, 2006 Tennessee KSIX Media, Inc. November 5, 2014 Nevada KSIX, LLC September 14, 2011 Nevada Surge Blockchain, LLC January 29, 2009 Nevada Injury Survey, LLC July 28, 2020 Nevada DigitizeIQ, LLC July 23, 2014 Illinois Surge Logics, Inc October 2, 2018 Nevada Surge Payments, LLC December 17, 2018 Nevada Surgephone Wireless, LLC August 29, 2019 Nevada SurgePays Fintech, Inc August 22, 2019 Nevada True Wireless, Inc * October 29, 2020 Oklahoma ECS Prepaid, LLC June 9, 2009 Missouri Central States Legal Services, Inc August 1, 2003 Missouri Electronic Check Services, Inc. May 19,1999 Missouri * Entity was disposed of on May 7, 2021. See below. Impact of COVID-19 The ongoing COVID-19 global and national health emergency has caused significant disruption in the international and United States economies and financial markets. In March 2020, the World Health Organization declared the COVID-19 outbreak a pandemic. The spread of COVID-19 has caused illness, quarantines, cancellation of events and travel, business and school shutdowns, reduction in business activity and financial transactions, labor shortages, supply chain interruptions and overall economic and financial market instability. The COVID-19 pandemic has the potential to significantly impact the Company’s supply chain, distribution centers, or logistics and other service providers. SURGEPAYS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2021 AND 2020 In addition, a severe prolonged economic downturn could result in a variety of risks to the business, including weakened demand for products and services and a decreased ability to raise additional capital when needed on acceptable terms, if at all. As the situation continues to evolve, the Company will continue to closely monitor market conditions and respond accordingly. We have implemented adjustments to our operations designed to keep employees safe and comply with international, federal, state, and local guidelines, including those regarding social distancing. The extent to which COVID-19 may further impact the Company’s business, results of operations, financial condition and cash flows will depend on future developments, which are highly uncertain and cannot be predicted with confidence. In response to COVID-19, the United States government has passed legislation and taken other actions to provide financial relief to companies and other organizations affected by the pandemic. The ultimate impact of the COVID-19 pandemic on the Company’s operations is unknown and will depend on future developments, which are highly uncertain and cannot be predicted with confidence, including the duration of the COVID-19 outbreak, new information which may emerge concerning the severity of the COVID-19 pandemic, and any additional preventative and protective actions that governments, or the Company, may direct, which may result in an extended period of continued business disruption, reduced customer traffic and reduced operations. Any resulting financial impact cannot be reasonably estimated at this time but is anticipated to have a material adverse impact on our business, financial condition, and results of operations. To date, the Company has not experienced any significant negative economic impact due to COVID-19. Basis of Presentation The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). Liquidity, Going Concern and Management’s Plans These consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the settlement of liabilities and commitments in the normal course of business. SURGEPAYS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2021 AND 2020 As reflected in the accompanying consolidated financial statements, for the year ended December 31, 2021, the Company had: ● Net loss of $ 13,531,144 ● Net cash used in operations was $ 15,288,261 Additionally, at December 31, 2021, the Company had: ● Accumulated deficit of $ 35,123,343 ● Stockholders’ equity of $ 3,551,321 ● Working capital of $ 3,894,487 We manage liquidity risk by reviewing, on an ongoing basis, our sources of liquidity and capital requirements. The Company has cash on hand of $ 6,283,496 The Company has incurred significant losses since its inception and has not demonstrated an ability to generate sufficient revenues from the sales of its products and services to achieve profitable operations. There can be no assurance that profitable operations will ever be achieved, or if achieved, could be sustained on a continuing basis. In making this assessment we performed a comprehensive analysis of our current circumstances including: our financial position, our cash flows and cash usage forecasts for the twelve months ended December 31, 2021, and our current capital structure including equity-based instruments and our obligations and debts. The Company may explore obtaining additional capital financing and the Company is closely monitoring its cash balances, cash needs, and expense levels. See Notes 5 and 9 for debt and equity capital raises. The consolidated financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern. Accordingly, the consolidated financial statements have been prepared on a basis that assumes the Company will continue as a going concern and which contemplates the realization of assets and satisfaction of liabilities and commitments in the ordinary course of business. SURGEPAYS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2021 AND 2020 Management’s strategic plans include the following: ● Continue the hyper growth of the Affordable Connectivity Program revenue stream, Execution of business plan and significant revenue growth from prior period, ● Pursuing a line of credit to achieve the hyper growth of the Affordable Connectivity Program, ● Expand product and services offerings to a larger surrounding geographic area, ● Continuing to explore and execute prospective partnering or distribution opportunities; and ● Identifying unique market opportunities that represent potential positive short-term cash flow. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2021 | |
Accounting Policies [Abstract] | |
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. 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 December 31, 2021 and 2020, goodwill was $ 866,782 SURGEPAYS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2021 AND 2020 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 2022 - 2023 52,227 2024 89,532 2025 44,766 186,525 Less: amount representing interest (9,674 ) Total $ 176,851 SURGEPAYS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2021 AND 2020 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 as follows: 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 Note 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 CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2021 AND 2020 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 years ended December 31, 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 CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2021 AND 2020 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 December 31, 2021 and 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 CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2021 AND 2020 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 December 31, 2021 and 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 $ 137,218 116,664 For the years ended December 31, 2021 and 2020, the Company recorded a bad debt expense of $ 24,841 1,750,239 Bad debt expense (recovery) is recorded as a component of general and administrative expenses in the accompanying consolidated statements of operations. Inventory Inventory consists primarily of tablets and sim cards (at December 31, 2021), as well as masks, hand sanitizer and other miscellaneous items (at December 31, 2020). Inventories are stated at the lower of cost or net realizable value using the first-in, first-out (FIFO) valuation method. At December 31, 2021 and 2020, the Company had inventory of $ 4,359,296 178,309 SURGEPAYS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2021 AND 2020 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 CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2021 AND 2020 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 September 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. Future obligations relating to the exercise of renewal options is included in the measurement if, based on the judgment of management, the renewal option is reasonably certain to be exercised. Factors in determining whether an option is reasonably certain of exercise include, but are not limited to, the value of leasehold improvements, the value of the renewal rate compared to market rates, and the presence of factors that would cause a significant economic penalty to the Company if the option is not exercised. Management reasonably plans to exercise all options, and as such, all renewal options are included in the measurement of the right-of-use assets and operating lease liabilities. 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. See Note 8. 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 CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2021 AND 2020 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 CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2021 AND 2020 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. SURGEPAYS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2021 AND 2020 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, 2021 and 2020, respectively, contained a significant financing component. 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. SURGEPAYS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2021 AND 2020 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 TW was sold in May 2021 and has been deconsolidated as of the disposal date. 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. Surge Phone Wireless (SPW) SPW is licensed to provide subsidized mobile broadband services through the FCC’s Affordable Connectivity Program (ACP) to qualifying low-income customers in fourteen states. Revenues are recognized when an ACP 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 28th of the following month. 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. SURGEPAYS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2021 AND 2020 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. 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. At December 31, 2021 and 2020, the Company had deferred revenue of $ 276,250 443,300 SURGEPAYS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2021 AND 2020 The following represents the Company’s disaggregation of revenues for the years ended December 31, 2021 and 2020: Schedule of Disaggregation of Revenue from Contracts with Customers Years Ended December 31, 2021 2020 Revenue Revenue % of Revenues Revenue % of Revenues ECS $ 24,627,796 48.23 % $ 34,861,891 64.08 % LogicsIQ, Inc. 17,846,698 34.95 % 16,430,057 30.20 % Surge Pays, Inc. 7,281,839 14.26 % - 0.00 % True Wireless 1,157,981 2.27 % 2,372,977 4.36 % Surge Blockchain, LLC 138,106 0.27 % 535,315 0.98 % Other 8,169 0.02 % 206,548 0.38 % Total Revenues $ 51,060,589 100 % $ 54,406,788 100 % 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”. 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 December 31, 2021 and 2020, respectively, the Company had no SURGEPAYS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2021 AND 2020 The Company recognizes interest and penalties related to uncertain income tax positions in other expense. No 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 years ended December 31, 2021 and 2020, respectively. Investment – Related Party On January 17, 2019, we announced the completion of an agreement to acquire a 40 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. SURGEPAYS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2021 AND 2020 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 December 31, 2021 and 2020, our investment in CenterCom was $ 443,288 414,612 During the years ended December 31, 2021 and 2020, we recognized a gain of $ 28,676 210,912 During 2021, CenterCom forgave $ 429,010 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 $ 661,238 273,031 Stock-Based Compensation The Company accounts for our stock-based compensation under ASC 718 “Compensation – Stock Compensation” The Company uses 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. SURGEPAYS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2021 AND 2020 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 September2018, 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 |
Property and Equipment
Property and Equipment | 12 Months Ended |
Dec. 31, 2021 | |
Property, Plant and Equipment [Abstract] | |
Property and Equipment | Note 3 – Property and Equipment Property and equipment consisted of the following: Schedule of Property and Equipment Estimated Useful Type December 31, 2021 December 31, 2020 Lives (Years) Computer equipment and software $ 283,484 $ 273,256 3 5 Furniture and fixtures 82,752 47,526 5 7 Leasehold improvements - 21,512 15 366,236 342,294 Less: accumulated depreciation (165,788 ) (105,484 ) Property and equipment - net $ 200,448 $ 236,810 Depreciation expense for the years ended December 31, 2021 and 2020 was $ 67,125 5,019 64,413 These amounts are included as a component of general and administrative expenses in the accompanying consolidated statements of operations. In connection with the deconsolidation of TW, the Company disposed of property and equipment with a net carrying amount of $ 20,645 |
Intangibles
Intangibles | 12 Months Ended |
Dec. 31, 2021 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Intangibles | Note 4 – Intangibles Intangibles consisted of the following: Schedule of Intangible Assets Estimated Useful Type December 31, 2021 December 31, 2020 Lives (Years) Proprietary Software $ 4,286,402 $ 4,286,402 7 Tradenames/trademarks 617,474 617,474 15 ECS membership agreement 465,000 465,000 1 Noncompetition agreement 201,389 201,389 2 Customer Relationships 183,255 183,255 5 5,753,520 5,753,520 Less: accumulated amortization (2,320,036 ) (1,627,778 ) Intangibles - net $ 3,433,484 $ 4,125,742 SURGEPAYS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2021 AND 2020 ECS has been a financial technology and wireless top-up platform for over 15 years. On October 1, 2019, we acquired ECS primarily for the favorable ACH banking relationships and a fintech transactions platform (proprietary software) processing over 20,000 transactions a day at approximately 8,000 independently owned retail stores. The goal was to incorporate our blockchain components into the existing ECS network (proprietary software). After a year of development and integration, we believe the ECS platform has been successfully merged into our platform with secure ledger data backups and will continue to serve as the proven backbone for wireless top-up transactions and wireless product aggregation. The majority of the purchase price was allocated to the “Proprietary Software” category being amortized straight-line over seven years. Amortization expense for the years ended December 31, 2021 and 2020 was $ 692,258 1,108,375 Estimated amortization expense for each of the five (5) succeeding years and thereafter is as follows: Scheduled of Estimated Amortization Expenses For the Year Ended December 31, 2022 $ 653,508 2023 653,508 2024 653,508 2025 653,508 Thereafter 819,452 Total $ 3,433,484 |
Debt
Debt | 12 Months Ended |
Dec. 31, 2021 | |
Debt Disclosure [Abstract] | |
Debt | Note 5 – Debt The following represents a summary of the Company’s notes payable – SBA government, loans payable – related parties, notes payable and convertible notes, key terms, and outstanding balances at December 31, 2021 and 2020, respectively: Notes Payable – SBA government (1) Paycheck Protection Program - PPP Loan Pertaining to the Company’s eighteen (18) month loan and in accordance with the Paycheck Protection Program (“PPP”) and Conditional Loan Forgiveness, the promissory note evidencing the loan contains customary events of default relating to, among other things, payment defaults, breach of representations and warranties, or provisions of the promissory note. The occurrence of an event of default may result in the repayment of all amounts outstanding, collection of all amounts owing from the Company, and/or filing suit and obtaining judgment against the Company. SURGEPAYS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2021 AND 2020 Under the terms of the PPP loan program, all or a portion of this Loan may be forgiven upon request from Borrower to Lender, provided the Loan proceeds are used in accordance with the terms of the Coronavirus Aid, Relief and Economic Security Act (the “Act” or “CARES”), Borrower is not in default under the Loan or any of the Loan Documents, and Borrower has provided documentation to Lender supporting such request for forgiveness that includes verifiable information on Borrower’s use of the Loan proceeds, to Lender’s satisfaction, in its sole and absolute discretion. (2) Economic Injury Disaster Loan (“EIDL”) This program was made available to eligible borrowers in light of the impact of the COVID-19 pandemic and the negative economic impact on the Company’s business. Proceeds from the EIDL are to be used for working capital purposes. Installment payments, including principal and interest, are due monthly (beginning twelve (12) months from the date of the promissory note) in amounts ranging from $ 109 751 SURGEPAYS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2021 AND 2020 Schedule of Notes Payable PPP EIDL EIDL PPP Terms SBA SBA SBA SBA Issuance dates of SBA loans April 2020 May 2020 July 2020 March 2021 Term 18 months 30 30 Years 5 Years Maturity date October 2021 May 2050 July 2050 March 2026 Interest rate 1 % 3.75 % 3.75 % 1 % Collateral Unsecured Unsecured Unsecured Unsecured Conversion price N/A N/A N/A N/A Conversion price Warrants issued as discount Total Principal $ 498,082 $ 150,000 $ 486,600 $ 518,167 $ 1,652,849 Balance - December 31, 2019 - - - - - Gross proceeds 498,082 150,000 486,600 - 1,134,682 Forgiveness of loan Deconsolidation of subsidiary (“TW”) Accrued interest included in note balance Conversion of debt into common stock Repayments - cash Amortization of debt discount Debt discount Repayments - common stock Conversion to equity/debt modification Reclassified to receivable Balance - December 31, 2020 498,082 150,000 486,600 - 1,134,682 Gross proceeds - - - 518,167 518,167 Forgiveness of loan (371,664 ) - - - (371,664 ) Deconsolidation of subsidiary (“TW”) - - (150,000 ) - (150,000 ) Balance - December 31, 2021 $ 126,418 $ 150,000 $ 336,600 $ 518,167 $ 1,131,185 1 During 2021, the Company received a partial forgiveness on a PPP loan totaling $ 377,743 371,664 6,079 2 In connection with the deconsolidation of TW, $ 150,000 SURGEPAYS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2021 AND 2020 Notes Payable – Related Parties Schedule of Notes Payable 1 1 2 2 3 3 Note Payable Note Payable Note Payable Terms Related Party Related Party Related Party Issuance dates of notes Various May 2020/January 2021 August 2021 Maturity date June 30, 2022 or January 1, 2023 due on demand March 2021 and due on demand August 2031 due on demand Interest rate 10 % 15 % 10 % Collateral Unsecured Unsecured Unsecured Conversion price N/A N/A N/A Total In-Default Balance - December 31, 2019 2,205,440 - - 2,205,440 $ - Gross proceeds 1,136,500 147,500 - 1,284,000 Balance - December 31, 2020 3,341,940 147,500 - 3,489,440 - Gross proceeds 3,825,000 63,000 467,385 4,355,385 Accrued interest included in note balance 692,458 - - 692,458 Conversion of debt into common stock (2,265,967 ) - - (2,265,967 ) Repayments - (210,500 ) - (210,500 ) Balance - December 31, 2021 $ 5,593,431 $ - $ 467,385 $ 6,060,816 $ 467,385 1 Activity is with the Company’s Chief Executive Officer and Board Director (Kevin Brian Cox). Prior to September 30, 2021, these notes were either due on demand or had a specific due date. Additionally, these advances had interest rates from 6% 15% The new notes had due dates of June 30, 2022 or January 1, 2023. All notes bear interest at 10% 692,458 561,758 4.30 2,415,560 2,265,967 149,593 2,415,560 1 Activity is with the Company’s Chief Executive Officer and Board Director (Kevin Brian Cox). Prior to September 30, 2021, these notes were either due on demand or had a specific due date. Additionally, these advances had interest rates from 6% 15% 10% 692,458 561,758 4.30 2,415,560 2,265,967 149,593 2,415,560 2 Activity is with the Company’s President, Chief Operating Officer and Board Director (Anthony Nuzzo). 3 Activity is with David May, who is a Board Member. The note requires payments of $ 5,000 SURGEPAYS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2021 AND 2020 Notes Payable Schedule of Notes Payable Terms Note Note Note Notes Terms Note Note Note Notes Issuance dates of notes 2016 2016 November 4, 2019 August/September/October 2021 Maturity date 2016 2017 November 3, 2020 August/September/October 2022 Interest rate 5 % 10 % 18 % 10 % Collateral Unsecured Unsecured Unsecured Unsecured Conversion price N/A N/A N/A N/A Warrants issued as discount N/A N/A N/A 2,406,250 Total In-Default Principal $ 485,000 $ 27,500 $ 250,000 $ 1,101,000 * $ 1,863,500 Balance - December 31, 2019 485,000 27,500 223,672 - 736,172 $ 512,500 Amortization of debt discount - - 26,328 - 26,328 Repayments (485,000 ) (27,500 ) - - (512,500 ) Balance - December 31, 2020 - - 250,000 - 250,000 250,000 Gross proceeds - - - 1,101,000 1,101,000 Debt discount - - - (672,254 ) (672,254 ) Amortization of debt discount - - - 698,511 698,511 Repayments - - (250,000 ) (1,127,257 ) (1,377,257 ) Balance - December 31, 2021 $ - $ - $ - $ - $ - $ - * In the event of default, these notes were convertible at 75% SURGEPAYS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2021 AND 2020 Convertible Notes Payable – Net Schedule of Notes Payable Convertible Convertible Convertible Terms Notes Payable Notes Payable Notes Payable Issuance dates of notes 2019 and Prior February 2020 - December 2020 January 2021 - March 2021 Maturity date 2020 February 2021 - September 2021 May 2021 - March 2022 Interest rate 14 % 10 14 % 5 12 % Collateral Unsecured Unsecured Unsecured Conversion price - A - A - B Total Principal $ - $ 2,347,000 $ 2,550,000 $ 4,897,000 Balance - December 31, 2019 $ 4,436,684 $ - $ - $ 4,436,684 Gross proceeds - 2,347,000 - 2,347,000 Debt discount - (2,347,000 ) - (2,347,000 ) Amortization of debt discount 161,217 1,829,219 - 1,990,436 Repayments - cash (438,698 ) (130,061 ) - (568,759 ) Repayments - common stock (4,159,203 ) (182,988 ) - (4,342,191 ) Balance - December 31, 2020 - 1,516,170 - 1,516,170 Balance - 1,516,170 - 1,516,170 Gross proceeds - - 2,550,000 2,550,000 Debt discount - - (2,460,829 ) (2,460,829 ) Amortization of debt discount - 517,781 2,460,829 2,978,610 Repayments - cash - - (2,550,000 ) D (2,550,000 ) Conversion to equity/debt modification - (2,110,898 ) - (2,110,898 ) Reclassified to receivable - 76,947 C - 76,947 Balance - December 31, 2021 $ - $ - $ - $ - Balance $ - $ - $ - $ - A – Convertible at 65 B – Convertible at 70 75 C - During 2021, the Company overpaid a note holder by $ 76,947 SURGEPAYS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2021 AND 2020 D - During 2021, the Company repaid the $ 2,550,000 2,300,000 120 465,239 Line of Credit The Company had a $ 1,000,000 6 0 912,870 |
Derivative Liabilities
Derivative Liabilities | 12 Months Ended |
Dec. 31, 2021 | |
Derivative Liabilities | Note 6 – Derivative Liabilities The above convertible notes contained an embedded conversion option with a conversion price that could result in issuing an undeterminable amount of future common stock to settle the host contract. Accordingly, the embedded conversion option is required to be bifurcated from the host instrument (convertible note) and treated as a liability, which is calculated at fair value, and marked to market at each reporting period. The Company used the binomial pricing model to estimate the fair value of its embedded conversion option liabilities with the following inputs: Schedule of Weighted Average Assumptions December 31, 2021 December 31, 2020 Expected term (years) 0.20 1 0.75 Expected volatility 143 291 % 96 132 % Expected dividends 0 % 0 % Risk free interest rate 0.03 0.09 % 0.08 1.51 % SURGEPAYS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2021 AND 2020 A reconciliation of the beginning and ending balances for the derivative liability measured at fair value on a recurring basis using significant unobservable inputs (Level 3) is as follows at December 31, 2021 and 2020: Summary of Changes in Fair Value Derivative liability - December 31, 2019 $ 190,846 Fair value at commitment date 2,024,191 Fair value mark to market adjustment (577,936 ) Gain on derivative liability upon related debt settled (279,573 ) Derivative liability - December 31, 2020 1,357,528 Fair value at commitment date 1,877,250 Fair value mark to market adjustment (1,806,763 ) Gain on derivative liability upon related debt settled (1,428,015 ) Derivative liability - December 31, 2021 $ - Changes in fair value of derivative liabilities are included in other income (expense) in the accompanying consolidated statements of operations. During the years ended December 31, 2021 and 2020, the Company recorded a change in fair of derivative liabilities of $ 1,806,763 577,936 SURGEPAYS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2021 AND 2020 In connection with bifurcating the embedded conversion option and accounting for this instrument at fair value, the Company computed a fair value on the commitment date, and upon the initial valuation of this instrument, determined that the fair value of the liability exceeded the proceeds of the debt host instrument. As a result, the Company recorded a debt discount at the maximum amount allowed (the face amount of the debt), which required the overage to be recorded as a derivative expense. For the years ended December 31, 2021 and 2020, the Company recorded a derivative expense of $ 1,775,057 566,789 During the year ended December 31, 2021, in connection with the repayment of convertible notes which contained embedded conversion features, the related derivative liabilities ceased to exist. During the years ended December 31, 2021 and 2020, the Company recorded a gain of $ 1,428,015 279,573 |
Fair Value of Financial Instrum
Fair Value of Financial Instruments | 12 Months Ended |
Dec. 31, 2021 | |
Investments, All Other Investments [Abstract] | |
Fair Value of Financial Instruments | Note 7 – Fair Value of Financial Instruments The Company evaluates its financial assets and liabilities subject to fair value measurements on a recurring basis to determine the appropriate level in which to classify them for each reporting period. This determination requires significant judgments to be made. Liabilities measured at fair value on a recurring basis consisted of the following at December 31, 2021 and 2020: Schedule of Liabilities Measured Fair Value on Recurring Basis Quoted Prices in Significant Other Significant Active Markets for Observable Unobservable Identical Assets Inputs Inputs Derivative liabilities December 31, 2021 (Level 1) (Level 2) (Level 3) $ - $ - $ - $ - Quoted Prices in Significant Other Significant Active Markets for Observable Unobservable Identical Assets Inputs Inputs Derivative liabilities December 31, 2020 (Level 1) (Level 2) (Level 3) $ 1,357,528 $ - $ - $ 1,357,528 |
Commitments and Contingencies
Commitments and Contingencies | 12 Months Ended |
Dec. 31, 2021 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Note 8 – Commitments and Contingencies Operating Lease We have entered into various operating lease agreements, including our corporate headquarters. We account for leases in accordance with ASC Topic 842: Leases, SURGEPAYS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2021 AND 2020 Right-of-use assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments over the lease term. Lease right-of-use assets and liabilities at commencement are initially measured at the present value of lease payments over the lease term. We generally use our incremental borrowing rate based on the information available at commencement to determine the present value of lease payments except when an implicit interest rate is readily determinable. We determine our incremental borrowing rate based on market sources including relevant industry data. We have lease agreements with lease and non-lease components and have elected to utilize the practical expedient to account for lease and non-lease components together as a single combined lease component, from both a lessee and lessor perspective with the exception of direct sales-type leases and production equipment classes embedded in supply agreements. From a lessor perspective, the timing and pattern of transfer are the same for the non-lease components and associated lease component and, the lease component, if accounted for separately, would be classified as an operating lease. We have elected not to present short-term leases on the balance sheet as these leases have a lease term of 12 months or less at lease inception and do not contain purchase options or renewal terms that we are reasonably certain to exercise. All other lease assets and lease liabilities are recognized based on the present value of lease payments over the lease term at commencement date. Because most of our leases do not provide an implicit rate of return, we used our incremental borrowing rate based on the information available at lease commencement date in determining the present value of lease payments. Our leases, where we are the lessee, do not include an option to extend the lease term. Our lease also includes an option to terminate the lease prior to the end of the agreed upon lease term. For purposes of calculating lease liabilities, lease term would include options to extend or terminate the lease when it is reasonably certain that we will exercise such options. Lease expense for operating leases is recognized on a straight-line basis over the lease term as an operating expense, included as a component of general and administrative expenses, in the accompanying consolidated statements of operations. Certain operating leases provide for annual increases to lease payments based on an index or rate, our lease has no stated increase, payments were fixed at lease inception. We calculate the present value of future lease payments based on the index or rate at the lease commencement date. Differences between the calculated lease payment and actual payment are expensed as incurred. SURGEPAYS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2021 AND 2020 At December 31, 2021 and 2020, respectively, the Company has no financing leases as defined in ASC 842, “Leases.” The tables below present information regarding the Company’s operating lease assets and liabilities at December 31, 2021 and December 31, 2020, respectively: Schedule of Lease Expense For the Year Ended For the Year Ended December 31, 2021 December 31, 2020 Operating Leases $ 170,962 $ 248,677 Interest on lease liabilities 38,093 44,237 Total net lease cost $ 209,055 $ 292,914 Supplemental balance sheet information related to leases was as follows: Schedule of Supplemental Information Related to Leases December 31, 2021 December 31, 2020 Operating leases Operating lease ROU assets - net $ 486,668 $ 368,638 Operating lease liabilities - current 49,352 210,556 Operating lease liabilities - non-current 438,903 155,167 Total operating lease liabilities $ 488,255 $ 365,723 Supplemental cash flow and other information related to leases was as follows: Schedule of Supplemental Cash Flow and Other Information Related to Leases For the Year Ended For the Year Ended December 31, 2021 December 31, 2020 Cash paid for amounts included in measurement of lease liabilities Operating cash flows from operating leases $ 145,684 $ 150,145 ROU assets obtained in exchange for lease liabilities Operating leases $ 515,848 $ 355,203 Weighted average remaining lease term (in years) Operating leases 8.25 2.03 Weighted average discount rate Operating leases 5 % 11 % SURGEPAYS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2021 AND 2020 Schedule of Future Minimum Payments Future minimum lease payments at December 31, 2022 $ 72,070 2023 60,294 2024 61,876 2025 63,460 Thereafter 349,330 Total lease payments 607,030 Less: amount representing interest (118,775 ) Total lease obligations $ 488,255 In May 2021, the Company and its landlord mutually agreed to terminate the outstanding lease for ECS. The Company had an outstanding ROU liability of $ 228,752 no Contingencies – Legal Matters Matzinger - DigitizeIQ Litigation On January 15, 2020, the Company and Carter Matzinger (formerly a member of the Board) (collectively, the “Surge Party”), and the former owners of the Company’s wholly owned subsidiary, DigitizeIQ, LLC (collectively, the “DigitizeIQ Party” and, together with the Surge Party, the “Parties”), entered into a settlement agreement (the “DigitizeIQ Settlement Agreement”) to settle any claims the Parties may have had against each other. The parties made claims against each other with regard to alleged breaches of an Exchange Agreement, a Non-Compete Agreement, and promissory notes issued by the Company to the DigitizeIQ Party (the “Digitize Promissory Notes”). Pursuant to the DigitizeIQ Settlement Agreement, the Parties, in addition to releasing all claims against each other, agreed to cooperate to ensure the complete transfer and assignment of the domain “digitizeiq.com” to the Company and agreed that the DigitizeIQ Promissory Notes are deemed terminated. As a result of the DigitizeIQ Promissory Notes being terminated, the Company reduced its liabilities by approximately $580,000. True Wireless - Regulatory Matter Regulatory matter before the Corporation Commission of Oklahoma (the “OCC”): Oklahoma Corporate Commission v True Wireless: Complaint Filed Feb 14, 2020. Compliance dispute. OCC has taken issue with some subscribers outside the designated service area. Seeking fines and other penalties up to an including revocation of license. Interim recommendation by ALJ is fine and revocation of license in OK. The May 7, 2021 sale of True Wireless took place subject to settlement of this matter with the OCC. The OCC and True Wireless’ new owner have concluded a settlement of this matter on September 8, 2021. SURGEPAYS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2021 AND 2020 True Wireless and Surge Holdings - Terracom Litigation Global Reconnect, LLC and Terracom, Inc. v. Jonathan Coffman, Jerry Carroll, True Wireless, & Surge Holdings: In the Chancery Court of Hamilton County, TN, Docket # 20-00058, Filed Jan 21, 2020. On January 21, 2020, a complaint was filed related to a noncompetition dispute. Terracom believes Mr. Coffman and Mr. Carroll are in violation of their non-compete agreements by working for us and True Wireless, Inc. Oklahoma and Tennessee state law does not recognize non-compete agreements and are not usually enforced in the state courts of these states, as such we believe True Wireless has a strong case against Terracom. The matter is entering the discovery process. Both Mr. Carroll and Mr. Coffman are no longer working for True Wireless in sales. Mr. Carroll is off the payroll and Mr. Coffman works for SurgePays, Inc., but not in wireless sales. The complaint requests general damages plus fees and costs for tortious interference with a business relationship in their prayer for relief. They have made no written demand for damages at this point in time. The Company believes this matter is simply an anti-competitive attempt by Terracom to cause distress to True Wireless. Surge Holdings – Juno Litigation Juno Financial v. AATAC and Surge Holdings Inc. AND Surge Holdings Inc. v. AATAC; Circuit Court of Hillsborough County, Florida, Case # 20-CA-2712 DIV A: Breach of Contract, Account Stated and Open Account claims against Surge by a factoring company. Surge has filed a cross-complaint against defendant AATAC for Breach of Contract, Account Stated, Open Account and Common Law Indemnity. Case is in discovery. Following analysis by our litigation counsel stating that there is a good defense, management has decided that a reserve is not necessary. Unimax - Litigation On July 9, 2020, the Company entered into a settlement and release agreement with Unimax Communications, LLC (“Unimax”). The settlement is related to a complaint filed by Unimax alleging the Company is indebted pursuant to a purchase order and additional financing terms. The Company agreed to pay Unimax the total sum of $ 785,000 Glen Eagles Litigation SurgePays, Inc., formerly named as Surge Holdings, Inc., a Nevada corporation, Plaintiff, vs. Glen Eagles Acquisition LP, a Delaware limited partnership, Defendant; District Court Clark County, Nevada; Case No.: A-21-831204-B ALTCORP TRADING, LLC, a Costa Rica limited liability company; et al, Plaintiffs, vs. Surge Holdings, Inc., a Nevada corporation; VSTOCK Transfer, LLC, a California limited liability company, et al; District Court Clark County, Nevada; Case No.: A-20-823039-B These two lawsuits involved AltCorp Trading, LLC, Stanley Hills, LLC, and Glen Eagles Acquisition LP (the “AltCorp Parties.”). Each of these lawsuits were ultimately disputes relating to the total consideration the Company paid to GBT Technologies, Inc. (“GBT”) to acquire all of the assets of the entities that comprise the ECS Business (prior to the Company’s January 2020 acquisition of the entities themselves). On October 18, 2021, the AltCorp Parties, GBT, and the Company entered into a non-binding Memorandum of Understanding (the “MOU”) to set up a framework for an attempt to settle the two lawsuits. On December 22, 2021 (the “Effective Date”), pursuant to the framework in the MOU, the AltCorp Parties, Igor 1 Corp. (an entity related to the AltCorp Parties), the Company, ECS Prepaid LLC (“ECS LLC), and, in his individual capacity, Kevin Brian Cox (the Company’s Chief Executive Officer), entered into a Resolution of Purchase, Mutual Release, and Settlement Agreement (the “Settlement Agreement”) to settle the two lawsuits and resolve all disputes related to the consideration paid by the Company to GBT. SURGEPAYS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2021 AND 2020 This Settlement Agreement was entered into pursuant to a resolution of the Board authorizing the negotiation of and entry into of such agreement. As part of this agreement, the Company has acquired GBT’s rights to a certain Master Distribution and Service Agreement between Interactive Communications International, Inc. and W.L. Petrey Wholesale Company, Inc., d/b/a UGO-HUB dated August 29, 2016 (the “MDA”), as amended. The MDA contains sales channel access to a variety of unique wholesale prepaid products with approximately $ 1,500,000 2,500,000 If the result of the GBT Lawsuit is an assignment of the MDA to GBT or that GBT or an affiliate of GBT is the legal owner of the MDA, GBT or such affiliate will assign the MDA to Surge and GBT shall be entitled to receive the Escrow Amount. If the result of the GBT Lawsuit is a monetary judgment without the assignment or legal decree of ownership of the MDA, GBT shall be entitled to receive the Escrow Amount and shall assign and timely pay to the Company the first one million dollars ($ 1,000,000 The Company agreed to make total payments of four million two hundred thousand dollars ($ 4,200,000 4.2 450,000 100,000 3,650,000 375,000 3,750,000 In addition, Igor 1 Corp. as of the Effective Date, held one hundred ten thousand ( 110,000 750 500,000 Glen Eagles and a related entity as of the Effective Date, held three thousand ( 3,000 15,000 15,000 8,552 SURGEPAYS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2021 AND 2020 The Settlement Agreement replaces all prior agreements between the parties. In addition, within three (3) trading days of the last payment related to the $ 4.2 Crystal Chapman, on behalf of herself and others similarly situated, Plaintiff versus SurgePays, Inc., Defendant; U.S. District Court for the Northern District of Illinois, Case No.: 1:21-cv-04272. On August 11, 2021, the plaintiffs filed a lawsuit alleging violations of the Telephone Consumer Protection Act as a putative class action. The plaintiffs are seeking unspecified damages and an order enjoining the Company or their agents from making autodialed calls. The case alleges contact to consumer(s) whose telephone numbers are on the Federal Do Not Call list, without their consent. There are no other counts under the TCPA or any other statute or tort. The Company vigorously disputes the allegations in this complaint as the Company only contacts consumers who have provided express written consent to be contacted. The Company believes it uses the leading software in the industry for lead verification and believes it can prove consent for all called parties. This matter was settled. SurgePays – Ambess Litigation On December 17, 2021, Ambess Enterprises, Inc. v SurgePays, Inc., Blair County Pa. case number 2021 GN 3222. Plaintiff alleges breach of contract and prays for damages of approximately $ 73,000.00 True Wireless and Surge Pays - Litigation Blue Skies Connections, LLC, and True Wireless, Inc. v. SurgePays, Inc., et. al. SURGEPAYS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2021 AND 2020 |
Stockholders_ Deficit
Stockholders’ Deficit | 12 Months Ended |
Dec. 31, 2021 | |
Equity [Abstract] | |
Stockholders’ Deficit | Note 9 – Stockholders’ Deficit Reverse Stock Split On November 2, 2021, the Company effected a 1 for 50 reverse stock split of all classes of its stock At December 31, 2021, the Company had three (3) classes of stock: Common Stock - 500,000,000 - Par value - $ 0.001 - Voting at 1 vote per share Series A, Convertible Preferred Stock - 13,000,000 - 260,000 - Par value - $ 0.001 - Voting at 10 votes per share (2,600,000 votes) - Ranks senior to any other class of preferred stock - Dividends - none - Liquidation preference – none - Rights of redemption - none - Conversion into 1/10 of a share of common stock for each share held (26,000 common stock equivalents) Series C, Convertible Preferred Stock - 1,000,000 - None - Par value - $ 0.001 - Voting at 250 votes per share - Ranks junior to any other class of preferred stock - Dividends – equal to the per share amount (as converted basis) as the common stockholders should the Board of Directors declare a dividend - Liquidation preference – original issue price plus any declared yet unpaid accrued dividends - Rights of redemption - none - Conversion into 250 shares of common stock for each share held SURGEPAYS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2021 AND 2020 In October 2021, all Series C, Preferred stockholders, representing 721,598 3,607,980 0 Equity Transactions for the Year Ended December 31, 2021 NASDAQ Listing On November 2, 2021, the Company was approved to be uplisted to NASDAQ. The common stock and warrants are traded on the Nasdaq Capital Market under the symbols SURG and SURGW, respectively. Stock Issued for Services The Company issued 13,411 99,436 5 14.05 Stock and Warrants Issued for Cash and Related Direct Offering Costs The Company issued an aggregate 4,862,247 21,294,800 4.30 8 2,222,952 19,076,710 Of the 4,862,247 4,600,000 690,000 On November 4, 2021, the Company issued 4,600,000 one share of common stock and one warrant 690,000 4.30 19,786,900 19,780,000 4,600,000 4.30 6,900 690,000 0.01 4.73 3 In connection with the Company’s sale of common stock, the Company incurred direct offering costs of $ 2,222,952 19,076,710 SURGEPAYS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2021 AND 2020 On November 4, 2021, the Company issued 230,000 5 4.73 647,897 Schedule of Fair Value of Warrants Expected term (years) 5 Expected volatility 118 % Expected dividends 0 % Risk free interest rate 0.53 % Since these warrants were issued as direct offering costs associated with the offering, the Company has accounted for these warrants as both a charge and increase to additional paid-in capital, resulting in a net effect on stockholders’ equity of $ 0 . Exercise of Warrants The Company issued 2,133 0 Stock and Warrants Issued as Debt Discount During 2021, the Company issued stock and warrants in connection with the issuance of debt and derivative liabilities totaling $ 3,562,829 , which were recorded as debt discounts to be amortized over the life of the debt. The Company issued 18,000 shares of common stock along with 137,500 three ( 3 ) year warrants, having an exercise price of $ 8 /share. The aggregate discount recorded was $ 2,645,890 for the stock and warrants which are reflected in the accompanying consolidated statements of stockholders’ equity. An additional discount of $ 102,194 was recorded in connection with the commitment date fair value of derivative liabilities for an aggregate discount of $ 2,748,084 . Fair value of the warrants was determined using a Black-Scholes option pricing model with the following inputs: Schedule of Fair Value of Warrants Expected term (years) 3 Expected volatility 118 % Expected dividends 0 % Risk free interest rate 0.53 % SURGEPAYS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2021 AND 2020 Conversion of Debt The Company issued 709,674 3,363,561 0.05 10.38 Make-whole Arrangement The Company issued 15,147 90,401 5.60 6 Stock Issued for Debt Modification The Company issued 13,916 108,931 5.60 8 Stock Issued in Settlement of Liabilities The Company issued 276,702 1,997,977 4.50 15.99 1,469,641 SURGEPAYS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2021 AND 2020 Stock Issued in Acquisition of Membership Interest in ECS On January 30, 2020, the Company entered into a Membership Interest Purchase Agreement and Stock Purchase Agreement with ECS Prepaid, ECS, CSLS and the Winfrey’s. Pursuant to the agreements, the Company acquired all of the membership interests of ECS Prepaid and all of the issued and outstanding stock of each ECS and CSLS. The agreements provide that the consideration is to be paid by the Company through the issuance of 10,000 2,000 17,900 8.95 5,500 Equity Transactions for the Year Ended December 31, 2020 Stock Issued and Warrants Issued for Cash The Company issued 113,563 56,781 1,068,500 9.41 37.50 Stock and Warrants Issued as Debt Discount During 2020, the Company issued 57,840 993,780 17.18 Conversion of Debt The Company issued 268,534 2,285,040 8.51 Make-whole Arrangement The Company issued 79,614 377,492 4.74 Stock Issued for Debt Modification The Company issued 9,600 67,650 7.05 SURGEPAYS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2021 AND 2020 Stock Options Stock option transactions under the Company’s Plan for the years ended December 31, 2021 and 2020 are summarized as follows: Schedule of Stock Option Transactions Weighted Weighted Average Average Weighted Remaining Aggregate Grant Number of Average Contractual Intrinsic Date Stock Options Options Exercise Price Term (Years) Value Fair Value Outstanding - December 31, 2019 - $ - 0 $ - $ - Exercisable - December 31, 2019 - $ - 0.00 $ - $ - Vested and Exercisable - December 31, 2020 - $ - 0.00 $ - $ - Unvested and non-exercisable - December 31, 2020 - $ - 0 $ - $ - Granted 17,004 $ 16.00 7.00 $ - $ 8.75 Exercised - $ - $ - Cancelled/Forfeited - $ - $ - Outstanding - December 31, 2020 17,004 $ 16.00 6.16 $ - $ - Vested and Exercisable - December 31, 2020 - $ - 0.00 $ - $ - Unvested and non-exercisable - December 31, 2020 17,004 $ 16.00 6.16 $ - $ - Outstanding - December 31, 2020 17,004 $ 16.00 6.16 $ - $ - Vested and Exercisable - December 31, 2020 - $ - 0.00 $ - $ - Unvested and non-exercisable - December 31, 2020 17,004 $ 16.00 6.16 $ - $ - Granted - - $ - Exercised - - Cancelled/Forfeited - - Outstanding - December 31, 2021 17,004 $ 16.00 5.16 $ - $ - Vested and Exercisable - December 31, 2021 3,401 $ 16.00 5.16 $ - $ - Unvested and non-exercisable - December 31, 2021 13,603 $ 16.00 5.16 $ - $ - SURGEPAYS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2021 AND 2020 During 2020, the Company granted 17,004 148,696 Schedule of Stock Option Year Ended December 31, 2020 Exercise price $ 16.00 Expected volatility 96.50 % Expected dividends 0.00 % Expected life in years 5.5 Risk-free interest rate 0.84 % Compensation expense recorded for stock-based compensation is as follows for the years ended December 31, 2021 and 2020, was $ 37,174 30,978 As of December 31, 2021, compensation cost related to the unvested options not yet recognized was $ 80,544 Weighted average period in which compensation will vest (years) 2.16 SURGEPAYS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2021 AND 2020 Warrants Warrant activity for the years ended December 31, 2021 and 2020 are summarized as follows: Schedule of Warrants Activity Weighted Average Weighted Remaining Aggregate Number of Average Contractual Intrinsic Warrants Warrants Exercise Price Term (Years) Value Outstanding and exercisable - December 31, 2019 136,993 $ 35.50 1.98 $ - Exercisable - - - - Granted 62,325 $ 26.50 - - Exercised - - - - Cancelled/Forfeited (5,000 ) $ 40.00 - - Outstanding - December 31, 2020 194,317 $ 32.50 1.52 $ - Exercisable - December 31, 2020 194,317 $ 32.50 1.52 $ - Outstanding - December 31, 2020 194,317 $ 32.50 1.52 $ - Exercisable - December 31, 2020 194,317 $ 32.50 1.52 $ - Unvested - December 31, 2021 230,000 $ 8.00 4.85 $ - Granted 5,935,450 $ 8.01 - - Exercised (2,133 ) $ 12.50 - - Cancelled/Forfeited (44,650 ) $ 23.49 - - Outstanding - December 31, 2021 6,082,984 $ 8.68 2.93 $ - Exercisable - December 31, 2021 5,852,984 $ 8.70 2.85 $ - Unvested - December 31, 2021 230,000 $ 8.00 4.85 $ - During 2021, the Company granted 277,950 137,500 3 5 8 12 Additionally, in connection with the NASDAQ uplisting, 5,290,000 230,000 In connection with the Company’s NASDAQ uplisting, 433,017 74,476 SURGEPAYS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2021 AND 2020 The fair value of these warrants was determined using a Black-Scholes option pricing model with the following inputs: Schedule of Fair Value of Warrants Expected term (years) 3 5 Expected volatility 119 146 % Expected dividends 0 % Risk free interest rate 0.07 1.15 % During 2020, the Company paid $ 95,000 5,000 SURGEPAYS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2021 AND 2020 |
Segment Information
Segment Information | 12 Months Ended |
Dec. 31, 2021 | |
Segment Reporting [Abstract] | |
Segment Information | Note 10 – Segment Information Operating segments are defined as components of an enterprise about which separate financial information is available and evaluated regularly by the chief operating decision maker, or decision–making group, in deciding how to allocate resources and in assessing performance. The Company’s chief operating decision maker is its Chief Executive Officer. The Company evaluated performance of its operating segments based on revenue and operating loss. Segment information for the years ended December 31, 2021 and 2020, are as follows: Schedule of Operating Segments For the Years Ended December 31, 2021 2020 Revenues Surge Phone Wireless & Other $ 7,428,114 $ 741,863 LogicsIQ 17,846,698 16,430,057 TW 1,157,981 2,372,977 ECS 24,627,796 34,861,891 Total $ 51,060,589 $ 54,406,788 Revenues 51,060,589 54,406,788 Cost of revenues Surge Phone Wireless & Other $ 6,083,498 $ 849,225 LogicsIQ 14,715,499 14,213,769 TW 306,062 3,003,099 ECS 23,785,551 33,872,018 Total $ 44,890,610 $ 51,938,111 Cost of revenues 44,890,610 51,938,111 Operating expenses Surge Phone Wireless & Other $ 7,733,527 $ 8,066,653 LogicsIQ 2,425,422 2,147,406 TW 615,013 937,196 ECS 1,388,585 1,463,090 Total $ 12,162,547 $ 12,614,345 Operating expenses 12,162,547 12,614,345 Operating income (loss) Surge Phone Wireless & Other $ (6,388,911 ) $ (8,174,015 ) LogicsIQ 705,777 68,882 TW 236,906 (1,567,318 ) ECS (546,340 ) (473,217 ) Total $ (5,992,568 ) $ (10,145,668 ) Operating income (loss) (5,992,568) (10,145,668 SURGEPAYS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2021 AND 2020 December 31, 2021 December 31, 2020 Total Assets Surge Blockchain & Other $ 14,244,440 $ 2,595,824 LogicsIQ 1,284,562 199,366 TW - (353,476 ) ECS 3,971,200 4,883,357 Total $ 19,500,202 $ 7,325,071 Total Assets 19,500,202 7,325,071 Total Liabilities Surge Blockchain & Other $ 13,871,370 $ 10,912,205 LogicsIQ 2,056,632 2,450,888 TW - 4,301,249 ECS 20,879 386,695 Total $ 15,948,881 $ 18,051,037 Total Liabilities 15,948,881 18,051,037 |
Income Taxes
Income Taxes | 12 Months Ended |
Dec. 31, 2021 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Note 11 – Income Taxes The Company’s tax expense differs from the “expected” tax expense for the period (computed by applying the blended corporate rate and state tax rates of 26.14 Schedule of Components of Income Tax Expense (Benefit) December 31, 2021 December 31, 2020 Federal income tax benefit - 19.64 $ (2,657,000 ) $ (2,252,000 ) State income tax - 6.5 (880,000 ) - Tax effect of timing differences for income tax purposes 120,000 - Non-deductible items (495,000 ) 460,000 Subtotal (3,912,000 ) (1,792,000 ) Change in valuation allowance 3,912,000 1,792,000 Income tax benefit $ - $ - The tax effects of temporary differences that give rise to significant portions of deferred tax assets and liabilities at December 31, 2021 and 2020, respectively, are approximately as follows: Schedule of Deferred Tax Assets December 31, 2021 December 31, 2020 Deferred Tax Assets Bad debt $ 6,000 $ (368,000 ) Gain on investment in Centercom - related party 48,000 44,000 Amortization of debt discount 434,000 423,000 Share based payments (47,000 ) (38,000 ) Change in fair value of derivative liabilities (321,000 ) (121,000 ) Other (2,000 ) (52,000 ) Net operating loss carryforwards (3,911,000 ) (3,801,000 ) Total deferred tax assets (3,793,000 ) (3,913,000 ) Less: valuation allowance 3,793,000 3,913,000 Net deferred tax asset recorded $ - $ - SURGEPAYS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2021 AND 2020 Deferred tax assets and liabilities are computed by applying the federal and state income tax rates in effect to the gross amounts of temporary differences and other tax attributes, such as net operating loss carryforwards. In assessing if the deferred tax assets will be realized, the Company considers whether it is more likely than not that some or all of these deferred tax assets will be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the period in which these deductible temporary differences reverse. During the year ended December 31, 2021, the valuation allowance increased by approximately $ 2,120,000 At December 31, 2021, the Company has federal and state net operating loss carryforwards, which are available to offset future taxable income, of approximately 33,599,000 7,824,000 These carryforwards may be subject to an annual limitation under Section 382 and 383 of the Internal Revenue Code of 1986, and similar state provisions if the Company experienced one or more ownership changes which would limit the amount of NOL and tax credit carryforwards that can be utilized to offset future taxable income and tax, respectively. In general, an ownership change, as defined by Section 382 and 383, results from transactions increasing ownership of certain stockholders or public groups in the stock of the corporation by more than 50 percentage points over a three- year period. The Company has not completed an IRC Section 382/383 analysis. If a change in ownership were to have occurred, NOL and tax credit carryforwards could be eliminated or restricted. If eliminated, the related asset would be removed from the deferred tax asset schedule with a corresponding reduction in the valuation allowance. Due to the existence of the valuation allowance, limitations created by future ownership changes, if any, will not impact the Company’s effective tax rate. The Company files corporate income tax returns in the United States and State of Tennessee jurisdictions. Due to the Company’s net operating loss posture, all tax years are open and subject to income tax examination by tax authorities. The Company’s policy is to recognize interest expense and penalties related to income tax matters as tax expense. At December 31, 2021 and 2020, respectively, there are no unrecognized tax benefits, and there were no significant accruals for interest related to unrecognized tax benefits or tax penalties. |
Subsequent Events
Subsequent Events | 12 Months Ended |
Dec. 31, 2021 | |
Subsequent Events [Abstract] | |
Subsequent Events | Subsequent Events Management did an evaluation and no subsequent evets were identified. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2021 | |
Accounting Policies [Abstract] | |
Principles of Consolidation | 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 | 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. 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 December 31, 2021 and 2020, goodwill was $ 866,782 SURGEPAYS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2021 AND 2020 |
Deconsolidation of Subsidiary | 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 2022 - 2023 52,227 2024 89,532 2025 44,766 186,525 Less: amount representing interest (9,674 ) Total $ 176,851 SURGEPAYS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2021 AND 2020 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 as follows: 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 Note 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 | 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 CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2021 AND 2020 |
Use of Estimates | 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 years ended December 31, 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 | 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 | 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 CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2021 AND 2020 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 December 31, 2021 and 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 CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2021 AND 2020 |
Cash and Cash Equivalents and Concentration of Credit Risk | 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 December 31, 2021 and 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 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 $ 137,218 116,664 For the years ended December 31, 2021 and 2020, the Company recorded a bad debt expense of $ 24,841 1,750,239 Bad debt expense (recovery) is recorded as a component of general and administrative expenses in the accompanying consolidated statements of operations. |
Inventory | Inventory Inventory consists primarily of tablets and sim cards (at December 31, 2021), as well as masks, hand sanitizer and other miscellaneous items (at December 31, 2020). Inventories are stated at the lower of cost or net realizable value using the first-in, first-out (FIFO) valuation method. At December 31, 2021 and 2020, the Company had inventory of $ 4,359,296 178,309 SURGEPAYS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2021 AND 2020 |
Impairment of Long-lived Assets | 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 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 | 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 CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2021 AND 2020 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 September 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. Future obligations relating to the exercise of renewal options is included in the measurement if, based on the judgment of management, the renewal option is reasonably certain to be exercised. Factors in determining whether an option is reasonably certain of exercise include, but are not limited to, the value of leasehold improvements, the value of the renewal rate compared to market rates, and the presence of factors that would cause a significant economic penalty to the Company if the option is not exercised. Management reasonably plans to exercise all options, and as such, all renewal options are included in the measurement of the right-of-use assets and operating lease liabilities. 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. See Note 8. |
Derivative Liabilities | 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 CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2021 AND 2020 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 | 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 | 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 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 CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2021 AND 2020 |
Revenue Recognition | 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. SURGEPAYS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2021 AND 2020 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, 2021 and 2020, respectively, contained a significant financing component. 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. SURGEPAYS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2021 AND 2020 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 TW was sold in May 2021 and has been deconsolidated as of the disposal date. 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. Surge Phone Wireless (SPW) SPW is licensed to provide subsidized mobile broadband services through the FCC’s Affordable Connectivity Program (ACP) to qualifying low-income customers in fourteen states. Revenues are recognized when an ACP 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 28th of the following month. 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. SURGEPAYS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2021 AND 2020 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. |
Contract Liabilities (Deferred Revenue) | 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. At December 31, 2021 and 2020, the Company had deferred revenue of $ 276,250 443,300 SURGEPAYS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2021 AND 2020 The following represents the Company’s disaggregation of revenues for the years ended December 31, 2021 and 2020: Schedule of Disaggregation of Revenue from Contracts with Customers Years Ended December 31, 2021 2020 Revenue Revenue % of Revenues Revenue % of Revenues ECS $ 24,627,796 48.23 % $ 34,861,891 64.08 % LogicsIQ, Inc. 17,846,698 34.95 % 16,430,057 30.20 % Surge Pays, Inc. 7,281,839 14.26 % - 0.00 % True Wireless 1,157,981 2.27 % 2,372,977 4.36 % Surge Blockchain, LLC 138,106 0.27 % 535,315 0.98 % Other 8,169 0.02 % 206,548 0.38 % Total Revenues $ 51,060,589 100 % $ 54,406,788 100 % |
Cost of Revenues | Cost of Revenues Cost of revenues primarily consists of purchased telecom services and access to wireless networks. |
Income Taxes | Income Taxes The Company accounts for income tax using the asset and liability method prescribed by ASC 740, “Income Taxes”. 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 December 31, 2021 and 2020, respectively, the Company had no SURGEPAYS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2021 AND 2020 The Company recognizes interest and penalties related to uncertain income tax positions in other expense. No 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 years ended December 31, 2021 and 2020, respectively. |
Investment – Related Party | Investment – Related Party On January 17, 2019, we announced the completion of an agreement to acquire a 40 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. SURGEPAYS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2021 AND 2020 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 December 31, 2021 and 2020, our investment in CenterCom was $ 443,288 414,612 During the years ended December 31, 2021 and 2020, we recognized a gain of $ 28,676 210,912 During 2021, CenterCom forgave $ 429,010 |
Advertising Costs | 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 $ 661,238 273,031 |
Stock-Based Compensation | Stock-Based Compensation The Company accounts for our stock-based compensation under ASC 718 “Compensation – Stock Compensation” The Company uses 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. SURGEPAYS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2021 AND 2020 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 September2018, 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 (September2018) 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 CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2021 AND 2020 |
Basic and Diluted Earnings (Loss) per Share and Reverse Stock Split | Basic and Diluted Earnings (Loss) per Share and Reverse Stock Split Pursuant to ASC 260-10-45, basic earnings (loss) per common share is computed by dividing net income (loss) by the weighted average number of shares of common stock outstanding for the periods presented. Diluted earnings per share is computed by dividing net income by the weighted average number of shares of common stock, common stock equivalents and potentially dilutive securities outstanding during the period. Potentially dilutive common shares may consist of common stock issuable for stock options and warrants (using the treasury stock method), convertible notes and common stock issuable. These common stock equivalents may be dilutive in the future. In the event of a net loss, diluted loss per share is the same as basic loss per share since the effect of the potential common stock equivalents upon conversion would be anti-dilutive. The following potentially dilutive equity securities outstanding as of December 31, 2021 and 2020 were as follows: Schedule of Diluted Net Income (Loss) Per Share December 31, 2021 December 31, 2020 Convertible notes payable and related accrued interest (1) - 736,260 Warrants (2) 5,852,984 154,178 Stock options (3) 3,401 17,004 Series A, convertible preferred stock (4) 26,000 26,000 Series C, convertible preferred stock (5) - 3,607,980 Total common stock equivalents 5,882,385 4,541,422 1 - exercise prices variable 2 - weighted average exercise price - $ 8.68 /share and $ 32.50 /share, respectively 3 - weighted average exercise price - $ 16 /share and $ 16 /share, respectively 4 - each share converts to 1/10 of a share of common stock 5 - each share converts to 250 shares of common stock The convertible notes contain exercise prices that had a discount to market ranging from 70% - 75% of the 10 or 20 days (See Note 5). As a result, the amount computed for common stock equivalents could have changed given the quoted closing trading price at each reporting period Warrants and stock options included as commons stock equivalents represent those that are vested and exercisable. Based on the potential common stock equivalents noted above at December 31, 2021, the Company has sufficient authorized shares of common stock ( 500,000,000 SURGEPAYS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2021 AND 2020 |
Related Parties | Related Parties Parties are considered to be related to the Company if the parties, directly or indirectly, through one or more intermediaries, control, are controlled by, or are under common control with the Company. Related parties also include principal owners of the Company, its management, members of the immediate families of principal owners of the Company and its management and other parties with which the Company may deal with if one party controls or can significantly influence the management or operating policies of the other to an extent that one of the transacting parties might be prevented from fully pursuing its own separate interests. |
Recent Accounting Standards | Recent Accounting Standards Changes to accounting principles are established by the FASB in the form of ASU’s to the FASB’s Codification. We consider the applicability and impact of all ASU’s on our consolidated financial position, results of operations, stockholders’ deficit, cash flows, or presentation thereof. Management has evaluated all recent accounting pronouncements as issued by the FASB in the form of Accounting Standards Updates (“ASU”) through the date these financial statements were available to be issued and found no recent accounting pronouncements issued, but not yet effective accounting pronouncements, when adopted, will have a material impact on the consolidated financial statements of the Company. In June 2016, the FASB issued ASU 2016-13 - Financial Instruments-Credit Losses-Measurement of Credit Losses on Financial Instruments. Codification Improvements to Topic 326, Financial Instruments – Credit Losses, have been released in November 2018 (2018-19), November 2019 (2019-10 and 2019-11) and a January 2020 Update (2020-02) that provided additional guidance on this Topic. This guidance replaces the current incurred loss impairment methodology with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. For SEC filers meeting certain criteria, the amendments in this ASU are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. For SEC filers that meet the criteria of a smaller reporting company (including this Company) and for non-SEC registrant public companies and other organizations, the amendments in this ASU are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2022. Early adoption will be permitted for all organizations for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. The Company is currently in the process of its analysis of the impact of this guidance on its financial statements and does not expect the adoption of this guidance to have a material impact on the Company’s consolidated financial statements. SURGEPAYS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2021 AND 2020 In December 2019, the FASB issued ASU 2019-12, “Simplifying the Accounting for Income Taxes.” This guidance, among other provisions, eliminates certain exceptions to existing guidance related to the approach for intraperiod tax allocation, the methodology for calculating income taxes in an interim period and the recognition of deferred tax liabilities for outside basis differences. This guidance also requires an entity to reflect the effect of an enacted change in tax laws or rates in its effective income tax rate in the first interim period that includes the enactment date of the new legislation, aligning the timing of recognition of the effects from enacted tax law changes on the effective income tax rate with the effects on deferred income tax assets and liabilities. Under existing guidance, an entity recognizes the effects of the enacted tax law change on the effective income tax rate in the period that includes the effective date of the tax law. ASU 2019-12 is effective for interim and annual periods beginning after December 15, 2020, with early adoption permitted. We adopted this pronouncement on January 1, 2021; however, the adoption of this standard did not have a material effect on the Company’s consolidated financial statements. Based on the Company’s history of immaterial credit losses from trade receivables, management does not expect that the adoption of this standard will have a material effect on the Company’s consolidated financial statements. In August 2020, the FASB issued ASU 2020-06, “Debt – Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging – Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity”, to reduce complexity in applying GAAP to certain financial instruments with characteristics of liabilities and equity. ASU 2020-06 is effective for interim and annual periods beginning after December 15, 2023, with early adoption permitted. We adopted this pronouncement on January 1, 2021; however, the adoption of this standard did not have a material effect on the Company’s consolidated financial statements. |
Reclassifications | Reclassifications Certain prior year amounts have been reclassified for consistency with the current year presentation. These reclassifications had no effect on the consolidated results of operations, stockholders’ deficit, or cash flows. At December 31, 2021 and 2020, respectively, on the consolidated balance sheets, the Company separated its various types of debt into more distinct categories. Certain accounts payable were reclassified from non-current to current. For the years ended December 31, 2021 and 2020, respectively, on the consolidated statements of operations, the Company reclassified certain expenses amongst general and administrative and cost of revenues. |
Organization and Nature of Op_2
Organization and Nature of Operations (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Schedule of Subsidiaries | The parent (SurgePays, Inc.) and subsidiaries are organized as follows: Schedule of Subsidiaries Company Name Incorporation Date State of Incorporation SurgePays, Inc. August 18, 2006 Tennessee KSIX Media, Inc. November 5, 2014 Nevada KSIX, LLC September 14, 2011 Nevada Surge Blockchain, LLC January 29, 2009 Nevada Injury Survey, LLC July 28, 2020 Nevada DigitizeIQ, LLC July 23, 2014 Illinois Surge Logics, Inc October 2, 2018 Nevada Surge Payments, LLC December 17, 2018 Nevada Surgephone Wireless, LLC August 29, 2019 Nevada SurgePays Fintech, Inc August 22, 2019 Nevada True Wireless, Inc * October 29, 2020 Oklahoma ECS Prepaid, LLC June 9, 2009 Missouri Central States Legal Services, Inc August 1, 2003 Missouri Electronic Check Services, Inc. May 19,1999 Missouri * Entity was disposed of on May 7, 2021. See below. |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Accounting Policies [Abstract] | |
Scheduled of Receivables | Scheduled of Receivables For the Year Ended December 31, 2021 2022 - 2023 52,227 2024 89,532 2025 44,766 186,525 Less: amount representing interest (9,674 ) Total $ 176,851 |
Scheduled of Deconsolidated Ownership | 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 as follows: 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 Note 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 |
Schedule of Disaggregation of Revenue from Contracts with Customers | The following represents the Company’s disaggregation of revenues for the years ended December 31, 2021 and 2020: Schedule of Disaggregation of Revenue from Contracts with Customers Years Ended December 31, 2021 2020 Revenue Revenue % of Revenues Revenue % of Revenues ECS $ 24,627,796 48.23 % $ 34,861,891 64.08 % LogicsIQ, Inc. 17,846,698 34.95 % 16,430,057 30.20 % Surge Pays, Inc. 7,281,839 14.26 % - 0.00 % True Wireless 1,157,981 2.27 % 2,372,977 4.36 % Surge Blockchain, LLC 138,106 0.27 % 535,315 0.98 % Other 8,169 0.02 % 206,548 0.38 % Total Revenues $ 51,060,589 100 % $ 54,406,788 100 % |
Schedule of Diluted Net Income (Loss) Per Share | The following potentially dilutive equity securities outstanding as of December 31, 2021 and 2020 were as follows: Schedule of Diluted Net Income (Loss) Per Share December 31, 2021 December 31, 2020 Convertible notes payable and related accrued interest (1) - 736,260 Warrants (2) 5,852,984 154,178 Stock options (3) 3,401 17,004 Series A, convertible preferred stock (4) 26,000 26,000 Series C, convertible preferred stock (5) - 3,607,980 Total common stock equivalents 5,882,385 4,541,422 1 - exercise prices variable 2 - weighted average exercise price - $ 8.68 /share and $ 32.50 /share, respectively 3 - weighted average exercise price - $ 16 /share and $ 16 /share, respectively 4 - each share converts to 1/10 of a share of common stock 5 - each share converts to 250 shares of common stock |
Property and Equipment (Tables)
Property and Equipment (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Property, Plant and Equipment [Abstract] | |
Schedule of Property and Equipment | Property and equipment consisted of the following: Schedule of Property and Equipment Estimated Useful Type December 31, 2021 December 31, 2020 Lives (Years) Computer equipment and software $ 283,484 $ 273,256 3 5 Furniture and fixtures 82,752 47,526 5 7 Leasehold improvements - 21,512 15 366,236 342,294 Less: accumulated depreciation (165,788 ) (105,484 ) Property and equipment - net $ 200,448 $ 236,810 |
Intangibles (Tables)
Intangibles (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of Intangible Assets | Intangibles consisted of the following: Schedule of Intangible Assets Estimated Useful Type December 31, 2021 December 31, 2020 Lives (Years) Proprietary Software $ 4,286,402 $ 4,286,402 7 Tradenames/trademarks 617,474 617,474 15 ECS membership agreement 465,000 465,000 1 Noncompetition agreement 201,389 201,389 2 Customer Relationships 183,255 183,255 5 5,753,520 5,753,520 Less: accumulated amortization (2,320,036 ) (1,627,778 ) Intangibles - net $ 3,433,484 $ 4,125,742 |
Scheduled of Estimated Amortization Expenses | Estimated amortization expense for each of the five (5) succeeding years and thereafter is as follows: Scheduled of Estimated Amortization Expenses For the Year Ended December 31, 2022 $ 653,508 2023 653,508 2024 653,508 2025 653,508 Thereafter 819,452 Total $ 3,433,484 |
Debt (Tables)
Debt (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Notes Payable [Member] | |
Short-term Debt [Line Items] | |
Schedule of Notes Payable | Notes Payable Schedule of Notes Payable Terms Note Note Note Notes Terms Note Note Note Notes Issuance dates of notes 2016 2016 November 4, 2019 August/September/October 2021 Maturity date 2016 2017 November 3, 2020 August/September/October 2022 Interest rate 5 % 10 % 18 % 10 % Collateral Unsecured Unsecured Unsecured Unsecured Conversion price N/A N/A N/A N/A Warrants issued as discount N/A N/A N/A 2,406,250 Total In-Default Principal $ 485,000 $ 27,500 $ 250,000 $ 1,101,000 * $ 1,863,500 Balance - December 31, 2019 485,000 27,500 223,672 - 736,172 $ 512,500 Amortization of debt discount - - 26,328 - 26,328 Repayments (485,000 ) (27,500 ) - - (512,500 ) Balance - December 31, 2020 - - 250,000 - 250,000 250,000 Gross proceeds - - - 1,101,000 1,101,000 Debt discount - - - (672,254 ) (672,254 ) Amortization of debt discount - - - 698,511 698,511 Repayments - - (250,000 ) (1,127,257 ) (1,377,257 ) Balance - December 31, 2021 $ - $ - $ - $ - $ - $ - * In the event of default, these notes were convertible at 75% |
Convertible Notes Payable [Member] | |
Short-term Debt [Line Items] | |
Schedule of Notes Payable | Convertible Notes Payable – Net Schedule of Notes Payable Convertible Convertible Convertible Terms Notes Payable Notes Payable Notes Payable Issuance dates of notes 2019 and Prior February 2020 - December 2020 January 2021 - March 2021 Maturity date 2020 February 2021 - September 2021 May 2021 - March 2022 Interest rate 14 % 10 14 % 5 12 % Collateral Unsecured Unsecured Unsecured Conversion price - A - A - B Total Principal $ - $ 2,347,000 $ 2,550,000 $ 4,897,000 Balance - December 31, 2019 $ 4,436,684 $ - $ - $ 4,436,684 Gross proceeds - 2,347,000 - 2,347,000 Debt discount - (2,347,000 ) - (2,347,000 ) Amortization of debt discount 161,217 1,829,219 - 1,990,436 Repayments - cash (438,698 ) (130,061 ) - (568,759 ) Repayments - common stock (4,159,203 ) (182,988 ) - (4,342,191 ) Balance - December 31, 2020 - 1,516,170 - 1,516,170 Balance - 1,516,170 - 1,516,170 Gross proceeds - - 2,550,000 2,550,000 Debt discount - - (2,460,829 ) (2,460,829 ) Amortization of debt discount - 517,781 2,460,829 2,978,610 Repayments - cash - - (2,550,000 ) D (2,550,000 ) Conversion to equity/debt modification - (2,110,898 ) - (2,110,898 ) Reclassified to receivable - 76,947 C - 76,947 Balance - December 31, 2021 $ - $ - $ - $ - Balance $ - $ - $ - $ - A – Convertible at 65 B – Convertible at 70 75 C - During 2021, the Company overpaid a note holder by $ 76,947 SURGEPAYS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2021 AND 2020 D - During 2021, the Company repaid the $ 2,550,000 2,300,000 120 465,239 |
Related Party [Member] | |
Short-term Debt [Line Items] | |
Schedule of Notes Payable | Notes Payable – Related Parties Schedule of Notes Payable 1 1 2 2 3 3 Note Payable Note Payable Note Payable Terms Related Party Related Party Related Party Issuance dates of notes Various May 2020/January 2021 August 2021 Maturity date June 30, 2022 or January 1, 2023 due on demand March 2021 and due on demand August 2031 due on demand Interest rate 10 % 15 % 10 % Collateral Unsecured Unsecured Unsecured Conversion price N/A N/A N/A Total In-Default Balance - December 31, 2019 2,205,440 - - 2,205,440 $ - Gross proceeds 1,136,500 147,500 - 1,284,000 Balance - December 31, 2020 3,341,940 147,500 - 3,489,440 - Gross proceeds 3,825,000 63,000 467,385 4,355,385 Accrued interest included in note balance 692,458 - - 692,458 Conversion of debt into common stock (2,265,967 ) - - (2,265,967 ) Repayments - (210,500 ) - (210,500 ) Balance - December 31, 2021 $ 5,593,431 $ - $ 467,385 $ 6,060,816 $ 467,385 1 Activity is with the Company’s Chief Executive Officer and Board Director (Kevin Brian Cox). Prior to September 30, 2021, these notes were either due on demand or had a specific due date. Additionally, these advances had interest rates from 6% 15% The new notes had due dates of June 30, 2022 or January 1, 2023. All notes bear interest at 10% 692,458 561,758 4.30 2,415,560 2,265,967 149,593 2,415,560 1 Activity is with the Company’s Chief Executive Officer and Board Director (Kevin Brian Cox). Prior to September 30, 2021, these notes were either due on demand or had a specific due date. Additionally, these advances had interest rates from 6% 15% 10% 692,458 561,758 4.30 2,415,560 2,265,967 149,593 2,415,560 2 Activity is with the Company’s President, Chief Operating Officer and Board Director (Anthony Nuzzo). 3 Activity is with David May, who is a Board Member. The note requires payments of $ 5,000 |
Paycheck Protection Program and Economic Injury Disaster Loan [Member] | |
Short-term Debt [Line Items] | |
Schedule of Notes Payable | Schedule of Notes Payable PPP EIDL EIDL PPP Terms SBA SBA SBA SBA Issuance dates of SBA loans April 2020 May 2020 July 2020 March 2021 Term 18 months 30 30 Years 5 Years Maturity date October 2021 May 2050 July 2050 March 2026 Interest rate 1 % 3.75 % 3.75 % 1 % Collateral Unsecured Unsecured Unsecured Unsecured Conversion price N/A N/A N/A N/A Conversion price Warrants issued as discount Total Principal $ 498,082 $ 150,000 $ 486,600 $ 518,167 $ 1,652,849 Balance - December 31, 2019 - - - - - Gross proceeds 498,082 150,000 486,600 - 1,134,682 Forgiveness of loan Deconsolidation of subsidiary (“TW”) Accrued interest included in note balance Conversion of debt into common stock Repayments - cash Amortization of debt discount Debt discount Repayments - common stock Conversion to equity/debt modification Reclassified to receivable Balance - December 31, 2020 498,082 150,000 486,600 - 1,134,682 Gross proceeds - - - 518,167 518,167 Forgiveness of loan (371,664 ) - - - (371,664 ) Deconsolidation of subsidiary (“TW”) - - (150,000 ) - (150,000 ) Balance - December 31, 2021 $ 126,418 $ 150,000 $ 336,600 $ 518,167 $ 1,131,185 1 During 2021, the Company received a partial forgiveness on a PPP loan totaling $ 377,743 371,664 6,079 2 In connection with the deconsolidation of TW, $ 150,000 |
Derivative Liabilities (Tables)
Derivative Liabilities (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Schedule of Weighted Average Assumptions | The Company used the binomial pricing model to estimate the fair value of its embedded conversion option liabilities with the following inputs: Schedule of Weighted Average Assumptions December 31, 2021 December 31, 2020 Expected term (years) 0.20 1 0.75 Expected volatility 143 291 % 96 132 % Expected dividends 0 % 0 % Risk free interest rate 0.03 0.09 % 0.08 1.51 % |
Summary of Changes in Fair Value | A reconciliation of the beginning and ending balances for the derivative liability measured at fair value on a recurring basis using significant unobservable inputs (Level 3) is as follows at December 31, 2021 and 2020: Summary of Changes in Fair Value Derivative liability - December 31, 2019 $ 190,846 Fair value at commitment date 2,024,191 Fair value mark to market adjustment (577,936 ) Gain on derivative liability upon related debt settled (279,573 ) Derivative liability - December 31, 2020 1,357,528 Fair value at commitment date 1,877,250 Fair value mark to market adjustment (1,806,763 ) Gain on derivative liability upon related debt settled (1,428,015 ) Derivative liability - December 31, 2021 $ - |
Fair Value of Financial Instr_2
Fair Value of Financial Instruments (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Investments, All Other Investments [Abstract] | |
Schedule of Liabilities Measured Fair Value on Recurring Basis | Liabilities measured at fair value on a recurring basis consisted of the following at December 31, 2021 and 2020: Schedule of Liabilities Measured Fair Value on Recurring Basis Quoted Prices in Significant Other Significant Active Markets for Observable Unobservable Identical Assets Inputs Inputs Derivative liabilities December 31, 2021 (Level 1) (Level 2) (Level 3) $ - $ - $ - $ - Quoted Prices in Significant Other Significant Active Markets for Observable Unobservable Identical Assets Inputs Inputs Derivative liabilities December 31, 2020 (Level 1) (Level 2) (Level 3) $ 1,357,528 $ - $ - $ 1,357,528 |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Commitments and Contingencies Disclosure [Abstract] | |
Schedule of Lease Expense | The tables below present information regarding the Company’s operating lease assets and liabilities at December 31, 2021 and December 31, 2020, respectively: Schedule of Lease Expense For the Year Ended For the Year Ended December 31, 2021 December 31, 2020 Operating Leases $ 170,962 $ 248,677 Interest on lease liabilities 38,093 44,237 Total net lease cost $ 209,055 $ 292,914 |
Schedule of Supplemental Information Related to Leases | Supplemental balance sheet information related to leases was as follows: Schedule of Supplemental Information Related to Leases December 31, 2021 December 31, 2020 Operating leases Operating lease ROU assets - net $ 486,668 $ 368,638 Operating lease liabilities - current 49,352 210,556 Operating lease liabilities - non-current 438,903 155,167 Total operating lease liabilities $ 488,255 $ 365,723 |
Schedule of Supplemental Cash Flow and Other Information Related to Leases | Supplemental cash flow and other information related to leases was as follows: Schedule of Supplemental Cash Flow and Other Information Related to Leases For the Year Ended For the Year Ended December 31, 2021 December 31, 2020 Cash paid for amounts included in measurement of lease liabilities Operating cash flows from operating leases $ 145,684 $ 150,145 ROU assets obtained in exchange for lease liabilities Operating leases $ 515,848 $ 355,203 Weighted average remaining lease term (in years) Operating leases 8.25 2.03 Weighted average discount rate Operating leases 5 % 11 % |
Schedule of Future Minimum Payments | Schedule of Future Minimum Payments Future minimum lease payments at December 31, 2022 $ 72,070 2023 60,294 2024 61,876 2025 63,460 Thereafter 349,330 Total lease payments 607,030 Less: amount representing interest (118,775 ) Total lease obligations $ 488,255 |
Stockholders_ Deficit (Tables)
Stockholders’ Deficit (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Accumulated Other Comprehensive Income (Loss) [Line Items] | |
Schedule of Stock Option Transactions | Stock option transactions under the Company’s Plan for the years ended December 31, 2021 and 2020 are summarized as follows: Schedule of Stock Option Transactions Weighted Weighted Average Average Weighted Remaining Aggregate Grant Number of Average Contractual Intrinsic Date Stock Options Options Exercise Price Term (Years) Value Fair Value Outstanding - December 31, 2019 - $ - 0 $ - $ - Exercisable - December 31, 2019 - $ - 0.00 $ - $ - Vested and Exercisable - December 31, 2020 - $ - 0.00 $ - $ - Unvested and non-exercisable - December 31, 2020 - $ - 0 $ - $ - Granted 17,004 $ 16.00 7.00 $ - $ 8.75 Exercised - $ - $ - Cancelled/Forfeited - $ - $ - Outstanding - December 31, 2020 17,004 $ 16.00 6.16 $ - $ - Vested and Exercisable - December 31, 2020 - $ - 0.00 $ - $ - Unvested and non-exercisable - December 31, 2020 17,004 $ 16.00 6.16 $ - $ - Outstanding - December 31, 2020 17,004 $ 16.00 6.16 $ - $ - Vested and Exercisable - December 31, 2020 - $ - 0.00 $ - $ - Unvested and non-exercisable - December 31, 2020 17,004 $ 16.00 6.16 $ - $ - Granted - - $ - Exercised - - Cancelled/Forfeited - - Outstanding - December 31, 2021 17,004 $ 16.00 5.16 $ - $ - Vested and Exercisable - December 31, 2021 3,401 $ 16.00 5.16 $ - $ - Unvested and non-exercisable - December 31, 2021 13,603 $ 16.00 5.16 $ - $ - |
Schedule of Stock Option | During 2020, the Company granted 17,004 148,696 Schedule of Stock Option Year Ended December 31, 2020 Exercise price $ 16.00 Expected volatility 96.50 % Expected dividends 0.00 % Expected life in years 5.5 Risk-free interest rate 0.84 % |
Schedule of Warrants Activity | Warrant activity for the years ended December 31, 2021 and 2020 are summarized as follows: Schedule of Warrants Activity Weighted Average Weighted Remaining Aggregate Number of Average Contractual Intrinsic Warrants Warrants Exercise Price Term (Years) Value Outstanding and exercisable - December 31, 2019 136,993 $ 35.50 1.98 $ - Exercisable - - - - Granted 62,325 $ 26.50 - - Exercised - - - - Cancelled/Forfeited (5,000 ) $ 40.00 - - Outstanding - December 31, 2020 194,317 $ 32.50 1.52 $ - Exercisable - December 31, 2020 194,317 $ 32.50 1.52 $ - Outstanding - December 31, 2020 194,317 $ 32.50 1.52 $ - Exercisable - December 31, 2020 194,317 $ 32.50 1.52 $ - Unvested - December 31, 2021 230,000 $ 8.00 4.85 $ - Granted 5,935,450 $ 8.01 - - Exercised (2,133 ) $ 12.50 - - Cancelled/Forfeited (44,650 ) $ 23.49 - - Outstanding - December 31, 2021 6,082,984 $ 8.68 2.93 $ - Exercisable - December 31, 2021 5,852,984 $ 8.70 2.85 $ - Unvested - December 31, 2021 230,000 $ 8.00 4.85 $ - |
Warrant One [Member] | |
Accumulated Other Comprehensive Income (Loss) [Line Items] | |
Schedule of Fair Value of Warrants | Schedule of Fair Value of Warrants Expected term (years) 5 Expected volatility 118 % Expected dividends 0 % Risk free interest rate 0.53 % |
Warrant Two [Member] | |
Accumulated Other Comprehensive Income (Loss) [Line Items] | |
Schedule of Fair Value of Warrants | Fair value of the warrants was determined using a Black-Scholes option pricing model with the following inputs: Schedule of Fair Value of Warrants Expected term (years) 3 Expected volatility 118 % Expected dividends 0 % Risk free interest rate 0.53 % |
Warrant Three [Member] | |
Accumulated Other Comprehensive Income (Loss) [Line Items] | |
Schedule of Fair Value of Warrants | The fair value of these warrants was determined using a Black-Scholes option pricing model with the following inputs: Schedule of Fair Value of Warrants Expected term (years) 3 5 Expected volatility 119 146 % Expected dividends 0 % Risk free interest rate 0.07 1.15 % |
Segment Information (Tables)
Segment Information (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Segment Reporting [Abstract] | |
Schedule of Operating Segments | The Company evaluated performance of its operating segments based on revenue and operating loss. Segment information for the years ended December 31, 2021 and 2020, are as follows: Schedule of Operating Segments For the Years Ended December 31, 2021 2020 Revenues Surge Phone Wireless & Other $ 7,428,114 $ 741,863 LogicsIQ 17,846,698 16,430,057 TW 1,157,981 2,372,977 ECS 24,627,796 34,861,891 Total $ 51,060,589 $ 54,406,788 Revenues 51,060,589 54,406,788 Cost of revenues Surge Phone Wireless & Other $ 6,083,498 $ 849,225 LogicsIQ 14,715,499 14,213,769 TW 306,062 3,003,099 ECS 23,785,551 33,872,018 Total $ 44,890,610 $ 51,938,111 Cost of revenues 44,890,610 51,938,111 Operating expenses Surge Phone Wireless & Other $ 7,733,527 $ 8,066,653 LogicsIQ 2,425,422 2,147,406 TW 615,013 937,196 ECS 1,388,585 1,463,090 Total $ 12,162,547 $ 12,614,345 Operating expenses 12,162,547 12,614,345 Operating income (loss) Surge Phone Wireless & Other $ (6,388,911 ) $ (8,174,015 ) LogicsIQ 705,777 68,882 TW 236,906 (1,567,318 ) ECS (546,340 ) (473,217 ) Total $ (5,992,568 ) $ (10,145,668 ) Operating income (loss) (5,992,568) (10,145,668 SURGEPAYS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2021 AND 2020 December 31, 2021 December 31, 2020 Total Assets Surge Blockchain & Other $ 14,244,440 $ 2,595,824 LogicsIQ 1,284,562 199,366 TW - (353,476 ) ECS 3,971,200 4,883,357 Total $ 19,500,202 $ 7,325,071 Total Assets 19,500,202 7,325,071 Total Liabilities Surge Blockchain & Other $ 13,871,370 $ 10,912,205 LogicsIQ 2,056,632 2,450,888 TW - 4,301,249 ECS 20,879 386,695 Total $ 15,948,881 $ 18,051,037 Total Liabilities 15,948,881 18,051,037 |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Income Tax Disclosure [Abstract] | |
Schedule of Components of Income Tax Expense (Benefit) | The Company’s tax expense differs from the “expected” tax expense for the period (computed by applying the blended corporate rate and state tax rates of 26.14 Schedule of Components of Income Tax Expense (Benefit) December 31, 2021 December 31, 2020 Federal income tax benefit - 19.64 $ (2,657,000 ) $ (2,252,000 ) State income tax - 6.5 (880,000 ) - Tax effect of timing differences for income tax purposes 120,000 - Non-deductible items (495,000 ) 460,000 Subtotal (3,912,000 ) (1,792,000 ) Change in valuation allowance 3,912,000 1,792,000 Income tax benefit $ - $ - |
Schedule of Deferred Tax Assets | The tax effects of temporary differences that give rise to significant portions of deferred tax assets and liabilities at December 31, 2021 and 2020, respectively, are approximately as follows: Schedule of Deferred Tax Assets December 31, 2021 December 31, 2020 Deferred Tax Assets Bad debt $ 6,000 $ (368,000 ) Gain on investment in Centercom - related party 48,000 44,000 Amortization of debt discount 434,000 423,000 Share based payments (47,000 ) (38,000 ) Change in fair value of derivative liabilities (321,000 ) (121,000 ) Other (2,000 ) (52,000 ) Net operating loss carryforwards (3,911,000 ) (3,801,000 ) Total deferred tax assets (3,793,000 ) (3,913,000 ) Less: valuation allowance 3,793,000 3,913,000 Net deferred tax asset recorded $ - $ - |
Schedule of Subsidiaries (Detai
Schedule of Subsidiaries (Details) | 12 Months Ended | |
Dec. 31, 2021 | ||
Entity Incorporation, State or Country Code | NV | |
Surge Pays Inc [Member] | ||
Name of subsidiary | SurgePays, Inc. | |
Entity Incorporation, Date of Incorporation | Aug. 18, 2006 | |
Entity Incorporation, State or Country Code | TN | |
Ksix Media Inc [Member] | ||
Name of subsidiary | KSIX Media, Inc. | |
Entity Incorporation, Date of Incorporation | Nov. 5, 2014 | |
Entity Incorporation, State or Country Code | NV | |
Ksix LLC [Member] | ||
Name of subsidiary | KSIX, LLC | |
Entity Incorporation, Date of Incorporation | Sep. 14, 2011 | |
Entity Incorporation, State or Country Code | NV | |
Surge Block Chain LLC [Member] | ||
Name of subsidiary | Surge Blockchain, LLC | |
Entity Incorporation, Date of Incorporation | Jan. 29, 2009 | |
Entity Incorporation, State or Country Code | NV | |
Injury Survey L L C [Member] | ||
Name of subsidiary | Injury Survey, LLC | |
Entity Incorporation, Date of Incorporation | Jul. 28, 2020 | |
Entity Incorporation, State or Country Code | NV | |
DigitizelIQ LLC [Member] | ||
Name of subsidiary | DigitizeIQ, LLC | |
Entity Incorporation, Date of Incorporation | Jul. 23, 2014 | |
Entity Incorporation, State or Country Code | IL | |
Surge Logics Inc [Member] | ||
Name of subsidiary | Surge Logics, Inc | |
Entity Incorporation, Date of Incorporation | Oct. 2, 2018 | |
Entity Incorporation, State or Country Code | NV | |
Surge Payments LLC [Member] | ||
Name of subsidiary | Surge Payments, LLC | |
Entity Incorporation, Date of Incorporation | Dec. 17, 2018 | |
Entity Incorporation, State or Country Code | NV | |
Surge Phone Wireless LLC [Member]. | ||
Name of subsidiary | Surgephone Wireless, LLC | |
Entity Incorporation, Date of Incorporation | Aug. 29, 2019 | |
Entity Incorporation, State or Country Code | NV | |
Surge Pays Fintech Inc [Member] | ||
Name of subsidiary | SurgePays Fintech, Inc | |
Entity Incorporation, Date of Incorporation | Aug. 22, 2019 | |
Entity Incorporation, State or Country Code | NV | |
True Wireless Inc [Member] | ||
Name of subsidiary | True Wireless, Inc | |
Entity Incorporation, Date of Incorporation | Oct. 29, 2020 | [1] |
Entity Incorporation, State or Country Code | OK | |
Ecs Prepaid Llc [Member] | ||
Name of subsidiary | ECS Prepaid, LLC | |
Entity Incorporation, Date of Incorporation | Jun. 9, 2009 | |
Entity Incorporation, State or Country Code | MO | |
Central States Legal Services Inc [Member] | ||
Name of subsidiary | Central States Legal Services, Inc | |
Entity Incorporation, Date of Incorporation | Aug. 1, 2003 | |
Entity Incorporation, State or Country Code | MO | |
Electronic Check Services Inc [Member] | ||
Name of subsidiary | Electronic Check Services, Inc. | |
Entity Incorporation, Date of Incorporation | May 19, 1999 | |
Entity Incorporation, State or Country Code | MO | |
[1] | Entity was disposed of on May 7, 2021. See below. |
Organization and Nature of Op_3
Organization and Nature of Operations (Details Narrative) - USD ($) | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||
Net loss | $ 13,531,144 | $ 10,721,627 | |
Net Cash Provided by (Used in) Operating Activities | 15,288,261 | 4,326,048 | |
Accumulated deficit | 35,123,343 | 21,592,199 | |
Total stockholders' deficit | 3,551,321 | $ (10,725,966) | $ (4,699,615) |
Working capital deficit | 3,894,487 | ||
Cash on hand | $ 6,283,496 |
Scheduled of Receivables (Detai
Scheduled of Receivables (Details) | Dec. 31, 2021USD ($) |
Accounting Policies [Abstract] | |
2022 | |
2023 | 52,227 |
2024 | 89,532 |
2025 | 44,766 |
Receivables, gross | 186,525 |
Less: amount representing interest | (9,674) |
Total | $ 176,851 |
Scheduled of Deconsolidated Own
Scheduled of Deconsolidated Ownership (Details) - USD ($) | May 07, 2021 | Dec. 31, 2021 | Dec. 31, 2020 |
Multiemployer Plan [Line Items] | |||
Note receivable | $ 176,851 | ||
Operating lease - right of use asset - net | 486,668 | $ 368,638 | |
Note payable - SBA government | 186,525 | ||
Operating lease liability | 488,255 | 365,723 | |
Total net liabilities assumed by buyer | $ 1,719,020 | ||
Gain on deconsolidation | 1,895,871 | 1,895,871 | |
True Wireless Inc [Member] | |||
Multiemployer Plan [Line Items] | |||
Note receivable | 176,851 | ||
Fair value of consideration received | 176,851 | ||
Cash | 325,316 | ||
Lifeline revenue due from USAC | 74,650 | ||
Inventory | 107,089 | ||
Property and equipment - net | 20,645 | $ 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 | ||
Note payable - SBA government | 150,000 | ||
Operating lease liability | 10,981 | ||
Total liabilities assumed by buyer | $ 2,257,701 |
Schedule of Disaggregation of R
Schedule of Disaggregation of Revenue from Contracts with Customers (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Product Information [Line Items] | ||
Total Revenue | $ 51,060,589 | $ 54,406,788 |
Percentage of Revenues | 100.00% | |
Other [Member] | ||
Product Information [Line Items] | ||
Total Revenue | $ 8,169 | $ 206,548 |
Percentage of Revenues | 0.02% | 0.38% |
ECS [Member] | ||
Product Information [Line Items] | ||
Total Revenue | $ 24,627,796 | $ 34,861,891 |
Percentage of Revenues | 48.23% | 64.08% |
LogicsIQ, Inc [Member] | ||
Product Information [Line Items] | ||
Total Revenue | $ 17,846,698 | $ 16,430,057 |
Percentage of Revenues | 34.95% | 30.20% |
Surge Pays Inc [Member] | ||
Product Information [Line Items] | ||
Total Revenue | $ 7,281,839 | |
Percentage of Revenues | 14.26% | 0.00% |
True Wireless Inc [Member] | ||
Product Information [Line Items] | ||
Total Revenue | $ 1,157,981 | $ 2,372,977 |
Percentage of Revenues | 2.27% | 4.36% |
Surge Block Chain LLC [Member] | ||
Product Information [Line Items] | ||
Total Revenue | $ 138,106 | $ 535,315 |
Percentage of Revenues | 0.27% | 0.98% |
Schedule of Diluted Net Income
Schedule of Diluted Net Income (Loss) Per Share (Details) - shares | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||
Total contingent shares issuance arrangement, stock options or warrants | 5,882,385 | 4,541,422 | |
Convertible Debt Securities [Member] | |||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||
Total contingent shares issuance arrangement, stock options or warrants | [1] | 736,260 | |
Common Stock Warrants [Member] | |||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||
Total contingent shares issuance arrangement, stock options or warrants | [2] | 5,852,984 | 154,178 |
Share-based Payment Arrangement, Option [Member] | |||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||
Total contingent shares issuance arrangement, stock options or warrants | [3] | 3,401 | 17,004 |
Series A Preferred Stock [Member] | |||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||
Total contingent shares issuance arrangement, stock options or warrants | [4] | 26,000 | 26,000 |
Series C Convertible Preferred Stock [Member] | |||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||
Total contingent shares issuance arrangement, stock options or warrants | [5] | 3,607,980 | |
[1] | exercise prices variable | ||
[2] | weighted average exercise price - $ 8.68 | ||
[3] | weighted average exercise price - $ 16 | ||
[4] | each | ||
[5] | each share converts to 250 shares of common stock |
Schedule of Diluted Net Incom_2
Schedule of Diluted Net Income (Loss) Per Share (Details) (Parenthetical) - $ / shares | Dec. 31, 2021 | Dec. 31, 2020 |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Class of Warrant or Right, Exercise Price of Warrants or Rights | $ 37.50 | |
Common Stock Warrants [Member] | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Class of Warrant or Right, Exercise Price of Warrants or Rights | $ 8.68 | 32.50 |
Share-based Payment Arrangement, Option [Member] | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Class of Warrant or Right, Exercise Price of Warrants or Rights | $ 16 | $ 16 |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies (Details Narrative) - USD ($) | May 07, 2021 | Dec. 31, 2021 | Dec. 31, 2020 | Jan. 17, 2019 |
Goodwill | $ 866,782 | $ 866,782 | ||
Retained Liabilities | 15,948,881 | 18,051,037 | ||
Notes receivable, net | 176,851 | |||
Insured by FDIC | 250,000 | |||
Allowance for doubtful accounts | 137,218 | 116,664 | ||
Bad debt expense | 24,841 | 1,750,239 | ||
Inventory, Net | 4,359,296 | 178,309 | ||
Impairment loss | 0 | 0 | ||
Impairnent loss on property and equipment | 0 | 0 | ||
Deferred revenue | 276,250 | 443,300 | ||
Unceratin tax positions | 0 | 0 | ||
Penalties related to uncertainincome tax positions | $ 0 | 0 | ||
Tax Cuts and Jobs act Description | 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 | |||
Equity method investment ownership percentage | 40.00% | |||
Investments | $ 443,288 | 414,612 | ||
Gain on investment | 28,676 | 210,912 | ||
Accounts payable | 429,010 | |||
Advertising expenses | $ 661,238 | $ 273,031 | ||
Authorised shares | 500,000,000 | 500,000,000 | ||
Convertible Note [Member] | ||||
Debt instrument description | The convertible notes contain exercise prices that had a discount to market ranging from 70% - 75% of the 10 or 20 days (See Note 5). As a result, the amount computed for common stock equivalents could have changed given the quoted closing trading price at each reporting period | |||
True Wireless Inc [Member] | ||||
Retained Liabilities | $ 1,097,659 | $ 4,301,249 | ||
Accounts payable and accrued expenses | 1,077,659 | |||
Related party loans | 20,000 | |||
Notes receivable, net | $ 176,851 | |||
Interest rate | 0.60% | |||
Default interest rate | 10.00% | |||
Repayment of principle and interest | $ 7,461 |
Schedule of Property and Equipm
Schedule of Property and Equipment (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Property, Plant and Equipment [Line Items] | ||
Computer Equipment and Software | $ 283,484 | $ 273,256 |
Furniture and Fixtures | 82,752 | 47,526 |
Leasehold Improvements | 21,512 | |
Property and equipment, gross | 366,236 | 342,294 |
Less: Accumulated Depreciation | (165,788) | (105,484) |
Property and equipment, net | $ 200,448 | $ 236,810 |
Computer Equipment [Member] | Minimum [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property, Plant and Equipment, Useful Life | 3 years | |
Computer Equipment [Member] | Maximum [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property, Plant and Equipment, Useful Life | 5 years | |
Furniture and Fixtures [Member] | Minimum [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property, Plant and Equipment, Useful Life | 5 years | |
Furniture and Fixtures [Member] | Maximum [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property, Plant and Equipment, Useful Life | 7 years | |
Leasehold Improvements [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property, Plant and Equipment, Useful Life | 15 years |
Property and Equipment (Details
Property and Equipment (Details Narrative) - USD ($) | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | May 07, 2021 | |
Depreciation expense | $ 67,125 | $ 64,413 | |
True Wireless Inc [Member] | |||
Disposed of property and equipment | 20,645 | $ 20,645 | |
True Wireless Inc [Member] | |||
Depreciation expense | $ 5,019 |
Schedule of Intangible Assets (
Schedule of Intangible Assets (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Finite-Lived Intangible Assets [Line Items] | ||
Intangible Assets Gross | $ 5,753,520 | $ 5,753,520 |
Less: Accumulated Depreciation | (2,320,036) | (1,627,778) |
Intangible Assets | 3,433,484 | 4,125,742 |
Computer Software, Intangible Asset [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Intangible Assets Gross | $ 4,286,402 | 4,286,402 |
Weighted average remaining useful lives | 7 years | |
Trade Names [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Intangible Assets Gross | $ 617,474 | 617,474 |
Weighted average remaining useful lives | 15 years | |
ECS Membership Agreement [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Intangible Assets Gross | $ 465,000 | 465,000 |
Weighted average remaining useful lives | 1 year | |
Noncompete Agreements [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Intangible Assets Gross | $ 201,389 | 201,389 |
Weighted average remaining useful lives | 2 years | |
Customer Relationships [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Intangible Assets Gross | $ 183,255 | $ 183,255 |
Weighted average remaining useful lives | 5 years |
Scheduled of Estimated Amortiza
Scheduled of Estimated Amortization Expenses (Details) - USD ($) | Dec. 31, 2021 | Dec. 31, 2020 |
Goodwill and Intangible Assets Disclosure [Abstract] | ||
2022 | $ 653,508 | |
2023 | 653,508 | |
2024 | 653,508 | |
2025 | 653,508 | |
Thereafter | 819,452 | |
Total | $ 3,433,484 | $ 4,125,742 |
Intangibles (Details Narrative)
Intangibles (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Goodwill and Intangible Assets Disclosure [Abstract] | ||
Amortization expense | $ 692,258 | $ 1,108,375 |
Schedule of Notes Payable (Deta
Schedule of Notes Payable (Details) | 12 Months Ended | |||
Dec. 31, 2021USD ($)shares | Dec. 31, 2020USD ($) | |||
Short-term Debt [Line Items] | ||||
Amortization of debt discount | $ 3,677,121 | $ 2,016,764 | ||
Debt discount | (3,677,121) | 1,417,524 | ||
Notes Payable to Related Parties In Default [Member] | ||||
Short-term Debt [Line Items] | ||||
Balance | ||||
Balance | $ 467,385 | |||
Notes Payable One [Member] | ||||
Short-term Debt [Line Items] | ||||
Issuance dates of notes | 2016 | |||
Maturity date | 2016 | |||
Interest rate | 5.00% | |||
Collateral | Unsecured | |||
Principal | $ 485,000 | |||
Balance | 485,000 | |||
Gross proceeds | ||||
Repayments - cash | (485,000) | |||
Amortization of debt discount | ||||
Debt discount | ||||
Balance | ||||
Notes Payable Two [Member] | ||||
Short-term Debt [Line Items] | ||||
Issuance dates of notes | 2016 | |||
Maturity date | 2017 | |||
Interest rate | 10.00% | |||
Collateral | Unsecured | |||
Principal | $ 27,500 | |||
Balance | 27,500 | |||
Gross proceeds | ||||
Repayments - cash | (27,500) | |||
Amortization of debt discount | ||||
Debt discount | ||||
Balance | ||||
Notes Payable Three [Member] | ||||
Short-term Debt [Line Items] | ||||
Issuance dates of notes | November 4, 2019 | |||
Maturity date | November 3, 2020 | |||
Interest rate | 18.00% | |||
Collateral | Unsecured | |||
Warrants issued as discount | shares | 2,406,250 | |||
Principal | $ 250,000 | |||
Balance | 250,000 | 223,672 | ||
Gross proceeds | ||||
Repayments - cash | (250,000) | |||
Amortization of debt discount | 26,328 | |||
Debt discount | ||||
Balance | 250,000 | |||
Notes Payable Four [Member] | ||||
Short-term Debt [Line Items] | ||||
Issuance dates of notes | August/September/October 2021 | |||
Maturity date | August/September/October 2022 | |||
Interest rate | 10.00% | |||
Collateral | Unsecured | |||
Principal | [1] | $ 1,101,000 | ||
Balance | ||||
Gross proceeds | 1,101,000 | |||
Repayments - cash | (1,127,257) | |||
Amortization of debt discount | 698,511 | |||
Debt discount | (672,254) | |||
Balance | ||||
Notes Payable [Member] | ||||
Short-term Debt [Line Items] | ||||
Principal | 1,863,500 | |||
Balance | 250,000 | 736,172 | ||
Gross proceeds | 1,101,000 | |||
Repayments - cash | (1,377,257) | (512,500) | ||
Amortization of debt discount | 698,511 | 26,328 | ||
Debt discount | (672,254) | |||
Balance | 250,000 | |||
Notes Payable In Default [Member] | ||||
Short-term Debt [Line Items] | ||||
Balance | 250,000 | 512,500 | ||
Balance | 250,000 | |||
Convertible Notes Payable One [Member] | ||||
Short-term Debt [Line Items] | ||||
Issuance dates of notes | 2019 and Prior | |||
Maturity date | 2020 | |||
Collateral | Unsecured | |||
Conversion price | [2] | |||
Principal | ||||
Balance | ||||
Gross proceeds | ||||
Repayments - cash | (438,698) | |||
Amortization of debt discount | 161,217 | |||
Debt discount | ||||
Repayments - common stock | (4,159,203) | |||
Conversion to equity/debt modification | ||||
Reclassified to receivable | ||||
Balance | ||||
Convertible Notes Payable Two [Member] | ||||
Short-term Debt [Line Items] | ||||
Issuance dates of notes | February 2020 - December 2020 | |||
Maturity date | February 2021 - September 2021 | |||
Collateral | Unsecured | |||
Conversion price | [2] | |||
Principal | $ 2,347,000 | |||
Balance | 1,516,170 | |||
Gross proceeds | 2,347,000 | |||
Repayments - cash | (130,061) | |||
Amortization of debt discount | 517,781 | 1,829,219 | ||
Debt discount | (2,347,000) | |||
Repayments - common stock | (182,988) | |||
Conversion to equity/debt modification | (2,110,898) | |||
Reclassified to receivable | [3] | 76,947 | ||
Balance | 1,516,170 | |||
Convertible Notes Payable Two [Member] | Minimum [Member] | ||||
Short-term Debt [Line Items] | ||||
Interest rate | 10.00% | |||
Convertible Notes Payable Two [Member] | Maximum [Member] | ||||
Short-term Debt [Line Items] | ||||
Interest rate | 14.00% | |||
Convertible Notes Payable Three [Member] | ||||
Short-term Debt [Line Items] | ||||
Issuance dates of notes | January 2021 - March 2021 | |||
Maturity date | May 2021 - March 2022 | |||
Collateral | Unsecured | |||
Conversion price | [4] | |||
Principal | $ 2,550,000 | |||
Balance | ||||
Gross proceeds | 2,550,000 | |||
Repayments - cash | (2,550,000) | [5] | ||
Amortization of debt discount | 2,460,829 | |||
Debt discount | (2,460,829) | |||
Repayments - common stock | ||||
Conversion to equity/debt modification | ||||
Reclassified to receivable | ||||
Balance | ||||
Convertible Notes Payable Three [Member] | Minimum [Member] | ||||
Short-term Debt [Line Items] | ||||
Interest rate | 5.00% | |||
Convertible Notes Payable Three [Member] | Maximum [Member] | ||||
Short-term Debt [Line Items] | ||||
Interest rate | 12.00% | |||
Convertible Notes Payable [Member] | ||||
Short-term Debt [Line Items] | ||||
Interest rate | 14.00% | |||
Principal | $ 4,897,000 | |||
Balance | 1,516,170 | 4,436,684 | ||
Gross proceeds | 2,550,000 | 2,347,000 | ||
Repayments - cash | (2,550,000) | (568,759) | ||
Amortization of debt discount | 2,978,610 | 1,990,436 | ||
Debt discount | (2,460,829) | (2,347,000) | ||
Repayments - common stock | (4,342,191) | |||
Conversion to equity/debt modification | (2,110,898) | |||
Reclassified to receivable | 76,947 | |||
Balance | 1,516,170 | |||
Paycheck Protection Program and Economic Injury Disaster Loan [Member] | ||||
Short-term Debt [Line Items] | ||||
Principal | 1,652,849 | |||
Balance | 1,134,682 | |||
Gross proceeds | 518,167 | 1,134,682 | ||
Forgiveness of loan | (371,664) | |||
Deconsolidation of subsidiary (“TW”) | (150,000) | |||
Balance | 1,131,185 | 1,134,682 | ||
Notes Payable to Related Parties [Member] | ||||
Short-term Debt [Line Items] | ||||
Balance | 3,489,440 | 2,205,440 | ||
Gross proceeds | 4,355,385 | 1,284,000 | ||
Accrued interest included in note balance | 692,458 | |||
Conversion of debt into common stock | (2,265,967) | |||
Repayments - cash | (210,500) | |||
Balance | $ 6,060,816 | 3,489,440 | ||
Notes Payable to Related Parties [Member] | Chief Executive Officer [Member] | ||||
Short-term Debt [Line Items] | ||||
Issuance dates of notes | [6],[7] | Various | ||
Maturity date | [6],[7] | June 30, 2022 or January 1, 2023 due on demand | ||
Interest rate | [6],[7] | 10.00% | ||
Collateral | [6],[7] | Unsecured | ||
Balance | [6],[7] | $ 3,341,940 | 2,205,440 | |
Gross proceeds | [6],[7] | 3,825,000 | 1,136,500 | |
Accrued interest included in note balance | [6],[7] | 692,458 | ||
Conversion of debt into common stock | [6],[7] | (2,265,967) | ||
Repayments - cash | [6],[7] | |||
Balance | [6],[7] | $ 5,593,431 | 3,341,940 | |
Notes Payable to Related Parties [Member] | President Chief Operating Officer and Board Director [Member] | ||||
Short-term Debt [Line Items] | ||||
Issuance dates of notes | [8] | May 2020/January 2021 | ||
Maturity date | [8] | March 2021 and due on demand | ||
Interest rate | [8] | 15.00% | ||
Collateral | [8] | Unsecured | ||
Balance | [8] | $ 147,500 | ||
Gross proceeds | [8] | 63,000 | 147,500 | |
Accrued interest included in note balance | [8] | |||
Conversion of debt into common stock | [8] | |||
Repayments - cash | [8] | (210,500) | ||
Balance | [8] | 147,500 | ||
Notes Payable to Related Parties [Member] | Board Member [Member] | ||||
Short-term Debt [Line Items] | ||||
Issuance dates of notes | [9] | August 2021 | ||
Maturity date | [9] | August 2031 due on demand | ||
Collateral | [9] | Unsecured | ||
Balance | [9] | |||
Gross proceeds | [9] | 467,385 | ||
Accrued interest included in note balance | [9] | |||
Conversion of debt into common stock | [9] | |||
Repayments - cash | [9] | |||
Balance | [9] | $ 467,385 | ||
Notes Payable to Related Parties [Member] | Board [Member] | ||||
Short-term Debt [Line Items] | ||||
Interest rate | [9] | 10.00% | ||
Paycheck Protection Program [Member] | ||||
Short-term Debt [Line Items] | ||||
Issuance dates of notes | April 2020 | |||
Term | 18 months | |||
Maturity date | October 2021 | |||
Interest rate | 1.00% | |||
Collateral | Unsecured | |||
Principal | $ 498,082 | |||
Balance | 498,082 | |||
Gross proceeds | 498,082 | |||
Forgiveness of loan | (371,664) | |||
Deconsolidation of subsidiary (“TW”) | ||||
Balance | $ 126,418 | 498,082 | ||
Economic Injury Disaster Loan [Member] | ||||
Short-term Debt [Line Items] | ||||
Issuance dates of notes | May 2020 | |||
Term | 30 years | |||
Maturity date | May 2050 | |||
Interest rate | 3.75% | |||
Collateral | Unsecured | |||
Principal | $ 150,000 | |||
Balance | 150,000 | |||
Gross proceeds | 150,000 | |||
Forgiveness of loan | ||||
Deconsolidation of subsidiary (“TW”) | ||||
Balance | $ 150,000 | 150,000 | ||
Economic Injury Disaster Loan One [Member] | ||||
Short-term Debt [Line Items] | ||||
Issuance dates of notes | July 2020 | |||
Term | 30 years | |||
Maturity date | July 2050 | |||
Interest rate | 3.75% | |||
Collateral | Unsecured | |||
Principal | $ 486,600 | |||
Balance | 486,600 | |||
Gross proceeds | 486,600 | |||
Forgiveness of loan | ||||
Deconsolidation of subsidiary (“TW”) | (150,000) | |||
Balance | $ 336,600 | 486,600 | ||
Paycheck Protection Program One [Member] | ||||
Short-term Debt [Line Items] | ||||
Issuance dates of notes | March 2021 | |||
Term | 5 years | |||
Maturity date | March 2026 | |||
Interest rate | 1.00% | |||
Collateral | Unsecured | |||
Principal | $ 518,167 | |||
Balance | ||||
Gross proceeds | 518,167 | |||
Forgiveness of loan | ||||
Deconsolidation of subsidiary (“TW”) | ||||
Balance | $ 518,167 | |||
[1] | In the event of default, these notes were convertible at 75% | |||
[2] | Convertible at 65 | |||
[3] | During 2021, the Company overpaid a note holder by $ 76,947 | |||
[4] | Convertible at 70 75 | |||
[5] | During 2021, the Company repaid the $ 2,550,000 2,300,000 120 465,239 | |||
[6] | Activity is with the Company’s Chief Executive Officer and Board Director (Kevin Brian Cox). Prior to September 30, 2021, these notes were either due on demand or had a specific due date. Additionally, these advances had interest rates from 6% 15% 10% 692,458 561,758 4.30 2,415,560 2,265,967 149,593 2,415,560 | |||
[7] | Activity is with the Company’s Chief Executive Officer and Board Director (Kevin Brian Cox). Prior to September 30, 2021, these notes were either due on demand or had a specific due date. Additionally, these advances had interest rates from 6% 15% | |||
[8] | Activity is with the Company’s President, Chief Operating Officer and Board Director (Anthony Nuzzo). | |||
[9] | Activity is with David May, who is a Board Member. The note requires payments of $ 5,000 |
Schedule of Notes Payable (De_2
Schedule of Notes Payable (Details) (Parenthetical) | 1 Months Ended | 12 Months Ended | |
Sep. 30, 2021USD ($) | Dec. 31, 2021USD ($)$ / sharesshares | Dec. 31, 2020USD ($)$ / shares | |
Short-term Debt [Line Items] | |||
Debt instrument forgiveness | $ 377,743 | ||
Proceeds from Loans | $ 1,101,000 | $ 3,481,582 | |
Accrued Interest | $ 692,458 | ||
Stock Issued During Period, Shares, Conversion of Convertible Securities | shares | 561,758 | ||
Shares Issued, Price Per Share | $ / shares | $ 4.74 | ||
Debt Conversion, Converted Instrument, Amount | $ 2,285,040 | ||
Repayments of Notes Payable | $ 1,377,257 | 280,636 | |
Convertible Notes Payable | $ 2,550,000 | ||
Convertible Notes Payable [Member] | |||
Short-term Debt [Line Items] | |||
Debt Instrument, Interest Rate, Stated Percentage | 120.00% | ||
Debt Instrument, Face Amount | $ 2,300,000 | ||
Interest and Debt Expense | $ 465,239 | ||
Notes Payable Five [Member] | |||
Short-term Debt [Line Items] | |||
Debt Instrument, Interest Rate, Stated Percentage | 75.00% | ||
Convertible Note Payable One [Member] | |||
Short-term Debt [Line Items] | |||
Debt instrument conversion rate | 0.65 | ||
[custom:DebtInstrumentSettlementOfOutstanding] | $ 76,947 | ||
Chief Executive Officer [Member] | |||
Short-term Debt [Line Items] | |||
Shares Issued, Price Per Share | $ / shares | $ 4.30 | ||
Debt Conversion, Converted Instrument, Amount | $ 2,415,560 | ||
Debt Instrument, Face Amount | 2,265,967 | ||
Accrued interest | 149,593 | ||
Adjustment to Additional Paid-in Capital, Convertible Debt Instrument Issued at Substantial Premium | 2,415,560 | ||
Board [Member] | |||
Short-term Debt [Line Items] | |||
Repayments of Notes Payable | $ 5,000 | ||
Minimum [Member] | Convertible Note Payable Two [Member] | |||
Short-term Debt [Line Items] | |||
Debt instrument conversion rate | 0.70 | ||
Maximum [Member] | Convertible Note Payable Two [Member] | |||
Short-term Debt [Line Items] | |||
Debt instrument conversion rate | 0.75 | ||
Kevin Brian Cox [Member] | Chief Executive Officer And Board Director [Member] | |||
Short-term Debt [Line Items] | |||
Bearing interest rate | 10.00% | ||
Kevin Brian Cox [Member] | Minimum [Member] | Chief Executive Officer And Board Director [Member] | |||
Short-term Debt [Line Items] | |||
Debt Instrument, Interest Rate, Stated Percentage | 6.00% | ||
Kevin Brian Cox [Member] | Maximum [Member] | Chief Executive Officer And Board Director [Member] | |||
Short-term Debt [Line Items] | |||
Debt Instrument, Interest Rate, Stated Percentage | 15.00% | ||
Paycheck Protection Program and Economic Injury Disaster Loan [Member] | |||
Short-term Debt [Line Items] | |||
Proceeds from Loans | $ 150,000 | ||
Principal Amount [Member] | |||
Short-term Debt [Line Items] | |||
Debt instrument forgiveness | 371,664 | ||
Accrued Interest [Member] | |||
Short-term Debt [Line Items] | |||
Debt instrument forgiveness | $ 6,079 |
Debt (Details Narrative)
Debt (Details Narrative) - USD ($) | 1 Months Ended | 12 Months Ended | |
Apr. 30, 2021 | Dec. 31, 2021 | Dec. 31, 2020 | |
Debt Instrument [Line Items] | |||
Line of credit, increased value | $ 1,000,000 | ||
Line of credit, interest rate | 6.00% | ||
Line of credit, outstanding | $ 0 | $ 912,870 | |
Minimum [Member] | |||
Debt Instrument [Line Items] | |||
Debt instrument, periodic payment | 109 | ||
Maximum [Member] | |||
Debt Instrument [Line Items] | |||
Debt instrument, periodic payment | $ 751 |
Schedule of Weighted Average As
Schedule of Weighted Average Assumptions (Details) | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Measurement Input, Expected Dividend Rate [Member] | ||
Federal Home Loan Bank, Advances, Branch of FHLB Bank [Line Items] | ||
Fair value assumptions, measurement input, percentages | 0.00% | 0.00% |
Minimum [Member] | Measurement Input, Expected Term [Member] | ||
Federal Home Loan Bank, Advances, Branch of FHLB Bank [Line Items] | ||
Fair value assumptions, measurement input, term | 2 months 12 days | 9 months |
Minimum [Member] | Measurement Input, Price Volatility [Member] | ||
Federal Home Loan Bank, Advances, Branch of FHLB Bank [Line Items] | ||
Fair value assumptions, measurement input, percentages | 143.00% | 96.00% |
Minimum [Member] | Measurement Input, Risk Free Interest Rate [Member] | ||
Federal Home Loan Bank, Advances, Branch of FHLB Bank [Line Items] | ||
Fair value assumptions, measurement input, percentages | 0.03% | 0.08% |
Maximum [Member] | Measurement Input, Expected Term [Member] | ||
Federal Home Loan Bank, Advances, Branch of FHLB Bank [Line Items] | ||
Fair value assumptions, measurement input, term | 1 year | |
Maximum [Member] | Measurement Input, Price Volatility [Member] | ||
Federal Home Loan Bank, Advances, Branch of FHLB Bank [Line Items] | ||
Fair value assumptions, measurement input, percentages | 291.00% | 132.00% |
Maximum [Member] | Measurement Input, Risk Free Interest Rate [Member] | ||
Federal Home Loan Bank, Advances, Branch of FHLB Bank [Line Items] | ||
Fair value assumptions, measurement input, percentages | 0.09% | 1.51% |
Summary of Changes in Fair Valu
Summary of Changes in Fair Value (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Defined Benefit Plan Disclosure [Line Items] | ||
Gain on derivative liability upon related debt settled | $ (1,428,015) | $ (279,573) |
Fair Value, Inputs, Level 3 [Member] | ||
Defined Benefit Plan Disclosure [Line Items] | ||
Derivative liability, beginning balance | 1,357,528 | 190,846 |
Fair value at commitment date | 1,877,250 | 2,024,191 |
Fair value mark to market adjustment | (1,806,763) | (577,936) |
Gain on derivative liability upon related debt settled | (1,428,015) | (279,573) |
Derivative liability, ending balance | $ 1,357,528 |
Derivative Liabilities (Details
Derivative Liabilities (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Gain on change in fair value of derivative liability | $ 1,806,763 | $ 577,936 |
Derivative expense | 1,775,057 | 566,789 |
Gain on settlement of convertible debt | $ 1,428,015 | $ 279,573 |
Schedule of Liabilities Measure
Schedule of Liabilities Measured Fair Value on Recurring Basis (Details) - USD ($) | Dec. 31, 2021 | Dec. 31, 2020 |
Defined Benefit Plan Disclosure [Line Items] | ||
Derivative liabilities | $ 1,357,528 | |
Fair Value, Inputs, Level 1 [Member] | ||
Defined Benefit Plan Disclosure [Line Items] | ||
Derivative liabilities | ||
Fair Value, Inputs, Level 2 [Member] | ||
Defined Benefit Plan Disclosure [Line Items] | ||
Derivative liabilities | ||
Fair Value, Inputs, Level 3 [Member] | ||
Defined Benefit Plan Disclosure [Line Items] | ||
Derivative liabilities | $ 1,357,528 |
Schedule of Lease Expense (Deta
Schedule of Lease Expense (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Commitments and Contingencies Disclosure [Abstract] | ||
Operating Leases | $ 170,962 | $ 248,677 |
Interest on lease liabilities | 38,093 | 44,237 |
Total net lease cost | $ 209,055 | $ 292,914 |
Schedule of Supplemental Inform
Schedule of Supplemental Information Related to Leases (Details) - USD ($) | Dec. 31, 2021 | Dec. 31, 2020 |
Commitments and Contingencies Disclosure [Abstract] | ||
Operating lease ROU assets - net | $ 486,668 | $ 368,638 |
Operating lease liabilities - current | 49,352 | 210,556 |
Operating lease liabilities - non-current | 438,903 | 155,167 |
Total operating lease liabilities | $ 488,255 | $ 365,723 |
Schedule of Supplemental Cash F
Schedule of Supplemental Cash Flow and Other Information Related to Leases (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Commitments and Contingencies Disclosure [Abstract] | ||
Cash paid for amounts included in measurement of lease liabilities Operating cash flows from operating leases | $ 145,684 | $ 150,145 |
ROU assets obtained in exchange for lease liabilities Operating leases | $ 515,848 | $ 355,203 |
Weighted average remaining lease term (in years) Operating leases | 8 years 3 months | 2 years 10 days |
Weighted average discount rate Operating leases | 5.00% | 11.00% |
Schedule of Future Minimum Paym
Schedule of Future Minimum Payments (Details) - USD ($) | Dec. 31, 2021 | Dec. 31, 2020 |
Commitments and Contingencies Disclosure [Abstract] | ||
2022 | $ 72,070 | |
2023 | 60,294 | |
2024 | 61,876 | |
2025 | 63,460 | |
Thereafter | 349,330 | |
Total lease payments | 607,030 | |
Less: amount representing interest | (118,775) | |
Total operating lease liabilities | $ 488,255 | $ 365,723 |
Commitments and Contingencies_2
Commitments and Contingencies (Details Narrative) - USD ($) | Feb. 16, 2022 | Jan. 30, 2022 | Jan. 07, 2022 | Jan. 07, 2022 | Jan. 04, 2022 | Dec. 17, 2021 | May 31, 2021 | Jul. 09, 2020 | Dec. 31, 2021 | Dec. 31, 2020 | Aug. 29, 2016 | Aug. 28, 2016 |
Operating lease, right use of asset | $ 486,668 | $ 368,638 | ||||||||||
Litigation settlement amount | $ 785,000 | |||||||||||
Monthly revenue | $ 2,500,000 | $ 1,500,000 | ||||||||||
Settlement expense | 3,750,000 | |||||||||||
Plaintiff amount | $ 73,000 | |||||||||||
Subsequent Event [Member] | ||||||||||||
Escrow amount | $ 375,000 | $ 375,000 | ||||||||||
Accrual payments | $ 3,650,000 | 450,000 | $ 100,000,000,000 | |||||||||
ECS Business [Member] | ||||||||||||
Operating lease, right use of asset | $ 228,752 | |||||||||||
Gain loss on termination of lease | $ 0 | |||||||||||
G B T [Member] | Settlement Agreement [Member] | ||||||||||||
Escrow amount | 1,000,000 | |||||||||||
Stanley Hills L L C [Member] | Subsequent Event [Member] | ||||||||||||
Accrual payments | $ 4,200,000 | |||||||||||
Igor One Corp [Member] | ||||||||||||
Accrual payments | $ 750 | |||||||||||
Shares issued | 110,000 | |||||||||||
Igor One Corp [Member] | Subsequent Event [Member] | ||||||||||||
Accrual payments | $ 8,552 | $ 500,000 | ||||||||||
Glen Eagles Shares [Member] | ||||||||||||
Shares issued | 3,000 | |||||||||||
Consideration amount | $ 15,000 |
Schedule of Fair Value of Warra
Schedule of Fair Value of Warrants (Details) | Dec. 31, 2021 |
Warrant One [Member] | Measurement Input, Expected Term [Member] | |
Accumulated Other Comprehensive Income (Loss) [Line Items] | |
Expected term (years) | 5 years |
Warrant One [Member] | Measurement Input, Price Volatility [Member] | |
Accumulated Other Comprehensive Income (Loss) [Line Items] | |
Risk free interest rate | 118 |
Warrant One [Member] | Measurement Input, Expected Dividend Rate [Member] | |
Accumulated Other Comprehensive Income (Loss) [Line Items] | |
Risk free interest rate | 0 |
Warrant One [Member] | Measurement Input, Risk Free Interest Rate [Member] | |
Accumulated Other Comprehensive Income (Loss) [Line Items] | |
Risk free interest rate | 0.53 |
Warrant Two [Member] | Measurement Input, Expected Term [Member] | |
Accumulated Other Comprehensive Income (Loss) [Line Items] | |
Expected term (years) | 3 years |
Warrant Two [Member] | Measurement Input, Price Volatility [Member] | |
Accumulated Other Comprehensive Income (Loss) [Line Items] | |
Risk free interest rate | 118 |
Warrant Two [Member] | Measurement Input, Expected Dividend Rate [Member] | |
Accumulated Other Comprehensive Income (Loss) [Line Items] | |
Risk free interest rate | 0 |
Warrant Two [Member] | Measurement Input, Risk Free Interest Rate [Member] | |
Accumulated Other Comprehensive Income (Loss) [Line Items] | |
Risk free interest rate | 0.53 |
Warrant Three [Member] | Measurement Input, Expected Term [Member] | Minimum [Member] | |
Accumulated Other Comprehensive Income (Loss) [Line Items] | |
Expected term (years) | 3 years |
Warrant Three [Member] | Measurement Input, Expected Term [Member] | Maximum [Member] | |
Accumulated Other Comprehensive Income (Loss) [Line Items] | |
Expected term (years) | 5 years |
Warrant Three [Member] | Measurement Input, Price Volatility [Member] | Minimum [Member] | |
Accumulated Other Comprehensive Income (Loss) [Line Items] | |
Risk free interest rate | 119 |
Warrant Three [Member] | Measurement Input, Price Volatility [Member] | Maximum [Member] | |
Accumulated Other Comprehensive Income (Loss) [Line Items] | |
Risk free interest rate | 146 |
Warrant Three [Member] | Measurement Input, Expected Dividend Rate [Member] | |
Accumulated Other Comprehensive Income (Loss) [Line Items] | |
Risk free interest rate | 0 |
Warrant Three [Member] | Measurement Input, Risk Free Interest Rate [Member] | Minimum [Member] | |
Accumulated Other Comprehensive Income (Loss) [Line Items] | |
Risk free interest rate | 0.07 |
Warrant Three [Member] | Measurement Input, Risk Free Interest Rate [Member] | Maximum [Member] | |
Accumulated Other Comprehensive Income (Loss) [Line Items] | |
Risk free interest rate | 1.15 |
Schedule of Stock Option Transa
Schedule of Stock Option Transactions (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Equity [Abstract] | ||
Number of options, outstanding beginning | 17,004 | |
Weighted average exercise price, outstanding beginning | $ 16 | |
Weighted Average remaining contractual term (years), beginning | 0 years | |
Aggregate intrinsic value, outstanding beginning | ||
Number of options, exercisable beginning | ||
Weighted average exercise price, exercisable beginning | ||
Weighted Average remaining contractual term (years), exercisable | 0 years | |
Aggregate Intrinsic Value, Exercisable Beginning | ||
Number of options, vested and exercisable | ||
Weighted average exercise price, vested and exercisable | ||
Number of options, unvested and non-exercisable | 17,004 | |
Weighted average exercise price, vested and exercisable | $ 16 | |
Number of options, granted | 17,004 | |
Number of options, unvested and non-exercisable granted | $ 16 | |
Weighted average remaining contractual term (Years), granted | 7 years | |
Weighted Average Grant Date Fair Value, Granted | $ 8.75 | |
Number of options, exercised | ||
Share-based Compensation Arrangements by Share-based Payment Award, Options, Exercises in Period, Weighted Average Exercise Price | ||
Number of options, cancelled forfeited | ||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Forfeitures and Expirations in Period, Weighted Average Exercise Price | ||
Number of options, outstanding ending | 17,004 | 17,004 |
Weighted average exercise price, granted, ending | $ 16 | $ 16 |
Weighted average remaining contractual term (Years) vested and exercisable | 5 years 1 month 28 days | 6 years 1 month 28 days |
Number of options, vested and exercisable, ending | 3,401 | |
Number of options, vested and exercisable, ending | $ 16 | |
Weighted average remaining contractual term (Years), vested and exercisable | 0 years | |
Number of options, unvested and non-exercisable | 13,603 | 17,004 |
Number of options, unvested and non-exercisable, ending | $ 16 | $ 16 |
Weighted average remaining contractual term (Years) unvested and non-exercisable | 5 years 1 month 28 days | 6 years 1 month 28 days |
Aggregate Intrinsic Value Vested and Exercisable |
Schedule of Stock Option (Detai
Schedule of Stock Option (Details) | 12 Months Ended |
Dec. 31, 2020$ / shares | |
Equity [Abstract] | |
Exercise price | $ 16 |
Expected volatility | 96.50% |
Expected dividends | 0.00% |
Expected life in years | 5 years 6 months |
Risk free interest rate | 0.84% |
Schedule of Warrants Activity (
Schedule of Warrants Activity (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Equity [Abstract] | |||
Warrants Outstanding, Beginning balance | 194,317 | 136,993 | |
Weighted Average Exercise Price Outstanding, Beginning balance | $ 32.50 | $ 35.50 | |
Weighted Average Remaining Contractual Life (in years), Ending balance | 2 years 11 months 4 days | 1 year 6 months 7 days | 1 year 11 months 23 days |
Warrants Aggregate Intrinsic Value, Beginning balance | |||
Warrants Exercisable, Beginning balance | 194,317 | ||
Weighted Average Exercise Price Exercisable, Beginning balance | $ 32.50 | ||
Warrants Granted | 5,935,450 | 62,325 | |
Weighted Average Exercise Price, Granted | $ 8.01 | $ 26.50 | |
Warrants Exercised | (2,133) | ||
Weighted Average Exercise Price, Exercised | $ 12.50 | ||
Warrants Forfeited/Cancelled | (44,650) | (5,000) | |
Weighted Average Exercise Price, Forfeited/Cancelled | $ 23.49 | $ 40 | |
Warrants Outstanding, Ending balance | 6,082,984 | 194,317 | 136,993 |
Weighted Average Exercise Price Outstanding, Ending balance | $ 8.68 | $ 32.50 | $ 35.50 |
Warrants Aggregate Intrinsic Value, Ending balance | |||
Warrants Exercisable, Ending balance | 5,852,984 | 194,317 | |
Weighted Average Exercise Price Exercisable, Ending balance | $ 8.70 | $ 32.50 | |
Weighted Average Remaining Contractual Life (in years), Exercisable Ending balance | 2 years 10 months 6 days | 1 year 6 months 7 days | |
Weighted Average Remaining Contractual Life (in years), Beginning balance | 1 year 6 months 7 days | ||
Weighted Average Remaining Contractual Life (in years), Exercisable Beginning balance | 1 year 6 months 7 days | ||
Warrants Unvested, Ending balance | 230,000 | ||
Weighted Average Exercise Price, Unvested, Ending balance | $ 8 | ||
Weighted Average Remaining Contractual Life (in years), Exercisable Ending balance, Unvested | 4 years 10 months 6 days |
Stockholders_ Deficit (Details
Stockholders’ Deficit (Details Narrative) - USD ($) | Nov. 04, 2021 | Nov. 02, 2021 | Oct. 31, 2021 | Jan. 30, 2020 | Dec. 31, 2021 | Dec. 31, 2020 | Jan. 31, 2020 | Dec. 31, 2019 |
Class of Stock [Line Items] | ||||||||
Stockholders equity reverse stock split | 1 for 50 reverse stock split of all classes of its stock | |||||||
Common stock, shares authorized | 500,000,000 | 500,000,000 | ||||||
Common stock, par value | $ 0.001 | $ 0.001 | ||||||
Preferred stock, voting rights | Voting at 1 vote per share | |||||||
Common stock for services, value | $ 3,575 | |||||||
Shares issued price per share | $ 4.74 | |||||||
Shares of common stock, shares | 113,563 | |||||||
Shares of common stock, value | 21,299,662 | |||||||
Cash paid for direct offering costs | 2,222,952 | |||||||
Exercise price | $ 37.50 | |||||||
Net effect on stockholders' deficit | 3,551,321 | $ (10,725,966) | $ (4,699,615) | |||||
Derivative Liability | 3,562,829 | |||||||
Stock and warrants issued with debt recorded as a debt discount ($5.35/share) | 2,645,890 | |||||||
Derivative Liability, Fair Value, Gross Liability | 102,194 | |||||||
[custom:DerivativeFairValueOfDerivativeLiabilityAggregateDiscount-0] | 2,748,084 | |||||||
Stock issued for conversion of debt, shares | 2,285,040 | |||||||
Gain on settlement of debt | 1,469,641 | 2,575,978 | ||||||
Number of common stock issued, value | $ 219,846 | |||||||
Number of warrants issued for cash | 56,781 | |||||||
Stock and warrants issued for cash | $ 1,068,500 | |||||||
Stock and warrants issued price per share | $ 9.41 | |||||||
Number of shares issued | 57,840 | |||||||
[custom:StockIssuedWithDebtRecordedAsDebtDiscountShareValue] | $ 993,780 | |||||||
Compensation expense | 37,174 | $ 30,978 | ||||||
Compensation cost related to unvested options not yet recognized | $ 80,544 | |||||||
Weighted average period cost not yet recognized, period for recognition | 2 years 1 month 28 days | |||||||
Warrants Granted | 5,935,450 | 62,325 | ||||||
Number of warrants sold for cash | 5,290,000 | |||||||
Number of warrants repriced | 433,017 | |||||||
Warrant modification expense | $ 74,476 | |||||||
Payment for cancellation of warrants | 95,000 | |||||||
Cancellation of warrants issued | $ 5,000 | |||||||
Convertible Note Holders [Member] | ||||||||
Class of Stock [Line Items] | ||||||||
Warrants Granted | 277,950 | |||||||
Warrants Holders [Member] | ||||||||
Class of Stock [Line Items] | ||||||||
Warrants Granted | 137,500 | |||||||
Underswriters [Member] | ||||||||
Class of Stock [Line Items] | ||||||||
Number of warrants issued | 230,000 | |||||||
Membership Interest Purchase Agreement and Stock Purchase Sgreement [Member] | ||||||||
Class of Stock [Line Items] | ||||||||
Number of common stock issued | 10,000 | |||||||
Convertible Debt [Member] | ||||||||
Class of Stock [Line Items] | ||||||||
Stock issued for conversion of debt, shares | 709,674 | |||||||
Stock issued for conversion of debt, shares | $ 3,363,561 | |||||||
Underwriter [Member] | ||||||||
Class of Stock [Line Items] | ||||||||
Exercise price | $ 4.73 | |||||||
Warrants term | 5 years | |||||||
Number of warrants issued during the period | 230,000 | |||||||
Fair value of warrants | $ 647,897 | |||||||
Minimum [Member] | Warrant [Member] | ||||||||
Class of Stock [Line Items] | ||||||||
Exercise price | $ 8 | |||||||
Warrants term | 3 years | |||||||
Minimum [Member] | Convertible Debt [Member] | ||||||||
Class of Stock [Line Items] | ||||||||
Conversion of debt price per share | $ 0.05 | |||||||
Maximum [Member] | Warrant [Member] | ||||||||
Class of Stock [Line Items] | ||||||||
Exercise price | $ 12 | |||||||
Warrants term | 5 years | |||||||
Maximum [Member] | Convertible Debt [Member] | ||||||||
Class of Stock [Line Items] | ||||||||
Conversion of debt price per share | $ 10.38 | |||||||
Common Stocks [Member] | ||||||||
Class of Stock [Line Items] | ||||||||
Number of common stock for services | 13,411 | |||||||
Common stock for services, value | $ 99,436 | |||||||
Shares of common stock, shares | 4,600,000 | |||||||
Common Stock [Member] | ||||||||
Class of Stock [Line Items] | ||||||||
Number of common stock for services | 13,411 | |||||||
Common stock for services, value | $ 13 | |||||||
Shares issued price per share | $ 4.30 | |||||||
Shares of common stock, shares | 4,600,000 | 4,862,247 | ||||||
Shares of common stock, value | $ 4,862 | |||||||
Proceeds from common stock | $ 19,780,000 | |||||||
Net effect on stockholders' deficit | $ 12,064 | $ 2,543 | $ 2,042 | |||||
[custom:StockIssuedAsDebtDiscount] | 18,000 | |||||||
Stock and warrants issued with debt recorded as a debt discount ($5.35/share) | $ 18 | |||||||
Stock issued for conversion of debt, shares | 268,534 | |||||||
Stock issued for conversion of debt, shares | $ 269 | |||||||
Number of common stock issued | 15,500 | |||||||
Number of common stock issued, value | $ 16 | |||||||
Stock and warrants issued for cash | $ 114 | |||||||
Common Stock [Member] | Minimum [Member] | ||||||||
Class of Stock [Line Items] | ||||||||
Shares issued price per share | $ 5 | |||||||
Conversion of debt price per share | 0.05 | |||||||
Common Stock [Member] | Maximum [Member] | ||||||||
Class of Stock [Line Items] | ||||||||
Shares issued price per share | 14.05 | |||||||
Conversion of debt price per share | $ 10.38 | |||||||
Stock and Warrants [Member] | ||||||||
Class of Stock [Line Items] | ||||||||
Shares issued price per share | $ 4.30 | |||||||
Shares of common stock, shares | 4,862,247 | |||||||
Shares of common stock, value | $ 21,294,800 | |||||||
Cash paid for direct offering costs | 2,222,952 | |||||||
Net proceeds from direct offering costs | 19,076,710 | |||||||
Stock and warrants shares, description | one share of common stock and one warrant | |||||||
Proceeds from stock and warrants issued for cash | $ 19,786,900 | |||||||
Direct offering cost | 2,222,952 | |||||||
Proceed from IPO | $ 19,076,710 | |||||||
Net effect on stockholders' deficit | $ 0 | |||||||
Stock and Warrants [Member] | Minimum [Member] | ||||||||
Class of Stock [Line Items] | ||||||||
Shares issued price per share | $ 4.30 | |||||||
Stock and Warrants [Member] | Maximum [Member] | ||||||||
Class of Stock [Line Items] | ||||||||
Shares issued price per share | $ 8 | |||||||
Over Allotment Warrants [Member] | ||||||||
Class of Stock [Line Items] | ||||||||
Shares issued price per share | $ 0.01 | |||||||
Shares of common stock, shares | 690,000 | 690,000 | ||||||
Proceeds from warrants issued | $ 6,900 | |||||||
Exercise price | $ 4.73 | |||||||
Warrants term | 3 years | |||||||
Warrant [Member] | ||||||||
Class of Stock [Line Items] | ||||||||
Exercise price | $ 8 | |||||||
Warrants term | 3 years | |||||||
Net effect on stockholders' deficit | $ 0 | |||||||
Cashless exercise of warrants | 2,133 | |||||||
Number of warrants issued | 137,500 | |||||||
Series A Convertible Preferred Stocks [Member] | ||||||||
Class of Stock [Line Items] | ||||||||
Preferred stock, voting rights | Voting at 10 votes per share (2,600,000 votes) | |||||||
Preferred stock, shares authorized | 13,000,000 | |||||||
Preferred stock, shares issued | 260,000 | |||||||
Preferred stock, shares outstanding | 260,000 | |||||||
Preferred stock, par value | $ 0.001 | |||||||
Debt instrument description | Conversion into 1/10 of a share of common stock for each share held (26,000 common stock equivalents) | |||||||
Series C Convertible Preferred Stock [Member] | ||||||||
Class of Stock [Line Items] | ||||||||
Preferred stock, voting rights | Voting at 250 votes per share | |||||||
Preferred stock, shares authorized | 1,000,000 | 1,000,000 | ||||||
Preferred stock, shares issued | 0 | 721,598 | ||||||
Preferred stock, shares outstanding | 0 | 721,598 | ||||||
Preferred stock, par value | $ 0.001 | $ 0.001 | ||||||
Debt instrument description | Conversion into 250 shares of common stock for each share held | |||||||
Series C Preferred Stock [Member] | ||||||||
Class of Stock [Line Items] | ||||||||
Preferred stock, shares issued | 721,598 | |||||||
Preferred stock, shares outstanding | 721,598 | |||||||
Common stock converted shares | 3,607,980 | |||||||
Net effect on stockholders' deficit | $ 0 | |||||||
Stock Issued Under Make Hole Arrangement [Member] | ||||||||
Class of Stock [Line Items] | ||||||||
Shares of common stock, shares | 15,147 | 79,614 | ||||||
Shares of common stock, value | $ 90,401 | $ 377,492 | ||||||
Stock Issued Under Make Hole Arrangement [Member] | Minimum [Member] | ||||||||
Class of Stock [Line Items] | ||||||||
Shares issued price per share | $ 5.60 | |||||||
Stock Issued Under Make Hole Arrangement [Member] | Maximum [Member] | ||||||||
Class of Stock [Line Items] | ||||||||
Shares issued price per share | $ 6 | |||||||
Stock Issued For Debt Modification [Member] | ||||||||
Class of Stock [Line Items] | ||||||||
Shares of common stock, shares | 13,916 | 9,600 | ||||||
Shares of common stock, value | $ 108,931 | $ 67,650 | ||||||
Stock Issued For Debt Modification [Member] | Minimum [Member] | ||||||||
Class of Stock [Line Items] | ||||||||
Shares issued price per share | $ 5.60 | $ 7.05 | ||||||
Stock Issued For Debt Modification [Member] | Maximum [Member] | ||||||||
Class of Stock [Line Items] | ||||||||
Shares issued price per share | $ 8 | |||||||
Stock Issued For Settlement of Liabilities [Member] | ||||||||
Class of Stock [Line Items] | ||||||||
Shares of common stock, shares | 276,702 | |||||||
Shares of common stock, value | $ 1,997,977 | |||||||
Stock Issued For Settlement of Liabilities [Member] | Minimum [Member] | ||||||||
Class of Stock [Line Items] | ||||||||
Shares issued price per share | $ 4.50 | |||||||
Stock Issued For Settlement of Liabilities [Member] | Maximum [Member] | ||||||||
Class of Stock [Line Items] | ||||||||
Shares issued price per share | $ 15.99 | |||||||
Gain on settlement of debt | $ 1,469,641 | |||||||
Common Stock [Member] | ||||||||
Class of Stock [Line Items] | ||||||||
Stock issued for conversion of debt, shares | 268,534 | |||||||
Stock issued for conversion of debt, shares | $ 2,285,040 | |||||||
Conversion of debt price per share | $ 8.51 | |||||||
Number of common stock issued | 5,500 | |||||||
Common Stock [Member] | Settlement of Agreements [Member] | ||||||||
Class of Stock [Line Items] | ||||||||
Number of common stock issued | 2,000 | |||||||
Number of common stock issued, value | $ 17,900 | |||||||
Stock Issued For Acquisition [Member] | ||||||||
Class of Stock [Line Items] | ||||||||
Shares issued price per share | $ 8.95 | |||||||
Stock Issued As Debt Discount [Member] | ||||||||
Class of Stock [Line Items] | ||||||||
Shares issued price per share | $ 17.18 |
Schedule of Operating Segments
Schedule of Operating Segments (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Revenues | $ 51,060,589 | $ 54,406,788 |
Cost of revenues | 44,890,610 | 51,938,111 |
Operating expenses | 12,162,547 | 12,614,345 |
Operating income (loss) | (5,992,568) | (10,145,668) |
Total Assets | 19,500,202 | 7,325,071 |
TW | (19,500,202) | (7,325,071) |
Total Liabilities | 15,948,881 | 18,051,037 |
Surge Phone Wireless And Other [Member] | ||
Revenues | 7,428,114 | 741,863 |
Cost of revenues | 6,083,498 | 849,225 |
Operating expenses | 7,733,527 | 8,066,653 |
Operating income (loss) | (6,388,911) | (8,174,015) |
LogicsIQ, Inc [Member] | ||
Revenues | 17,846,698 | 16,430,057 |
Cost of revenues | 14,715,499 | 14,213,769 |
Operating expenses | 2,425,422 | 2,147,406 |
Operating income (loss) | 705,777 | 68,882 |
Total Assets | 1,284,562 | 199,366 |
TW | (1,284,562) | (199,366) |
Total Liabilities | 2,056,632 | 2,450,888 |
True Wireless Inc [Member] | ||
Revenues | 1,157,981 | 2,372,977 |
Cost of revenues | 306,062 | 3,003,099 |
Operating expenses | 615,013 | 937,196 |
Operating income (loss) | 236,906 | (1,567,318) |
Total Assets | 353,476 | |
TW | (353,476) | |
Total Liabilities | 4,301,249 | |
ECS Business [Member] | ||
Revenues | 24,627,796 | 34,861,891 |
Cost of revenues | 23,785,551 | 33,872,018 |
Operating expenses | 1,388,585 | 1,463,090 |
Operating income (loss) | (546,340) | (473,217) |
Total Assets | 3,971,200 | 4,883,357 |
TW | (3,971,200) | (4,883,357) |
Total Liabilities | 20,879 | 386,695 |
Surge Block Chain and Other [Member] | ||
Total Assets | 14,244,440 | 2,595,824 |
TW | (14,244,440) | (2,595,824) |
Total Liabilities | $ 13,871,370 | $ 10,912,205 |
Schedule of Components of Incom
Schedule of Components of Income Tax Expense (Benefit) (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Income Tax Disclosure [Abstract] | ||
Federal income tax benefit - 19.64% | $ (2,657,000) | $ (2,252,000) |
State income tax - 6.5% | (880,000) | |
Tax effect of timing differences for income tax purposes | 120,000 | |
Non-deductible items | (495,000) | 460,000 |
Subtotal | (3,912,000) | (1,792,000) |
Change in valuation allowance | 3,912,000 | 1,792,000 |
Income tax benefit |
Schedule of Components of Inc_2
Schedule of Components of Income Tax Expense (Benefit) (Details) (Parenthetical) | 12 Months Ended |
Dec. 31, 2021 | |
Income Tax Disclosure [Abstract] | |
Federal statutory tax rate | 19.64% |
State and local tax rate | 6.50% |
Schedule of Deferred Tax Assets
Schedule of Deferred Tax Assets (Details) - USD ($) | Dec. 31, 2021 | Dec. 31, 2020 |
Income Tax Disclosure [Abstract] | ||
Bad debt | $ 6,000 | $ (368,000) |
Gain on investment in Centercom - related party | 48,000 | 44,000 |
Amortization of debt discount | 434,000 | 423,000 |
Share based payments | (47,000) | (38,000) |
Change in fair value of derivative liabilities | (321,000) | (121,000) |
Other | (2,000) | (52,000) |
Net operating loss carryforwards | (3,911,000) | (3,801,000) |
Total deferred tax assets | (3,793,000) | (3,913,000) |
Less: valuation allowance | 3,793,000 | 3,913,000 |
Net deferred tax asset recorded |
Income Taxes (Details Narrative
Income Taxes (Details Narrative) | 12 Months Ended |
Dec. 31, 2021USD ($) | |
Income Tax Disclosure [Abstract] | |
Valuation allowance increase (decrease) | $ 2,120,000 |
Operating loss carryforwards | 33,599,000 |
Blended tax rate | $ 7,824,000 |